Good morning. The Alberta government’s sudden dismissal of the chief executive officer and the entire board of Alberta Investment Management Corp., its public-sector pension manager, sent shockwaves across the investment industry. More on the questions swirling around the fate of the $169-billion fund below, but first:
In the news
Japan’s Seven & i Holdings Co. Ltd. is weighing a takeover offer from a member of its founding Ito family, a white-knight bid that could thwart efforts by Canada’s Alimentation Couche-Tard Inc. to buy the 7-Eleven chain.
The psychedelic sector in Canada sees a path forward as two Canadian-incorporated companies announce progress in getting their products to market.
Nine families and foundations are making the largest philanthropic commitment to climate action in Canada’s history.
Happening today
- Domestic earnings include AtkinsRéalis Group Inc., previously known as SNC-Lavalin Group Inc. In the U.S., analysts will be watching for signs that Walt Disney Co is realizing its streaming dreams. Brookfield Corp. and Applied Materials Inc. are also up.
- Taylor Swift kicks off the Canadian leg of the Eras Tour in Toronto this week. A team of Globe journos put together a wonderful “Swiftie starter pack” for anyone just joining in on the fun, but they’ve given it a potentially controversial title: “Tay to Z.” Tay does not rhyme with zed. More shameless clickbait from the lamestream media.
Alberta Premier Danielle Smith addresses the United Conservative Party annual meeting earlier this month. Just over 91 per cent of voting members endorsed her leadership.Jeff McIntosh/The Canadian Press
In focus
Alberta’s pension surprise, and what it means for you
On a recent chilly evening in Edmonton, the CEO of AIMCo, Canada’s sixth-largest pension fund, attended a public meeting to discuss its oversight of the province’s multibillion-dollar rainy-day fund.
The next morning, the Alberta government announced that Evan Siddall, the CEO, was out – along with the fund’s 10-member board. “Those folks on the receiving end of the pink slip didn’t see it coming,” The Globe’s Alberta reporter Carrie Tait told me. “And it was a pretty big surprise to the public.”
The news sent shockwaves across Canada’s investment industry, which struggled to reconcile the mass dismissals with the $169-billion fund’s performance. In recent months, its returns were at least in line with those of industry peers, and promising signs were emerging that an ambitious three-year turnaround plan under Siddall, who took the helm in 2021, was heading in the right direction.
The fund’s performance evidently failed to impress the provincial government, which said it had been “monitoring with concern” the higher costs and expanded staff that came as part of that plan.
That concern was news to just about everybody. But set against Premier Danielle Smith’s political and economic vision for Alberta – and how the province fits into Canada’s shared fortunes – new leadership at AIMCo represents a chance to reset its priorities and direction. One question hanging over AIMCo’s future is whether the government’s “clean slate” might make it easier to align the fund with the province’s own ambitions.
First things first: So what?
In Alberta, if you’re a public-sector employee, odds are AIMCo manages your pension. What the province does to the pension’s leadership – the government has pledged to put in place a new board chair within the month – signals how and where it wants the pension to invest.
Tait said some will cheer the moves because the governing United Conservative Party has framed the fund’s leadership as “outsiders or people from Toronto coming in, flying into Alberta and then leaving.”
But if your retirement hinges on AIMCo’s fate, “you don’t want your money to become part of a political game.” That brings us to the next question.
But what if I don’t live in Alberta? It’s a dramatic story of ambition, power and betrayal that has newsgeeks like me enthralled. But in a practical sense, right here, right now, it doesn’t change much, to be honest.
In a lasting way, however, critics say the government’s mass dismissal represents an extraordinary intervention in an organization with a mandate to operate at arm’s length from the government. It’s a move that institutional investing reporter James Bradshaw told me sends “concerning signals about pension-fund independence and about government willingness to intervene if they’re not happy about what those funds are doing.”
Public-sector pension funds argue independence from political interference plays a key role in their duty to pensioners, allowing them to focus on what makes sense for them – not a particular region’s economy or infrastructure.
“Whether or not this is actual meddling, even a perception of that is potentially harmful,” Bradshaw said. “The people making investment decisions at these funds need to feel they can make tough calls without looking over their shoulders, and members who rely on the funds want to feel confident that no one is meddling in their retirement security.”
Plus: Smith’s public push to have the fund invest in the province’s oil and gas industry is partly why Canada is having a similar debate on a national scale. Business leaders across the country have pressed the provinces and Ottawa to steer more of the trillions of dollars overseen by the country’s largest pension funds into Canadian investments.
That idea has caught the attention of finance ministers across the country (please add me to your group chat, finance ministers), but it has run into major pushback from pension executives, who argue their investments must be made on behalf of the pensioner and not necessarily a country’s economy. (Again, even if those funds are located there.)
Advantage, Alberta? AIMCo is one thing. Another is Smith’s long-term ambition to extricate Alberta’s taxpayers from the Canada Pension Plan and invest that money into the province. That idea has seemingly failed to pick up steam – the province and Ottawa are likely several billions of dollars apart on how much Alberta would be entitled to claim if it withdrew from the CPP, and there could be legal roadblocks – but there are other avenues the Premier could pursue if building a treasure chest for the province alone is her goal.
Of the many funds under AIMCo’s watch is the $23.4-billion Heritage Savings Trust Fund. In June, Smith said her government would release a plan to boost its value to somewhere “between $250-billion and $400-billion by the year 2050.”
The province said the dismissals at AIMCo are unconnected with the stalled-out dream of leaving the CPP. “This has nothing to do with that, I can assure you. Nothing at all,” said Nate Horner, Alberta’s Finance Minister.
What’s next? The province has appointed Ray Gilmour, its most senior public servant, as AIMCo’s interim CEO. We should find out soon whether that appointment will be made permanent. Perhaps a more consequential development – for a pension plan that oversees a rainy-day fund the Premier expects to be worth $400-billion one day – will be the announcement of the Crown corporation’s next chair.
A stock photo demonstrates the importance of holding tiny representations of each expense as you draw up your monthly budget.NATEE MEEPIAN/iStockPhoto / Getty Images
Calling all renters
Statistics show rent prices are dropping around the country. Globe reporter Salmaan Farooqui is writing about how that drop is actually being felt by renters. Are you actually seeing lower prices in your community, or are they still much higher than your current apartment? Is moving any easier now that demand has dropped? Or are you still holding on for dear life to an apartment that you got pre-pandemic or when rental markets collapsed at the beginning of COVID-19? If you have a story to share about the current environment of renting, reach out to Sal at sfarooqui@globeandmail.com.
The outlook
On our radar and reading list
On the horizon: Canada is far from ready for the Trump-induced chaos coming our way, Andrew Coyne writes. The president-elect is a man “who likes to take inspiration from himself” and will further tie trade to national security, Rita Trichur notes.
At the concert hall: How musicians with the Kitchener-Waterloo Symphony helped rescue the orchestra from bankruptcy.
In the cart: How one parenting expert prioritizes protein when grocery shopping for her young daughters.
Morning update
Global markets were mixed as investors saw U.S. inflation numbers adding to bets on a Federal Reserve rate cut next month while the U.S. dollar continued its post-election surge. Wall Street futures and TSX futures edged higher.
Overseas, the pan-European STOXX 600 was up 0.8 per cent in morning trading. Britain’s FTSE 100 rose 0.54 per cent, Germany’s DAX gained 1.35 per cent and France’s CAC 40 advanced 1.08 per cent.
In Asia, Japan’s Nikkei closed 0.48 per cent lower, while Hong Kong’s Hang Seng slid 1.98 per cent.
The Canadian dollar traded at 71.40 U.S. cents.