The provincial government has removed the entire board of the Alberta Investment Management Corporation (AIMCo), saying its ballooning costs demand intervention.
In a statement Thursday afternoon, the province announced it will “reset” the focus of the government-owned pension management fund, and will be appointing a new board chair within 30 days.
The province’s statement says the move comes “after years of AIMCo consistently failing to meet its mandated benchmark returns.”
The appointments of 10 members of the AIMCo board of directors were rescinded in an order-in-council Thursday.
The same order-in-council appointed Finance Minister Nate Horner as the board’s chair for a term to expire Sept. 30, 2025.
AIMCo CEO Evan Siddall and three other top executives are also out, Horner said Thursday.
“I’m doing this because I have to,” he told reporters at the legislature.
On Friday, the province announced that senior public servant Ray Gilmour has been appointed interim CEO.
Gilmour, deputy minister of executive council, is a chartered professional accountant who spent 15 years in banking and the financial services industry, according to the government’s website.
Horner said a new board chair will be appointed within a month.
AIMCo manages nearly $170 billion in assets, according to its 2024 mid-year investment performance report.
It is responsible for the investments of several provincial government funds, including the Heritage Savings Trust Fund.
It also acts as an investment manager for pension plans of hundreds of thousands of Alberta public sector workers: teachers, municipal police officers, academic and professional staff at universities and municipal and provincial public servants, among others.
A public meeting on the Heritage Savings Trust Fund, held Wednesday evening, confirmed some of AIMCo’s costs that have raised red flags for the government for some time, according to Horner.
Horner pointed to increasing operating costs, management fees and staffing without corresponding return on investment.
In Friday’s news release, the government said AIMCo’s third-party management fees increased 96 per cent between 2019 and 2023.
In the same period, the number of employees increased 29 per cent, and salary, wage and benefit costs increased by 71 per cent. Those costs all increased while AIMCo managed a smaller percentage of funds internally. the province said.
“If you’re going to see costs like this, I think you would expect them to hit their benchmark,” Horner said Thursday.
“When you have a body like this that’s managing funds like that, you’re expecting some value add, frankly. That’s what they get paid the big bucks for … and we weren’t seeing that.”
Opposition criticizes ‘drastic’ move
NDP finance critic Court Ellingson said he’s alarmed to see a government minister in charge of AIMCo, even temporarily.
“It makes Albertans question the stability of this fund. It makes Albertans question whether or not that fund really is under the thumb of the premier and the finance minister,” he said.
Ellingson also questioned the urgency and timing of such a big change.
The province said it has decided to “reset” the focus of the provincial corporation, and will be appointing a new board chair within 30 days. Court Ellingson with the Alberta NDP says the move shows incompetence by the government.
“If they had been monitoring this for a while, they had many opportunities to do something that was not so drastic and earth-shattering as today’s move,” he said.
Horner will not make any investment decisions or receive compensation in his temporary role at AIMCo, the province said.
The United Conservative Party government, under former premier Jason Kenney, passed a bill in 2019 requiring the Alberta Teachers’ Retirement Fund to use AIMCo as its investment manager.
The bill also required three large public sector pension plans to use only AIMCo as their investment manager.
In 2020, AIMCo announced a bet on market volatility led to a loss of $2.1 billion.
In the aftermath of that loss, CEO Kevin Uebelein, who had been at the helm since 2014, said he would leave the organization by June 2021.
Siddall, the former head of the Canada Mortgage and Housing Corp., replaced him as CEO shortly after.
AIMCo did not respond to a request for comment on Thursday.