Alberta Teachers' Association, principal sue government over pension order
New law will require Alberta Teachers' Retirement Fund to use AIMCo as investment manager
Alberta teachers' battle over government changes to their pensions is headed for the courts.
The Alberta Teachers' Association and an Edmonton school principal have filed a lawsuit against the provincial government about an order they say wrests more control of pension funds away from teachers.
The association, and Greg Meeker, who was president of the Alberta Teachers' Retirement Fund (ATRF) for 10 years, claim a December ministerial order conflicts with the law. They say it also contradicts public statements by Finance Minister Travis Toews, who said current and retired teachers would retain control of how their pension fund is invested.
"[Teachers and the government] should both be interested in the best, cost-effective investment return possible," Meeker said on Friday. "But that does not seem to be the case. And it seems to be that one of those two parties is making some arbitrary decisions about how that's going to roll out for the next 40 or 50 years."
None of the allegations have been proven in court.
At issue is control of the $19.3-billion teachers retirement fund, which has nearly 84,000 members.
In 2019, thousands of teachers were outraged when the United Conservative Party government passed a bill requiring the ATRF to use the Crown corporation Alberta Investment Management Corporation (AIMCo) to manage investment of the fund.
The government, which pays about half of teachers' pension contributions, said the move would save investment management fees. Toews has said that ATRF would retain ownership of the fund and keep its ability to decide the strategy of how the billions of dollars should be invested.
The $19 billion is gradually being transferred to AIMCo's control, and that transfer is supposed to be complete by the end of 2021. But to complete that transfer, the teachers' pension fund board and AIMCo have to reach an investment management agreement.
When those talks stalled last fall, the government passed a ministerial order, which took effect in January. It allows AIMCo to veto the teachers' fund investment directions in some cases, and says AIMCo will be the arbiter of any disputes between the parties.
In January, a government spokesperson said the order was intended to be temporary until AIMCo and the ATRF could reach an agreement. They said none of the changes affect the benefits paid to retired teachers.
The ATA and Meeker allege it contradicts the Teachers Pension Plan Act and public statements by Toews.
AIMCo's decisions have been under additional scrutiny since a risky investment strategy cost its clients $2.1 billion last year. The shakeup prompted an external review and turnover of senior leaders.
Meeker said if AIMCo underperforms while investing public-sector pensions, younger teachers and the government will face rising contributions to prop up the plan.
"If we get solely betrothed with an investment manager that doesn't perform as advertised, that could be a real problem for costs," he said.
Toews's press secretary, Charlotte Taillon, said Friday the government cannot comment on the legal action.
"We are confident that ATRF and AIMCo will be able to come to an agreement," she said in an email. "Once the parties agree to a final investment management agreement the Ministerial Order will no longer be in effect."
The ATA, which has publicly posted legal documents in the case, declined to comment on Friday.