Public Pension Plans and Prosperity in Canada

story_images_Canada-flagCanada’s 10 largest public pension funds contribute significantly to national prosperity and also provide Canadians with one of the strongest retirement income systems in the world, a Boston Consulting Group (BCG) study concludes.

“This study is the first of its kind covering a group of financial institutions whose daily activities have an enormous impact on the retirement prospects of current and future generations of Canadians, and on the economy at large,” says Kilian Berz, senior partner and head of BCG Canada.

The funds have focused on prudent investments offering attractive, risk-adjusted returns in public and private equities, infrastructure, real estate and bonds. And they are “major long-term investors in Canada,” with more than $400 billion invested across various asset classes in the country.

BCG also says the funds have a broader impact on the Canadian financial sector with a $1.5 billion payroll and ability to attract and retain top Canadian talent.

Among the key findings:

  • The top 10 pension funds are healthy, growing, and increasingly important to Canada as it faces challenging demographics and economics
  • They have created a centre of excellence in Canada for managers of quality, large-scale investments
  • They manage about 35% of Canada’s retirement assets
  • Their net assets grew by more than 100% between 2003 and 2011
  • They have invested roughly $400 billion in Canada, including $100 billion in real estate, infrastructure and private equity
  • They are strong proponents of good corporate governance practices, ultimately improving the efficiency and effectiveness of capital markets
  • They comprise four of the top 20 global commercial real estate investors
  • They also comprise four of the top 20 global investors in infrastructure assets
  • They directly employ 5,000 professionals in the Canadian financial sector and an additional 5,000 employees in their real estate subsidiaries

BCG’s study focused on the 10 largest public sector pension funds: the Canada Pension Plan Investment Board, the Caisse de dépôt et placement du Québec, Ontario Teachers’ Pension Plan, the British Columbia Investment Management Corporation, PSP Investments, the Ontario Municipal Employees Retirement System, Healthcare of Ontario Pension Plan, Alberta Investment Management Corp., the Ontario Pension Board, and OPSEU Pension Trust.

This story appeared on our sister publication, BenefitsCanada.com