Lochead and Infantino: How to increase accountability in the public service? Start with Revera

 

As the new president of the Treasury Board, one of MP Mona Fortier’s responsibilities should be to increase accountability and transparency in the management of the federal public service.

A good first step would be to start with the Treasury Board’s own federal Public Service Pension (PSP) fund and its ownership of Revera.

Revera is a for-profit retirement company owned by the PSP. The company’s high death rates during COVID and its long trail of class action suits have been highly publicized by the media.

Unlike its publicly traded competitors Extendicare, Chartwell and Sienna, Revera is privately owned. This means that when the media reported on high salaries and bonuses paid to executives of major long-term care companies last year, Revera was not included — not because its executive salaries were lower, but because as a private company, it is not required to disclose this information.

Revera was acquired by the federal Public Sector Pension Investment Board (PSPIB), a Crown corporation whose role is to invest funds for federal public service employee pensions.

Revera’s terrible record during the pandemic caused all federal public service unions to join together to demand PSPIB divest itself of this investment and that Revera be made a public company. There has been no response from PSPIB management or the Treasury Board to this proposal.

When individual public service employees asked the PSPIB president at their public annual general meeting to disclose the executive salaries and profits at Revera, their questions were ignored. In fact, the company received only one line in PSPIB’s entire 340-page annual report.

When asked directly what the federal government could do about Revera, Deputy Prime Minister Chrystia Freeland replied that all options were on the table. But Freeland also added PSPIB is an independent pension fund operating separately from the federal government, apparently justifying the government‘s hands-off position.

Although all federal public service unions want to make Revera public and opinion polls indicate a majority of taxpayers are against for-profit long-term care homes, PSPIB can willfully ignore the opinion of its members and Canadian taxpayers. Why? Because, it says, like most pension funds, its mandate and fiduciary duty to retirees is to maximize returns without undue risk of loss.

Yet shareholders are increasingly questioning this mantra and demanding their pension fund investments reflect their concerns about climate change, unethical working conditions and corrupt corporate practices known as environmental, social and governance (ESG) guidelines. These are now de rigueur for pension funds and investment houses. The 2021 PSPIB annual report devoted 22 pages to them, citing examples of actions taken. But Revera was not included.

Right now, public service retirees don’t know what percentage of Revera’s profits comes from long-term care homes as opposed to its retirement residences. It is quite likely that transferring Revera’s long-term care business into public hands would have minimal impact on the overall revenues of the Public Service Pension fund. Such a move would signal to its members and the public that it takes its ESG declarations seriously.

A lot can be done here to improve transparency and accountability.

First, have the PSPIB disclose the same level of information for Revera (its profits and executive salaries) that is required for its publicly traded competitors in long-term care.

Second, involve public service unions in the oversight of the application of ESG guidelines for the PSPIB.

Third, if public service employees provide 50 per cent of the contributions to the pension fund, why not have representation for those employees on the board of directors?

Finally, make the PSPIB more accessible. Notice of its most recent AGM was not even listed on its website.

The case of Revera is but one example of questionable investment decisions taken by pension funds. The Public Service Pension fund could be a good place to reverse this course.

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