Vestcor reports $1.1 billion loss in New Brunswick government employee pensions

Vestcor losses fared better than industry averages, record bonuses for staff

Vestcor reports $1.1 billion loss in New Brunswick government employee pensions

Vestcor, the firm responsible for managing New Brunswick’s government employee pension funds, revealed in their annual report that assets under their management experienced a loss of $1.1 billion.  

Despite the setback, the losses were considerably below the industry averages, leading to record bonuses for Vestcor staff for the second consecutive year. 

"Our investment returns significantly outperformed most other Canadian pension plans," said Vestcor President John Sinclair. 

By the end of December, Vestcor managed a total of $19.9 billion in New Brunswick government employee pension and other funds, down from $21 billion the previous year. The decrease was influenced by various factors, with the most significant being the return earned on fund investments. 

The pension fund for New Brunswick public servants experienced a decline of $534 million, settling at $8.8 billion, while the New Brunswick Teachers' Pension Plan decreased by $458 million, reaching $6.5 billion.  

2022 proved to be a challenging year for financial markets, as the Toronto Stock Exchange composite index fell by 8.7% over 12 months. 

According to the Royal Bank, such declines contributed to the worst investment results for pension plans across Canada since 2008.  

In January, Niki Zaphiratos from the bank's investor and treasury services division described 2022 as "a challenging year for pension asset managers” with a median return of -10.3% for defined benefit plans tracked by the bank. 

Contrasting these figures, Vestcor's annual report revealed that their investment returns for 2022 were significantly better, measured at -3.63%.  

Vestcor's board surpassed its benchmarks by over $500 million during the year. As a result, the bonus pay pool increased by $459,900, enabling a record-breaking $9 million to be awarded in 2022.  

Among the top five investment executives, a total of $3.7 million was allocated, including $1.26 million in bonuses for Sinclair, surpassing his base salary of $375,057. 

Vestcor has consistently defended its bonus pay program, considering it standard in the investment industry and necessary for attracting and retaining high-quality employees while incentivizing performance.  

In an email to CBC, Sinclair affirmed that the bonus program undergoes annual review and approval by a specialized committee of Vestcor's board, designed in consultation with an independent compensation expert. 

"Vestcor's active investment approach has realized strong success in adding significant value-added returns," Sinclair said.  

Since former New Brunswick auditor general Kim Adair raised concerns in 2021 about the lack of transparency regarding bonus pay and the associated results, Vestcor has seen a doubling of its bonus pay earned by employees.  

Vestcor, formerly known as the New Brunswick Investment Management Corporation, underwent reconfiguration, renaming, and gained independence in 2016. It is now jointly owned by the province's two largest public pension plans serving civil servants and teachers.  

Vestcor maintained its status as an independent entity and asserted that it is not subject to the authority of the auditor general. The New Brunswick government has supported this view.