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In the pension world, trust matters


November 26, 2019 Jonathan Teghtmeyer, ATA News Editor-in-Chief

Teachers are relatively familiar with matters of trust.

We have trustees who govern our school boards. Every teacher knows about the fiduciary duty we owe to the students in our care. This trust relationship concept originates in the financial world and teachers — whether they like it or not — are getting a better appreciation for this concept.

A trust relationship is at the heart of all pension plans. Teachers contribute their own money to the pension fund to be held in trust until retirement. The government makes roughly equal contributions* as deferred compensation for teachers. The money, teachers’ money, is held and managed by trustees until the teacher retires and receives retirement income paid from the combined contributions and returns on investment.

The players in this relationship are the trustor, the trustees and the beneficiaries.

The trustors are the government and teachers themselves — those who make the initial contributions. The beneficiaries are the teachers who receive the retirement benefits. The trustees are the directors of the pension board, in this case the Alberta Teachers’ Retirement Fund (ATRF) board. These trustees owe a duty to the trustors to act in the best interests of the beneficiaries.

The ATRF board holds the money, oversees the investments and, therefore, has a duty to teachers and the government to act in the best interests of plan members to keep those assets safe so a pension can be paid upon retirement.

The whole scheme and the way it was implemented amounts to a huge breach of trust.

It is here where we begin to really appreciate the offensiveness of the government’s move to forcibly transfer teachers’ pension assets to government control. The whole scheme and the way it was implemented amounts to a huge breach of trust.

First off, the decision was made without consultation with either teachers or the ATRF. The decision was announced by surprise, buried deep in budget documents. The initial move did not engender trust.

The ATRF board, the group currently entrusted with fund management, identified concerns that the move was not in the members’ best interests (as is their duty). Instead of sharing further data to make the case, the government dismissed the concerns.

As a dispute emerged over the data being used to justify the decision, the government rejected a reasonable suggestion to bring in an independent third party, the auditor general, to review the data and the decision. The government carried on toward the predetermined outcome, unwavered by the concerns of the beneficiaries, the partner trustors or the trustees themselves.

Finally, in the face of significant pressure and demonstrable resistance, the government used procedural strong-arm tactics to limit debate and ram the legislation through. Well over 30,000 emails have been written to MLAs expressing concern about this decision. Now, how can they be trusted to act in plan members’ best interests?

What the government is proposing amounts to shifting a big chunk of the trusteeship relationship from joint control by the sponsors to sole control, and yet their behaviour has eroded all trust that teachers might have had. How can you do this without the trust of teachers?

Imagine (to borrow from the educational trust relationship), if divorced parents with joint custody agree to send their child to one school and then out of the blue, unannounced, one parent unilaterally walks to school, pulls the student out and transfers her to a new school with absolutely no consultation with the other parent and in the face of objections by the student herself. It would be considered a gross travesty.

Yet, here we are. Bill 22 has passed and the Alberta Teachers’ Association will explore and use any legal recourse. But that doesn’t change the fact that the trust has been irreparably broken. And that’s not a good position to be in relative to the people who are managing your money.

Because trust matters — a lot. ❚

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