EDMONTON, Alberta -- Two pension plans under the aegis of the Alberta government are trying to withdraw from its control.
At stake, ultimately, is the management of billions in pension assets.
The C$7.8 billion (U.S. $5.2 billion) Local Authorities Pension Plan and the C$1.5 billion Universities Academic Pension Plan, have been moving toward independence from the Alberta Treasury since 1994.
The treasury's investment management division oversees C$13 billion in pension assets for eight pension plans, including the Universities Academic and the Local Authorities. The Local Authorities fund is the largest of the eight.
The investment management division runs Canadian equity and fixed-income assets internally, with more than half of those assets run passively, said Ron Liteplo, chief executive officer of the Local Authorities fund in Edmonton.
The treasury's external managers run active international equity portfolios, Mr. Liteplo said.
Observers said once the two pension systems achieve independence, their separate boards would have the ability to hire and fire managers and set investment policy.
The hope, observers said, was to have the new boards up and running independently by the end of this year. Those efforts, however, appear stalled.
Mr. Liteplo said the province's treasurer, Stockwell Day, was "concerned about doing this in a prudent fashion." He added that Mr. Day's due diligence could be finished by the end of October, with the pension plan fully independent by next summer.
Others were not so optimistic.
The process appears to have hit a snag, said Allan BonBernard, transition manager for the Universities Academic Pension Plan, Edmonton.
The two pension plans now are "jointly sponsored," with both employers and employees having oversight.
But the Employment Pension Plan Act, which like ERISA in the United States sets guidelines for private sector pension plans, names only employers as responsible for the pension system, Mr. BonBernard said. The act would have to be revised, and at the moment there are "some rough spots" in the move, he said.
The desire to change was spurred in part by the Treasury Department's below-par performance. "We were not happy with investment results," said Nancy Walker, vice president of finance and administration at the University of Lethbridge and an administrative representative for the universities' plan. Returns were between one and two percentage points lower than the average pension fund between 1994 and 1998, she said.
Investment results have improved and now are closer to the average, she said. They have been helped by the push to independence.
"Results have improved the past couple of years. But some of that was (due to) pressure because they knew that we wanted to go out," she said.
But the main reason, stressed Mr. BonBernard, was the desire for independence.
"It's an issue that's larger than" investment results, he said.
Another issue, he said, was the anomaly of a government agency running the pension plans of non-government workers. "The provincial government raised the question of, 'What are we doing administering pension plans for people who don't work for the provincial government.' "
The universities plan has a C$254 million unfunded liability, Ms. Walker said. "This is part of the process of meeting unfunded liabilities."
The Local Authorities Pension Plan is running a surplus, Mr. Liteplo said.
At the end of March, the Local Authorities had $121 million, or 1.6%, in cash; $3.2 billion, or 41.8%, in bonds; $2.4 billion, or 30.9%, in Canadian equities; $1.7 billion, or 21.7%, in foreign equities; and $318 million, or 4.1%, in real estate, according to its Web site.
It had a one-year return of 4% vs. a 4.5% return of its benchmarks as of March 31. Its four-year return was 14.1% vs. 13.9% for its benchmarks.
Alberta Treasury's investment manages division manages a total of C$32 billion in assets, including the pension assets, Mr. Liteplo said.
The investment management division reports to the separate boards of the pension plans.