Legislature committee votes against debating public-sector pensions bill
Private members bill would prevent Alberta from withdrawing from the Canada Pension Plan
An Opposition push to reverse government changes to the control of public-sector pension plans hit a snag on Monday.
The government majority of an all-party committee voted against allowing members of the Alberta legislature to debate a private members' bill that would reverse the pension changes.
The bill, introduced by NDP MLA Christina Gray, would also prevent the provincial government from withdrawing the province from the Canada Pension Plan (CPP) — a proposal currently being studied by the finance ministry.
"You are really affecting individuals' future retirement," committee member and NDP MLA Rakhi Pancholi said Monday. "It doesn't matter how they voted or who they voted for. They planned for their future on their pension. So why we're here today is because there was no consultation. People were simply shocked by what happened."
UCP MLAs argued the NDP wants to eliminate a best practice of screening pension board appointees to ensure they are qualified.
In the span of a week, the committee received correspondence from 3,400 people concerned about the future of their public sector pension or CPP, the committee heard Monday morning.
The majority of members on the UCP-dominated committee also voted to keep that correspondence private. NDP members wanted it released to the public.
At a news conference after the meeting, Gray said she was disappointed and that government MLAs are ignoring the voices of thousands of Albertans.
At issue is an omnibus bill passed rapidly by the legislature last November. It requires that three major public-sector pension plans use the Alberta Investment Management Corporation (AIMCo) to manage their investments.
Though the plans already use AIMCo, they used to be able to choose their investment manager.
400,000 Albertans affected by changes
Health-care workers, municipal staff, post-secondary employees, police officers and many other public front-line workers and retirees are enrolled in the pension plans.
The government bill last year also required the Alberta Teachers' Retirement Fund (ATRF) to use AIMCo as its investment manager by the end of 2021.
The government also changed the balance of power on the board of the largest public-sector pension plan, and introduced new competency evaluations for board appointees. Critics say that would allow the government to veto representatives chosen by unions.
All told, more than 400,000 Albertans' pensions are affected by the changes.
Gray has said government consultation about the changes with affected people and organizations was non-existent.
AIMCo has also been the subject of scrutiny after losing at least $2.1 billion earlier this year on one investment strategy.
The committee also heard statements from five interested people on Monday.
Athana Mentzelopoulos, Alberta's deputy minister of finance, said it was wasn't necessary to allow for pension plans' to choose their investment managers because people on pension boards told her they had no plans to leave AIMCo.
Requiring major public-sector pension plans to use AIMCo would save money and eliminate duplication of services, Mentzelopoulos said. Those savings would evaporate if government approved Bill 203, she said.
Though critics have said the government's changes erode the "joint governance model" that gives employers and workers equal representation on pension boards, Mentzelopoulos rejected the notion that joint governance had changed.
She said there was a risk of the industry fragmenting, which could lead to multiple public agencies paying executives lavish compensation packages in the future.
NDP MLA Chris Nielsen later argued that while saving millions on investment management fees may sound attractive, poorly managed pension plans could potentially lose billions of dollars in value for retirees.
Another speaker selected by the government was Mac Van Wielingen, an energy executive and investor who has previously served as AIMCo board chair. He said the public discourse around the pension changes is full of misinformation. Workers mistakenly believe they're losing control of their pension plans, he said.
He also called the lack of government consultation on the changes "unfortunate."
Government 'gaslighting' opponents, AFL president says
Greg Meeker, former chair of the teachers' pension board, said AIMCo had a "massive" conflict of interest in recommending the government consolidate public pensions under their control. He said executives stand to financially benefit by increasing the sizes of their portfolios.
Meeker also pointed to public-sector pension plans in other provinces that are not locked into using one investment manager. He said AIMCo was unlikely to achieve promised economies of scale if it grew too large.
The ATRF never chose to use AIMCo as an investment manager because the organization couldn't find references that inspired confidence, he said.
Gil McGowan, president of the Alberta Federation of Labour and sponsor board chair for the Local Authorities Pension Plan, said boards want the option to chose their pension manager so AIMCo doesn't take mandated clients for granted.
He also slammed the government's idea of withdrawing from CPP, saying Alberta's relatively young demographic could change quickly with the decline of the oil industry and the current government's policies.
After the meeting, McGowan said government MLAs were "gaslighting" critics by claiming workers' control over their pension plans is unchanged.
NDP members of the legislative committee voted to push the bill to the legislature, and UCP MLAs voted against the move. Members of the legislature will decide next week whether the bill will proceed.