Alberta Finance resists pension plan representation on AIMCo board

Alberta finance officials are pushing back against a proposal in a private members' bill that would add members representing public sector plans to the board of the Alberta Investment Management Corporation (AIMCo). 

Shannon Phillips, the NDP MLA for Lethbridge-West, presented Bill 208, Alberta Investment Management Corporation Amendment Act, 2020, to the Standing Committee on Private Bills and Private Members' Public Bills on Friday. 

The bill proposes adding four members representing the Alberta Teachers Retirement Fund, Special Forces Pension Plan , Local Authorities Pension Plan and Public Sector Pension Plan to AIMCo's 11-person board.

Since taking office nearly two years ago, the current United Conservative government has compelled the pension funds to use AIMCo as their investment manager. 

MLAs have been inundated with phone calls, emails and letters about this issue, Phillips said.

Adding representation from the four largest public sector pensions to the AIMCo board would help ease those worries, she said. 

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"Those funds then deserve a better window over governance at AIMCo and input into how they make investment decisions and ultimately how they serve their clients," she told the committee. 

AIMCo is an investment firm owned by the provincial government. Management came under fire last year after losing $2.1 billion from a bet on market volatility. 

Managers of the four pensions, which provide retirement income for teachers, provincial and local government workers, health care workers and municipal police officers have expressed concern that AIMCo would mishandle their funds. 

Lowell Epp, assistant deputy minister for Treasury Risk and Management for the Alberta government, rejected Phillips' proposal in his presentation to the committee. 

He says a 15-member board is unwieldy and would be less productive than a smaller board. He also suggested the proposed new members would represent the interests of their individual pension plans and not AIMCo as a whole. 

"Representative boards frequently take a combative approach to decision making rather than a much more productive, consensus-based approach," he said. 

Epp said each public sector pension retains control over their investment policies. 

UCP MLAs, who make up the majority on the committee, echoed some of Epp's concerns. 

Referendum question 

The Alberta government has the power to issue investment directives to AIMCo. Bill 208 would remove that provision from existing legislation. 

Concerns have been raised that the UCP government could order AIMCo to invest funds in oil and gas projects. 

Phillips said the power has never been used, so it shouldn't be a problem to remove it. 

"Removing that section of the act is a very simple solution to some of the concerns that have been raised by the public," she said. 

The government is currently studying the feasibility of leaving the Canada Pension Plan and creating an Alberta Pension Plan in its place, a measure recommended by the Fair Deal Panel last year. 

Bill 208 proposes asking Albertans in a referendum whether they want to switch to a provincial pension plan and if they want AIMCo to manage the fund. 

Epp, in his presentation, said early evidence suggests a provincial pension plan could be beneficial, but that no decisions have been made on who would manage the funds. 

MLAs on the committee agreed to hear stakeholder presentations on Phillips' bill before deciding whether to send it back to the legislative assembly for additional debate.