CARTA Memo for January 2021
Happy New Year. Welcome to 2021. I know many of us were thinking that there would be so many changes in 2021 from what we have experienced in 2020. And hopefully with some of the restrictions being relaxed we can get out and do more things. Outdoor restrictions allow us to have gatherings of less than ten with social distancing. Just be very careful of the sidewalks and paths and of course maintain the social distancing. Hopefully, the restrictions will continue to diminish and we can get back to normal…. But I for one am starting to forget what that looked like.
I know many of you are keeping up to date on this so this may be redundant. I am enclosing some information that you really need to read carefully and especially contact your MLA. Some of the promises made by our current government have been broken. Please read the information below and check out the website HandsOffMyPension.ca
Then contact your MLA so we can have some impact on the decisions they are making.
Finance Minister Imposes Investment Management Agreement …. from the Alberta Teachers’ Association
Teachers and pensioners received a late, unwelcome Christmas gift from Finance Minister Travis Toews in the form of an imposed agreement on pension investment management. On December 23, 2020, Toews signed a ministerial order imposing an investment management agreement (IMA) between the
Alberta Teachers’ Retirement Fund (ATRF) and the Alberta Investment Management Corporation (AIMCo). ATRF was informed of the imposed agreement on January 4, 2021.
According to a release posted yesterday on the ATRF website, the IMA includes a recognition that the ATRF board will establish the investment policy to direct how plan assets are managed, but the full discretion of the board in establishing and executing the investment policy is restricted. Effectively, the government has given AIMCO a veto. “Specifically, AIMCo is not required to implement ATRF’s Investment Policy if, in the sole opinion of AIMCo, it would threaten to compromise AIMCo’s economies of scale or operational efficiencies,” says the ATRF release. “Such decisions by AIMCo are not subject to appeal or arbitration.”
The imposed terms contradict statements made by Toews in the legislature at the time Bill 22 was being passed. “The ATRF board will remain in control of determining how the pension funds are invested at a strategic level as well as retaining ownership of the plan’s assets,” said Toews on November 7, 2019. “That is, AIMCo will invest according to the policies set by the ATRF board.” Bill 22, the Reform of Agencies, Boards and Commissions and Government Enterprises Act, required ATRF to use AIMCo as its sole investment manager, despite a long-standing strong-returns history of investment management by ATRF. The bill required the negotiation of an IMA between ATRF and AIMCo to be concluded by June 30, 2020. Yesterday’s ATRF release says negotiations occurred throughout much of 2020 but that AIMCo was not willing to agree to key terms that ATRF felt protected the board’s role and the interests of the plans. Alberta Teachers’ Association president Jason Schilling is incensed by the ministerial order. “Throughout debate on Bills 22 and 203, the government was adamant that ATRF would retain control over investment decisions. Officials and MLAs told teachers they were overreacting and that they were being lied to. Now we have an investment agreement with loopholes big enough to fit a bad $2.1 billion volatility bet.” Schilling is puzzled that AIMCo and the government would not accept reasonable terms suggested by the ATRF board.
“You would think that AIMCo, which independent reviewers described as demonstrating unsatisfactory investment decisions, risk controls, collaboration and risk culture and as being desperately in need of culture change would have approached its negotiations with ATRF with a little less arrogance and more flexibility. You would think the government would think twice before backing AIMCo’s position.”
Schilling is calling on teachers and retirees to contact their MLAs to order a stop to the IMA until AIMCo can come to terms with ATRF and the promises made by government officials. The agreement would allow the transfer of management to now begin, with a deadline established by Bill 22 and the IMA for the management of all assets to be completely transferred by December 31, 2021. While these recent developments are deeply concerning for teachers, ATRF says that teacher pensions remain secure and that benefit entitlements are not impacted by the change in investment management.
The following letter was sent out to teachers last week.
Teachers and retirees are livid. Earlier this week, we sent out news that Finance Minister Travis Toews has imposed terms of an investment management agreement (IMA) between the Alberta Teachers’ Retirement Fund (ATRF) and the Alberta Investment Management Corporation (AIMCo). The response has been incredible. I want to be clear about one thing first. While this decision is not good for sound pension management and governance, it does not have a direct impact on the benefits you currently receive or can expect to receive. Your pension remains secure. However, forcing ATRF to use AIMCo as the sole investment manager for teacher pensions and allowing AIMCo to have a veto over decisions about how investments are made are still bad decisions. We are working on a number of strategies and responses to push back. The first thing we have done is updated our HandsOffMyPension.ca website to include updated content and a new template for sending an email to your MLA. I know that many of you have received unsatisfactory responses from your MLA, but there are two reasons we are doing this:
We need to make things uncomfortable for MLAs, who were told to use talking points making a promise that has now been broken. These MLAs may also respond differently today, given other recent controversies. This tool helps us identify additional supporters for other campaigns and activities. To that end, please share this e-mail and HandsOffMyPension.ca with as many teachers and retired teachers as possible.
We will be back in touch with additional strategies in the coming days.
Thank you for your support, solidarity and advocacy.
Sincerely,
Jason Schilling
ATA President
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