Canadian Funds Score High on Global Pension Transparency Benchmark
Norway’s sovereign wealth fund, Government Pension Fund Global, has topped the list of the most transparent funds according to the Global Pension Transparency Benchmark’s 2024 findings, scoring a perfect 100 out of 100.
In the four years the GPTB has been measuring transparency of global funds, the Government Pension Fund Global has improved its score by 27 points from 73 in 2020 to 100 in 2024.
Executive leadership at the Government Pension Fund Global have put transparency front and centre over the past few years and the improvements in the score reflect that dedication. [See Why transparency is strategic initiative for Norway’s SWF]
The GPTB, a collaboration between Top1000funds.com and CEM Benchmarking aimed at measuring the transparency of disclosures across cost, governance, performance and responsible investment in a bid to improve the industry transparency, asks binary questions: does a fund disclose something, or not.
Edsart Heuberger, CEM Benchmarking’s product lead for transparency benchmarking, says the GPTB measures the completeness of the disclosure, but not necessarily the quality.
“Mind you, in our experience, the leading funds clearly have higher quality disclosures, and the Government Pension Fund Global has best-in-class reporting. Their materials are a joy to read,” he says.
“Addressing gaps in reporting isn’t always trivial. In some cases, the data needs to be sourced internally or by third parties. We understand the Government Pension Fund Global had to lobby the Ministry of Finance this year to provide more transparency on governance to achieve their new score.”
Like last year, CPP Investments was ranked second, only narrowly beaten by Government Pension Fund Global. CPP Investments, which topped the benchmark in the first and second editions, improved its score from 88 last year to 96 in 2024.
CalPERS was in third spot this year, jumping from fourth in 2023 and displacing AustralianSuper, which slipped to equal seventh.
This year the top 10 funds globally were particularly competitive, with an average score improvement of 10 points. So, while AustralianSuper scored two points higher than it did last year, it was leapfrogged by others with greater improvements.
The fourth edition of the GPTB again reveals that increased scrutiny on public disclosures is driving measurable transparency improvements. Last year, 77 per cent of the reviewed organisations improved their total transparency scores, while this year 69 per cent of funds scored higher.
In 2024, the average fund scored 63 out of 100, versus 60 last year, and 55 in 2022. The funds at the top of the rankings continue to improve the most.
This year 19 funds scored over 80, compared to nine last year, and six scored over 90. Further, nine of the top 10 most-transparent funds scored the same or higher than the most-transparent fund last year.
“For leading funds, the GPTB methodology has become a roadmap for improving transparency. These funds have addressed the gaps in their score,” Heuberger says.
But while there have been huge improvements in transparency at the top end of the fund rankings, there remains a big gap between the leaders and the laggards. The lowest-ranked fund scored only 14 overall.
“Surprisingly, we continue to see few improvements from funds that were laggards in the first edition of this benchmark,” Heuberger says.
“The laggards then are still the laggards now. The gap between the best and the laggard funds is increasing, which is unusual for most benchmarks.”
A few quick notes on this Global Pension Transparency Benchmark.
Transparency matters, pensions are all about trust so you need to disclose as much information as possible to members and key stakeholders.
Once again, Norway’s giant pension fund topped the list and I'm not surprised as they are a global leader on transparency, disclosing a lot of information.
Canada's large pension funds scored high once again, led by CPP Investments, the national pension fund which sets the standards on transparency here, but CDPQ (#4), BCI (#5) and OTPP (#7) all scored high as well and were among the top ten.
Transparency is absolutely critical when running a pension fund and to be honest, it's a work in progress because you can always improve it.
For example, there was talk that federal Finance Minister Chrystia Freeland would force all of Canada's large pension funds to disclose more sector, geographic detailed information on their investments across public and private markets.
In my opinion, this would be a good thing, it should be publicly available on their website, everyone should know detailed breakdown by asset class in every country all over the world.
There are other things you can improve on transparency but for the most part, Canada's large pension funds are extremely transparent.
I was actually surprised not to see AIMCo there this year.
On AIMCo, Sarah Rundell of Top1000funds reports chaos as politicians take control:
In a dramatic purge in a pension sector renowned for its stable governance, the government in Canada’s western province has removed the entire board of the $160 billion Alberta Investment Management Corporation (AIMCo) and sacked its CEO, citing rising costs and poor returns.
The province’s finance minister conservative Nate Horner, who has been in the position since June 2023, has been appointed the sole director and chair for AIMCo on an interim basis. Before being elected to parliament in 2019 aged in his mid-30s, Horner was a rancher with a cow-calf mix farm operation.
The abrupt departure of AIMCo’s chief investment officer Marlene Puffer earlier in September foreshadowed the most recent turmoil. Puffer joined AIMCo in 2023 from Canada’s railway pension fund CN Investment Division and was part of a new management team put in place to shore up governance at the asset manager after 2020 losses.
“Last week’s wholesale dismissal of AIMCo’s new board and senior management team is difficult to understand,” Keith Ambachtsheer, University of Toronto Rotman School of Management executive in residence and pension system luminary, told Top1000funds.com. “Was there something in the benchmarking process that triggered the Alberta government’s actions? If not, was fraud or major conflicts of interest detected? Also, what makes the government think it can improve on the high quality of the board and executive team it just fired?”
Another industry insider called the sacking “sensational” noting noone in the wider industry “saw it coming.”
“Most of the major commentators agree that this was unprecedented,” they added.
A new board chair will be appointed within 30 days, Alberta United Conservative Party premier Danielle Smith said in a statement.
Meanwhile, the ousted board included pension veterans like interim chair Ken Kroner and Jim Keohane, the former chief executive of the Healthcare of Ontario Pension Plan.
AIMCo’s chief executive officer, Evan Siddall, in the role since summer 2021, was also fired. Ray Gilmour, deputy minister of executive council, a senior public servant in Alberta, has been appointed interim CEO.
Pressure to invest more at home
One rationale for the board overhaul could be a push by policy makers to get the fund to invest more at home. Alberta’s premier Danielle Smith has made it clear she wants the pension fund to put more capital to work in Alberta.
Some stakeholders have already voiced concerns that this could mean more investment in fossil fuels.
Like Alberta Federation of Labour (AFL) president Gil McGowan who said the billions of dollars of pension assets controlled by AIMCo belong “to workers, not the government,” continuing, “workers with money in pensions need to know they are secure. They remember Danielle Smith musing about using pension funds to prop up oil and gas companies that couldn’t otherwise get financing. They remember Danielle Smith musing about setting up a sovereign wealth fund, but she hasn’t been clear where the money would come from. Albertans are jittery. Rightly so.”
The encroaching politicisation of Canada’s $4.1 trillion Canadian pension industry was front of mind at FIS Toronto earlier this year. Ambachtsheer and the former chief executive of CPP Mark Wiseman warned the founding principles that have made Canadian funds exemplars around the world are under attack.
“The Canadian model is under threat today,” Wiseman said. “When you see trillions of dollars in assets, when you see a government that is running deficits, when you see economic malaise – and we’ve seen this in other jurisdictions –this is the time when pension assets get raided. And I’ll use that term, because that is the risk that I think the Canadian model faces today.”
Wiseman warned that the issue is “much more acute than people think”.
“It will come under a different guise, it’ll be said, ‘you should invest more in Canada’, ‘you should invest more in infrastructure’, ‘we should let people have access to their capital earlier’, or whatever excuse may be the fact of the day.”
Rising costs and struggling returns
AIMCo posted an overall return of 6.9 per cent in 2023 despite challenges in its real estate portfolio. The return, though positive, fell below its benchmark return of 8.7 per cent and policy makers, including Minister Horner, cited rising costs and poor returns as a key rationale for the re-set.
According to a statement from the government, between 2019 to 2023 AIMCo’s third-party management fees increased by 96 per cent; the number of employees jumped by 29 per cent and wage and benefit costs increased by 71 per cent. AIMCo has around 600 employees spread across seven offices in Canada, London, New York and Singapore.
One reason for rising costs has been the push into alternatives. Like the growing $7 billion private credit portfolio where the organization has recently expanded its talent base with new hires in New York and a strategy to push into large cap partnerships and deal flow out of the US.
The investor has also attracted criticism in recent years from some of its member funds. AIMCo manages assets for 17 pension funds and organizations, a more complex job than overseeing one single pool of capital. Speaking at FIS Toronto earlier this year, Puffer explained the complexities of running money over 32 pools of capital and paying attention to each client individually.
“We need to make sure we’re delivering what each client actually needs. Not just at the total portfolio or total fund level,” she said.
And hot off the presses this evening, Canadian prime minister Harper is being eyed as Alberta pension chairman:
Alberta’s government has considered hiring former Canadian Prime Minister Stephen Harper to oversee its public pension fund manager, which is without a permanent board after all of its directors were fired last week, according to people familiar with the matter.
Harper’s name has been circulating as a potential chair for Alberta Investment Management Corp. for a number of months, the people said, asking not to be named discussing private matters.
The role would give Harper influence to reshape an organization managing some C$169 billion ($121 billion) of public pension and other government money and with offices from Edmonton to London and New York. The former Conservative politician governed Canada from 2006 to 2015 and lives in the western province.
Alberta Premier Danielle Smith’s government is seeking major changes at Aimco and sacked Chief Executive Officer Evan Siddall and the board last week, saying the firm’s headcount and costs have swelled even as it managed a smaller portion of funds with its own staff. Aimco has more than 200 investment professionals and more than 600 employees in total, according to publicly available information.
Finance Minister Nate Horner is temporarily acting as Aimco’s chairman and sole director, and long-serving bureaucrat Ray Gilmour is interim CEO of the firm, which invests for dozens of pensions and government accounts, including the province’s sovereign wealth fund.
“Alberta’s government will be announcing the new chair of Aimco within the next couple weeks,” Ashley Stevenson, a government spokesperson, said in an emailed statement without commenting further.
Harper now runs Harper & Associates, which provides advice to businesses in the financial services, technology and energy sectors. The firm touts access to Harper’s global network and his experience as a former Group of Seven leader, according to his website. His office did not immediately reply to requests for comment.
Aimco has been through several significant changes in recent years. The firm began a leadership overhaul after a bad bet against market volatility cost it C$2.1 billion when the pandemic roiled markets in 2020. The changes included appointing former BlackRock Inc. executive Mark Wiseman as chair later that year.
Wiseman then led the recruitment of new leadership, including Siddall as CEO. Wiseman stepped down at Aimco at the end of 2023. Chief Investment Officer Marlene Puffer left in September after less than two years in the job.
Under Siddall’s watch, Aimco’s investment team beat its benchmark in the three-year period ended Dec. 31, with its balanced fund returning 6.2% annualized, according to its annual report. The firm outperformed its benchmark in 2021 and 2022 but underperformed last year.
Aimco’s balanced fund earned a 5.6% net return in the first six months of this year.
Harper was first elected to Canada’s House of Commons in 1993, then later left politics to run a conservative organization before returning to seek the leadership of the Canadian Alliance party. That group later merged with another right-leaning party, and Harper ultimately led the Conservative Party of Canada to three straight election victories.
Siddall said on LinkedIn that he is “tying up loose ends, smelling wildflowers, reading, writing, playing guitar (badly), restoring my health and focusing on Sonia, our family and friends.” Siddall is married to Sonia Verma, a prominent Canadian journalist.
I must have missed Evan's comment on LinkedIn because I couldn't find it but on Stephen Harper, I didn't mince my words:
I have nothing against Harper but Chair of Alberta Investment Management Corporation (AIMCo)? Really? Come on! Talk about politicizing a global investment organization and having it run by government and former government bureaucrats. This is like the a horror show, going from bad to worse. AIMCo's strong governance going to hell!
Imagine, you're going from Mark Wiseman who used to run the biggest pension fund in the country to Stephen Harper who is a former prime minister of Canada and has never ran any investment fund whatsoever.
What's next? Appoint Justin Trudeau to be chair of AIMCo?
I'm being facetious as Premier Danielle Smith and most Albertans detest Trudeau but my point is simply this, let's try hard to keep politics out of our large pension funds.
The minute politicians start meddling in our pensions, those global pension rankings which score governance will see Canadian pensions go down, not up.
Pensions are for members, not governments, let's all remember that.
Below, Travis McEwan of CBC News reports on what the skakeup at AIMCo could impact Albertans.
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