ATRF Updates from the Alberta Teacher Representatives at Annual Assembly

It’s been an eventful year at ATRF, so we were especially grateful to be able to speak with delegates again this year at the Alberta Teachers’ Association Annual Representatives Assembly (ARA).

The ARA was an excellent opportunity to provide an update on our pension plans, and to give an overview of their exceptionally strong position.

The market value of the Teachers’ Pension Plan assets continues to increase, and was $22.3 billion as of the last actuarial valuation on August 31, 2021. The plan’s funded ratio is now is 98%, with liabilities exceeding available assets, creating a deficiency of $320 million, down from $711 million just last year. To illustrate how far the plan has come, five years ago the deficiency was $1.9 billion and the funded ratio was 86%.

In fact, as a result of exceptionally strong investment returns and prudent management that allowed us to pay down deficiencies earlier than anticipated, the ATRF Board was able to reduce the total contribution rate by 2% to 20.21%, shared between teachers and the Government of Alberta. As of September, teachers will see a reduction in their contributions equal to 1% of their salaries.

Representatives were also given an overview of the transition of asset management to AIMCo that was completed last year as required by law. By far the most important message for teachers in this regard was that their pensions remain safe and secure with ATRF, and while investment management has moved to AIMCo, responsibility for managing the pension plans and determining the investment strategy remains with ATRF.

To be clear, even though the day to day management of our investments has changed, teacher pensions are still managed by ATRF. We are firmly in control of the strategy that directs our investments. ATRF continues to be here to ensure the security of teacher pensions, provide professional and experienced pension management, and make sure teachers receive excellent service.

ATRF Board Chair Sandra Johnston spoke about the role of the board in overseeing that work, and especially about the legal principle of fiduciary duty that guides that work. “It means when considering matters related to ATRF we are required to focus solely on the best interests of our plans,” she said. “As trustees of the plans, we must consider the best interests of all categories of members (including future members) in every decision we make. Only ATRF has this fiduciary duty, so while we work collaboratively with our plan sponsors (the ATA and the government) and with other stakeholders, we must do so with complete independence, and while always respecting our fiduciary duty to put our pension plans first.”

ATRF Board member Maria Holowinsky, also chair of the ATRF Board Investment Committee, provided more detail about the transition, and especially the way ATRF continues to oversee investment strategy for our portfolio – and the importance of that function. “ATRF is a pension manager; we put in place an investment policy that meets our plans’ unique risk and investment needs,” she explained. “That’s an important distinction because AIMCo is an investment manager and their perspective is focused on managing only the assets, while ours is a holistic approach of balancing the management of both the assets and the liabilities of the plan.”

Tim Wiles then spoke as a board member and chair of the ATRF Board Audit and Finance Committee to provide details of the financial impacts of the transition. Outlining the difficulties in accurately calculating the costs of transferring over $20 billion in assets for management, he nonetheless was able to announce, “We determined that the financial implications for ATRF were $30.4 million. This is around 0.14% of the total fund transferred, or 14 basis points. I would like members to know the board monitored the transition and we can confirm that ATRF staff took every possible measure to minimize these financial impacts.“

He also clarified that according to legislation these financial implications are borne by ATRF. There are no avenues available to ATRF to recoup these amounts other than through future investment performance.

While explaining that it is still too early to say what savings will come as a result of the transition, Mr. Wiles also reinforced an important point that ATRF has made repeatedly throughout the transition, “Any financial impacts and potential savings also need to be considered as a component of our most important measure of performance, which is net investment returns- that’s investment returns minus costs of investing.”

ATRF Board member Greg Francis also spoke as the chair of the ATRF Board Governance Committee and the Human Resources and Compensation Committee. “My colleagues have made clear why this is a particularly important time for ATRF to have the right team in place with the specialized expertise needed to ensure members and sponsors continue to be well served by our plans,” he said.

Other highlights of the ATRF presentation included an overview of continuing improvements in member service like a new website and secure email, as well as recognition of ATRF’s oldest member who recently turned 104 years old.