Clarification for Members
February 20, 2021
The Government of Alberta issued a Ministerial Order (MO) in late December 2020 establishing the terms of the investment management services relationship between ATRF and the Alberta Investment Management Corporation (AIMCo). Since then a great deal of discussion about this MO continues to take place in the media and on social media.
The complexity of the issue has led to some confusion. Our members have contacted us, sharing information they received from a variety of sources, and asked for clarification. The following information has been prepared for members in response to their questions and concerns.
Public Statements and Information Received by Members, and the Response from ATRF
- Similar agreements have long been successful in the responsible management of pensions for many Alberta public sector employees.
- There are certainly elements of the MO that are similar to those agreements used in the past by AIMCo and other pension funds. However, those prior agreements included provisions that established the pension funds’ full authority over their investment policy and the requirement for the investment manager to implement the policy. The MO does not provide ATRF that key element, and allows AIMCo the discretion to decide against implementing any aspect of the investment policy if AIMCo determines it compromises its operating model or economies of scale.
- Bill 22 required ATRF and AIMCo to reach agreement on an Investment Management Agreement (IMA) by June 30, 2020, and the Government of Alberta granted an extension to October 31, 2020 after one was requested by ATRF and AIMCo. AIMCo and ATRF continued to negotiate the IMA but were not able to reach agreement.
- ATRF and AIMCo spent several months and countless hours working towards agreement on an IMA in 2020, and ATRF believed agreement had been reached on all but a few key terms. In late November AIMCo advised ATRF in writing that it was ceasing negotiations.
- The Ministerial Order was necessary as a temporary measure to ensure ATRF’s pension plans remain appropriately managed until the IMA is developed.
- At the time the MO was issued, all ATRF assets were being managed by ATRF staff with the same skill and prudence they have demonstrated for over 80 years. The MO was not necessary, even as a temporary measure, in order to ensure that the pension plans remained appropriately managed. The IMA is required for the transfer of ATRF’s investment management to AIMCo before the end of 2021, as prescribed by the legislation.
- Once ATRF and AIMCo can agree to the terms of an investment management agreement, the Ministerial Order will no longer be in effect.
- ATRF welcomes the opportunity to resume discussions with AIMCo to resolve the outstanding items where we were unable to reach agreement. However, ATRF continues to believe that the plans are best served when the investment manager has clear accountability for implementing the investment policy and strategy established by the Board. The investment policy is developed to fund the plans’ liabilities over the long-term at a risk level that is appropriate for our sponsors and members and for plan sustainability. Every element of the investment policy contributes to that long-term goal.
- ATRF and AIMCo are encouraged to re-commit to good faith bargaining.
- ATRF staff worked diligently to fulfil their legal and fiduciary requirements to reach agreement on the terms of an IMA. This included reaching out to AIMCo and Treasury Board and Finance in November to influence AIMCo to resume negotiations as we believed an agreement was within reach. ATRF takes its commitment to its members and its corporate values very seriously, and would never negotiate in bad faith.