Unions to launch legal challenge over province's pension powers

Public sector unions plan to launch a legal challenge after Alberta's finance minister quietly signed ministerial orders at the end of the year that they say give the government-owned investment manager more control over workers' pensions.

One of four orders signed by Finance Minister Travis Toews on Dec. 23 changed the terms of the Alberta Teachers' Retirement Fund (ATRF) to allow the Alberta Investment Management Corporation (AIMCO) to reject changes proposed by the pension manager in its investment policy.

The orders, which came into effect Jan. 1, follow the November 2019 implementation of Bill 22, an omnibus bill introduced and passed within four days which moved investment control of 82,000 practising and retired teachers' pensions to AIMCO from ATRF by December 2021.

Toews has said repeatedly that public sector pension boards, including the ATRF, would continue to control their own investment strategies and decisions.

But according to the ministerial order affecting the ATRF, the finance minister can intervene and dictate how investment management services are provided by AIMCO to ATRF until both parties come to a deal.

ATRF and AIMCO are without an agreement, despite an initial deadline of June 30, 2020, followed by an extension to Oct. 31, 2020.

Jerrica Goodwin, press secretary to Toews, said in a statement Wednesday the order was necessary as a temporary measure to ensure that the pension plan remains appropriately managed.

“We are confident that ATRF and AIMCO will be able to come to an agreement. Once the parties agree to a final investment management agreement, the ministerial order will no longer be in effect,” she said.

The ATRF said in a statement the order does not impact members' pension benefits.

Along with the ATRF, the Local Authorities Pension Plan (LAPP), Special Forces Pension Plan (SFPP), and Public Service Pension Plan (PSPP), together representing more than 450,000 individual pensions, received ministerial orders reserving AIMCO'S right to reject amended investment policies from fund managers. Speaking on behalf of the Alberta Union of Provincial Employees (AUPE), the United Nurses of Alberta (UNA), the Health Sciences Association of Alberta (HSAA), and the Alberta division of the Canadian Union of Public Employees (CUPE), Alberta Federation of Labour (AFL) president Gil Mcgowan said Thursday unions will be arguing in court that Bill 22 is unconstitutional.

“AIMCO and the finance minister will be the deciders, and the hundreds of employers, and the hundreds of thousands of workers who actually pay into the plan, have to shut up, take what they are given and trust that the government and AIMCO will do what's best,” said Mcgowan.

Mcgowan added that the unions believe the government's end game is to use the pension funds to prop up oil and gas ventures in the province that have seen difficulty raising money from international investors.

The order affecting its fund first became public when the ATRF published a statement Jan. 11.

Normally, the government publishes ministerial orders.

Goodwin said in this case, the change applies to a specific group, so the order was given to the affected parties.

Greg Meeker, a school principal and former board member of the ATRF, said last week that while benefits are defined by law, costs are not, and an increased cost to members was his biggest concern given AIMCO'S performance.

During a debate in the legislature in November 2019, Toews promised that, with larger economies of scale, AIMCO could “deliver with lower costs.”

But the order states that AIMCO'S costs “should be lower” than market standard fees.

That's a red flag for Meeker, since it doesn't force AIMCO to provide investment services at a lower cost.

By taking unilateral control of the pension fund's management, Meeker said AIMCO is being given the right to refuse ATRF'S strategy.

“Imagine you have some money with a stock broker, and you picked up the phone and told the stockbroker to sell all the IBM shares that you have, and the stockbroker says `I decline to take that order' — how's that going to go over with you?” he said.

He said teachers were outraged by Bill 22, but he is hearing even more anger from them now.