They are known as Maple Revolutionaries, efficient and effective providers of adequate retirement income. And the successes of these Canadian pension plans is garnering attention around the globe.
Recently in Washington, American policymakers and other retirement stakeholders joined their Canadian counterparts at a conference to discuss possible solutions for the challenges facing the US retirement system and whether the Canadian approach held the answers.
On Wednesday (Nov. 22) pension experts gathered in Toronto for a session hosted by Canadian Club. The event featured the release of the report The Evolution of the Canadian Pension Model, prepared by Toronto-based Common Wealth, a firm founded in 2015 with the vision of expanding access to retirement security.
The World Bank Group worked with Canadian pension experts to produce the report, authored by Common Wealth. The report details 14 key lessons relating to the provision of adequate retirement income and identifies several success factors.
“The World Bank project is really a partnership with four Canadian pension funds, HOOPP, OPTrust, Caisse de dépôt, and AIMco, as well as the government of Ontario,” Alex Mazer, founding partner of Common Wealth, told ARIA.
“The purpose of the report, from the World Bank perspective, is to help lower-income countries improve their retirement systems, and the bank thinks that the lessons from the Canadian model will be very helpful for those countries.”
Panelists at the event were Jim Keohane, President and CEO of the Healthcare of Ontario Pension Plan (HOOPP); Hugh O’Reilly, President and CEO of OPTrust; Kim Thomassin, Executive Vice-President, Legal Affairs and Secretariat, Caisse de dépôt et placement du Québec (CDPQ); and Kevin Uebelein, CEO of AIMCo.
Keohane and O’Reilly were also at the Washington event.
“The report really looks at the evolution of these plans over the last 20 or 30 years, because they didn’t necessarily start from where they are today,” says Mazer, adding challenges for Canadian plans moving forward are also considered.
The report, he explains, is based on 25 in-depth interviews with “some of the pioneers of the Canadian model” including current and former pension fund board chairs, trustees, CEOs, pension experts and advisors, and others.
Although Canada has some of the world’s most respected and successful pension plans “this was not always the case,” states the report, explaining that as recently as the mid-80s many plans “were invested largely or entirely in domestic government bonds, were funded primarily on a pay-as-you-go basis” and “lacked independent governance.”
However, it continues, over the past three decades a Canadian model emerged which “combines independent governance, professional in-house investment management, scale, and extensive geographic and asset-class diversification.”
So, what are some of the key lessons and success factors learned from the Canadian model? According to the report, they include:

• Strong collaboration between diverse stakeholders (labour, government, business, and finance) and a sustained relationship built on trust
• Strong, independent governance
• Singularity of purpose … to run the organization like a business and focus on delivering retirement security for plan members
• Presence of strong, ethical leadership at the top and throughout the organization
• Recruitment and retention of top global talent with a competitive and performance-based compensation framework
• Critical “founding” stage of a new or reformed pension organization
• Governments creating the right regulatory environment
• Investments managed in-house rather than outsourced to third-party fund managers.

The report identifies strong, independent governance as perhaps the most important component of the Canadian model.
“Canadian pension organizations are governed to run as high-performing, arm’s-length entities that meet high standards of transparency, accountability, and ethical conduct.”
It continues that despite their successes, Canadian plans face a challenging future of lower returns and interest rates, fewer active workers supporting retirees, a “simmering pension envy” driven by the “gap between those who have a good pension and those who do not,” market upheavals and other factors.
And it says that collaboration between Canadian plans and emerging markets could present mutual benefits “enabling Canadian funds to build local knowledge and partnerships to assist them in investing in emerging economies, and it could help emerging economy stakeholders to incorporate the most relevant, practical lessons from the Canadian experience into a program for reform and continuous improvement.”
Acknowledging that there is no “universally accepted definition,” the report says the Canadian model is typically DB in nature, with specific elements, including: independent governance, scale, internal management, diversification, talent, and a long-term horizon.
“Although Canada’s most successful pension organizations tend to be in the public sector and have defined benefit plan designs, their lessons are also applicable to plans in the private sector and with defined contribution or target benefit” designs.
The authors say the report is for “those with a stake in building better pension institutions. Its primary audience is the wide range of stakeholders in emerging economies that wish to deliver retirement security in a more efficient and sustainable manner.”
They continue that the strength of the Canadian model is based not only on the size and reputation of the country’s public pension plans, it’s “also rooted in evidence” of financial growth and the ability to maintain the promise of paying retiree benefits.
“HOOPP is honoured to be recognized by the World Bank for our role in the evolution of the Canadian Pension Model. 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,” HOOPP’s Keohane is quoted saying.
“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 promise.”
OPTrust’s O’Reilly is quoted saying that in “recent years, Canada has seen some great accomplishments in pension funding and governance. As the international pension model evolves, OPTrust is happy to provide guidance on the successes we’ve had in enhancing our members’ retirement income security through full funding, an enhanced investment program, and effective administration.”

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