Is Kenney Coming After Our Pensions?

Premier Jason Kenney, ardent free market conservative, has started sounding a little like Peter Lougheed, a former premier with more progressive conservative leanings. Indeed Lougheed was once labelled "Peter the Red" by B.C. Premier Dave Barrett after he bought Alberta an airline. Lougheed never hesitated to dive into socialism when he saw an advantage for Alberta. In 1973 he established the Alberta Energy Company (AEC) to be owned equally by private shareholders and the Alberta government. It is Lougheed's AEC that has caught Kenney's eye.

And that's not all that has caught his eye. He is also gathering up civil servants' pensions under the umbrella of the government-owned Alberta Investment Management Company (AIMCo). The government has announced that the Alberta Teachers’ Retirement Fund as well as funds managed by Alberta Health Services and the Workers’ Compensation Board are to be turned over to AIMCo for investment management.

Three other plans have also attracted government attention. The Local Authorities Pension Plan (LAPP), the Public Service Pension Plan (PSPP) and the Special Forces Pension Plan (SFPP) had recently become independent of government, to be equally managed by employers and union reps. This change, long sought by public workers, was introduced in legislation by the former NDP government. The change gave over 351,000 public sector employees, including government and municipal employees, health-care workers, firefighters and police officers, joint control of their pension funds.

The new government has now restored government control. It has mandated AIMCo as permanent investment manager with no discretion for the plans to make changes. Boards of directors, currently appointed by the sponsor groups, will henceforth be appointed by government.

And not only Alberta pension plans are under scrutiny. One of the items being examined by the province’s “Fair Deal” panel is Alberta taking control of its share of the Canada Pension Plan. A separate Alberta pension plan could then also be tucked into the warm embrace of AIMCo.

Kenney's pension-grabbing may stem from a concern about where future oil investment is going to come from. His concern is well-founded. Major investment institutions such as BlackRock and J.P. Morgan are making environmental concerns central to their investment strategies. Even Norway's massive sovereign wealth fund, which was built by oil revenues, is ditching its tar sands portfolio. Foreign oil corporations have been selling off tar sands assets to Canadian companies. Apparently even U.S. shale drillers, who have been leading a phenomenal growth in oil production, are now seeing the money pipeline drying up.

If the premier's plan is to open up a pipeline with our security blanket, we pensioners (I am a member and beneficiary of the LAPP) have great cause for worry. AIMCo is committed to its fiduciary duty to act solely in the best interests of the members, but the AIMCo Act explicitly states that it must follow directives issued by the Treasury Board. Presumably that includes directives aiming investment at tar sands mines. What irony for me, a long-time advocate of strong action on climate change, if my pension fund were used to fuel global warming.

Justifying Lougheed's decision, Kenney stated, “The Toronto banks and the foreign funds, they weren’t going to go there. A lack of access of capital was met by bold leadership and public participation.” Well, they aren’t going there today, either, but for very different reasons. As Calgary Herald columnist Don Braid put it, "The earlier premier was launching an energy economy with infinite prospects. Kenney is trying to preserve it." Bold leadership today is moving away from fossil fuels, not desperately clinging to the past.