Pension Plan Take Over "feels like a hijacking"

The 2019 provincial budget introduced a plan by the government to have the Alberta Investment Management Corporation (AIMCO) take over control of ATRF assets.

October 26, 2019

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Buried deep in the text of the budget tabled by Finance Minister Travis Toews last Thursday is a provision that will have the Alberta Investment Management Corporation (AIMCo) take over control of $18 billion in assets of the Alberta Teachers’ Retirement Fund (ATRF).

Ostensibly intended to create a “Made in Alberta” investment portfolio, the take over will see the ATRF fund, along with those of the Alberta Health Services and the Workers Compensation Board,  placed under the control of the government crown corporation.

Government’s decision was made without any prior consultation. The ATRF board was informed only once the budget had been released and the Alberta Teachers’ Association (ATA), co-sponsor of the plan, has yet to hear anything from government about the implications of the take-over, what might lie ahead, or why this is in the interests of teachers.

For now, the ATA is advising its active members and retired teachers that the change should not immediately affect their pension benefits or contribution and that they will continue to be served by ATRF staff.

“Why didn’t they talk to us? Individual teachers contribute half of the money that funds the plan and now will have no say over the management of those funds. Making this decision without consulting teachers at all makes this feel like a hijacking.”

―Jason Schilling, ATA President

For 80 years, teachers have had joint governance over the management of the funds held in trust by the ATRF and occupy half of the seats on the board that governs the plan. The board has directly employed and supervised the investment professionals who safeguard and grow the contributions held in trust for teachers, often achieving returns on investment that have exceeded external benchmarks and AIMCo results. Teachers are concerned that rolling their investments into AIMCo will mean the plan will be less able to respond to their needs and concerns, be less accountable, and force an increase in contribution rates.

“The fact that the government is having to force public sector pension plans, such as the Local Authorities Pension Plan, to remain with AIMCo does not inspire confidence.  I have a lot of questions to ask: Will the portfolio of AIMCo’s investments be prioritized to ensure the security and sustainability of pensions or will other political considerations hold sway? How will contribution rates for teachers be affected? Will government continue to fund its obligations on an ongoing basis? What measures will AIMCo take to ensure that it is responsive to teachers who would now be its contributors and clients?”

―Jason Schilling, ATA President

Schilling indicated that the ATA is anticipating that enabling legislation will be tabled next week. The Association will be monitoring developments closely and considering all options available in response.