Spotty performance at AIMCo since inception, says SACPA speaker

By Ry Clarke - for the Lethbridge Herald on April 13, 2022.

Southern Albertans were provided with an update last week on the investment climate in the province and how government is managing its assets.
The Southern Alberta Council on Public Affairs (SACPA) welcomed Robert Ascah, a research fellow at the Parkland Institute, to its Thursday session.
Talking about the Alberta Investment Management Corporation, AIMCo, and Ascah’s research paper published by the Parkland Institute “Can AIMCo be fixed?”, the session presented audiences with recommendations to improve governance within AIMCo, the independence of operations, and the level of trust they share with Albertans.
Ascah says “AIMCo is one of the most significant provincial agencies in Alberta and is largely unknown. Its importance is central to financial security of nearly half a million people, mostly in Alberta. AIMCo’s investment performance since its inception in 2009 has been spotty. Recent poor returns contribute to the erosion of trust.”
Ascah educated SACPA members in an online session about AIMCO and its work regarding pension funds.
“Trust is central to the pension bargain. The UCP government’s first budget in November 2019 swept teachers, worker compensation boards and AHS investments (over $130 billion) under the management of AIMCo. And there was no consultation with the ATRF, the teacher’s retirement fund board, nor the Alberta Teachers Association.”
In his paper Ascah says this was done without consultation and removed the right for public sector pension plans to withdraw funds from AIMCo, neither of which was mentioned in the UCP’s spring 2019 election platform. Mistrust was also created in the public when Travis Toews, president of the Treasury Board and Minister of Finance, referenced AIMCo’s public money during legislative debates.
“I want to be very clear on this: public sector pension plan investments are not public money,” said Ascah. “They are investments held in trust to pay pensions. Not public money once employer contributions are made, as well as the employee contributions.”
Ascah also discussed ways that AIMCo could make changes to improve its public relations.
“The first policy recommendation is to eliminate the Crown’s sole ownership of AIMCO. Ownership possessions should be subject to negotiation between the major clients of AIMCO and the Government of Alberta. In general terms, the proportion of board seats should be based on the amount of funds managed by AIMCo. Revised legislation could address board representation, eliminating the need for cabinet approval of all directors.”
Ascah says this would give specific pension plans sole responsibility to appoint a board member because the provincial government is no longer trustee or administrator.
He also says AIMCo’s board does not reflect demographics in the population, reflecting unequal representation in the population they serve.
“There is a very high bar to qualify to serve on AIMCo’s board. Board individuals have to have proven and demonstrably experience and expertise in investment management. Finance and accounting, or law, or experience as an executive or director in a publicly traded issuer of securities. So, you need to be part of the corporate club. That’s not a good recipe for good management and a lot of the literature today says so. Now this is not to say each current director is not qualified. However, a lack of diversity on boards means that issues tend to be discussed only in financial or technical terms.”
The session finished with a Q & A from those in attendance, asking about legal rights towards pensions in Alberta and cross provincial investment funds, and investment strategies AIMCo invests in.
Ascah does note AIMCo has a new CEO, Evan Siddall, working to improve client relations and investment returns.
“There are signs that investment performance may be improving. However, the proof is not in words but in concrete actions. And it’s hoped this report will stimulate discussion on this important public policy issue.”
A copy of Ascah’s paper can be found online at http://www.parklandinstitute.ca/can_aimco_be_fixed.