Alberta Premier Danielle Smith has reignited her controversial push for an Alberta Pension Plan (APP), appointing former Prime Minister Stephen Harper as the new chair of the Alberta Investment Management Corporation (AIMCo). The appointment has raised eyebrows and sparked speculation about its political motives.
AIMCo is a government-owned investment management firm that manages funds for Alberta public sector clients.
The AIMCo Shakeup
In a surprising turn, Smith’s government recently dismissed AIMCo’s board and CEO, citing concerns about high costs and unsatisfactory returns. However, critics challenge this reasoning, pointing out that AIMCo’s recent performance exceeded benchmarks, delivering a 5.8% return compared to 3.6% from comparable index funds. AIMCo’s costs, at 0.66% of assets under management, were below the industry average, making Finance Minister Nate Horner’s claims of inefficiency questionable.
Speculation swirls that the real reason for the shakeup lies in AIMCo’s previous board’s plan to invest in a carbon-neutral economy, a strategy at odds with the government’s staunch defence of Alberta’s oil and gas industry. By replacing AIMCo’s leadership with more politically aligned figures like Harper, Smith may be positioning the organization to serve a broader political agenda.
Harper’s Role
Stephen Harper, a long-time proponent of provincial autonomy, is a natural fit for Smith’s renewed APP campaign. Harper’s past advocacy for an Alberta-controlled pension fund dates back to the 2001 “Firewall Letter,” which proposed withdrawing from the Canada Pension Plan (CPP) to establish a provincial alternative. While Harper denies any direct connection between his past stance and current role, the ideological overlap is hard to ignore.
Harper, who accepted the AIMCo chair role on a pro bono basis, has been lauded by Smith for his governance expertise. She envisions him as a key figure in achieving her ambitious goal of growing the Alberta Heritage Savings Trust Fund to $250 billion by 2050. However, unions and opposition figures see Harper’s appointment as a political maneuver to increase government control over Alberta’s $170 billion in pension assets.
The APP Strategy
Smith’s government has long considered withdrawing Alberta from the CPP, claiming the province could achieve better returns and lower costs with a standalone pension plan. Early pitches, which argued Alberta was entitled to over half of the CPP’s $500 billion in assets, faced public backlash for their unrealistic assumptions. With Harper at the helm of AIMCo, the government appears ready to repackage and reintroduce the APP concept.
Critics argue the move is part of a larger strategy to use pension funds to support Alberta’s oil and gas sector. As institutional investors increasingly divest from fossil fuels, AIMCo could act as a captive buyer, filling the gap left by other pension funds and banks. This strategy has been likened to “betting the farm” on an industry undergoing a disruptive transition.
Concerns from Unions and Albertans
Public sector unions have expressed alarm over the politicization of AIMCo under Smith’s government. Many remember the 2020 decision to transfer teacher pensions to AIMCo without their consent, which drew widespread criticism. Leaders like Gil McGowan of the Alberta Federation of Labour have called the recent changes a dangerous attempt to use workers’ retirement savings as a “political slush fund.”
The decision to appoint Harper and other politically aligned figures to AIMCo’s board has only deepened these concerns. Union leaders argue the changes undermine the corporation’s independence and jeopardize the security of 500,000 Albertans’ pensions.
Poll after poll shows that the majority of Albertans are against withdrawing from the Canada Pension Plan in favour of an Alberta-made pension plan, but Albertans’ views aren’t swaying the government’s determination to proceed with the APP.
A Risky Bet on Oil and Gas
The heart of the controversy lies in Alberta’s reliance on its oil and gas economy. Critics warn that doubling down on this sector through pension fund investments is reckless, particularly as global markets shift toward green energy. They point to examples like Norway’s sovereign wealth fund, which avoids domestic investments to hedge against economic risks tied to oil dependency.
Smith’s vision of using AIMCo to bolster Alberta’s energy sector runs counter to calls for diversification and preparation for an energy transition. The government risks undermining long-term returns and stability by redirecting pension assets into local projects that are struggling to attract private capital.
What’s Next?
As Smith awaits the federal government’s ruling on how much Alberta could withdraw from the CPP, skepticism abounds about the true goals of her APP push. Harper’s appointment has added fuel to the fire, with many seeing it as a step toward greater centralization of pension assets under government control.
Whether Smith’s renewed APP campaign will succeed remains to be seen, but the stakes are high. Alberta’s workers and retirees can only watch as their pension fund becomes a focal point in a high-stakes political and economic gamble.
