Rob Schwartz (past director of Alberta Surface Rights Group):
Posted on ASRG because pensions are private property. Over the past several years AIMCo has been the go to lender for small underfinanced companies proposing to buy depleted oil & gas wells from major producers. The track record of these smaller companies long term survival regardless of oil prices has not been great. AIMCo has bet the farm on several of these now bankrupt newly minted juniors which has resulted in temporarily keeping some depleted wells from showing up on the orphan well list. Albertans may have serious cause for concern about the futures of their pensions given that recent operational changes to AIMCo allow for the fund to take direct instruction from govt.
University teachers pension plan pulls out billions in assets from AIMCo management by Lisa Johnson, May 10, 2021
A pension fund for academics and professional staff at universities has dumped Alberta’s government-owned investment manager from control of $2.7 billion of its assets.
The board of the Universities Academics Pension Plan (UAPP) agreed in December to move its public equities portfolio, and has since withdrawn those assets from the the Alberta Investment Management Corporation (AIMCo) while it searches for a new manager.
The move comes after AIMCo reported a $2.1-billion loss last April due to a volatile investment strategy that has since been scrapped, and as other Alberta teachers are set to see their public pensions move under AIMCo management.
UAPP board chair Geoffrey Hale said Monday some of the board’s concerns with AIMCo’s management have been addressed, but the board was not entirely satisfied with responses to what they see as problematic issues.
“While no one likes to see an investment manager blow 10 years of value-added as a result of poor oversight over a strategy, it went beyond that,” said Hale.
The total value of UAPP’s public equities fund was $2.7 billion — or about 46 per cent of a total $5.8 billion in assets — as of the end of last year, according to its annual 2020 report.
AIMCo chief executive officer Kevin Uebelein told a legislature committee meeting Friday that withdrawing assets from AIMCo is well within UAPP’s purview, but he disagreed with the strategy.
“The last time they did that, it did not serve them well … while I truly wish UAPP all the best in the decisions that they’re making, it is a well founded principle that chasing performance by moving from asset manager to asset manager rarely works,” said Uebelein.
Hale called that statement presumptuous and the board has done its due diligence.
“We have seen an adaptation on our fixed-income managers that has served us well,” said Hale.
Last year, the vast majority — or 77.5 per cent — of UAPP’s investments were managed by AIMCo, which includes separate portfolios that continue to be managed by AIMCo, including alternative investments.
Legislation passed in late 2019 made changes to the oversight of public sector pension funds, and required that teachers’ pension assets be moved under AIMCo management from the Alberta Teachers Retirement Fund by December 2021. After the government imposed an investment management agreement in January, the Alberta Teachers’ Association filed a legal challenge.
However, the UAPP is governed under different legislation than most other public sector plans, and has been jointly governed since 2001. It counts about 16,500 members who either contribute or are pensioners.
Kassandra Kitz, press secretary to Finance Minister Travis Toews, said in a statement Monday the government has no plans to change the legislation and regulations in place surrounding UAPP’s agreement.
“We are confident that public sector workers will continue to benefit from efficiencies achieved through AIMCo’s investment management,” Kitz said.
NDP Opposition labour critic Christina Gray said the UAPP’s ability to move its pensions to another manager put the hypocrisy of Bill 22 on full display.
“If you’re a university teacher, you get control, if you’re a K-12 teacher, (Premier) Jason Kenney gets control of your pension,” said Gray in a statement Friday.
In April, AIMCo announced a new CEO, Evan Siddall, will replace Uebelein in July.
With assets under management reaching $118.6 billion, AIMCo noted a 2.5 per cent overall return in 2020 — 5.4 per cent below its performance benchmark — and a 7.7 per cent annualized return over the last 10 years.
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