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In this BLOG we will look at pensions and their impact on what are called Public Private Partnerships or P3’s.  IT will also deal with other pension matters, such as Defined Contribution Plans (DC) vs Defined Benefit (DB) PLANS, the weakness in private plans, the need for pension reform in public pensions to have shareholder rights, directorships and ethical investment directives and policies.

I use the term SOCIALCAPITAL, not as the total value of so called human resources but rather the VALUE OF PENSION PLANS as well as government sovereign wealth funds.

There are three kinds of pensions in Canada, private sector, public sector and government (Canada and Quebec Public Pension plans).  Private sector plans are those incurred by large corporations such as the Big Three Auto Companies, Building trades and their unions. Air Canada and other former Crown corporations while now private companies, retain the Defined Benefit Plan of the public sector.

There is the appearance in the media that there is a social security crisis or pension crisis, this is more often than not appearance than reality, depending on the pension or social security plan as we will see.

What is the reality is that for 60 years pension funds have developed such a large, risk adverse pool of capital that they dwarf private equity, hedge funds, and private capital. In fact hedge funds and private capital are constantly looking to pension funds to partner in investment schemes.

This is what I intend to cover in this blog, with regular updates on Canada Pension Plan Investment board, Cassie Populaire, Teachers, OMERS, AIMCO, et. The whole alphabet soup of investment funds in Canada and where they are investing and why.  And why we need to have a say in investment and other governance policies as well as representation on the Boards.

I will look at International pension funds and American pension funds where they provide further evidence of the impact that so called Institutional Investors or Bond Holders such as pension funds and university endowment funds have, the later is another form of social capital.

I have posted on this topic in the past on my other Blog and my Facebook page. 

Because there has been a rapid expansion of our pension funds into the investment

market I have begun this blog to be able to go into more detail as to the why and wherefore of these investments of OUR money.

I will also develop my thesis that the formation of social capital as dominating private capital 

is the coming of socialism. And what impact this could have if applied ethically and towards a self managed economic democracy.

Why do I think I am qualified to talk about pensions when I ain’t no chartered accountant, or financial advisor. Well actually in the later case I am a financial

Advisor of sorts, I am one step better I am a historical materialist political economist.

So I always take the Macro with the Micro, As Above So Below, so to speak and say that the sum total of all the Microeconomic data is still not as great as the whole; Macroeconomics.

Will you find investment tips here, well no, this is not that kind of Pension site. 

Instead we will take the Kondratieff Wave and the World Systems long view, of capital formation and its transformation from private capital to social capital, from private investors to institutional investors.

Do you need to know economics?  

No. I took Economics 30 twice in High School; once for credit once for fun, this will be like those presentations which simplified capitalism to a system of distribution and exchange of products. Where our role in the process was that of consumers there were no producers, no workers making these products, there was just the capitalist and us consumers, we worked to buy goods.

I went to class reading Proudhon’s What is Property, and Marx’s Das Kapital and debated my teachers. I also read right wing market economists and monetary reformers like Social Credit, and my anarcho-capitalist pal SEKIII, in order to validate or invalidate my Proudhonian and Marxian views of capitalism against theirs.

After university I worked for the Alberta Government Department of Advanced Education and Manpower and there I researched and wrote the provinces Retirement Planning guide. This was my introduction to the whole issue of retirement and pensions. I was 25 at the time.

In the nineties I worked for the Alberta Union of Provincial Employees, (AUPE) and   wrote up their retirement planning pamphlet, where I learned about actuarial tables, and how much $$$$ money you need to retire with; the minimum being $500,000, half a million dollars!  

My father as a contracted worker, a car salesman, had to use RRSP investing to ensure he had money for his retirement. I learned more about RRSP’s when I was working and they were being promoted as investments for retirement as well as for tax credits. One of the few tax credits working people in Canada were entitled to. And one of the few ways working people can save to put a down payment on a house.

I wrote the Alt. Business column for Labour News the Alberta Federation of Labour newspaper, I have always read the capitalist press, and have recommended that all leftists do so as it is the only honest press there is.

I went through the bad days of 95-97 as a public sector worker when Ralph Klein in Alberta attacked our Pension fund, the LAPP and tried to privatize it. That is a whole other story I cover here. (link) and which continues to this day when Premier Redford attacked provincial public sector pensions; LAPP and the Provincial Pension Plan.

I belong to the Local Authorities Pension Plan (LAPP) which covers public sector workers, managers and administration in municipalities, colleges, school boards, hospitals, the MUSH (Municipalities University School Boards and Hospitals) sector. While those directly employed by the Alberta Government have a separate pension plan. Our pension plan system unlike many others is actually administered by the members organizations, unions, managers associations, administration professional associations, who appoint representatives to the LAPP board. 

I am Sixty years old this year, since I belong to a Defined Benefit Pension Plan that means I have my magic number of 85  I can opt for early full pension retirement which means  I can retire with a full pension now five years before I am 65 and required to retire.

 My pension is my banked earnings which I and the employer have contributed to and which make money off of the magic of compound interest, the magic 65. You take years of service expected with a single employer, though with LAPP it is transferable, meaning I can take from one employer to another within the LAPP MUSH group.

This is standard; you are expected to work Thirty Years. Take your age and add thirty to it and you get how many years you have to work to get to 85. For instance my magic number would have been 55 plus 30 = 85 this is where the formula for Freedom 55 came from.

Since I am able to work for other employers with this Pension fund, then I can continue to contribute to it till I retire. Once I retire at; 55, 60, 65, or 70 then my pension is locked in and I live off the interest it is earning, which is collectivized and distributed to all shareholders.

Once CPP and Old Age Security kick in at 65 they are then offset with income from my DB Pension. And I can continue earning and investing in a workplace pension or an RRSP until I am 70..

So in this blog we will take a look at the big picture about Canadian Pensions which are a new form of Social Capital that could be used more productively investing in projects that are harbingers of the socialism to come.

As I stated above that  some of the blog posts will not be mine, nor will they all come with comments, or references. They not be current, but they all point in the same directionthey are in fact part of the stand alone connect the dots I share with you as I post these pension stories as they relate to a single purpose to fund public sector investment. Ironic eh,

As you connect the dots, like me, you will see that pension funds, sovereign wealth funds, and other forms of socialized capital are the transitional forms of capitalism as it transforms into post scarcity socialism.

The crisis now is a long wave of slow growth with a falling rate of profit  a reflection once again on capitalism’s flaws and failure to achieve its full potential for human productivity which is why these crisis’s are the death knell of capitalism and the birth of the ascendancy and domination of private capital by social capital, peoples capitalism, socializedcapital; socialism.

Our Canada Pension Plan needs Public Ownership

Back in  the bad old days of the deficit and debt hysteria of the 1990’s the federal government decided that it could no longer continue to fund our public pension system known as the Canada Pension Plan. The CPP had been operated out of the Department of Finance, and as such was part of the Federal Governments general revenues.

 “By 1996, it was clear the CPP was unsustainable. For example, in that year $11 billion in contributions were collected, but $17 billion in benefits were paid out. As well, demographic projections indicated that there would be far fewer workers whose contributions would be supporting retirees in the coming decades.” Canada Pension Plan Investment Board History.

The solution, as was the case with the Alberta Local Authorities Pension Plan, LAPP
was to divest the government from responsibility for funding the CPP and create a private corporation that would oversee the fund, and allow it to invest funds in the marketplace. And so the Canadian Pension Plan Investment Board was born.

Since 2003 the CPPIB has been a major player in the international marketplace, being one of the world’s largest pools of investment capital. CPPIB has large investments in international real estate holdings, indeed that was one of the first investments it made in 2003.

Recently CPPIB partnered with major Real Estate companies to purchase malls in the United States and make a major investment in UK real estate.

CPPIB specializes in long term investments, rather than playing the stock market, they look at investments with a thirty to forty year investment timeline. So they have become one of main players in the infrastructure market place, that we know as Public Private Partnerships (P3).

For instance when the Ontario government allowed for a privatized Toll Highway 407, to be operated by a private company CPPIB two years ago invested in this toll highway.

CPPIB has purchased or partnered with private investors and other public pension funds to purchase airports in Australia and New Zealand, highway projects, and of course large real estate holdings in the U.S. and UK.

CPPIB is just one of the large pools of public sector pension capital that Canada has available for investment around the world. The others include; the Ontario Teachers Pension Fund (aka Teachers), which recently sold its holdings in Maple Leaf Gardens/Toronto Maple Leafs franchise to Bell and Rogers. The Ontario Municipal Employees Retirement System (OMERS), which owns its own Real Estate Company; Oxford Developments, which owns Edmonton Centre. The newest player on the scene is AIMCO, the Alberta Government investment company that includes public employee pension funds and the Heritage Trust funs. They helped bail out GM and Chrysler, along with the Ontario and Federal government.

While these pension funds are based on original investments by you and me, the public, in the case of CPP or by public sector workers in the case of Teachers, OMERS and AIMCO, they are not administered by us.

The Board of Directors of CPP Investment Board has former bankers, corporate CEO’s, university economists and academics employed by the financial industry, actuaries, etc.

The board does not reflect the diversity of the owners of the fund, its shareholders, you and me.

How our pension money is used should not just be left up to a select group of financial insiders. Such a large pool of capital could well be used for ethical investments globally that would return on investment and would also help change the world.

But as long as there are no public representatives on this board, it will continue to act as a pool of capital for those who, ironically, wish to privatize the public sector.

The CPP as well as the other public sector pension funds in Canada have been at the forefront of promoting institutional investors rights, that is the right of shareholders to elect directors and decide on executive payments and bonuses, company ethical business standards, for companies they invest in.

Isn’t it time they apply the same standards to themselves, and allow for shareholder appointments to their boards, these would and should include worker representatives, consumer activists, environmentalists, etc.

Shouldn’t our pension money be used for ethical investments rather than just being another source of capital for hedge funds and private capital investment companies to partner with to pay for the privatization of public services.

Until we democratize our pension boards, they will continue to be used for private investment schemes that may not be in our best interests.

        Eugene Plawiuk 

 PAST PENSION POSTS I HAVE DONE ON MY OTHER BLOG LA REVUE GAUCHE