The Alberta Teachers’ Association

In December, the Parkland Institute released a study I wrote about the Alberta Investment Management Corporation (AIMCo). The pension security of more than 460,000 Alberta workers and retirees depends on the investment management performance of AIMCo. AIMCo is one of the most financially significant agencies of the Alberta government, managing the investments of the Alberta Heritage Savings Trust Fund, various government accounts and five major public sector pension funds, including the Alberta Teachers’ Retirement Fund (ATRF).

Trust in the governance of pension plans and in the investment management done on behalf of pension plan members and beneficiaries is critical to the pension arrangement. Since a pension is intended to provide financial security in retirement, any behaviour by government, the asset manager or pension boards that undermines security creates uncertainty. 

However, in October 2019, out of the blue and without consultation, Travis Toews announced teachers’ pension investments would be managed by AIMCo and not by the ATRF investment management team. This idea was never mentioned in the UCP’s spring 2019 election platform. Teachers were obviously perplexed. How could the government do this? Weren’t these pension funds untouchable by the government? Then, in late 2020, AIMCo – acting through the UCP government – also attempted to remove the discretion of pension boards to set investment policies.

This report shows that AIMCo’s investment management performance overall has been less than satisfactory for its clients when compared to most of its peers. Key research findings include the following:

AIMCo’s five-year performance against its own benchmarks was minus 0.7 per cent, meaning AIMCo as the investment manager failed to meet its own performance expectations.

The formerly independent ATRF had a four-year performance that was more than one percentage point above that of AIMCo, and AIMCo has not outperformed ATRF since 2017. An ATRF report to the Alberta Teachers’ Association (ATA) found that, had AIMCo managed ATRF’s investments over the past seven years, $1.3 billion of value would have been lost.

In recent years, AIMCo was not a top performer compared to other major public pension fund managers based in British Columbia, Ontario and Québec. Over a 10-year period, AIMCo outperformed its four main peers once, nine years ago in 2012/13, when AIMCo’s value-add equalled that produced by the Ontario Teachers’ Pension Plan.

The report makes the following key recommendations to improve the damaged relationship between AIMCo, plan members and Albertans:

• Rethink AIMCo’s board of directors and ownership structure in light of the troubling actions of the UCP government.
• Eliminate the Crown’s sole ownership of AIMCo and implement a new ownership structure, with the government holding a minority position, to prevent governments from using AIMCo funds for their own political purposes.
• Allocate representation on AIMCo’s board based on the percentage of investments contributed.
• Define the qualifications or skills required in a refurbished AIMCo Act to make it difficult for the government to change these details for political reasons.
• Give plan participants and owners the option to give two years’ notice of departure after AIMCo has managed their funds for eight years.

Actions, not words, are required from AIMCo and the government to repair the damaged trust of the past two years. Ultimately, AIMCo needs to serve citizens, not ideology.

The above recommendations are fundamentally important to all teachers. The ATA did a great job of mobilizing members with the “Hands off Our Pensions” campaign. It is particularly important that before the May 2023 general election, members inform themselves about their pensions and make their views known to their MLAs. ❚

Bob Ascah is a research fellow at the Parkland Institute. His blog is Abpolecon.ca. 

Read the report

The full report is available here: www.parklandinstitute.ca/can_aimco_be_fixed.