‘Not theirs for the taking’: Can the Canadian pension model survive a new era of politicization?
Rachel Reeves, the U.K.’s new chancellor of the exchequer, had a goal in mind when she flew to Toronto last August to meet with the heads of some of Canada’s largest pension funds.
“I want British schemes to learn lessons from the Canadian model and fire up the U.K. economy, which would deliver better returns for savers and unlock billions of pounds of investment,” Reeves told U.S. investors in New York on the first leg of her trip, according to the Financial Times.
Reeves had at least half of the equation right. The informal group of large institutional investors known as the Maple 8, which includes the Ontario Teachers’ Pension Plan and the Canada Pension Plan Investment Board, has been envied globally over the past decade-plus for their ability to earn world-class returns through a diverse blend of investment strategies. But the group’s unique achievement has been a model that shelters the funds from government influence when it comes to investment decisions.
In other words, the funds aren’t there to fire up the economy or pursue the political cause of the day — they are there to invest for their beneficiaries, full-stop.
That fundamental advantage came under pressure at home like never before in 2024, raising concerns that it’s only a matter of time before Canada’s biggest funds are forced to make concessions to government. It’s a threat pension veterans aren’t taking lightly.
“Governments need cash. They are turning over every stone to look for it, but the (pension) money is not theirs for the taking,” Mark Wiseman, the former chief executive of the CPPIB, said in a recent interview with the Financial Post. “It’s the retirement savings of millions of Canadians — no different than the monies in their bank accounts
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