9:58 AM
Dear Pat Rehn,
I'm writing to you today because I am concerned about the government's proposal to take control of the assets of the Alberta Teachers' Retirement Fund (ATRF). The government has crossed a line by not consulting with Alberta’s teachers on this decision to transfer our pension to Alberta’s Investment Management Corporation (AIMCo). Individual teachers make 50% of contributions to the ATRF, and we deserve to have a say over the management of our money.
ATRF recognizes the contributions teachers make to their pension and have provided us with half the seats on the board so we can ensure our money is being properly managed. This decision to move our pensions over to AIMCo, who is not required to respond to our needs and concerns, provide any accountability and will force an increase in our contribution rates, goes against all principles of good governance.
ATRF has maintained a secure and sustainable pension for us that is not subject to any political meddling. In fact, ATRF's returns on investment have often exceeded benchmarks and AIMCo results. The most recent 6-year return for ATRF was 9.5%, while a comparable AIMCo managed pension fund only produced a return of 8.0%. Those returns are after management costs are paid!
While the government has argued this decision was made to reduce management costs, the current management costs related to ATRF are very low and are paid for out of returns of the fund. AIMCo would not be able to generate lower costs relative to the returns generated.
Pensions belong to teachers, not the government, and with that, we respectfully ask that MLA’s take their hands off our pensions.
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Response
November 4
10:01 AM
Dear Nicola
Thank you for your November 4th email, regarding making the Alberta Investment Management Corporation (AIMCo) the exclusive investment manager of the Alberta Teachers Retirement Fund (ATRF). I appreciate your questions and concerns and I am pleased to respond.
The broader use of AIMCo is a reflection of our commitment to make government more efficient and ensure the best use of taxpayer dollars. This change does not impact your contribution levels or the benefits to which you are entitled. We have proposed moving the ATRF assets under AIMCo simply to reduce redundant investment management costs and yield higher investment returns.
AIMCo has a long history of achieving strong returns for their clients. From August 2017 to August 2018, the ATRF had a return of 9.6 per cent. Over the same time period, AIMCo outperformed the ATRF with a return of 9.8 per cent. When you look at a four year average, AIMCo again outperformed the ATRF.
However, the real gain for pension plans here is the substantially larger investment pool managed by AIMCo, which provides it with economies of scale that will lower the administrative cost of investing. AIMCo has provided an estimate that the ATRF’s administrative fees will decrease by 0.25% when the change is fully implemented, bringing investment costs in line with other pensions managed by AIMCo. This will result in estimated annual savings of $41 million, redirecting redundant administration costs into the overall health of the fund. In completing due diligence on this decision, a third party verified AIMCo’s estimate.
The ATRF board will remain in place to oversee the pension. The board retains control of determining how the pension fund is invested at a strategic level, as well as retaining ownership of the plan’s assets. The board will develop and approve the investment policy for the fund, including the mix of different types of investments such as bonds, equities and real estate among others. AIMCo will invest according to policies set by the ATRF board.
Our government is committed to working with both the ATRF and AIMCo to ensure a smooth transition and a strong relationship between the two entities going forward. We strongly believe that this move is in the best interest of both teachers, and Alberta taxpayers.
Thank you for taking the time to write.
Sincerely,
MLA Pat Rehn
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November 4
10:58 AM
Thanks for your amazingly quick response to my email.
However, you did not address my main point.
The teachers pension fund is teacher money. It’s not the government’s money. Please keep your hands off it.
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No response.
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