The province’s top deputy minister and secretary to cabinet, Ray Gilmour, will take over as the head of Alberta Investment Management Corp.Supplied
Alberta’s government appointed a long-time provincial bureaucrat to lead its $169-billion public-sector pension fund, choosing a trusted official to steer the arm’s-length investment manager after ousting its top leaders en masse.
The province’s most senior public servant, Ray Gilmour, will lead Alberta Investment Management Corp. as interim chief executive officer. The province dismissed AIMCo’s 10-member board as well as previous CEO Evan Siddall and other senior executives on Thursday.
The provincial government said it plans to “reset the investment corporation’s focus” and to restore confidence in its leadership, citing rising costs as a trigger for the changes. It described Mr. Gilmour, who resigned as the government’s Deputy Minister of Executive Council to take the interim role at AIMCo, as a steady hand to keep the pension fund on course until a new board is in place.
The province’s sudden decision to purge the top ranks of the country’s sixth-largest pension fund stunned Canada’s pension sector. AIMCo’s mandate is 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, independently of government.
But the government’s choice of Mr. Gilmour – a veteran civil servant who has worked under several premiers – has raised questions about whether the distance that separates AIMCo from government is narrowing.
The province expects to name a new board chair within 30 days, and could make an announcement as soon as two weeks from now, after it rescinded the appointments of all of AIMCo’s board members on Thursday. Nate Horner, the province’s Minister of Finance, is AIMCo’s sole director and board chair in the meantime, but said he will not make investment decisions or receive any pay for those roles.
“Ray has been the most trusted official in the province under three premiers. I have complete confidence in his ability to get costs at AIMCo under control and restore stability to the corporation,” Mr. Horner said in a news release.
Mr. Gilmour joined Alberta’s public service in 2007 and has served in multiple deputy minister positions, including Treasury Board and Finance, Infrastructure, and Municipal Affairs. He previously worked for the City of Medicine Hat as its commissioner for corporate services and spent 15 years in the banking industry, according to his government biography. He did not return a message seeking comment.
In a separate statement, AIMCo said it “remains committed to investing on behalf of its clients and the Albertans they serve and welcomes the appointment of Ray Gilmour” to his interim role.
The Globe and Mail first reported Mr. Gilmour’s appointment on Friday.
Mr. Horner has singled out a sharp increase in AIMCo’s costs, driven by third-party management fees and expanded staffing compared with five years ago, as the central factor in its decision to clean house. He said the increased expenditures haven’t been matched by stronger investment performance.
In the meantime, Alberta's 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.JASON FRANSON/The Canadian Press
“It’s the trajectory on the costs,” Mr. Horner said Thursday. “It seemed like it needed a reset.”
AIMCo’s costs have risen, sharply by some measures. Salary, wage and benefit costs rose 71 per cent to $222-million from 2019 to 2023, as the number of employees climbed from 465 to 600, according to the province. AIMCo’s cost ratio relative to its assets rose 29 per cent to 48 basis points – meaning it spent 48 cents for every $100 of assets it manages. (100 basis points equal one percentage point).
But its overall costs and executive compensation are comparable to many of its large Canadian peers. The country’s next-largest pension fund, Ontario Municipal Employees Retirement System (OMERS), had a cost ratio of 54 basis points last year, and 60 basis points the year before. The Caisse de dépot et placement du Québec, which manages $452-billion in assets, had a ratio of 59 basis points in 2023.
Mr. Siddall made just under $4.6-million in direct compensation in 2023, plus more than $400,000 in pension benefits, other compensation, and a payout from a special award made in 2021, the year he became CEO. By comparison, OMERS CEO Blake Hutcheson, who oversees a fund with $134-billion of assets, made nearly $5.8-million in total compensation last year.
Prior to Thursday’s dismissals, Alberta’s government had not raised any special concerns about AIMCo’s costs, or directed the pension fund manager to rein them in, according to three sources with knowledge of AIMCo’s interactions with government.
Two of the sources said costs were not a point of contention when AIMCo had a budget review meeting with the province in recent weeks.
One of those sources and a fourth source with knowledge of those discussions said the province had, at times, raised subtle questions about AIMCo’s level of investment in the province. But the two sources said the pension fund manager’s board was steadfast in focusing its investment decisions on its fiduciary duty to clients.
The Globe and Mail is not naming the sources because they are not authorized to discuss internal personnel decisions.
Mr. Siddall made major changes in his three years at AIMCo, after previously serving as CEO at Canada Mortgage and Housing Corp. He arrived amid upheaval at AIMCo after it lost $2.1-billion at the start of the pandemic on trading instruments that were hit hard when markets fluctuated wildly. An internal review found that the organization had a poor approach to risk management and weak oversight. He replaced most of its executive team, revamped risk management practices and technology systems, and opened new offices in New York and Singapore.
He did not respond to requests for comment.
Mr. Horner said he dismissed Mr. Siddall and three other executives. Those were AIMCo’s chief people, culture and engagement officer, its chief legal officer and its chief of staff and managing director, according to two of the sources.
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.
Some AIMCo clients have complained about costs. The Alberta Teachers’ Retirement Fund said in a statement on Thursday that is has raised the issue “with both the Government of Alberta and with AIMCo.”
However, CUPE Alberta said in a statement on Friday that the government’s “unilateral changes to AIMCo’s board without any consultation with public sector unions representing members … shows a deep disregard for the fact that pension funds belong to Alberta workers and retirees, not the government.”
Leaders from AIMCo’s client pension plans met Friday with Alberta’s Deputy Minister of Finance, Katherine White, to discuss the changes.
It remains to be seen how the provincial government’s plans for AIMCo will dovetail with its blueprint for remaking the province’s vaunted, multibillion-dollar Heritage Savings Trust Fund.
In February, Premier Danielle Smith said the province likely had one last chance to grow its non-renewable resource revenues savings, and she would introduce a plan to grow the fund to between $250-billion and $400-billion by 2050. She reiterated this pledge last Saturday, in her keynote address to party members at the United Conservative Party’s annual general meeting.
Ms. Smith, a fierce advocate for Alberta’s oil and natural gas industry, said in June at a Calgary Chamber event she would look at using Heritage Fund assets more like a sovereign wealth fund, “to assist in de-risking projects that were finding it difficult to get financing.”
On Thursday, alongside the order dismissing AIMCo’s board, the province published an order approving “the incorporation of a Provincial corporation for the purpose of managing and investing all or a portion of Crown assets.”
With reports from David Milstead and Kelly Cryderman