{"id":20070,"date":"2020-10-28T15:15:17","date_gmt":"2020-10-28T19:15:17","guid":{"rendered":"https:\/\/www.benefitscanada.com\/news\/albertas-lapp-ending-coordination-option-due-to-pension-member-confusion-151749"},"modified":"2020-10-28T15:15:17","modified_gmt":"2020-10-28T19:15:17","slug":"albertas-lapp-ending-coordination-option-due-to-pension-member-confusion","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2020\/10\/28\/albertas-lapp-ending-coordination-option-due-to-pension-member-confusion\/","title":{"rendered":"Alberta\u2019s LAPP ending coordination option due to pension member confusion"},"content":{"rendered":"
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Blake Wolfe<\/span> | October 28, 2020 <\/p>\n

Alberta\u2019s Local Authorities Pension Plan is cancelling its coordination option, citing regret and confusion from plan members who mistakenly accessed the feature without fully understanding the financial implications.<\/p>\n

According to a statement by the LAPP, coordination will be discontinued for members who start their pension on or after Jan. 1, 2021. It noted the option\u2019s elimination will have no financial impact on the plan.<\/p>\n

Originally intended for individuals with a shortened life expectancy, coordination allows plan members to receive a temporary increase to their pension until they turn 65, after which the increase is removed and the pension is reduced permanently.<\/p>\n

Read: Downside protection strategy saves LAPP $1.9 billion<\/a><\/strong><\/p>\n

Phil Rivard, vice-president of pension policy and funding at the LAPP, says the decision was made following several years of complaints and concerns by members who mistakenly took the option, in some cases out of a desire to front-load their pension.<\/p>\n

And with pension unlocking provisions now included in Alberta\u2019s Employment Pension Plans Act, there\u2019s little reason for the LAPP to continue offering coordination, according to a statement from the plan.<\/p>\n

\u201cThe theory of coordination makes a lot of sense, but the issue we run into is that reality isn\u2019t always consistent with theory and there\u2019s several members who never understood the implications properly,\u201d says Rivard.<\/p>\n

\u201cThere\u2019s also a lot of individuals driven by short-term income needs and they looked at it as a way to receive the highest payment level at retirement. They ended up seeing a significant drop in income at age 65 and that\u2019s very difficult to deal with.\u201d<\/p>\n

Read: LAPP reporting $3.4-billion loss in first quarter of 2020<\/a><\/strong><\/p>\n

Sheri Wright, vice-president of stakeholder relations and communications at the LAPP, says that, while confusion over coordination is the No. 1 concern expressed by members, she suspects there are many more who may regret their decision yet remain silent.<\/p>\n

\u201cThere\u2019s lots of behavioural economics out there, with respect to people making decisions related to their own financial gain. What it teaches us is that people often choose what\u2019s right in front of them and looks really good, but it isn\u2019t always the best choice.\u201d<\/p>\n

Read: Alberta\u2019s LAPP introducing new pension portal for members<\/a><\/strong><\/p>\n

Read the full article at BenefitsCanada.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Blake Wolfe | October 28, 2020 Alberta\u2019s Local Authorities Pension Plan is cancelling its coordination option, citing regret and confusion from plan members who mistakenly accessed the feature without fully understanding the financial implications. According to a...<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/20070"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=20070"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/20070\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=20070"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=20070"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=20070"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}