With the passage of Bill 22, the Reform of Agencies, Boards and Commissions and Government Enterprises Act, teachers are left with many questions about next steps. The bill legislated the transfer of assets from the Alberta Teachers’ Retirement Fund (ATRF) to the government-owned Alberta Investment Management Company (AIMCo).
The ATA News seeks to answer teachers’ most common questions here. Members who require further advice should call Teacher Welfare at 1-800-232-7208. If teachers require information about their pension specifically, they should call ATRF at 1-800-661-9582.
Is my pension safe?
Yes. The transfer of assets from ATRF management to AIMCo management does not, on its own, jeopardize the financial security of the plan.
Will the ATA be fighting Bill 22 in court?
Association lawyers are still advising on legal avenues to advance the interests of teachers, but it looks quite likely that a legal challenge on the constitutionality of the bill would not be successful. See Q&A on page 2.
What are the next steps?
ATRF is required to transfer $18 billion in assets to AIMCo by the end of December 2021. ATRF and AIMCo must negotiate an investment management agreement by the end of June 2020. That agreement will outline the process and timelines for transferring the assets, but more importantly it will include ATRF’s directions to AIMCo on how the investments are to be made.
Will ATRF still exist?
Yes, ATRF will continue to be the trustee for the plan and will continue to manage the administration of the pension. The board remains in control of determining how the pension fund is invested at a strategic level, and it retains ownership of the plan’s assets. It will continue to make pension payments to retirees and provide customer service to teachers — you will likely notice very little difference in your interactions with ATRF. The ATRF board will continue to make governance decisions related to the establishment of contribution rates.
The government has promised that the ATRF board will retain control over the investment policy and strategy. The government’s budget documents state, “AIMCo is expected to provide maximum returns to its clients and processes will be expanded to support broader agency involvement.”
So, what is actually changing?
ATRF will no longer be the direct managers of the funds and will no longer directly employ the fund managers. ATRF will become an investment client of AIMCo’s. It has been said that AIMCo will provide customized asset management to meet the required returns and inherent risks for the plan, but ATRF will have no opportunity to use any other asset managers.
Are any changes coming to AIMCo?
The budget announcement contained an expectation that ATRF will solely use AIMCo to manage the plan assets, which was then codified in Bill 22. The expectation that the organization of AIMCo include more involvement by the agencies was not formalized by legislation. How AIMCo will be responsive to the needs of the agencies whose money they invest is a legitimate question for teachers to ask their MLA.
Can’t we do more?
At this point, the most important opportunity to advance members’ interests is through the negotiation of the investment management agreement with AIMCo. This negotiation is in ATRF’s hands. Fortunately, members have applied considerable pressure on this issue, which should result in a better bargaining position for ATRF. Further contact with MLAs to express disappointment with the decision and the expectation for future consultation is the best opportunity to leverage your frustration into future value, because it is extremely unlikely that the government will reverse course on this decision.
How will this change my pension deductions or my future pension payments?
Hopefully there will be no changes. The government has said that AIMCo will provide higher returns after costs are deducted, resulting in reduced contributions for teachers and government. That is yet to be seen, and ATRF data on past performance has suggested that ATRF had been achieving higher returns — this was disputed by government. If returns do not match established benchmarks, then contribution rates may have to go up in the future.
There is no change to the benefits that active and retired members can expect to receive — retired teachers will notice no difference. Pension benefits can only be changed through negotiation by the Association and government or through further legislation.
Should I take my money out of the pension plan?
No. You receive the best value by staying in the plan. On average, retired teachers receive eight dollars in benefit for every dollar that they contribute into the plan. If you are thinking about pulling your contributions out of the plan, contact ATRF or Teacher Welfare for advice before making a final decision. ❚