Phillips calls out Toews for poor fiscal management at AIMCo
By Justin Seward - Lethbridge Herald on August 16, 2022.
Alberta NDP finance critic Shannon Phillips held a press conference in Calgary on Monday to call out former finance minister Travis Toews on coming clean on more than $1.3 billion in potential additional losses from a failed high-risk investment strategy at AIMCo.
“The last things Albertans want is politicians messing around in their retirement,” said Phillips.
“Yeah, that’s exactly what we’ve seen from the UCP government and now it might have really big consequences for all of us and our public funds.”
According to AIMCo’s recently released annual report, “Clients have commenced arbitration proceedings against AIMCo and the Province of Alberta alleging that AIMCo breached investment management agreements in connection with portfolio investment losses incurred from a Volatility Trading Strategy in calendar 2022.”
Phillips said AIMCo undertook a number of very risky investment strategies that resulted in $2.1 billion of losses to our public sector pension plans.
“Those are pension plans that cover everyone from folks who work in hospitals, schools, firefighters and the broader Alberta public service,” said Phillips.
“Now that risky strategy also caused a serious loss to our Heritage Trust Fund. But it caused a big loss to those pension plans. So now the pension plans representing hundreds of thousands of Alberta workers are seeking damages from the Government of Alberta of $1.3 billion plus interest and costs. That is really big money that we are on the hook for.”
Phillips is convinced Albertans are being exposed to more risk by the UCP government in a time of high inflation, when provincial residents are having a hard time putting food on the table and making ends meet.
“The financial incompetence and carelessness of Travis Toews in the finance minister’s chair was staggering,” she said.
“To make matters worse, Travis Toews lied about this. He initially told Albertans that the losses that they incurred to our public sector pension plans and our Heritage Fund were limited to $2.1 billion. We asked for more information for the last two years on this matter repeatedly – over and over again he said that the losses were a mere $2.1 billion. Well now it turns out, he never mentioned, it’s been a whole year, that there was an additional $1.3 billion lawsuit. Travis Toews needs to come clean on exactly how much more of our money he plans to lose.”
Despite the losses at AIMCo and the UCP’s poor record on fiscal management, Toews and other UCP leadership contenders, including Danielle Smith, have promised to withdraw from the Canada Pension Plan.
According to Toews’ leadership website, the Albertan Pension Plan “file was on my desk” and “I will make the case with Albertans for a provincial pension plan.”
In response to criticism from Phillips, AIMCo disputes the NDP’s interpretation of its performance indicating it has provided good results for Albertans.
According to figures provided by AIMCo, in 2021 it posted historically strong results, earning a total fund return of 14.7 per cent, net of all costs, and generating $7.7 billion in additional value in excess of a composite benchmark.
AIMCo has also delivered a 5-year annualized investment return of 7.77 per cent (as of Dec 31st, 2021), surpassing the benchmark by 0.5 per cent and earning $43 billion in net investment returns for clients, of which $3.8 billion comprises excess returns above benchmark.
As the province’s institutional investor focused on long term results, AIMCo has a 10-year total fund net investment return of 8.62 per cent, 0.7 per cent above benchmark, earning $78.1 billion in net investment returns for clients.
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Agreed. Myself, whose LAPP pension plan depends on AIMCo renders this just yet, another reason, to vote for the NDP next election…..just more mess caused by the UCP bumbling. Much will need to be fixed.