BC Investment

Heads they win; tails we lose – updated

When the custodian of public pension funds, British Columbia Investment Management Corporation, revealed poor results for fiscal year 2019-2020, I knew there was another shoe to drop. This week, BC nurses received this notice from BCNU:

Nurses are counting on retirement security. Therefore, it is important that all BCNU members are aware of and understand the proposed changes recently announced by the Municipal Pension Plan.

For our members, the proposed MPP redesign would result in fewer choices, a major reduction in pension income for those wanting to retire early and contribution costs for nurses that are higher than they should be – this is unfair.

The announced Municipal Pension Plan redesign could have serious consequences for nurses…

What does the proposed Municipal Pension Plan redesign mean for you?

– You have less control.

– You’ll get less than you deserve.

– You’ll pay more than you should.

So, pensioners who are part of BC’s Municipal Pension Plan take a hit, mostly because the stock market was near its recent low on the last day of fiscal year 2020. As noted below, senior executives gained massive rewards.

I guarantee one thing. Those same executives will be in line for huge increases in the current year and that will be justified by March 31 valuation losses being recovered in subsequent months.

As I wrote in the title: heads they win; tails we lose.


Corporate reports issued each year ought to provide an accurate and fulsome picture of positions and prospects. Some do; some do not.

The Annual Report of British Columbia Investment Management Corporation (BCI)—investor of this province’s public pension funds—promotes more than it informs. It is laden with self-praise but lacking in meaningful data.

The fiscal year ended March 2020 was not a rewarding one for public pension funds run by BC Investment Management Corp. The rate of return earned was less than half that of the preceding year and failed to meet client benchmarks.

While current and future pension beneficiaries did poorly, the people running BCI did swimmingly well.

Here are the increases received by BCI’s top five paid employees in FY 2020:

Perhaps you surmise those hefty wage increases were needed because these folks had been lagging, maybe suffering a decade long freeze like that imposed on BC’s Persons With Disabilities.

Well, you would be wrong.

Regardless of whether investment returns are above or below conveniently flexible benchmarks, massive salary increases are given. For pensioners, this fits the old quip, “Heads they win; tails we lose.”

As written here previously, Washington State Investment Board (WSIB) is somewhat comparable to BCI. The American organization manages about C$200 billion in assets, while BCI’s Annual Report shows C$171 billion. But, similarities end there.

WSIB typically gains better returns than BCI. In 2019, it earned 8.4% while BCI gained 6.1%, a one-year difference in the $4 billion range. That superior performance has been repeated frequently over the past decade.

WSIB operates with a fraction of the overheads of BCI, pays substantially lower salaries but has a healthy retention rate. WSIB’s most senior officers have been in place longer than those at the BC counterpart.

This demonstrates the scale of difference.

For years, the Chief Executive Officer of BC Investment Management Corporation has been the highest paid leader of any public body in BC. Yet the scale of earnings draws surprisingly little coverage in corporate media.

During times that pay restraint was imposed on most everyone in the province, and despite government promises that executive compensation would be moderated, BCI kept writing ever larger cheques to its executives.

I am told that what BCI reports is only part of the annual earnings of its senior executives. Some are rewarded as Directors of other organizations, including companies where BCI is a material investor.

Categories: BC Investment

20 replies »

  1. You’re reporting that Gordon Fyfe took home $3.5 MILLION dollars as an employee of a Government created agency. That is SICK. And there is no explanation that will convince me that individual is worth such remuneration.

    Liked by 2 people

  2. So if some BCI senior execs are directors of other organizations in which BCI has investments then isn’t that a conflict of interest? If so then why isn’t this public knowledge and why isn’t anything being done about it?

    Liked by 2 people

  3. Little oversight and this should be well publicized by conventional media yet silence. Gordon Fyfe must have certain photos of elected people in barnyard scenes.

    Liked by 1 person

  4. Canada has culture of entitlement , not performance driven.

    That is further compromised by an unwillingness to process what “conflict of interest “means as our former Finance Minister demonstrated.

    Liked by 1 person

  5. The greatest “grift” in today’s government is remunerations to politicians and bureaucrats and in my way of looking, all vastly overpaid for what little they do

    With Covid -19 and the long lasting financial ills that will last years, if not decades, should see federal, provincial and civic bureaucracies reduced, by 5% for the next 5 years.

    All gross incomes over $100K should be taxed back; all frills, such as travel, free food, and expense accounts should cease and all major projects should be put on hold until a truly independent commission, including laypeople, investigate and see if the project is worthwhile.and or financially feasible.

    Oh, I can here the screams of indignant bureaucrats and lazy politicians now, but we must stop spending or else far worse things will happen and happen soon.

    Corruption, thy name is BC.

    Liked by 1 person

  6. WSIB uses a lot of external asset management though, which means they’re still paying big fees. However, its just not as tracklable because the people they’re paying aren’t on the disclosed payroll.

    Like

    • You’ve no comment on extraordinary raises gained regularly by BCI officials? That’s resulted in CEO’s remuneration going from $770,000 in 2007, measured in today’s dollars, to more than $3.5 million. BCI has a number of people earning 7-figure salaries that have grown rapidly in recent years.

      WSIB’s top paid executive Gary Bruebaker earns about 1/4 of the amount paid BIC CEO Gordon Fyfe. Neither of them sits daily at a trading desk.

      WSIB’s lesser paid investment managers have generally outperformed BCI. That’s not insignificant. In 2019, BCI reported 6.1% return, while WSIB’s return was 8.4%. The single year difference was worth about $4 billion to future pension beneficiaries.

      Like

  7. It’s bad enough that they’re getting paid excessively — but they’d be fools if their day jobs don’t help them be better investors of their own riches.

    A preacher might get insider info on new bibles; a teacher might learn where to get deals on paints or paper; and a taxi driver might ‘know someone’ with good, low-cost tires — but these guys, apparently, know the best-performing stocks to invest in — AND what to avoid.

    Rich getting richer comes to mind…

    Liked by 1 person

  8. From the BCI website:

    “The trustees of the four statutory pension plans (College Pension Plan, Public Service Pension Plan, Municipal Pension Plan and the Teachers Pension Plan) are each responsible for appointing one director. The Minister of Finance appoints three directors, two of whom must be representative of BCI’s other clients. The third appointee by the Minister is designated under the Act as the Chair of the Board.”

    “The Board’s accountabilities include: appointing the CEO/CEO (and monitoring and reviewing his performance); appointing auditors; approving policies, our business plan, budget, conflict of interest guidelines; establishing the employee classification system and compensation scale; and overseeing operations.”

    “The Board must:
    4.1 select and appoint the Chief Investment Officer (who also serves as the Chief Executive Officer and is referred to herein in respect of both roles as the “CIO”), and review and monitor the CIO’s performance and determine the CIO’s salary in accordance with sections 20(1)(a) and (b) of the Act;”

    When you cut through the bureaucracy to see who is ultimately responsible for the remuneration of BCI employees (including the CEO), you find that it is BC public sector union employees. Barring a change in legislation it is they who elect those who select the majority of the BCI Board of Directors.

    I’m guessing the vast majority of them are unaware of it, but would be outraged if they knew. Besides Norm, who will tell them?

    Liked by 1 person

    • That is exactly the point. Just as no one in corporate media bothered to pay serious attention to the multi-billion dollar private power schemes that harm every resident and small-medium sized business in the province.

      Nor have our political reporters examined BC Hydro’s false claims of demand growth since 2005 or evaluated the wisdom of spending $12 billion to $15 billion for an unneeded dam sited on unstable lands subject to earthquakes caused by fracking.

      Media has reversed the old saying, turning Dooley’s old quote into, “Comfort the comfortable and afflict the afflicted.”

      Like

    • The IPP deals are secret but we do know they include inflation escalators calculated annually. The contracts were never arranged by competitive bidding. BC Hydro said, “We’re willing to pay this.”

      Market price was not an issue. Imagine if the BC Government said they didn’t want to buy $40,000 pickup trucks manufactured in Ontario. Because they wanted BC to have pickup truck self-sufficiency, government would contract to buy $140,000 (plus inflation) pickup trucks made in BC for the next 30 to 60 years, whether the trucks were needed or not.

      Construction contracts are typically kept secret but arrangements for a large project almost never involve a fixed total price. This is why initial price estimates often double for things like highways, hydro dams and stadium roofs.

      The old concept of buying from the low bidders now seems to be an anachronism, except perhaps for office supplies like the black pens used to redact documents.

      Like

  9. Lew,

    Thank you for sharing the information, it’s so important to have an informed electorate if we want a functioning democracy.

    I’m really interested in uncovering the links and ties of all the public executives that have lined their pockets over the last 20 years in BC. I’ve seen many executives rise through the ranks with little competence (e.g. Jessica McDonald) and I got the impression that they are bolstered by equally incompetent executives elsewhere in the public service. In contrast to each other, they make each other look good. Heaven forbid we have an executive who speaks the truth and has a working knowledge of the specific area of responsibility, that would make the rest of them look like fools.

    I truly wish for voters to realize that the emperor has no clothes this election. Don’t fall for political spin from figureheads, we need to do our own research.

    Like

  10. ARE YOU KIDDING ME?

    Gordon Fyfe recieves $3.5 MILLION DOLLARS PER YEAR ?
    For missing his business targets? Wow.
    What does he get for achieving his targets?
    A island in the south Pacific?

    What in god’s name is going on in govt?
    No wonder our taxes keep going up and the govt is broke.

    FIRE THEM ALL.

    Like

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