Opposition bill seeks to reverse public sector pension changes in Alberta
Alberta government requires pension plans to use AIMCo as investment manager
An Opposition MLA is attempting to reverse changes the Alberta government made last year to the control of several public sector pension plans.
NDP MLA and labour and immigration critic Christina Gray tabled a private member's bill on Monday that also seeks to halt cabinet ministers from withdrawing Alberta from the Canada Pension Plan — a proposal floated by Premier Jason Kenney.
"Albertans are very concerned about making sure that they can rely on that retirement, particularly now during the pandemic with the economic uncertainty that is happening," Gray said in a Friday interview.
"Albertans want to know that their money they have earned through a lifetime of contributing to their country will be there for them when they retire."
In its inaugural October 2019 budget, the United Conservative Party government said changes were coming to the oversight and investment requirements of four major public sector pension plans.
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More than 400,000 Albertans, including current and retired teachers, nurses, municipal employees, post-secondary education workers, police officers and others have retirement savings in the pension plans.
Passed last November as part of the omnibus Bill 22, the UCP government changes require three of the plans to use only the Alberta Investment Management Corporation as an investment manager.
It's also requiring the Alberta Teachers' Retirement Fund to start using AIMCo as investment manager by the end of 2021.
The legislation also gave the government the right to reject pension board appointees and changed the balance of power on the Local Authorities Pension Plan board.
Teachers and labour groups, initially incensed by the changes, are now increasingly worried after reports that Crown corporation AIMCo lost $2.1 billion on a risky investment strategy. External advisers have been called in to review the loss.
LAPP, which has 275,000 members, said AIMCo losses reduced the net value of the plan by 6.5 per cent during the first quarter of 2020.
Government backs AIMCo
Finance Minister Travis Toews said in the legislature on Monday the government has confidence in AIMCo. He said every pension manager in the world has been hit this year by an economic downturn resulting from the COVID-19 pandemic. The corporation has exceeded its benchmarks in eight of the last 10 years, Toews said.
In a Monday email, Toews' press secretary, Jerrica Goodwin, said government wants to consolidate pension management with AIMCo to achieve "economies of scale."
"AIMCo's size enables it to participate in sophisticated investment opportunities, such as international private equity and real estate investments, that are difficult for some smaller investment managers to access," she said.
Government has no intention of changing its mind, she said. The minister had not reviewed Gray's bill as of Monday afternoon.
Gray's Bill 203, tabled in the legislature Monday afternoon, would reverse the UCP's pension changes and require that a current or future government consult with pension holders before making future changes to the plans' administration.
"The UCP, the party of the free market, is choosing to force all Albertan pensioners to use AIMCo rather than allowing them the opportunity to have competition within the market," Gray said at a Monday press conference. "They are creating a monopoly."
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If passed, the Pension Protection Act would also halt Alberta withdrawing from CPP.
Pulling Alberta out of the CPP and creating a provincial pension plan was one of the ideas considered last fall by the Fair Deal panel. The group of MLAs and other Albertans was tasked with holding public hearings and studying ways for Alberta to seize more autonomy from Ottawa. Their report has been submitted to the government, but not yet released.
Gray said the panel floated the idea before Albertans without presenting information about merits or risks of a switch.
In the legislature, Toews said the government would put the question of a provincial plan to Alberta voters in a referendum if ministers believe the idea is worth pursuing.
Three retired teachers opposed to changes to their pension plan also spoke at the NDP's Monday press conference.
Retired Sherwood Park teacher Dianna Millard said the change without consultation is anti-democratic.
"I feel powerless and vulnerable," she said. "We're not being listened to and there's no justification for this to be happening at all."
Retired Edmonton teacher Dolaine Koch pointed to an ATRF analysis released earlier this month showing the teachers' pension fund would have been worth $1.3-billion less if managed by AIMCo between 2013 and 2019.
She said when she tried to meet with her MLA about her pension concerns, he told her she could vote for an opponent during the next election if she was unhappy.
Lin Zurawell, a retired teacher from Sherwood Park, said she feels as if the government is reaching into her savings account without her permission and reallocating her money.
"It's beyond outrageous," she said. "It's terrifying. When your pension is your single source of income, it's terrifying to think that your government can manipulate it this way."
Toews said Monday all public sector pension plans are fully funded, and their money is safe and secure.
Previously, cabinet ministers have said switching investment management of teacher pensions to AIMCo would save both taxpayers and teachers millions of dollars each year in fees.
Private members' bills go before an all-party legislative committee before being debated in the legislature. The committee, which has a majority of government members, can opt to recommend the legislature not consider the bill.
The NDP has launched a website to collect stories from Albertans concerned about pension changes. Submissions are automatically emailed to committee members in an attempt to pressure the committee to allow the bill to proceed to the legislature.