Alberta Finance Minister Nate Horner delivers the 2024 budget in Edmonton, on Feb. 29.JASON FRANSON/The Canadian Press
Alberta’s government has dismissed the CEO and the entire board of Alberta Investment Management Corp., its public-sector pension manager, citing a need for “a clean slate” after a run-up in costs.
The province ousted AIMCo’s 10-member board as well as chief executive officer Evan Siddall on Thursday, and said it plans to reset the investment corporation’s focus and to restore confidence in its leadership.
The decision to replace the top leadership at AIMCo – which is Canada’s sixth-largest pension fund manager, overseeing $169-billion – is an extraordinary intervention in an organization with an independent mandate to operate at arm’s length from government.
It upends a three-year turnaround plan that had reshaped AIMCo and sought to put it on more stable footing, setting the stage for another change in direction. And the mass dismissal is sure to raise concern at Canada’s other major pension fund managers, which prize autonomy from governments as a key safeguard to allow them to make decisions solely to pay pensions for decades into the future.
AIMCo exists to manage money on behalf of 17 pension, endowment, insurance and government clients in Alberta, including the province’s $23.4-billion Heritage Savings Trust Fund.
The government will start by appointing an interim CEO within days, and a new board chair within 30 days. In the meantime, Minister of Finance Nate Horner will be AIMCo’s sole director and board chair but will not make investment decisions or receive any pay for those roles.
“All board appointments have been rescinded and a new board will be established after a permanent chair is named,” the government said in a statement Thursday.
Mr. Horner told reporters in Edmonton he relieved Mr. Siddall of his duties, and let three other unnamed executives go. He called out a sharp increase in third-party management fees, expanded staffing and higher costs at AIMCo, compared with five years ago, without boosting return on investment by a similar degree.
“It’s something we’ve been monitoring with concern for a while,” Mr. Horner said. “It was my determination it wasn’t going to change without a major reset.”
Spokespeople for AIMCo did not respond to requests for comment, and Mr. Siddall could not be reached for comment.
The government made the shakeup roughly six weeks after AIMCo announced its chief investment officer, Marlene Puffer, was departing after less than two years on the job.
AIMCo has been without a permanent board chair since January, when Mark Wiseman stepped down after a three-year turnaround. Since the start of the year, Kenneth F. Kroner has served as interim chair.
Even so, the government’s wholesale changing of the guard was sudden and unexpected. In Edmonton on Wednesday evening, Mr. Siddall and AIMCo’s chief fiduciary management officer Amit Prakash, along with senior government officials and other interested parties attended a public meeting of the standing committee on the Alberta Heritage Savings Trust Fund, the province’s multibillion-dollar rainy-day fund. There was no indication at the gathering that mass dismissals were afoot, said Court Ellingson, the opposition New Democratic Party finance critic, who was at the meeting.
Criticism over rising costs at the agency would not seem to warrant the terminations of board members that the government appointed, Mr. Ellingson said.
“We have some questions. To take such a drastic move as removing the board chair, the CEO and additional executives all in one move and walking them out of the building – it feels like it’s more than concerns over executive compensation,” he said.
At the end of June, AIMCo reported an average investment return of 8 per cent over the past four years, and 7.2 per cent over the past decade. Those returns are comparable to the rates of return earned by several other large Canadian pension funds.
But Alberta’s government said Thursday that AIMCo has missed some internal benchmarks and noted that its costs were up 29 per cent over a four-year span, while the share of funds it manages in-house fell 18 per cent.
The government’s actions are “truly shocking,” and “should be construed as a government takeover of a [$169-billion] asset pool that belongs to the people of Alberta,” said Keith Ambachtsheer, director emeritus of the International Centre for Pension Management at the University of Toronto’s Rotman School of Management, in an e-mail.
Mr. Siddall took the helm in July, 2021, after his tenure as CEO of the Canada Mortgage and Housing Corp. His entry followed a period of upheaval at AIMCo sparked by a $2.1-billion investment loss at the start of the pandemic on volatility-linked instruments, when markets gyrated wildly. An internal review into the losses found that the organization suffered from a poor approach to risk management as well as insufficient oversight.
Mr. Siddall entered with a mandate to make major changes to strengthen and modernize the pension fund manager. He changed most of its executive team, revamped risk management practices and technology systems, and opened new offices in New York and Singapore to expand its reach and expertise in global investment markets.
AIMCo was structured to be an arm’s-length investment manager but has been under increasing political pressure in recent years.
“We continue to work through, have conversations with the board, expressing our displeasure with things, or let them know where we think that they’re doing well,” Mr. Horner said on Thursday. “But sometimes you just need a clean slate.”
In 2019, then-premier Jason Kenney’s UCP government passed legislation to put the previously independent Alberta Teachers’ Association pension plan under AIMCo’s umbrella. The ATA was staunchly against the move, arguing that its own long-time manager had provided above-average returns for retirees.
As one of his first moves as CEO, Mr. Siddall agreed to give the teachers say in how their investments would be managed, defusing a major source of tension between Mr. Kenney and the province’s well-organized teachers.
Since before she became leader, current Premier Danielle Smith has pushed for Alberta to exit the Canada Pension Plan and set up its own provincial plan, with AIMCo as a possible manager. The proposal is controversial and has so far failed to gain widespread support within the province.
“This has nothing to do with that, I can assure you. Nothing at all,” Mr. Horner said.
With a report from Kelly Cryderman in Calgary.