With representatives of the Alberta Investment Management Corp. scheduled to appear before the Alberta Heritage Savings Trust Fund Committee today to explain their recent laggard performance, the NDP Opposition reminded Albertans about Premier Jason Kenney’s scheme to snatch their retirement savings from the Canada Pension Plan and hand them over to the provincial Crown corporation.
Mr. Kenney’s faux independantiste United Conservative Party Caucus has long cast covetous sidelong glances at the huge pool of Albertans’ retirement savings managed by the CPP Investment Board, which is considered to be one of the best pension fund managers in the world.
AIMCo, as the Alberta corporation is usually known, does not have such a sterling reputation.
Indeed, AIMCo didn’t have all that great a reputation in professional investment circles even before word leaked out in April 2020 that it had lost more than $2 billion – initial reports said $4 billion – on a hard-to-fathom gamble on market volatility.
When the bet went expensively south, AIMCo CEO Kevin Uebelein explained that “markets behaved in a manner never-before-seen and the result was a very unfortunate loss.” You don’t say?
The same day Mr. Uebelein was saying that, a report in the New-York-based online publication for institutional investors that broke the original story described AIMCo’s volatility trade strategy as “amateurish” and noted that “experts and data put AIMCo on a lower tier of sophistication” among fund managers.
But Premier Kenney – who as we now know doesn’t mind risking billions himself, having given away $1.3 billion of our money on a bad bet that Donald Trump would win last November’s U.S. presidential election – still has plans for AIMCo that have the potential to make a couple of bad bets in the low billions sound like the stakes in a kitchen-table poker game.
The UCP government has already made legislative moves to take over all public service pensions, including the previously independently managed Alberta Teachers Retirement Fund – to the horror and disgust of most Alberta teachers.
AIMCo currently manages about $119 billion in assets, about $18 billion of which is what’s left of the Alberta Heritage Savings Trust Fund after decades of being frittered away by successive Conservative governments since it was set up by premier Peter Lougheed’s Progressive Conservatives in 1976.
Now, after being so rudely interrupted for so long by the global COVID-19 pandemic, Mr. Kenney and the UCP obviously hope to get back to their agenda.
And next on Mr. Kenney’s hitlist is the CPP – essentially the base pension fund for almost all Albertans – with rumours flying the government will call an easy-to-manipulate referendum on the question in this October’s province-wide municipal election.
That would give the UCP an almost unimaginably huge slush fund made up of other people’s retirement savings with which to make really bad bets designed to prop up Mr. Kenney’s friends and allies in the fossil fuel industry, gambles that could dwarf the billion-dollar gambling debts we’ve had to pay off for them so far.
As Mr. Kenney told party donors on May 27, “I’ve actually personally become increasingly bullish and supportive of the prospects of an Alberta Pension Plan and Alberta police force.” (The latter being another one of the sovereignist fever dreams of the notorious Firewall Letter drafted Stephen Harper and few like-minded ivory tower neoliberals in 2001 and sent to Alberta premier Ralph Klein, who sensibly spiked it.)
In advance of today’s meeting, the NDP noted that with less than 24 hours to go, the government still hadn’t released the fund’s annual report.
UCP MLAs on the committee, of course, are sure to argue that all is well now that AIMCo is about to appoint a new CEO – former Canada Mortgage and Housing Corp. President Evan Siddal. But as has been said here before, the departure of a single senior officer offers little reassurance the company will be better run.
Which gets us back to the NDP’s number crunching yesterday. Given the CPPIB’s return of 12.1 per cent on its assets under management in 2020, compared to AIMCo’s paltry 2.5 per cent, if the CCPIB had been managing the money now managed by AIMCo, “Alberta pensioners and the Government of Alberta would have earned an additional $11.4 billion in a single year.”
Compound annual returns alone would grow those one-year gains to $247 billion over the next 30 years, the party noted.
Indeed, comparisons of average CPP to AIMCo results over the previous 10 years show the federal fund doing significantly better in the longer run as well. “If the historical pattern holds over Alberta’s long-term horizon,” said an NDP background paper, “we would lose out on hundreds of billions in returns.”
“It is beyond comprehension that Jason Kenney would put at risk hundreds of billions of dollars in returns when he’s got literally the world’s best investment manager, CPPIB, doing the work for Albertans right now, and doing a good job at that,” said NDP Labour Critic Christina Gray.
Pulling out of the CPP, she stated, “would be the worst investment decision in Alberta’s history.”
That seems fair. It also seems like it’s still the UCP plan.
Cabinet shuffle in the offing?
It’s summertime, and there are rumours of a cabinet shuffle as early as next week. A real shuffle is arguably overdue, but any changes are likely to be minor, aptly filed under: Deck Chairs, Titanic, Shuffle. If it happens, don’t look for any of the guests at Premier Kenney’s controversial recent Sky Palace patio dinner to suffer demotions.