Update on Investment Management Transfer to AIMCo
One of the legislated requirements is that ATRF’s assets are managed in accordance with an Investment Management Agreement (IMA) between ATRF and AIMCo. The IMA is a foundational document that defines the investment management relationship between the two organizations. The legislation states that if an agreement is not put in place the Minister of Finance can impose the terms under which AIMCo manages ATRF’s assets.
Extensive negotiation between ATRF and AIMCo to establish a mutually agreeable IMA occurred throughout much of 2020. ATRF’s single focus during the negotiations was on ensuring terms were established in the IMA that protected the best interests of our plans over the long-term, and that carefully considered and addressed the variety of issues that could arise in managing the assets of our plans.
Through the course of the intensive discussions, we reached agreement with AIMCo on many important matters. However, AIMCo was not willing to agree to certain key terms that we felt appropriately protected ATRF’s role and responsibility and the interests of our plans.
On January 4, 2021, ATRF was informed that in accordance with the legislation, the Minister of Finance had issued a Ministerial Order (MO) establishing the terms and conditions of the relationship between ATRF and AIMCo. The MO will remain in force until replaced by an IMA that is the product of mutual negotiations.
This Ministerial Order does not impact member’s pension benefits. Your pension remains secure and ATRF is still managing your pension plan.
The MO includes some terms that had been sought by ATRF during the IMA negotiations. This includes general recognition that the ATRF Board continues to be responsible for establishing the Investment Policy to inform and direct how our plans’ assets are managed. However, it also includes terms that restrict the full discretion the ATRF Board currently exercises in establishing and executing on its Investment Policy. Specifically, AIMCo is not required to implement ATRF’s Investment Policy if, in the sole opinion of AIMCo, it would threaten to compromise AIMCo’s economies of scale or operational efficiencies. Such decisions by AIMCo are not subject to appeal or arbitration.
While we were not able to agree to terms of an IMA, the MO allows us to move forward with the significant work that will go into the next steps of the transition process. The ATRF Board is proud of the work done by ATRF staff with AIMCo to ensure everything is planned and in place for a successful transition of asset management. As planned, we will begin the staged transfer of asset management to AIMCo in accordance with our legislated requirements in the coming months, and we will also keep members informed as that transition progresses.
Our primary focus in the course of this work has always been the best interests of our pension plans, and that will continue as we progress within the constraints that have been set out in the Ministerial Order.
The MO contemplates that an investment management agreement between ATRF and AIMCo will be finalized in due course and in that event the MO will no longer be in effect. In addition to ensuring the asset transition is successfully completed, we expect to resume negotiations with AIMCo in the near future and we will continue to be singularly focused on outcomes that are in the best interests of the plans in those negotiations.