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This is your daily pension announcement, with a business case: Yeah, I was sent the business case today that the GOA allegedly used to support this massive multi billion-dollar shift of assets. #handsoffmypension #lies #ABleg #ABfin
I can't go through all of it today, but I will start with the biggest problems with this and then work my way down into the latrine of financial details. First, shout out to all of you writing letters and visiting your MLAs. #shitstorm
Some backbenchers are now openly (as they dare) questioning AIMCO's numbers and the whole strategy of dictating pension policy to jointly sponsored plans. Please, all of you keep it up! These letters and visits are turning the tide.
The business case: well anyone who turned this in for an MBA class would have failed. It has three parts:
1. a five page summary prepared by TBF
2. an 8 page business case prepared by AIMCO
3. A 33 page report from Ontario from 2012 (that actually argues against AIMCO mostly).
First, the biggest problem here is that the business case is written by AIMCo. This is the mother of all conflicts of interest. No wonder they delayed the release of this as long as they could. #scam
You can not have an organization that stands to materially benefit from a decision be the only organization to research it. Fox in the hen house. AIMCO's executive team stands to make millions of dollars more based on this decision. Kevin's pay alone could jump by $1,000,000 pa.
This one fact alone should prevent anyone from using this drivel. It should also cause the OAG to investigate. This is like inviting a vacuum cleaner salesperson into your house and asking them "do you think I need a new vacuum?"
Second, no one signed it or dated it. Business cases usually are credited with authors. This one mentions the AIMCO Team but no individual. Curious. Then, nowhere does it have a date on it. Business cases are warranted to be accurate at one point in time.
For obvious reasons, if factors change the business case needs to be changed too. I suspect that this business case was not even written until after the decision was made and announced. #fail #travisfail Somebody who has a CFA or a CA would never put their name on it.
These two reasons alone fail this analysis. So I will say it: AIMCo wrote 8 pages of meaningless, self-serving swill that is supposed to justify a decision that is going to cost teachers between $80 and $100 million per year. And they wrote it after the fact.
Then Travis has the balls to include a Ontario paper from 2012 that allegedly supports this movement of assets. I can't even.....
The paper actually outlines what should have happened here, let me save you some time: it starts with a public consultation with all the stakeholders. #handsoffmypension
Imagine the arrogance and unmitigated gaul. Yeah, we need to be like the Ontario plans who conduct a consultation.... with all the involved parties. (Bill Morneau was the (independent) fellow who both signed and dated this report.) #ineedashower #ifeeldirty
Third, the return data they provide is incomplete and misleading at best. C'mon guys this is not nuclear physics. They talk relative returns compared to benchmarks, but nowhere do they mention that AIMCO's benchmarks are so much lower.
Fourth, Treasury Board and Finance seemed to be alive to the conflict of interest so they went the extra mile: "This business case was assessed and verified by both the
department of Treasury Board and Finance, and by Peter Milburn..."
So AIMCo had there work checked over even if they should not be doing said work. Athana Mentzelopoulos is the DM resposible (she came from BC where she was DM). Peter also used to be DM of Finance in BC. Independent of each other? No. Kevin and Peter?
While Peter has proofread AIMCO's work he has not offered an opinion on it. Peter, is this level analysis sufficient for a decision that could cost taxpayers $100 million dollars each and every year? #hirebillmorneau
Fifth, they never obtained the data that they needed to make this decision. #fail For instance, I happen to know that the ATRF is executing project Whiteboard to move into the next decade. When this project is fully implemented ATRF costs will only be 0.03% higher than LAPP.
AIMco says they can save 25 basis points in costs. They can't; they can save 3 basis points. And, earn a lower return while doing so. But at least with AIMCO you never have to worry about paying performance fees....
Sixth, the real issue with this analysis is that only the paper from Ontario defines small medium and large pension funds. Small< 1 billion; large >10 billion
Remember ATRF almost $20 billion. That is large by this definition. All of the research they site is about small funds being aggregated. Which I will agree can save costs. When funds get too large there are actually dis-economies of scale.
It is actually comical that they site research that studies funds smaller than a billion amalgamating to save on costs as applicable to large funds amalgamating. Comical if it was not so stupid.
In fact Finance produced this five page summary so fast and so recently they didn't even proof read it:

"...views AIMCo has (sic) having an investment capacity..."
Look guys, it is not hard to do a risk adjusted rate of return comparing LAPP and ATRF. Someone with a CFA and in possession of the data could probably do it in three days.
Instead you give us a "business case" written by a conflicted party that reads like retail mutual fund sales literature. Taxpayers deserve better. All this to save 3 basis points of costs? You might save $4.9 million instead of $41 million.
And none of that will be saved because lower returns are pretty much statistically guaranteed. Has LAPP hit benchmark for even one quarter this year?
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