Rachel Reeves yesterday met with the so-called ‘Maple 8’ pension funds as she urged UK schemes to learn from the Canadians.
The Chancellor held a round table of Canada’s biggest retirement fund bosses in Toronto (pictured) – launching a push for British funds to follow their example and use their pension pots to ‘fire up the UK economy’.
Canada’s top schemes, known as the Maple 8, collectively manage around £1.1tn worth of taxpayer-backed pension schemes for the likes of teachers, municipal employees and healthcare workers.
The eight schemes, among the largest pension funds in the world, have invested billions in the UK.
Investment: Canada’s Maple 8 funds collectively manage around £1.1tn worth of taxpayer-backed pension schemes for the likes of teachers, municipal employees and health workers
They include the giant Ontario Teachers Pension Plan, worth C$250billion (£143billion) and whose chief executive is Jo Taylor, and the Canada Pension Plan at C$630billion (£361billion) – run by John Graham.
They own stakes in British infrastructure including utility companies, the gas network, airports and ports as well as offices and shopping centres.
Reeves is hoping to pick up tips, such as consolidating the £360billion local government pension scheme, which is made up of 86 individual funds in England and Wales.
As a mega-fund, the scheme, which has more than six million members, would be among the top ten biggest in the world.
Reeves wants to copy the Canadians and have the retirement funds invest in listed and unlisted companies, and back big infrastructure projects.
Many of the Maple 8 are long-term investors. As Britain’s major infrastructure is open to private funds, the Canadian giants have had a chance to take a slice of the pie. And the size of the funds means they can invest in huge projects.
‘I want British schemes to learn lessons from the Canadian model and fire up the UK economy, which would deliver better returns for savers and unlock billions of pounds of investment,’ the Chancellor said.
An alignment could deliver £16billion of investment into UK infrastructure projects, according to analysts by Local Pensions Partnership Investments.
Richard J Tomlinson, its chief investment officer, believes looking at the Maple 8 is ‘a strong starting point’.
And Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said embracing that blueprint could transform the local government pension scheme into ‘an international pension giant’.
Jon Greer, head of retirement policy at Quilter, said it could also boost London’s stock market.
‘Historically, UK pension funds and insurers held a significant portion of shares listed on the London Stock Exchange – 39 per cent at the turn of the century,’ he said. ‘However, this plummeted to just 4 per cent by 2020.
‘Reeves’ vision is to reverse this trend.’ But he warned that ‘any shift in asset allocation must be executed carefully to avoid harming savers’ interests’.
Recent events showed investing in Britain’s infrastructure is a strategy that does not always pay off.
The Ontario Municipal Employees Retirement Scheme, known as OMERS, invests the pensions of government employees in its namesake Canadian province.
It hit the headlines in the UK this year when it was forced to write down its stake in embattled utility firm Thames Water, effectively saying that its investment in Britain’s largest water company is worthless.
Another Canadian pension fund – British Columbia Investment Management Corporation – has also become entangled in the fortunes of Thames Water as a major investor.
A huge 14.4 per cent of its total assets under management are based in the UK, including its stake in Britain’s gas transmission network, which it owns with Australian investment bank Macquarie.
And CPP, which is Canada’s state pension, has invested in the UK’s troubled water industry, owning 32 per cent of Anglian Water, which serves 7m customers.
Research: Chancellor Rachel Reeves held a round table of Canada’s biggest retirement fund bosses in Toronto
In CPP’s portfolio is also Associated British Ports, which owns 21 ports in the UK. However, the retirement fund is reportedly seeking to offload its 34 per cent stake.
Some 12 per cent of the UK’s largest airport, Heathrow, is owned by Caisse de depot et placement du Quebec, which has more than £14billion of assets under management in the UK.
The fund, which manages public pensions in Quebec, also has a stake in London Array, which operates a wind farm off the Kent coast.
In 2019, CPP helped take Merlin Entertainments – behind Alton Towers and Madame Tussauds – private in a £4.8billion deal.
And it is a backer of some of Britain’s biggest shopping centres such as Westfield Stratford in east London.
The jewel in the crown of Ontario Teachers’ Pension Plan’s UK holdings was Camelot, which operated the National Lottery since its launch in 1994.
It was dealt a blow when the Gambling Commission handed the licence to Allwyn Entertainment from this year.
The pension fund sold Camelot to its rival in 2022, in a deal thought to be worth around £100million.
And the scheme hit the headlines in 2022 after it emerged that it was a significant backer of the now-disgraced cryptocurrency tycoon Sam Bankman-Fried.
Among its existing British investments are Bristol and Birmingham airports, and the energy firm SSE.
Alberta Investment Management Corporation (AIMco) was behind the redevelopment of west London’s BBC Television Centre. It is also one of five owners of Porterbrook, one of the UK’s three main train leasing companies.
Healthcare of Ontario Pension Plan teamed up with the Crown Estate to develop the St James’s Gateway, a huge property deal in London.
And PSP Investments holds stakes in Forth Ports, a life sciences campus in Cambridge, and Hoxton Campus, an east London development.
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