Question: What’s going on with my pension? (Editor’s note: this is an expurgated version of a longer and much more colourful question.)
Answer: Okay, everyone remain calm …. your pensions are secure. The plan is fully funded and running into surplus. If you are currently employed, you will continue to accrue pension entitlement, and if you are retired, you will continue to receive your benefits.
That important thing now said, you still are entirely justified in wondering what is going on at AIMCo and what potential impact it might have on teachers.
On the afternoon of Thursday, November 7, the government issued a news release announcing that the chair and board of AIMCo, Chief Executive Officer Evan Siddall and several other senior staff of the organization, were being unceremoniously canned. No prior notice appears to have been provided to interested parties, including the institutional clients of AIMCo.
By way of background, AIMCo, the Alberta Investment Management Corporation, was established in 2008 as the crown corporation responsible for investing the province’s financial assets. Today, it is the custodian of over $160 billion worth of financial capital including the $22 billion Alberta Heritage Trust Fund and $111 billion belonging to the province’s public sector pension plans, including the Alberta Teachers’ Retirement Fund (ATRF).
This is not the first time that, for all the wrong reasons, AIMCo has been in the news. In 2019, the provincial government passed Bill 22, the Reform of Agencies, Boards and Commissions and Government Enterprises Act, which required public sector pension plans to use AIMCo as their exclusive pension manager. While several large Alberta pension plans, including the Public Service Pension Plan, the Local Authorities Pension Plan, the Special Forces Pension Plan and the Management Employees Plan, had previously been required to use AIMCo, the New Democratic government of Rachel Notley had opened the door to their using other fund managers. That door was slammed shut by Bill 22. Of more direct concern to teachers was a new requirement that forced the ATRF to transfer the assets that it had been managing independently to AIMCo, despite the ATRF consistently outperforming AIMCo. At the time, Alberta teachers decried the unilateral actions of government, characterizing the government’s passage of Bill 22 as a “hijacking” of teacher pensions.
After a precedent-setting court action initiated by the Alberta Teachers’ Association (ATA) concerning the scope of the Bill 22 regulations, an agreement was struck that at least provided ATRF and other public sector pension plans with the ability to define investment strategies for implementation by AIMCo. With that, some measure of control was returned to the constituent plans and there was a return to stability.
Still, concerns about AIMCo’s performance remained. In 2020, AIMCo experienced a $2.1 billion loss due to a volatility-based investment strategy known as VOLTS. This substantial loss led to increased scrutiny and criticism of AIMCo’s investment practices and risk management, ultimately resulting in the “mutually agreed upon” departure of the CEO of the day, Kevin Uebelein.
The current shake-up also appears to arise from continuing concerns around the performance of AIMCo, which has seen rising costs, as well as an expanded staff, even though the total assets under its management have fallen.
...you still are entirely justified in wondering what is going on at AIMCo and what potential impact it might have on teachers.
There are several reasons why teachers should be legitimately concerned about these developments. Of course teachers are directly and materially interested, as contributors to their pension plan, in insuring that the plan assets are managed effectively and efficiently, so as to keep costs down for both pension participants and Alberta taxpayers.
Further, the decision to name the president of the Treasury Board and minister of finance, as well as the deputy minister of executive council, to oversee AIMCo in the immediate future raises the issue of the independence of AIMCo and its ability to operate in the interests of its beneficiaries and clients, free from undue political influence.
Given the UCP government’s continuing and quixotic interest in taking over and managing “Alberta’s share” of the Canada Pension Plan fund, the continuing instability of AIMCo and the government’s willingness to seize the reins will give many Albertans pause about a policy direction that is already deeply unpopular.
The key to restoring confidence in AIMCo among teachers is consultation — specifically, for the government to consult both with the plans whose assets are being managed by AIMCo and also with organizations such as the ATA that represent the ultimate owners and beneficiaries of those plans, the participant members.
In the meantime, the ATA will continue to monitor developments closely and be ready to step in to defend the interests of active and retired teachers. ❚
Questions for consideration in this column are welcome. Please address them to Dennis Theobald at dennis.theobald@ata.ab.ca.
ATA Executive Secretary
