Updated: January, 2021
ATRF pension plan members continue to express concern and ask questions about
Alberta's Bill 22
, which legislates transfer of the management of ATRF's pension assets to the
Alberta Investment Management Corporation (AIMCo)
. The following FAQs address some of the numerous questions we continue to receive from ATRF members.
Will the changes contained in Bill 22 have any impact on my contributions or my pension when I retire?
- Your pension remains secure.
- This legislation change does not affect pension benefits.
- This legislation change will not have any immediate impact on your pension contributions.
Does this bill include any other changes to the plan?
Does ATRF believe the changes contained in Bill 22 are in plan members' best interests?
ATRF was not expecting the Government of Alberta to make this change, however, Bill 22 is now law so ATRF will comply while working tirelessly to ensure the best interests of our plans are protected as much as possible. The ATRF Board does not believe this legislation is in the best interests of ATRF Plans and its members for the following reasons:
- For 80 years ATRF has had the optimal situation – complete control of our own destiny including managing our Plans' assets with a team of investment professionals dedicated to specifically addressing our Plans' unique asset and liability needs. This independence led to tremendous success and a very strong track record of investment results. Moreover, we recently launched a major strategic initiative designed to move ATRF's approach to investment portfolio management to an even higher level, one aligned with world class pension plans.
- Our goal as we negotiate the transition in compliance with legislation is to achieve an outcome that allows us to remain as close to the current ideal state as possible.
- In addition, the table below shows ATRF's net investment returns from December 31, 2012 to December 31, 2019, as compared to what they would have been had AIMCo managed the assets. ATRF's investment track record is superior. Based on this simulation, ATRF's current asset value would be approximately $1.3 billion lower as of December 31, 2019 had our assets been under AIMCo management during that time.
ATRF Actual Total Fund Net Return||14.42%||2.40%||11.01%||5.65%||8.98%||12.08%||17.40%|
Simulated ATRF Total Fund Net Returns under AIMCo management||11.11%||2.26%||9.24%||5.29%||6.86%||11.79%||14.85%|
Note: Calendar year-by-year comparison of ATRF actual total fund net returns with simulated ATRF total fund returns under AIMCo management. Net investment returns are those realized after paying all investment-related expenses, including internal investment operating expenses and all fees, including performance fees, paid to any third-party managers. In short, net investment returns are the actual profits investors earn after accounting for all costs incurred to create those returns. AIMCo returns are computed using asset class returns reported by
Local Authorities Pension Plan, AIMCo’s largest client.
What control will ATRF retain when the assets are managed by AIMCo?
- Government has repeatedly said ATRF will retain "strategic control" of the plans' assets. We expect this to mean ATRF will continue to be responsible for strategic aspects of pension management including funding, investments strategy and policy, and setting the strategic asset allocation for dassets. Further details regarding how AIMCo will manage these assets are set out in the government’s Ministerial Order and will be supplemented with additional documents, including a Statement of Investment Policies and Goals (SIP&G), that together will set out the rules of engagement for AIMCo to manage ATRF’s assets.
- ATRF will maintain a small team of investment and risk professionals to ensure the Board is supported in carrying out its fiduciary duty to the extent possible while complying with the legal requirements of Bill 22. This team will enable ATRF to preserve our ability to establish the strategic investment portfolio that best matches our unique pension liabilities while balancing our unique risk framework at the same time.
- In the negotiations respecting the IMA / SIP&G and the transition of asset management to AIMCo as required by law, ATRF was driven by the single goal of achieving an outcome that is in the best interests of our members' pension plans that we have managed for decades.
Is ATRF fighting this change?
- While we do not believe this legislated change is in the best interest of our pension plans, as fiduciaries we are required to follow the law regarding our plans. That means we exist to do everything possible within the law to serve our members and our plans – which is what we're doing.
Has ATRF considered a legal challenge to this change?
- At this time we do not believe there are any legal avenues ATRF can pursue that would be beneficial for our members.
- ATRF will continue to explore all options available as the transition progresses to ensure we do everything possible to protect our plans' best interests and fulfill our fiduciary responsibilities.
Once AIMCo begins managing ATRF assets, could the government use our pension funds to pay for government programs, or direct our funds to be invested in specific ways or in specific industries through AIMCo?
- ATRF will remain the owner of the funds, and the Plan assets cannot be taken from AIMCo by government for a different use.
- While the legislation governing AIMCo, and especially
Section 19 of the AIMCo Act, does permit government to direct AIMCo activities, including those related to investments, the current government and AIMCo have repeatedly and publicly stated that government does not direct AIMCo to invest in specific industries or ventures.
After Bill 22 was proclaimed, a Ministerial Order was issued in December, 2020, establishing the terms of the relationship between ATRF and AIMCo. What will this Ministerial Order mean for ATRF’s pension funds?
- In the absence of a negotiated Investment Management Agreement (IMA), the Order imposes terms on ATRF and AIMCo. The MO does not provide ATRF all the terms it had been seeking in extensive negotiations with AIMCo. Under the MO, ATRF retains the ability to provide high-level, strategic direction for the investment of ATRF assets, but it is too early to determine the specific impacts of the Order on the plans.
What should plan members do if they are concerned about the transition?