Double bonus payments net N.B. pension fund executives record rewards

Investment managers and executives with the Fredericton-based firm that oversees New Brunswick government employee pension funds earned a record $8.6 million in bonus pay in 2021 from two incentive programs that operated simultaneously, records show.

The bonuses earned by senior personnel of Vestcor were $3.3 million higher than the previous record amount paid in 2019 and $4.3 million higher than what was paid in 2020. 

Much of the increase was generated by the operation of two bonus programs in 2021 that in many cases paid rewards to employees for the same achievements twice.

The size and growth of Vestcor's bonus program is one of the issues New Brunswick's Office of the Auditor General said in 2021 it would like to review with the organization. At the time, Vestcor disputed that it is subject to the auditor general's authority any longer, in what has become an ongoing issue between the two.

"Vestcor's accountability to government, the Legislative Assembly and the public remains a significant concern for our Office," declared a report issued by new Auditor General Paul Martin earlier this year.

"Two of our most significant areas of concern continue to be NB Power's ability to self-sustain its operations and the Auditor General's access to Vestcor." 

Vestcor is headquartered in Fredericton and was set up in the 1990s to manage what has become $21 billion in New Brunswick government employee pension and other funds. 

It was originally a Crown agency but was reconfigured, renamed and given its independence in 2016.

It's now jointly owned by the province's two largest public pension plans serving New Brunswick civil servants and teachers, but it 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, retirement accounts for other organizations like the City of Fredericton and nuclear waste and decommissioning funds for NB Power.

Although Vestcor is not owned by government any longer, two New Brunswick auditor generals have argued "the significant amount of funds from public sources Vestcor manages" as well as its "extensive government-entity client base" make its operations a public interest concern.

Vestcor has offered incentive programs to employees for more than two decades. The organization argues bonus pay is standard in the investment industry, helps to recruit and retain quality employees and incentivizes good performance. 

In Vestcor's case, bonus payments started out at modest levels but over the years grew significantly, an issue that eventually caught the attention of auditors.

"The Auditor General should have unrestricted access to audit the reasonableness of Vestcor's incentive program," former New Brunswick Auditor General Kim Adair-MacPherson wrote in her report on the matter in early 2021.