Christmas-time takeover of Alberta’s pensions plans shuts workers out of pension governance

Just before Christmas Finance Minister Travis Toews signed several still-secret and unpublished ministerial orders that handed over financial control of the Alberta Teachers’ Retirement Fund (ATRF) and most of Alberta’s other public sector pensions to AIMCo. The ATRF as well as the Local Authorities Pension (LAPP), the Special Forces Pension Plan (SFPP) and the Public Service Pension Plan (PSPP) are now the plaything of AIMCo and workers and their representatives have little to no say in how their pensions’ funds are managed.

The managers of these public sector pension plans were informed of these imposed investment management agreements in January after they returned from their holiday break. Alberta Teachers’ Association president Jason Schilling was incensed by the ministerial order.

This is the end result of Bill 22 which was passed in the fall of 2019 by the United Conservative Party government. It took away the ability of workers to directly appoint who sits on pension plan boards and forced the pension plans into a shotgun marriage with AIMCo. The bill allowed no other option when it came to who could manage those funds. 

“It’s like a customer going to an auto dealership and saying “I want to buy a red car,” and the dealership saying “here’s your blue truck.” Most people would walk away from that dealership and take their business elsewhere. But, as a result of the Ministerial Orders, the government is saying to more than 400,000 Albertans “you’ll take the blue truck because we say so, whether you like it or not,” said Gil McGowan, the president of the Alberta Federation of Labour. 

“This is unprecedented in Canada. Normally, if an investment manager says, “no we can’t or won’t do that for you,” the pension plan can simply find another investment management firm. But, here in Alberta, the power of choice has been taken away by government fiat.”

The bill also gave the pension plans and AIMCo until the end of 2020 to negotiate an agreement on how the funds would be managed. According to Rory Gill, the president of Canadian Union of Public Employes Alberta (CUPE Alberta) AIMCo walked away from negotiations. 

Finance Minister Travis Toews has said in public statements that these imposed measures are temporary until an agreement can be reached but there are no currently no plans to sit down and restart negotiations and given that AIMCo now has nearly unfettered control of the funds of the pensions plans it’s unclear why they would come back to the negotiating table. 

“Based on the track record of this and other conservative governments I have grave doubts that this is a temporary order,” says Gill.  

What the end game of the UCP is for making these sweeping changes to pension plan governance at this point is unclear. Kenney has mused about a referendum for taking the Alberta portion of the Canada Pension Plan and handing it over to CPP but it’s still unclear why Kenney would take the risk of angering 400,000 pensioners by handing control of their pensions to AIMCo given its poor performance. Just last year it vaporized more than $2 billion dollars on a single trade and we’ve reported extensively on how AIMCo has over-invested in poorly performing oil and gas companies. AIMCo has not once met the performance benchmarks of its largest pension plan, the LAPP, in its entire existence. 

This Christmas-time takeover of the pension plans by AIMCo means that they likely won’t be able to protect themselves from AIMCo’s incompetence. As we reported back in May, LAPP had prudently invested in a downside protection plan that was essentially the opposite strategy of what AIMCo lost billions doing. They saved their members a lot of money and that strategy was done over AIMCo’s wishes. Now AIMCo very well might have a veto. 

While the unions and pension plans involved are fighting this out in court Guy Smith, the president of the Alberta Union of Public Employees, made it clear what their strategy is.  

“If we want to stop the UCP government’s attack on our pensions, we need to fight back.

To succeed, we are going to need a whole lot of member engagement and involvement; our energy needs to go into making sure our fellow workers are aware of these attacks and preparing them to act,” said Smith.