New hire reveals Wynne’s secret pension agenda

Saäd Rafi is the new CEO of the Ontario Retirement Pension Plan Administration Corp.

In a news release issued Tuesday,
Rafi is a seasoned and highly-respected bureaucrat.  Most recently, he was CEO of the organization that ran the 2015 Pan Am/Parapan Games in Toronto.  “Mr. Rafi will bring his vast experience in public sector administration, capital planning, and public-private partnerships to the administration of the ORPP,” says the Ministry of Finance release.

What Rafi does not have, however, is any apparent experience managing investments, large investment portfolios, or organizations that manage large investment portfolios.  Some may argue his is a general management role and he can hire experts to manage the investments.  This is partially true.  But many in the Wynne government point to the CPP Investment Board as an exemplar of what they want ORPP to be.  So, let’s look at its CEO for an example.

CPP Investment Board CEO Mark Wiseman

Joined the CPP Investment Board in June 2005 as it’s Senior VP of Investments, then was promoted to Executive VP of Investments responsible for managing all of the investment activities of the board: public market investments, private investments and real estate investments.  Before 2005 he was the responsible for the private equity fund and co-investment program for one of the world’s largest and most successful pensions plan: Ontario Teachers’ Pension Plan.  He’s a lawyer, merchant banker and investment manager.

ORPP Administration Corporation CEO Saad Rafi

Joined the Ontario civil service in 1988 and worked his way up through multiple ministries to Deputy Minister of Health during the Ornge air ambulance scandal, later DM of Energy and Infrastructure where he was in charge of the green energy strategy.  He was VP of public-private partnerships at Ontario Superbuild. In 2005, he left the civil service for three years to work at Deloitte and Touche as an adviser on infrastructure  and project finance.  He left the civil service in January 2014 to take over the helm at the Pan-Am Games organization which, while it delivered a successful event, was a cost-centre activity that was not expected to generate a profit; it didn’t surprise anyone.

Rafi is a politically-astute bureaucrat who knows how to manoeuvre through the halls of Queen’s Park without making waves.  Mr. Wiseman knows how to take $10 of invested assets and turn it into $20. Personally, if I’m going to be forced at gun-point to hand over money to somebody, I’d trust a CEO like Wiseman to be in a position to pay me back someday, before I’d trust Rafi.

The Not-so Secret Agenda

When the ORPP was announced by Premier Wynne back in 2014, as part of the ill-fated budget that precipitated the 2014 provincial election, it was described as a provincial version of the CPP that would invest in public transit and provincial infrastructure projects.  And, I suspect, that is exactly what it will be: a de facto payroll tax on workers who aren’t represented by large corporations or unions, and small employers; with their money dumped into a holding account to be used on public infrastructure projects.

The problem, though, is that those projects don’t generate profits.  So, I’m not at all sure how the retirees of tomorrow will get any of their money back in the form of a pension.  I’m fairly confident that no one else, including the Premier and her finance minister Charles Sousa, do either.  If this was important to them, though, one might have expected them to hire a CEO like Wiseman, who has made a career out of managing investments to generate returns – rather than one like Rafi, who has built his career on spending money, not making money.

This leaves only one way the ORPP can possibly pay future benefits: by picking the pockets of future workers/employers to pay retirees.  Using future premiums to directly pay future benefits.  This is how the old CPP used to work, but it only works when there are more people working than drawing pension.  That is unlikely to be the case in our future, which is why the CPP doesn’t work this way anymore.

When Ontario Liberals said they’d model the ORPP on the CPP – I think everyone assumed they meant the modern, highly successful CPP, not the old, failed CPP model.  The idea any of us will ever receive a dime in benefits from Premier Wynne’s ORPP seems little more than a fantasy.