How Pensions Made Canada Great

Pats on the back all round as the Great White North assesses a decade’s progress.

(June 13, 2013) — The Canadian economy and fiscal health overall have been bolstered by the country’s 10 largest pension funds, research has found.

The funds, dubbed “the Top 10”, provide Canadians with one of the strongest retirement income systems in the world but also contribute significantly to the national economy, a study from Boston Consulting Group (BCG) has concluded.

“Several factors have enabled their success, with a core factor being a strong governance structure that allows the funds to operate as a business in the best interests of their members,” said Kilian Berz, head of BCG Canada.

The study found that the largest funds have grown their assets by more than 100% in the eight years to the end of 2011, a period marked for most as a time of financial stress.

While some of this increase was due to employer and staff contributions, worth C$125 billion, two thirds of the growth was down to investment returns of C$240 billion.

The report found the Top 10 had invested roughly C$400 billion in Canadian enterprises, including C$100 billion in real estate, infrastructure, and private equity.

The funds have focused on “prudent investments offering attractive, risk-adjusted returns in public and private equities, infrastructure, real estate and bonds” and are a “major long-term investors in Canada”.

BCG also found the Top 10 had a broader impact on the Canadian financial sector with a C$1.5 billion payroll and ability to attract and retain top Canadian talent. The 10 directly employ 5,000 professionals in the financial sector, with a further 5,000 employed in real estate subsidiaries.

By the end of 2011, these funds managed C$714 billion, which had risen to C$775 billion just 12 months later, BCG said.

Ranked in size of assets, the Top 10 are: The Canada Pension Plan Investment Board, The Caisse de dépôt et placement du Québec, The Ontario Teachers’ Pension Plan Board, The British Columbia Investment Management Corporation, The Public Sector Pension Investment Board, The Ontario Municipal Employees’ Retirement System, The Healthcare of Ontario Pension Plan, The Alberta Investment Management Corp., The Ontario Pension Board, and The OPSEU Pension Trust.

For an in-depth interview with the outgoing CEO of The Ontario Teachers’ Pension Plan Board, see aiCIO‘s June edition, released later this month.

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