Frequently Asked Questions about Proposed Pension Change in Budget 2019

November 7, 2019
Have your Say! Outline your concerns in a message to your MLA at www.handsoffmypension.ca

Update: November 19, 2019
ATA President, Jason Schilling, writes to the Auditor General of Alberta requesting an independent review of  Bill 22 and the ATRF asset transfer to AIMCo. Read his letter here.

Update: November 18, 2019
ATRF Chair, Sandra Johnson contacts Mr Doug Wylie, Auditor General of Alberta, urging him to investigate and perform an independent review of the of the course of action proposed by the Government of Alberta to transfer pension assets from the ATRF to the government appointed AIMCo. Read her letter here.

UPDATE November 7, 2019
Sandra Johnston, Chair of ATRF, has written a letter in response to the open letter published to ATRF members from Finance Minister Travis Toews. In the letter, the ATRF provides detailed analysis comparing ATRF returns to AIMCo returns. The letter also asks the minister to share the background information and business case that the government is using to support their proposal to transfer assets from ATRF to AIMCo. Finally, the ATRF is suggesting that an independent third party, such as the Auditor General of Alberta, be brought in to provide an independent review of the data and the decision. Read Johnston’s letter here.

In addition to our October 26 release, Pension Plan Take Over “feels like a hijacking,” the Association has compiled the following responses to frequently asked questions related to proposed changes to the administration of the Teachers’ Pension Plan.

 

1. What does this budget announcement mean for ATRF?

The future status of ATRF operations and the implications of the proposed transfer of assets from ATRF to the Alberta Investment Management Corporation (AIMCO) are currently unclear. We will know more if and when the legislation to put the change into effect is tabled.

ATRF has put out a fact sheet here with information about the ATRF as a fund manager and other issues.

 

2. Is my pension safe?

The takeover of ATRF asset management by AIMCo announced in the budget would not, in and of itself, change the benefits active and retired members can expect to receive. Teachers’ pensions remain secure.

 

3. What is the ATA doing about this?

The Association disagrees with the decision. We have set up the website www.handsoffmypension.ca to make it easy for teachers and retirees to send a message outlining their concerns to their MLA. We are considering additional ways—both legal and political— to fight the decision. Stay tuned to the Association website and social media channels for further developments.

 

4. Why does this concern me?

Plan members should be concerned that this will result in a less responsive, less productive and ultimately more expensive plan. They should be concerned that this decision was made unilaterally by the government without consultation with teachers, who are investors and owners of the plan. They should be concerned that this might presage other changes that would have an effect on their benefits.

Teachers have had joint governance over their pension plan for 80 years. Currently they occupy half the seats on the board of ATRF, recognising their 50 per cent share of the contributions. Individual teachers contribute half of the money that funds the plan, and now they will have no say over the management of those funds.

 

5. Will AIMCo be able to get a better return than ATRF?

ATRF has obtained excellent returns on investment, often exceeding benchmarks and AIMCo results. Here is some data comparing rates of return, net of costs for ATRF and the AIMCO-managed Local Authority Pension Plan (LAPP):

Annualized Return - Years ended December 31, 2018 
  ATRF LAPP Difference
6 years   9.5% 8.0% 1.5%
5 years   8.0% 7.4% 0.6%
4 years   7.0% 6.4% 0.6%

 

6. The government says this is about reducing costs?

The current management costs related to ATRF are very low and are paid for out of returns of the fund; as a result, this change would have no impact on the government’s bottom line. At 0.05 per cent of plan assets (2017–18), the administration cost of ATRF is very, very low. When all costs are added in (operating expenses, management fees and performance fees), the investment cost is 0.84 per cent of asset value, which, given ATRF’s strong rates of return is a very reasonable investment to achieve superior results. Costs have to be considered in relation to investment returns. If investment returns are lower, then the fact that costs are also lower doesn’t matter. Read more about plan costs on p.47 of the ATRF annual report.

 

7. What is ATRF saying about this?

A message on the ATRF website says that “ATRF is committed to transparency and open communication.” They have published a fact sheet here that includes facts about the ATRF as a pension manager, their costs and returns and information about the fiduciary duties of the Board.

On November 6, 2019, ATRF chair Sandra Johnston wrote a letter to Finance Minister Travis Toews outlining ATRF returns compared to AIMCo returns and suggesting the Finance Minister refer elements of the matter to the Office of the Auditor General of Alberta. Read the November 6 letter, here.

 

8. What can I do?

Write to your MLA. Express your concerns using our online email tool at www.handsoffmypension.ca.