As I am sure most teachers are aware, the Government of Alberta has unilaterally imposed an investment management agreement (IMA) between the Alberta Teachers’ Retirement Fund (ATRF) and the Alberta Investment Management Corporation (AIMCo). I am outraged, as are many other people. The ATRF and three other pension plans spent a year trying and failing to negotiate an agreement with AIMCo. If you recall, the odious Bill 22 forced the ATRF to exclusively use AIMCo as its investment manager.
Parts of this imposed agreement range from troubling to heinous. It is worth pointing out that the ATRF is a joint enterprise between the government and the ATA, while AIMCo is a corporation solely owned by the government — and that teachers make the majority of contributions to the plan.
I spent 12 years on the ATRF board, so I feel qualified to point out that this board is the trustee and has a fiduciary duty to plan members. That duty requires the ATRF board to act in the best interest of plan members, which includes seeking the most cost-effective investment strategies and managers for the plan. There is no logical explanation as to why the minister would supplant the board’s judgment with his own. This decision negated the hard work and dedication of the ATRF board, which for decades has provided the most cost-effective investment management possible.
May I remind you that the minister of finance appoints half of the ATRF board. AIMCo has been in existence for about 10 years. During that time the ATRF has always had the opportunity to use them as an investment manager. They never did. I think long and hard about that every day.
The imposed agreement gives AIMCo control in some areas that it should not have. It can decline to implement changes to the investment policy that the ATRF board orders if it affects AIMCo’s “economies of scale.” This is a commercially unreasonable provision. It also flies in the face of the many UCP MLAs who insisted that the ATRF will retain “strategic control” of its assets under Bill 22.
The imposed agreement dictates that the costs charged by AIMCo “should” be less than private investment managers. But the investment costs charged by AIMCo could be far more than current costs.
It is my considered opinion that AIMCo did not really try to negotiate an agreement. The negotiation framework was tilted heavily in AIMCo’s favour. If no agreement was reached, they knew that the government would impose an AIMCo-friendly agreement, one that is supposed to be temporary but has no termination date.
The ATRF assets are held in trust. They do not belong to the government. They imposed commercially unreasonable contracts on a joint pension plan. This does not affect the benefit paid, which is defined under law, but it could affect the cost of the plan in the long run.
Teachers will not ever forget elected representatives interfering in the financial future of their pension plan. Workers do not take kindly to this behaviour, particularly ones that are on the front lines of a pandemic. After all, the assets are the deferred wages of teachers held in trust for a time when they cannot work. This plan is worth fighting for. ❚
Greg Meeker is principal of Coronation School in Edmonton.