Thread by @yomeeks

This is your daily pension announcement. The Pension War Room™️continues to act in place of a hog manure pump. AIMCO total return was 14.7% last year and ATRF returned 15.6%.

Yet these numbers tell us very little about performance.#handsoffmypension

Short time periods are unreliable, as well we need to separate out the skills of the portfolio manager from the movement of the general market. We would do this by looking at the 10-year value add above the benchmark return (think index fund). #AbLeg

The 10 year value add at ATRF is 0.8%.

The 10 year value add for AIMCO's balanced fund (mainly pensions) is 0.5%.

Most pension funds have a value add target of around 0.7% to 0.85% depending on risk. This is the information that should have been in the "business case". #AbLeg

The 4 year value add at ATRF is 0.7%.

The 4 year value add for AIMCO's balanced fund (mainly pensions) is 0.3%.

It is this "extra" tenths of a per cent that make a real difference upon billions of dollars invested over long time periods. #AbLeg #handsoffmypension

It is this "value add" that can materially reduce the costs for taxpayers and plan members in securing their retirement savings.

This is also what investment bonuses at AIMCO and every other investment manger are (primarily) based upon. #AbLeg

This year AIMCO has announced that that it has started an entirely new compensation system for executives.

"Performance-based compensation relating to investment returns is driven by value-add returns above relevant investment benchmarks, over a multi-year period....
#AbLeg

...The concept is to reward successful active management over multiple years, by exceeding returns otherwise achievable through passive investing."

Well then, what the hell were you doing in the past? #AbLeg

Regular readers of The Pension War Room™️will know that one of my major complaints is that @aimcoinvests seems to pay performance bonuses regardless of performance.

A case in point, the long term incentive program, or LTIP based on value add.

Almost every investment manager has an LTIP to reward long term good performance. Take a look at this

"Annual Performance Factors below the -2.00 floor is calculated at the floor."

This changes the 4-year performance factor from 2.3 to 5.9. #AbLeg #thedevilisinthedetails

This shields executives from feeling a full financial hit of poor performance to their bonuses. "Performance" my ass. If their is a floor their also needs to be a ceiling, and no ceiling is evident in this Annual Report. #AbLeg

I am exceedingly happy that @aimcoinvests is implementing a new compensation system. In addition to the LTIP they also has a "Special LTIP" that literally paid out a bonus on a bonus. This was (and is) not industry standard. #AbLeg

Which brings me back to MLAs who criticize Dr. Yiu for being paid $575,000 to head AHS.

But keep their yaps shut when Kevin is paid $5 million not to work. Even the AIMCO mouthpiece got $600,000 in severance.
cbc.ca/news/canada/ed…

It gets worse. We are apparently paying Kevin for years to come. Kevin's future projected payments:
2022 $2.6 million
2023 $2.0 million
2024 $1.3 million
2025 $0.2 million

All this for an investment fund that under-performed and then engaged in political chicanery.