CPP Investments chief warns 'freedom to invest' key to pension fund success
The head of one of the world’s biggest pension funds has said United Kingdom retirement plans should not be told where to invest their money, as the government sets out plans to funnel more cash into unlisted assets and early-stage companies.
John Graham, chief executive of the Canada Pension Plan Investment Board, which has $576 billion in assets, told the Financial Times he was opposed to “any constraint on portfolio construction” or “any influence to invest in a specific asset class or a specific part of the market.”
His comments come as the U.K. government tries to increase returns for long-term pension savers and unlock an additional £75 billion from retirement plans for investment in high-growth businesses.
In last month’s Autumn Statement it announced it will revise guidance to the £360 billion Local Government Pension Scheme (LGPS), setting a new goal to double its allocation to private equity to 10 per cent.
The government also supported an agreement announced in July — the so-called “Mansion House” compact — between nine of the U.K.’s largest defined contribution pension providers representing more than £400 billion in assets. This committed them to allocating 5 per cent of the assets in their default funds to unlisted equities by 2030.
However, some schemes said the higher costs of investing in unlisted companies could push up their own fees and deter investors. Nest, the U.K. government-backed workplace pension fund, said it preferred proven business models to early-stage venture capital.
Huge pension funds in Canada and Australia have been held out as examples that U.K. schemes could follow to improve returns.
Graham said the key to the Canadian model has been its “governance, scale and a return-focused
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