World Bank highlights Canadian pension model as ideal system for emerging countries to follow

The World Bank has published a new report, "Evolution of the Canadian Pension Model," an effort to provide information to emerging countries on how to create an efficient and sustainable retirement system.

The report provides a history of the Canadian pension model, lessons learned and the future of the model. It includes detailed case studies on the history and structure of Caisse de Depot et Placement du Quebec, Montreal, which manages C$286.5 billion ($225.9 billion) in Quebec pension and other assets; Alberta Investment Management Corp., Edmonton, which managed C$95.7 billion in assets for Alberta-based public pension and other provincial funds as of Dec. 31; the C$70.6 billion Healthcare of Ontario Pension Plan, Toronto; and OPTrust, which manages the assets of the C$19.5 billion Ontario Public Service Employees Union Pension Plan, Toronto.

The report says the success of the Canadian model can be attributed to "collaboration between diverse stakeholders." The report cites processes on how those diverse stakeholders — including the government, regulators, plan trustees, plan managers and unions — can "build and maintain trust."

Those trust-building principles, according to the report, are to align interests for each stakeholder "around the best outcomes for plan members," continuous and respectful engagement, and that "each stakeholder performs its highest and best function according to competencies."

Among the successes of the Canadian model cited in the report are independent governance, the scale of plans that often exceed C$10 billion, internal money management, significant diversification of assets, a long-term time horizon and personnel talent.

In a news release announcing the report, Jim Keohane, president and CEO of HOOPP, said: "We are strong proponents of the importance of independent governance, scale and in-house investing as well as a balance of risk management, investment success and low administrative costs. This allows us to deliver 80 cents of every pension dollar from investments while achieving a 122% fully funded status that ensures HOOPP delivers on its pension process."

The report was a collaboration between World Bank staff, the four participating Canadian pension fund entities, the government of Ontario, and Common Wealth, a Toronto-based retirement security firm.