Alberta Politics
Alberta Teachers Association Associate Communications Coordinator Jonathan Teghtmeyer (Photo: David J. Climenhaga).

Excellent question: If a referendum’s good enough for the CPP, why not for the teachers’ pension fund?

Posted on November 18, 2019, 1:57 am
12 mins

“Jason Kenney says he will use a referendum to determine if Albertans want their Canada Pension Plan shifted to AIMCo,” Jonathan Teghtmeyer, Associate Communications Coordinator of the Alberta Teachers Association, observed before asking a perfectly reasonable question on social media yesterday.

So, Mr. Teghtmeyer tweeted, “why won’t he allow teachers to vote on whether they approve the move of their pension funds to AIMCo?”

Alberta Premier Jason Kenney (Photo: David J. Climenhaga).

I will endeavour to answer this question.

The answer is: Because he doesn’t have to.

Alberta law lets Mr. Kenney hijack teachers’ retirement funds by legislative fiat and hand them over to the Alberta Investment Management Corp., commonly known as AIMCo, the Crown corporation set up to manage public sector pension funds. So he will.

Never mind that AIMCo underperforms the nearly $17-billion Alberta Teachers Retirement Fund, which currently manages teachers’ pensions. The Alberta government’s pension agenda, readers need to understand, has nothing at all to do with looking out for the interests of teachers and retired teachers.

It will be considerably more challenging for Mr. Kenney to get his paws on the money invested in the Canada Pension Plan by Canadians who happen to live in Alberta.

So the United Conservative Party Government is prepared to engage in a referendum exercise if that will help it badger the federal government into to handing over our retirement funds to an agency into which it can dip its fingers.

Former AIMCo CEO Leo de Bever (Photo: Pensions & Insurance).

Since we already have a pretty clear understanding of the electoral ethics of Mr. Kenney and his allies, not to mention their unquestionable campaign skills and the unlimited PAC funds that would be available to assist such an operation, an electoral victory on a pension referendum cannot be ruled out.

Another tweeter — an apparently well informed but seemingly pseudonymous one — pointed out yesterday that the answer to why Mr. Kenney and the UCP would want to do this is hidden in plain sight, in Section 19 of the Alberta Investment Management Corporation Act.

“The Treasury Board may issue directives that must be followed by the Corporation, the board, or both,” Section 19 says in part.

In other words, Beckie Turlington concluded, correctly, in a thread on this topic that is worth reading, “the government can tell AIMCo what to do with the money it has even though the vast bulk of it belongs to pensioners, not the govt. Scary.”

This also explains why the government is in the process through Bill 21, the tendentiously named Ensuring Fiscal Stability Act, of snatching back the independence of large government pension funds like the Local Authorities Pension Plan and the Public Service Pension Plan that was promised 30 years go by the Progressive Conservative government of the day and finally delivered by the NDP last year.

Beckie Turlington. Whoever she is, she seems to know what she’s talking about (Photo: Screenshot of Twitter).

Independent governance for the LAPP and PSPP lets taxpayers off the hook for unfunded liabilities by the funds, so on the face of it this would seem like a natural policy for a bean-counting government like the UCP to support.

However, it would also prevent the UCP or some future government from helping itself to any of the close to $60 billion in assets of the various Alberta public sector pension plans for whatever reason it wished.

Moreover, the NDP’s Joint Governance of Public Sector Pension Plans Act would have allowed the independent pensions’ boards to find another service provider than AIMCo after five years — a necessary condition of true independence in the market-based competitive spirit the UCP claims to believe in.

This is as good a moment as any, I suppose, to remind readers that Norway with a population and fossil fuel resource similar in scale to Alberta’s has accumulated more than a trillion U.S. dollars in its sovereign wealth fund over the past 40 or so years, whereas Alberta under more than four decades of Conservative mismanagement has pissed almost all of it away. The Alberta Heritage Savings Trust Fund was reported to be worth about $18.2 billion in March.

So we do need to ask, are these the people we want managing any of our retirement savings?

Which brings us back to the CPP. Mr. Kenney is not letting up on his campaign to get his mitts on that money — and, from his perspective, why not go for the main chance?

Prime minister Lester B. Pearson in 1957, when a Canadian man could wear a bow tie and still look like a grownup (Photo: Nobel Foundation, Public Domain).

“Another report suggests that Albertans would be better off running our own pension plan, like Quebecers have done for 60 years,” the premier tweeted yesterday, even before his $650,000 Firewall-style “Fair Deal” committee led by Preston “Secession Needs to be Part of the Strategy” Manning makes its report. He failed, however, to mention several salient facts.

First among them was that the report in question was done by … wait for it … AIMCo. Readers will agree AIMCo is hardly an unbiased source of information in these particular circumstances.

In other words, the “report” cited by Mr. Kenney could be fairly described as a sales pitch, despite its gee-whiz presentation in Calgary’s Postmedia newspaper.

Second, Quebec chose to stay out of the CPP when it was created in 1965 by the Liberal government of prime minister Lester B. Pearson, not to pull out with God only knows what kind of nefarious intentions when it has been operating successfully for more than half a century and has the security of a vast fund of $330 billion to protect retired Canadians from the vagaries of volatile markets that Conservatives love, except when they’re not working in the interests of an industry they favour.

Third … what other reports? The last time the government of Alberta looked at this question, in 2004 when Premier Ralph Klein decided he had better respond to the infamous Firewall Manifesto dreamed up by Stephen Harper et. al., it concluded that “withdrawing from the CPP and creating a separate Alberta pension plan is not in the best interests of Albertans.”

“Those opposed to withdrawing from the CPP … were also concerned that an Alberta plan would reduce pension portability between Alberta and other provinces,” the nine MLAs on the Committee on Strengthening Alberta’s Role in Confederation said in their final report. “They worried an Alberta plan would be subject to more risk due to its reliance on a smaller population of contributors. They noted that Alberta’s current demographics could shift quickly and significantly.”

Leo de Bever, former CEO of AIMCo, told the CBC last week that the idea makes no sense from the point of view of efficiency. “It would be better if all of Canada had one plan, OK, from an efficiency point of view,” he said.

So it would be nice, one supposes, if Mr. Kenney would point us to these other, more favourable reports.

Fourth, the obvious fact that Mr. Kenney’s principal objective is political — to attack and discomfit the Liberal government of Prime Minister Justin Trudeau, not to benefit Albertans, particularly retired ones trying to get by on a limited income.

Alberta pensioners would be wise to note how the Kenney Government has recently de-indexed payments to severely handicapped Albertans. It’s safe to assume Albertans dependent on a provincial pension plan might well face the same fate the moment it suited the government’s need for additional tax cuts for billionaires. As long as Canadians sensibly keep Conservatives out of power in Ottawa, this kind of monkeying is far less likely with the CPP.

None of this answers the pressing question of what kind if directives the UCP might give to AIMCo. They could order it to invest additional funds in the Alberta oilpatch to buffer it from the cruel decisions of the market — a policy that might be politically popular but would not be a sound investment strategy.

Or they might do considerably worse than that. The history of Conservative governments in Alberta should not make us confident they would exercise good stewardship of our retirement savings.

Regardless of what Mr. Kenney’s tame “Fair Deal” panel concludes, we must hope that the federal government and the rest of English Canada firmly reject the idea of handing over Albertans’ CPP savings to Mr. Kenney and his cronies.

One thing is certain, if the premier could just pull out of the Canada Pension Plan without so much as a by your leave, he would.

11 Comments to: Excellent question: If a referendum’s good enough for the CPP, why not for the teachers’ pension fund?

  1. Nancy

    November 18th, 2019

    I hope that you are all happy now. We need a new Premier.

    Reply
  2. Nancy

    November 18th, 2019

    I hope that you are all happy now.!!!

    Reply
  3. Jim

    November 18th, 2019

    Triggering Albertans to rage against the public service seems easier than shooting fish in a barrel. Why did Kenney not consult Teachers when taking over their pension? Simple answer by imposing the move on them, and given the history of mismanagement, Teachers quite rightly would be a little upset. This triggers a large swath of Albertans who seem to think public servants don’t work and are just leaches. This largely uninformed swath then provides Kenney with cover to continue looting the public purse.
    Where is the rage when Kenney gave large corporations a $4 billion tax cut to cover, what appears to be, moving and layoff expenses? Make no mistake Kenney and his financial backers are just grabbing what is left of this once proud and strong province. There is no long term plan just get what you can get and get out, case in point they don’t even plan to balance the books any time soon. At least with Klein there was an effort made to pay down the debt. Similar to a corporation racking up debt for share buybacks to create a false image of success through a higher share price and dividend payout Kenney doesn’t have a long term plan. It is sometimes hard to admit you have been conned but hopefully Albertans wake up soon otherwise it will all be gone.

    Reply
  4. Just Me

    November 18th, 2019

    Let the fleecing begin.

    The billions in pension funds will now be dropped into that deep hole called the Alberta oil patch. Billions will be dropped into questionable resource speculation and wild notions of subsidizing the O&G industry. And once that money runs out, Kenney will just start the APP and use those contributions. And if Kenney intends to abolish the Royalty Program in favour of a sales tax, that money will be pumped into the O&G industry.

    It’s Brownback’s Kansas Experiment all over again…

    Reply
  5. Bill Malcolm

    November 18th, 2019

    Huh, there’s old Maggie Atwood nattering away on CBC TV about her life, right now, and prognosticating. She seems with it and suitably progressive. I read A Handmaids Tale and couldn’t make heads or tails of it back in the late ’80s. As a keen pimply young subscriber to the Science Fiction Book Club in the early ’60s, I read some decent stuff, I thought. But as the genre turned mostly to unscientific fantasy, I lost interest. I can therefore confirm that I merely skimmed Atwood’s book because I found it boring. How judgmental of me! Still, there is a vision of future dystopia within its covers.

    Which seems to be right here, right now in Alberta. I read this stuff, this impending robbery, for surely running these pension funds to Kenney’s own ends is just that, like a duplicitous relative appointed power of attorney over a disabled relative, and I really cannot take it in all at once. The hits just keep on coming. You can see doom approaching like an unstoppable wave, and find there is nothing, not a darn thing that can be done to stop it — the public has been scuppered by Kenney, a tin pot wannabe autocrat running things as in his distorted daydreams, using the letter of the law but not the intent, for no gentleman he. There is no directed meanness in his actions, they are done merely to elevate his personal power and influence — no other reason. Humans are just objects to a sociopath, they care not one way or the other or in any way for other people. Just personal aggrandizement. Persons in the way will be ruthlessly shunted aside, that’s all.

    I wish us all luck as this man goes through his rather dreadful deliberations, scheming only for himself with a cunning genius. If he manages to hoodwink Alberta thoroughly for his own ends, the remainder of us can only await the spread of the deadly virus to Ottawa. If when running the top job needs be deem it involves giving away the people’s resources to big friendly corporate influencers, well, give away the citizen’s gelt he will without a qualm. By resources, I mean institutions, money, pension boards, mineral and water rights. All that matters to Mr Kenney is how he comes out of things himself. All this other stuff and people’s feelings or freedoms are only incidental things, and of zero concern to him personally. Cold as a fish.

    It’s kind of like climate change, you can see it coming yet feel powerless to stop it. Either way you’re screwed.

    Reply
    • Colin Varty

      November 19th, 2019

      Acadamic freedom,this be
      autocraticay spanking of thee? Rule of law could this be? East
      Power’s, useless eaters we be.

      Reply
  6. alan

    November 18th, 2019

    Apparently, if you can’t stand the heat, then you have to get rid of the people investigating you and replace them with people that are more agreeable with your wants and needs.

    “Alberta’s government is facing accusations of political interference for moving to fire the province’s elections commissioner, who is in the middle of investigating Premier Jason Kenney’s 2017 campaign for the leadership of the United Conservative Party.”– https://www.cbc.ca/news/canada/edmonton/ucp-interference-election-commissioner-lorne-gibson-1.5364012

    Nothing to see here folks, because the voter is always ‘right’ (and the PR machine wants everyone in Alberta moving even further to the right, it seems, #Wexit anyone?) and lack of transparency and accountability are always huge political advantages for an unscrupulous ruling Conservative government. They can polish it all they want, it still stinks, and the voter never tires of being happily hoodwinked.

    Reply
  7. Al

    November 19th, 2019

    To answer Mr. Teghtmeyer’s question: “ . . So, why won’t he (Kenney) allow teachers to vote on whether they approve the move of their pension funds to AIMCo?” The answer is he will, along with everyone else who gets to pay for their pension.

    Thoughts on why the ATA shouldn’t ask for a referendum:

    1. Do teachers really want the electorate deciding on their compensation? I doubt it.

    2. Data from the Fraser Institute report titled “Comparing Government and Private Sector Compensation in Alberta, 2018” includes the following: 72% of public sector workers have pension plans. 69% of those workers have Defined Benefit plans. 24% of private sector workers have pension plans. 7% of private sector workers have Defined Benefit plans. 69% of all Alberta workers (2,286,900 from the report) have no registered pension plans.

    3. In February 2018 records on Alberta government pensions to 2016 showed an unfunded liability of $3.3 Billion. * Numbers did not include the teacher’s pension – ATRF – but it appears pre 1992 pensions are government guaranteed and post 1992 pensions are funded by government and teachers but it seems (after a quick internet search) that ATRF has an unfunded liability. I cannot determine the amount.

    4. One National Post article quoting the 2017 ATRF annual report stated the 4 year rate of return was 10.3% & I think it is around 8% for 2018. ** Not bad. Maybe the ATA should ask for a referendum on moving government pensions to ATRF.

    Calling for the teachers pensions to be moved to AIMCo does several things:

    1. Pressures other provinces that will pay more for their own pensions if Alberta leaves CPP. Helps them think more of supporting Alberta?

    2. Focuses taxpayer attention on how good Alberta government employee and teacher pensions are when most have no pension.

    3. ATRF contributions and liabilities will be compared to LAPP, PSPP and MEPP once ATRF comes under AIMCo control. Probably not good for teachers depending on funding formulas for each.

    4. Considering most working Albertan’s have no registered pension the call will come to get rid of defined benefit and indexed pensions for government workers and teachers.

    5. Someone will point out that in 1977, Saskatchewan grandfathered Defined Benefit pensions and enrolled government employees in a Defined Contribution plan. This eliminated unfunded pension liabilities. And if they can do it why can’t Alberta? ***

    I can see why teachers are not happy about moving ATRF to AIMCo control.

    * MLA letter.

    * https://business.financialpost.com/investing/asset-surge-has-alberta-teachers-pension-plan-looking-to-overhaul-investment-operations

    ** https://www.fraserinstitute.org/article/controlling-soaring-public-sector-pension-costs-lessons-saskatchewan-ndp

    Reply
  8. Dave

    November 19th, 2019

    Mr. Kenney is a political opportunist and this is a great opportunity for a big power grab, but if this doesn’t work out at least it will prove to provide some distraction from his budget cuts. I think he approaches political strategy as “heads I win, tails you lose”. So if he wins the referendum(s) he will be happy with more power, if not, he hasn’t really lost because it was the people’s decision and he’s managed to distract us from other things.

    It’s unfortunate he is not more consistent or he does not have an aversion to hypocricy, because if he did, he would give government employees the right to decide on how to handle their pensions too.

    Reply
  9. Duayne Aries

    November 19th, 2019

    Is kenneys pension in this plan just a question
    I’m sure he would like if it someone took his pension which he invested a great amount of his own money . I have voted conservative my whole life well I just changed to a different party never again

    Reply
  10. Abs

    November 21st, 2019

    Mr. Kenney would pull out if he could…that is so true.

    My advice to Special K: “Take your hands off my (CPP) assets.”

    Reply

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