Without any advance notice, the government of Alberta last week fired all 10 directors on the board of its pension fund, Alberta Investment Management Corporationjolibet, along with its chief executive and three of his most senior employees. Then, this week, it announced that Stephen Harper, the former Conservative prime minister, would serve as the fund’s chairman.
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The change at AIMCo, which manages 161 billion Canadian dollars, shook the pension world.
“In my history of being in this space, it’s unique,” Keith Ambachtsheer, emeritus director of the Toronto-based International Centre for Pension Management, told me, describing the purge as “Soviet style.”
“It’s a departure certainly in the eyes of not just Canada, but the world,” he said. “I’ve talked to people from Australia to the U.K. about what’s going on. The Canadian pension model has become the global standard for how you should think about these things. Now here is a government that is kind of stepping outside those rules.”
The Canadian pension model, pioneered by the Ontario Teachers’ Pension Plan during the 1990s, is based on the principle that funds should be managed independently of both governments and unions and free of political interference. It calls for independent boards whose members are experienced in investments and finance. And to ensure that the best people manage funds, most Canadian pension plans pay fund managers salaries on the scale of those offered for similar positions at banks, private equity firms and other private sector firms.
Those high salaries sometimes draw complaints from politicians. But Mr. Ambachtsheer said that the politically independent Canadian system justified them with returns that have not only more than covered pension obligations, but have also sometimes allowed pension contributions by employees to be lowered.
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