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MLAs back auditor general unanimously in dispute with pension manager
Vestcor now required to appear before the public accounts committee in the coming days
New Brunswick MLAs from all parties voted Wednesday to call officials from the pension management agency Vestcor in front of the legislature's public accounts committee, in a striking show of support for Auditor General Kim Adair-MacPherson in her ongoing dispute with the former Crown entity.
"Members of the government side support the motion fully keeping in the spirit and the theme of government members supporting the auditor general fully at all times," Progressive Conservative MLA Jeff Carr said before casting his own vote to summon Vestcor to answer questions.
Although the motion to summon Vestcor was originally made Tuesday by People's Alliance Leader Kris Austin, Green Party MLA Megan Mitton also spoke in favour of it as did Liberal MLA Rob McKee.
"I think it's important that we be able to ask questions of Vestcor," said McKee.
People's Alliance MLA Michelle Conroy paused to make note of the unanimous support.
"Thank you everybody. We love to see a collaborative working government," she said.
Vestcor is the Fredericton-based organization set up to manage what is now $18 billion in New Brunswick government pension and other funds.
Formally known as the New Brunswick Investment Management Corporation, it was created and owned by the province for more than two decades and subject to full review by the auditor general's office.
However, in 2016 it was given its independence and rebranded as Vestcor, and when Adair-MacPherson requested access to a number of its financial documents beginning in late 2019, the agency refused.
In a statement released this week, Vestcor accused the auditor general of attempting to overstep her authority now that it is on its own.
"Our analysis and advice have indicated that the auditor general should be much more limited with respect to access to Vestcor related information than what had been requested, and we therefore have had to respectfully decline these requests," read the statement.
The defiance has been received cooly by Adair-MacPherson, who is adamant Vestcor is still subject to provincial oversight, and this week she turned to MLAs for help enforcing her point.
Billions of dollars in funds Vestcor invests impact the New Brunswick government's financial statements, and the province pays Vestcor millions of dollars in annual pension contributions on behalf of employees.
In a written response to the vote by MLAs, Adair-MacPherson said she was pleased the public accounts committee so quickly agreed to call Vestcor to appear before it.
"The hope of this recommendation, along with others in our report, is to prevent future disagreements over access so that my office can fulfil our legislated mandate as per Auditor General Act and conduct necessary audit work of over $18 billion in New Brunswick public sector related funds," she said.
Last year, hundreds of millions of dollars in nuclear decommissioning and spent fuel management funds managed for NB Power by Vestcor lost value in the COVID-19 market crash in March. This transformed the utility's profit into a loss and drove down the province's surplus.
Adair-MacPherson insists those financial ties mean Vestcor is still within her authority to audit.
"Vestcor is an auditable entity because, in substance, it is both a service provider on behalf of the Province and a funding recipient from the Province," she wrote in her report.
"The Auditor General is entitled to free access to information that relates to fulfilling her responsibilities, such as the audit of the Province's financial statements, which requires information from Vestcor."
Adair-MacPherson also made the point that Vestcor obtained its independence in part on suggestions it would be freed up to market its expertise and manage funds for public bodies outside New Brunswick.
"We have had preliminary discussions with some fairly big public sector pools of money, even outside the province," she quotes Vestcor CEO John Sinclair telling MLAs back in 2016.
But no out-of-province pools of money have yet signed on, and Adair-MacPherson told MLAs they should be asking questions about that.
"In our view, potential growth outside New Brunswick was one of the main arguments Vestcor and its representatives used to convince Legislators that Vestcor needed to be a private entity," Adair-MacPherson said in her report.
"Since Vestcor has not grown its public sector client base outside of New Brunswick, an audit by the Auditor General could verify and publicly report on what steps Vestcor is taking to grow its public sector client base."
The motion voted on by MLAs not only requires Vestcor to appear before the public accounts committee in the coming days but also puts it on a permanent list of "entities who are regularly called to appear before the committee."
43 Comments
Deja Vu Anyone???
Exaggerated success: Province's pension managers profit from 'joke' target, analysts say
Pension analyst says benchmark is inappropriately low, managers being over rewarded
Robert Jones · CBC News · Posted: Apr 24, 2018 6:00 AM AT
Methinks Higgy et al can't deny that this is just one of my many comments before i ran for public office two more times N'esy Pas?
David Amos
Methinks there have been at least three lawsuits since Mr Higgs fixed things that lead to the creation of Vestcor I bet a lot of pensioners are upset by CBC big revaluation today Too bad so sad nobody listened to me in 2004 N'esy Pas?
What was your comment? Interested readers would like to know.
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https://www.cbc.ca/news/canada/new-brunswick/auditor-general-pension-newbrunswick-vestcor-1.5925407
Auditor general recruits MLAs for help in dispute with N.B.'s pension body
MLAs to vote Wednesday morning on summoning Vestcor to the legislature to answer questions
· CBC News· Posted: Feb 24, 2021 6:43 AM AT
Auditor General Kim Adair-MacPherson asked New Brunswick MLAs Tuesday to help her push Vestcor to release financial records so she can review its pay and performance processes. (CBC)
New Brunswick's auditor general took a dispute over her authority to dig into the books of the body in charge of billions of dollars in New Brunswick government employee pension funds directly to MLAs Tuesday, a forum that has worked well for her in the past.
Kim Adair-MacPherson told MLAs in her report to the legislature's public accounts committee she has been refused full access to the financial records of Vestcor to review its pay and performance, and requested their intervention to avoid a court fight with the body.
"In our view, the Auditor General Act, as it stands, grants the Auditor General authority to audit Vestcor," said Adair-MacPherson in her report.
"To prevent future disagreements over access, however, we propose a regulation be added to the Auditor General Act to explicitly list Vestcor as an auditable entity."
Vestcor is the Fredericton-based organization set up to manage what is now $18 billion in New Brunswick government pensions and other funds.
It's jointly owned by the province's two largest public pension funds serving civil servants and teachers, but also oversees the retirement plans of hospital workers, nurses, Crown corporation employees, provincial court judges, MLAs and other groups.
Vestcor also manages other investment accounts, including University of New Brunswick endowment funds and nuclear waste and decommissioning funds for NB Power.
It used to be a Crown agency but was given its independence in 2016, in part, so it could market its expertise and manage funds for other out-of-province public bodies.
So far none have signed on, something the auditor general suggested should also be looked into.
She said she also has an interest in reviewing other issues, like how six-figure bonus payments to Vestcor executives are earned and calculated and how its investment strategy is performing.
In 2019, Vestcor paid its top three executives a combined $2.63 million, most of that in bonus and incentive pay.
Vestcor president John Sinclair earned $1.26 million in 2019, most of that from $882,721 in bonus pay. (Vestcor/YouTube)
In a statement posted on its website Vestcor disputed the Auditor General's contention she has the authority to review the body's operations.
"Our analysis and advice have indicated that the Auditor General should be much more limited with respect to access to Vestcor related information than what had been requested, " read the statement.
"We therefore have had to respectfully decline these requests to ensure we can continue to fulfill our contractual and other commitments to our clients."
In addition to wanting the province to order Vestcor to accept the authority of her office, Adair-MacPherson encouraged MLAs to call the body before the public accounts committee to ask their own questions about its operations.
"We're now five years later and some of the things [MLAs] were told have not panned out the way that they were led to believe," Adair-MacPherson told reporters.
"Decision makers have to agree that they want this entity subject to audit."
People's Alliance Leader Kris Austin made a motion for Vestcor to appear before the public accounts committee to answer questions. (Ed Hunter/CBC)
In her report, Adair-MacPherson reproduced letters back and forth between her office and Vestcor trying to arrange a review of materials the body claimed it is not required to disclose.
She said the effort dragged on for weeks and stalled the audit of the province's books until she could trust the valuation of pension assets the province was reporting in its own financial statements.
She said New Brunswick's comptroller had to hire an outside auditor for $30,000 to deal with the matter.
"It was in my view ridiculous the hurdles we had to go through to get to the point to finalize the statements," she said.
Vestcor recently upgraded its accommodations by moving its operations into two floors of a new office tower on Carleton Street, Fredericton's so called "sexiest building."
People's Alliance Leader Kris Austin made a motion to summon the body to answer questions. The committee is scheduled to vote on the matter Wednesday.
It's not the first time Adair-MacPherson has used her appearance in front of MLAs to ask for help.
'It's a simple fix,' says AG
In 2018, she told MLAs her office was underfunded and required a $1-million budget increase to properly do its job. It was a plea political parties immediately added to their election platforms that year and which the Higgs government delivered in its first post-election budget.
On Tuesday, she said she hoped taking her dispute with Vestcor to MLAs would generate support and another swift response.
"It's a simple fix. It's an easy clarification of the Auditor General Act," she said.
"It's my attempt to resolve the issue once and for all."
105 Comments
Exaggerated success: Province's pension managers profit from 'joke' target, analysts say
Pension analyst says benchmark is inappropriately low, managers being over rewarded
Robert Jones · CBC News · Posted: Apr 24, 2018 6:00 AM AT
Methinks Higgy et al can't deny that this is just one of my many comments before i ran for public office two more times N'esy Pas?
David Amos
Methinks there have been at least three lawsuits since Mr Higgs fixed things that lead to the creation of Vestcor I bet a lot of pensioners are upset by CBC big revaluation today Too bad so sad nobody listened to me in 2004 N'esy Pas?
Higgs faces angry retirees over pension changes
Apologizes for lack of consultation on proposed shared-risk model
Robert Jones · CBC News · Posted: Apr 17, 2013 7:07 PM AT