'Risky ventures': Alberta unions worry about plan to put pensions under government control

Public sector employees say they are increasingly worried about the future of their pension plans after the Alberta government introduced legislation Monday to lock in pension assets from all public sector pension plans under the management of the Alberta Investment Management Corporation, or AIMCo.

"We think it is sort of tantamount to theft," said Alberta Federation of Labour (AFL) president Gil McGowan. 

The transfer of pension plan assets from hundreds of thousands of Alberta teachers is contained in legislation of Bill 22, the Reform of Agencies, Boards and Commissions and Government Enterprises Act.

If passed, Bill 22 will move some $18 billion in assets from the Alberta Teachers' Retirement Fund (ATRF) to AIMCo, an arm's-length investment agency of the Alberta government. 

'Risky ventures'

Bill 22 further prohibits any public sector pension plan from withdrawing from AIMCo as an investment manager.

McGowan says the pension contributions paid by Alberta workers are not Premier Jason Kenney's to spend at will. He suspects the real reason the Kenney government wants to bring the pension assets under AIMCo management, is to have more say over how it's used. 

"We're worried that he's going to start dumping a lot of this retirement income into risky ventures," said McGowan. 

Recent changes introduced as part of the Alberta budget will also affect other public sector pensions, such as the Local Authorities Pension Plan (LAPP), Alberta's largest pension plan covering municipal employees, health workers and more. 

According to information on its website, those covered by LAPP, like Alberta teachers, have a defined benefit pension plan that offers a predictable monthly payout for life.

Trevor Wilson/CBC

But a defined benefit plan is more costly to maintain than other self-managed plans, said the president of the Alberta Teachers' Association, Jason Schilling. 

The ATA wants Bill 22 stalled until Alberta's Auditor General reviews the asset transfer legislation, Schilling said. 

Calling it a "pension grab," Schilling said teachers fear their contributions will rise, their pension plans could drastically change, or just disappear.

"You work your whole life, and you want to make sure that you're secure when you get to the retirement phase of your career," said Schilling during an interview with CBC News.

Contributions may drop

At a news conference, Finance Minister Travis Toews said all public sector pension plans, the Workers' Compensation Board, and Alberta Health Services, will be required to use AIMCo to manage their long term investments and endowments. 

Toews says the change will add $30 billion to AIMCo and could bring down pension contributions in the future.

"The increased efficiency will allow contribution rates to fall in the long term," said Toews adding there will be better investment returns for lower administrative costs. 

The last time an Alberta government intended to bring major change to public sector pensions was in 2014 under then-premier Alison Redford. 

The Redford legislation would've de-indexed pensions and raised the age at which a plan member could retire on full pension. The legislation was passed but never proclaimed.

The pension legislation was eventually scrapped by incoming premier Jim Prentice.