March 29, 2012
Ontario's big three fishes in the public sector pension fund world have assets of more than $200 billion combined and the new budget means a fourth could be joining the list. The province plans to introduce a framework in the fall to pool the investment management functions of smaller public sector pension plans.
But is a bigger pension fund really better? They're certainly more cost-effective to manage. Large funds allow the hiring of in-house investment professionals, and can attract top talent.
The other benefits lies in access opportunity and diversification, says lawyer Mitch Frazer.
"If you look at what some our larger public sector plans are doing, like the CPPIB (Canadian Pension Plan Investment Board) or Teachers' or OMERS, they're investing in infrastructure …Teachers' owned the Leafs and associated enterprises," he said. Those aren't investments you can make with a $1 billion or smaller pension fund. They can also partner with other pension funds or financial institutions because they are recognized players, he says.
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