Last week, I wrote about AIMCo in the news with their alleged $4B loss. We discussed how it affects our pension and the fact that actions taken by LAPP Administration, despite advice to the contrary from AIMCo, are what protected our Plan.
Those are the nuts-and-bolts facts, but today, I’d like to talk a bit about the politics of it all. But, first, let’s correct the rumour mill: AIMCo’s loss on the failed VOLTS strategy was about $2.1B, not the $4B reported. Don’t get me wrong – that’s still an inexcusable blunder. Over TWO THOUSAND MILLION dollars of Plan members’ assets, vanished.
The important thing to consider here is that this blunder didn’t need to happen. One of the important functions of Plan Administrations and their Boards is to carefully calculate the Plan’s risk tolerance in the best interests of the Plan members. We then inform AIMCo of our determination and they go off and invest our assets. Sounds great until you consider that the failed VOLTS strategy was outside the Plans’ established risk levels. Had AIMCo adhered to the risk tolerances stated by the Plans, there would have been no VOLTS strategy and therefore no failure.
AIMCo is an “arm’s length” corporation owned by the people of Alberta. But, how “arm’s length” is it really? AIMCo’s CEO, Kevin Ubeleine is appointed (and fired) by the Lieutenant Governor in Council (LGIC) also known as the Provincial Cabinet. Cabinet is advised by the Minister of Finance.
In comes the Jason Kenney posse to take over the Government and save the Energy Industry. But the government is broke because it has relied so heavily on what is now a failing industry for its royalty revenues. What to do?
Pension funds hold a huge body of assets. LAPP alone has assets in the range of $55B. Probably a bit less now because of the COVID slump in the equities markets, but still a LOT of money’s worth.
Institutional investors like AIMCo, large banks and mutual funds are flocking AWAY from any investment in OIL & GAS. It’s an industry that can see its sunset out there on the horizon and nobody wants to get caught up in that.
So, why is AIMCo buying in? They tell us that these intermediate oil patch companies with billions in liabilities for cleanups are a good investment. So, while Canadians – and Albertans especially – are left on the hook for the costly cleanups, Alberta Pension Plans are left holding an empty bag and corporate CEOs make off with the goods when their companies go bankrupt. The goods being our invested Pension Plan assets. How arm’s length is that?
So, for those of you who have read this far down, I have a request to make. Many Unions and Union Locals have a Pension Committee. I think it is about time ATU Local 569 took the Pension challenge seriously and established such a committee of the membership.
I envision a committee of about 5 people who have an interest in how our Pension Plan works and in how the world of macro investment works, people who are willing to research the facts about our Plan and report back to the Membership 2 or 3 times a year.
If you are such a person, or know of someone who is, drop us an email and let’s see if we can get something going here.
ATU Local 569.