City of Lethbridge sign inside the City Hall foyer (Lethbridge News Now)

By Justin Goulet

City explains additional pension plans for employees following CTF report

Nov 19, 2020 | 10:28 AM

LETHBRIDGE, AB – The City of Lethbridge has responded to a new report from the Canadian Taxpayers Federation (CTF).

The report focused on pension plans, specifically second and third pensions available to municipal employees across the province of Alberta. The CTF alleges that these additional pensions are costing Alberta taxpayers millions of dollars.

READ MORE: Second and third pensions for municipal employees in Alberta costing taxpayers millions

Lethbridge News Now reached out to the City of Lethbridge for more details.

The city provided a breakdown of the pension plans available to municipal employees, via email to LNN.

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The following information is also publicly available through the City of Lethbridge 2019 annual report, on pages 58 and 59, which can be viewed here.

LOCAL AUTHORITIES PENSION PLAN (LAPP)

Employees of the City of Lethbridge, with the exception of police officers, take part in the LAPP. It is a multi-employer defined benefit plan in Alberta.

This plan serves approximately 265,000 people across 421 employers in the province. The LAPP is funded by employer and employee contributions and investment earnings from more than $50 billion in portfolio assets.

LAPP offers a pension benefit of 1.4 percent up to the Yearly Maximum Pensionable Earnings (YMPE) and two percent over the YMPE up to the Canada Revenue Agency (CRA) salary cap.

The City is required to make current service contributions to the LAPP of 9.39 percent of pensionable earnings up to the Canada Pension Plan Year’s Maximum Pensionable Earnings (YMPE) and 13.84 percent for the excess.

Employees are required to make current service contributions of 8.39 percent to the YMPE and 12.84 for any portion of pensionable salary over the YMPE.

According to the 2019 report, total current and pas service contributions by the City of Lethbridge to the LAPP were $12,039. Total current and past service contributions by the employees were $9,029.

According to the City of Lethbridge, there are 1,322 employees who received the LAPP for the 2019 year.

APEX SUPPLEMENTARY PENSION PLAN

The APEX supplementary pension plan is sponsored by the Alberta Urban Municipalities Association (AUMA) and is covered under the provisions of the Alberta Employment Pension Plans Act.

It offers supplementary pension benefits to a “prescribed class of employees” and supplements the LAPP. It was launched on January 1, 2013 and is designed as a recruitment and retention tool for public sector management staff.

It is a voluntary plan for participants. APEX essentially tops up the LAPP pension benefit to a full two percent pension up to the CRA salary cap, according to the city’s emailed response.

Contributions are made by the City of Lethbridge and eligible employees. They are required to make current service contributions to APEX of 2.84 percent and 3.78 percent, respectively of pensionable earnings up to $151.

The annual report states that total service contributions by the city to APEX in 2019 were $728 and total current service contributions by the employees of the city were $446.

There are 156 employees that received the APEX Supplementary Pension Plan for the 2019 year.

SUPPLEMENTARY EMPLOYEE RETIREMENT PLAN (MuniSERP)

In December 2002, Lethbridge City Council approved the city’s participation in the MuniSERP program, which is a plan available through the AUMA.

It is a supplementary employee retirement plan (SERP) that offers supplementary benefits to a prescribed class of employees whose retirement income would be affected by the CRA Income Tax Act cap on pension contributions.

The city said that the benefit takes the form of a lump sum cash payment upon retirement or death. MuniSERP is a voluntary, non-contributory defined benefit plan.

It is a payment designed to pay a one-time benefit to employees who have a portion of their pensionable salary above the CRA salary cap. This allows the full salary to be considered when calculating the retirement benefits provided.

According to the 2019 annual report, the retirement benefit expense recorded by the city in the year was $193.

In 2019, 11 employees were eligible for a third pension, the MuniSERP.

SPECIAL FORCES PENSION PLAN

The 2019 annual report also notes a Special Forces Pension Plan (SFPP), which is available for police officers employed by the City of Lethbridge. It is a multi-employer plan covered by the Alberta Public Sector Pension Plans Act. The plan serves about 7,375 people and seven employers in Alberta.

It is financed by employer and employee contributions and investment earnings of the SFPP funds.

The contribution rates for 2019 were 14.55 percent of pensionable earnings for the city and 13.45 percent of pensionable salaries for police officers.

Total current and past service contributions by the city to the SFPP were $2,695. Total current and past service contributions by the police officers to the SFPP were $2,023.

Further details on municipal employee salaries, pensions and benefits can be found in the City of Lethbridge’s Salary Disclosure List, available on the city’s website. A direct link to the Salary Disclosure List is here.

Lethbridge News Now has made numerous requests for a full interview on this matter, but those requests have been denied.

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