Pension Pulse

Freschia Gonzales of Pensions and Benefits Monitor reports  CPP ‘enhancement’ leaves workers paying more for less:  Ottawa’s latest Canada Pension Plan hike will raise contributions for an $85,000 earner by nearly 80 percent over eight years, even as active management by the Canada Pension Plan Investment Board trails its own benchmarks.  According to Matthew Lau in the Financial Post , someone earning $85,000 will face combined worker and employer CPP contributions of $9,292.90 in 2026, once the newer “CPP2” layer that began in 2024 is fully in place.   Lau calculates that as an annual CPP tax inc...

Mark Harris, Ihab Khalil, Nolan Harte, Johannes Glugla, Christy Carter, and Andrew Claerhout of BCG wrote an insightful comment on how private equity’s advantage is shifting, not shrinking: The past three years of public-market strength have made private equity an easy target. Returns from a small group of mega-cap stocks have driven public indexes sharply higher, giving investors both stronger short-term performance and full liquidity. That combination has widened the gap with private markets and renewed debate about PE’s value proposition. Long-term investors might wonder why they should stay committed to an asset class that has lagged public markets and offers less flexibility in reallocating capital. The question is not without merit. Measured on a money-weighted basis, PE has only modestly outperformed broad public benchmarks over the past five and ten years. PE marks also tend to move more slowly than public valuations, especially on the downside. That lag can make t...

James Bradshaw of the Globe and Mail reports  Dutch tax court rules Ontario pension plan wrongly claimed $346-million in tax refunds: A Dutch tax court ruled this week that Healthcare of Ontario Pension Plan wrongly claimed nearly €214-million ($346-million) of dividend tax refunds through a trading strategy designed to take advantage of the pension fund’s favourable tax status in the Netherlands. The court upheld the opinion of a tax inspector who found that in 445 transactions between 2013 and 2018, HOOPP was not the true beneficial owner of the Dutch shares that paid the dividends and so could not reclaim tax withheld against them, in a ruling published on Wednesday. The decision is a setback for HOOPP in a long-running tax dispute, launched in 2019, which also led a Dutch prosecutor to initiate a separate criminal investigation in October. The tax court’s decision would require HOOPP to repay the refunded tax as well as about €40-million ($65-million) in interest c...

A little over a month ago, James Bradshaw of the Globe and Mail reported that CPPIB’s private-equity head steps into uncertain market aiming to sharpen portfolio’s focus: It wasn’t supposed to be Caitlin Gubbels’s job to make big changes when she took charge of the $146-billion private-equity business at Canada’s largest pension fund manager. But the market for deals is changing in ways that make it impossible to stand still. In October last year, Canada Pension Plan Investment Board promoted Ms. Gubbels to global head of private equity at a moment when that industry’s deals, and the outsized returns they were known for, had largely dried up. A frenzied period of deal-making in 2020 and 2021 led to a “lack of discipline” on the part of some investors, she recalled in an interview. That frothy market soon collided with a quick rise in interest rates, which put pressure on company valuations and made it harder to recycle cash that was tied up in investments. As a result...