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{{short description|Canadian pension fund manager}}{{more citations needed|date=January 2012}}

factoids

| operating_income = | net_income = Canadian dollar>C$590.8 Billion (December 2023)HTTPS://WWW.CPPINVESTMENTS.COM>TITLE=CPP INVESTMENTS, 2023-08-11, | owner = Government of Canadaweblink}}}}The Canada Pension Plan Investment Board (CPPIB; ), operating as CPP Investments (), is a Canadian Crown corporation established by way of the 1997 Canada Pension Plan Investment Board Act to oversee and invest the funds contributed to and held by the Canada Pension Plan (CPP).CPP Investments is one of the world's largest investors in private equity, having invested over US$28.1 billion between 2010 and 2014 alone.NEWS,weblink The World's Largest Private Equity Investors Are..., Primack, Dan, November 16, 2015, Fortune, January 13, 2019, Despite being a Crown corporation, CPPIB is not considered a sovereign wealth fund because it operates at arm's length from the Government of Canada and solely manages CPP contributions paid by workers and employers, not public funds.WEB, The CPP Fund and CPP Investment Board are not Sovereign Wealth Funds,weblink Canada Pension Plan Investment Board, February 16, 2020,weblink" title="web.archive.org/web/20090617075759weblink">weblink June 17, 2009, December 10, 2007, NEWS, Smith, Brooke, Why the CPP is not an SWF,weblink February 16, 2020, Benefits Canada, Transcontinental Media G.P., December 4, 2007, JOURNAL, Gomes, Tamara, 2008, The Impact of Sovereign Wealth Funds on the International Financial System,weblink Bank of Canada, Financial System Review, 41–44, February 16, 2020, It is important to note that the CPP Investment Board and the Caisse de dépôt et placement du Québec are not included in the definition of SWFs used here because of characteristics that set them apart from SWFs as described above (e.g., they do not manage government money or, as with the Caisse, manage both public and private money), As of December 31, 2023, the CPP Investment Board manages over C$590 billion in assets under management for the Canada Pension Plan on behalf of 22 million Canadians.WEB,weblink 2023 Annual Report, November 29, 2023, CPP Investment Board, WEB, CPP Investments to Invest in Italy’s Digital Infrastructure Network,weblink 2024-03-10, CPP Investments, en-US,

History

{{See also|Canada Pension Plan#History}}The Canada Pension Plan was first established in 1966. For much of its history, the plan relied on contributions to pay benefits. By 1996, the federal government had determined that the CPP as then constituted was unsustainable.WEB, Our History,weblink CPPIB, 13 August 2012, Changes were made to the plan, gradually increasing the contribution rate to its current 9.9% and creating the CPP Investment Board.Under the direction of then Minister of Finance Paul Martin, the CPP Investment Board was created by an Act of Parliament in 1997 as an independent, but accountable, body to monitor the funds held by the Canada Pension Plan. The CPP Investment Board began its investing program in 1999, establishing the CPP Reserve Fund to hold investment earnings and CPP contributions not needed to pay current pensions.WEB, CPP Reserve Fund Grows to $91.7 Billion,weblink News Releases, CPP Investment Board, 10 January 2016, It reports quarterly to the public on its performance, has a professional board of directors to oversee the operations of the CPP reserve fund, and also to plan changes in direction. As a Crown corporation, the CPP Investment Board is accountable to Parliament and reports annually through the Minister of Finance. While accountable to Parliament, the CPP Investment Board is not controlled by the government or subject to government appointments, its employees and directors are not part of the Public Service of Canada. CPPIB is a partner of the World Economic Forum.WEB, CPP Investments,weblink live,weblink 2022-03-18, 2022-11-06, World Economic Forum, 5 October 2021, en,

Mandate

The CPP Investment Board's mandate is laid out in its founding legislation, the Canada Pension Plan Investment Board Act (S.C. 1997, c. 40). Its sole investing mandate is to achieve a "maximum rate of return, without undue risk of loss."WEB, Canada Pension Plan Investment Board — June 27, 2012,weblink Government of Canada, 13 August 2012,

Investments

The CPP Investment Board invests in private equity, public companies, and real estate. The CPPIB invests in real estate and made their first direct office investment in Seattle in 2016.NEWS, CPPIB Buys its First Seattle Office Tower,weblink October 10, 2016, Sovereign Wealth Fund Institute, Notable investments include 50% of the American pet store chain Petco,WEB, CVC, Canada's CPPIB to buy Petco for about $4.6 billion,weblink Reuters, 23 November 2015, 30 June 2017, 26 November 2015,weblink" title="web.archive.org/web/20151126181213weblink">weblink live, 50% of American luxury department store chain Neiman Marcus, 50% of Australian office tower development International Towers Sydney, 50.01% of the Ontario Highway 407 toll highway,NEWS,weblink Court clears way for SNC-Lavalin to close $3.25B sale of stake in Hwy. 407, 12 August 2019, The Hamilton Spectator, 21.5% of South Korean discount store chain Homeplus, and 19.8% of multinational media corporation Entertainment One.NEWS, Mayers, Adam, Some Canada Pension Plan investments that might surprise you,weblink April 15, 2016, Toronto Star, April 14, 2016, Other prominent investments are made in Indian companies Byju's, Delhivery, Embassy Office Parks, Eruditus, Power Grid Corporation of India, SBI Life Insurance Company etc.WEB, Top Canadian pension fund CPPIB to increase India public equity exposure,weblink 2022-03-24, Moneycontrol, 21 May 2021, en, As outlined in its Policy on Responsible Investing, first adopted in 2005, the Board considers environmental, social and governance (ESG) issues/factors from a risk/return point of view and encourages companies to adopt policies and practices that enhance long-term financial performance.WEB, 2020-07-23, CPP Investment Board reinforces ESG role with new policy,weblink 2023-08-12, Advisor's Edge, en,

Future and direction

John Graham is the current Chief Executive Officer of the CPPIB, replacing Mark Machin on February 26, 2021. Mark Machin resigned after traveling to the United Arab Emirates to receive a COVID-19 vaccine.NEWS,weblink Canada Pension Fund CEO Mark Machin Resigns After U.A.E. Vaccine Trip, Strasburg, Jenny, McNish, Jacquie, February 26, 2021, Wall Street Journal, February 26, 2021, Prior to Machin, Mark Wiseman was CEO until June 13, 2016.According to the 2013 Annual Report, about 63% of the fund's assets are now invested outside Canada, largely in the United States, Europe and Asia. In addition, the CPPIB has been broadening the scope of its investments to include emerging markets, although David Denison, CEO at the time, would not pinpoint a specific country or area. "Canada as a single market cannot accommodate the future growth of our organization," said Denison.In recent years, the CPPIB changed direction in its investment philosophy. It evolved from investing exclusively in non-marketable government bonds to passive index-fund strategies and, in 2006, to active investment strategies.WEB, Ten Years of Active Management,weblink 2023-08-12, CPP Investments, en-US,

Growth and strategy

According to the Office of the Chief Actuary of Canada, the CPP Fund needs a real rate of return of 4.0%, over the 75-year projection period in his report, to help sustain the plan at the current contribution rate.{{Citation needed|date=August 2012}}In December 2013, the Chief Actuary reaffirmed that the CPP is sustainable throughout the 75-year timeframe of his 2012 report. Over this long timeframe it is expected that there will be periods where returns are above or below this threshold.Consistent with the CPPIB's mandate to maximize investment returns without undue risk of loss, they pursue a value-added strategy that seeks to deliver returns over and above a market-based benchmark over the long term. That benchmark is called the CPP Reference Portfolio and under reasonable capital market assumptions, it can generate the long-term 4.0% real rate of return required to help sustain the CPP.The CPPIB reserve fund receives its funds from the CPP and invests them like a typical large fund manager would. The CPP reserve fund seeks to achieve at least the projected return (inflation-adjusted) needed to help sustain the CPP {{Citation needed|date=February 2007}}, a rate set at 4.0% by 2017 in the CPP actuary's report, starting from 3.2% in 2011. As indicated in its Financial Highlights for the fiscal year ended March 31, 2013, the CPP reserve fund averaged 4.2% return in the past 5 years, and a 7.4% return in the past 10 years, above the sum of projected Canadian inflation rates and the 4.0% target identified by the CPP Actuary report, or 6.3% in nominal basis, that is required for CPP contribution sustainability.The CPP total assets are projected to reach the following levels according to the 2021 actuarial report: (in assets):Actuarial Report (31st) on the Canada Pension Plan. Office of the Superintendent of Financial Institutions Canada. Accessed 16 November 2022.

• $671 billion by 2025.
• $991 billion by 2030.
• $1,959 billion by 2040.
• $3,562 billion by 2050.

The strategies used to achieve these targets are:

• Diversification. In 1997, the CPP fund was 100% invested in government bonds, but it has since diversified not only by asset class, but also internationally.
• Employing basic asset allocation theories, with diversification of investments as one of the objectives. The asset mix has evolved over the years as follows:WEB,weblink CPP Investment Board – 2008 Annual Report, www.cppib.ca, 2008-06-24,weblink" title="web.archive.org/web/20120212101739weblink">weblink 2012-02-12, dead,

{| class="wikitable"| Asset| 2008 mix| 2013 mix2018 mix CPP INVESTMENT BOARD - 2018 ANNUAL REPORT ACCESS-DATE=9 JANUARY 2021, | Public Equity| 51.8%| 32.1%| 38.8%| Fixed Income| 25.6%| 33.3%| 17.4%| Private Equity| 10.9%| 18.1%| 20.3%| Real Assets| 11.7%| 16.5%| 23.5%

• Using equity firms to assist in achieving targets for each asset class. The CPP reserve fund allocates certain amounts to various pre-qualified equity firms to be managed and used towards reaching the growth targets. For example, the CPP Investment Board hires private equity firms to help it invest in private companies, fund managers to help it invest in public equities, bond managers to assist in investing in bonds (within Canada and foreign bonds), and so forth.

Significant transactions

CPPIB, as part of a consortium, first invested US$300 million in Skype in September 2009. In May 2011 CPPIB sold its stake in Skype to Microsoft for US$1.1 Bn before debt repayment,CPPIB scoops windfall as Microsoft buys Skype for $8.5-billion. The Globe and Mail. Retrieved on 2013-07-26. or US$933 million.{{Citation needed|date=May 2015}}In 2009 CPPIB also invested in the $5.2-billion purchase of IMS Health with Texas Pacific Group and the $2.1-billion purchase of Macquarie Communications Group.In 2012 CPPIB acquired a 45% stake in ten shopping centers and two redevelopment sites from Westfield Group. CPPIB's equity investment was $1.8 billion and the total gross value of the properties was $4.8 billion.WEB,weblink CPPIB Press Release, 2017-11-16, 2017-11-16,weblink" title="web.archive.org/web/20171116083310weblink">weblink dead, In May 2015, Unibail-Rodamco revealed it had signed an agreement with the Canada Pension Plan Investment Board to sell its 46.1 percent stake in German shopping mall operator MFI AG for €394 million.WEB, James Regan,weblink Unibail sells German mall operator stake to Canada's CPPIB, Reuters, 15 May 2015, 18 May 2015, 26 May 2015,weblink" title="web.archive.org/web/20150526004818weblink">weblink live, In May 2015, the sale of a joint 70% investment with BC Partners in U.S. cable television operator Suddenlink for over US$9 Bn to Altice was also announced. The interest had been acquired in a 2012 leveraged buyout.Scott, Mark, and Emily Steel, "Altice's Deal to Buy Suddenlink May Be Prelude to Pursuit of Time Warner Cable", New York Times, May 20, 2015. Retrieved 2015-05-21.In June 2015, CPPIB announced it would acquire GE Capital's private equity lending portfolio for $12 billion.Reuters {{Webarchive|url=https://web.archive.org/web/20151010184555weblink |date=2015-10-10 }}, Canada's CPPIB to buy GE private equity lending arm for $12 billion, Reuters, 9 June 2015In October 2015, CPPIB announced plans to acquire Encana's Denver-Julesberg Basin Colorado oil and gas assets for $900 million (US).WEB, Wallace, Alicia, Encana sells Colorado assets to Broe Group partnership for $900M,weblink The Denver Post, 22 December 2017, 8 October 2015, The deal, with Denver-based partner, private equity firm The Broe Group, having a 5% share in the new Crestone Peak Resources partnership, was completed in July 2016.WEB, Canada Pension Plan Investment Board and The Broe Group Complete Acquisition of DJ Basin Oil & Gas Assets,weblink Marketwired, 22 December 2017, Broe will manage the portfolio of more than 1600 wells.WEB, Svaldi, Also, Encana Corp. completes sale of Denver-Julesburg Basin assets,weblink The Denver Post, 22 December 2017, 29 July 2016, In November 2015, CPPIB and CVC Capital Partners acquired American pet supplier Petco in a deal worth $4.6 billion.In July 2016, CPPIB and Calgary-based Wolf Midstream Inc. purchased a 50% stake in Devon Energy's Access Pipeline located in Alberta.NEWS,weblink Canada Pension Plan and Wolf Midstream invest big in Alberta pipeline, July 14, 2016, July 7, 2017, CBC News, In September 2016, CPPIB and Cinven acquired the business-to-business accommodation wholesaler Hotelbeds for a purchase price of around €1.3 billion.NEWS,weblink TUI Group to Sell Hotelbeds Group for $1.3 Billion, Bray, Chad, 28 April 2016, The New York Times, 10 July 2018, In October 2019, CPPIB announced to invest alongside KKR in acquiring stake in German Axel Springer SE. CPPIB's financial commitment will be at least €500 million.WEB,weblink Canada Pension Plan Investment Board to invest alongside KKR in acquiring stake in Axel Springer,

Performance

The performance and the market value of the CPP Fund is reported on a quarterly basis.Investments held by the CPP Fund include equities, fixed income (primarily government bonds), and inflation-sensitive assets (real estate, inflation-linked bonds and infrastructure). The CPPIB is making a major push into real estate, especially real estate in India.WEB, CPPIB Initially Commits 200 Million Toward Sharpooji Venture, Sovereign Wealth Fund Institute,weblink 1 December 2014, July 15, 2014, Historical information on the performance of assets available to the Canada Pension Plan, and financial statements of the CPP Investment Board, can be found under the Quarterly Reports and Annual Reports section of the CPPIB's website.The total growth of the CPP Reserve Fund is derived from the CPP contributions of working Canadians, and the return on investment of the contributions.WEB,weblink CPP Investment Board – Financial Highlights, www.cppib.ca, 2008-02-17,weblink" title="web.archive.org/web/20120715015603weblink">weblink 2012-07-15, dead, The portion of CPP Reserve Fund growth due to CPP contributions varies from year to year, but have shown a slight decrease in the past 3 years. The historical growth with the investment performance is tabulated as follows:{{col-begin}}{{col-break}}{| class="wikitable" style="float:left; text-align:center; font-size:100%; margin:1em;"! Date (March 31) !! Net Asset Value (CAD)¹ !! Rate of Return (annual)²| -1.1%| +10.3%| +8.5%| +15.5%| +12.9%| -0.29%| -18.6%| +14.9%| +11.9%| +6.6%PUBLISHER=VANCOUVERSUN.COM, May 17, 2013, {{col-break}}{| class="wikitable" style="float:left; text-align:center; font-size:100%; margin:1em;"! Date (March 31) !! Net Asset Value (CAD)¹ !! Rate of Return (annual)²| +16.5%PUBLISHER=CBC.CA, May 21, 2015, | +3.4%| +11.8%| +8.0%| +11.1%| +9.9%| +20.4%| +6.8%| +1.3%{{col-end}}¹Assets are as at the period end date (March 31).²Commencing in fiscal 2007, the rate of return reflects the performance of the CPP Fund which excludes the short-term cash required to pay current benefits.³Increased fund value due to worker and employer CPP contributions not needed to pay current benefits. The negative investment return amounted to $303 million CAD.WEB,weblink CPP Investment Board reports 0.29 per cent annual investment setback, The Canadian Press, 2008-05-22, {{Dead link|date=June 2019 |bot=InternetArchiveBot |fix-attempted=yes }}

Board of directors

File:João Doria meets with the Canada Pension Plan Investment Board.jpg|alt=Three men in business suits, wearing masks|thumb|João Doria, Governor of São Paulo, meets with the Canada Pension Plan Investment Board (December 2020)]]

• Heather Munroe-Blum
• Sylvia Chrominska
• Dean Connor
• William ‘Mark’ Evans
• Ashleigh Everett
• Tahira Hassan
• Chuck Magro
• John Montalbano
• Barry Perry
• Mary Phibbs
• Boon Sim
• Kathleen Taylor

Criticism

In 2009 executives of the Canada Pension Plan Investment Board took a 31.4% cut in their bonuses after questions were raised about the level of compensation at the crown corporation.CPPIB exec bonuses to be cut by about a third. Financialpost.com. Retrieved on 2013-07-26.As worldwide concern for global climate change implications increasingly call on institutional divestment from fossil fuels, CPPIB has also been criticized{{by whom|date=September 2020}} for failing to do so, both on climate groundsWEB, A Fix for the Climate Polluting Canada Pension Plan : Friends of the Earth Canada,weblink foecanada.org, June 2016, 22 December 2017, en-CA, and financial loss.WEB, How not divesting from carbon economy has already hurt your pension,weblink CBC News, 22 December 2017, en, WEB, Fillmore, Nick, Canada Pension Plan Knee-Deep In Unethical Fossil Fuel Stocks,weblink HuffPost Canada, 22 December 2017, en-CA, 14 November 2016, In May 2019, Conservative MP Tom Kmiec (Calgary Shepard) criticized the CPPIB during a meeting of the Canadian House of Commons Standing Committee on Finance for its indirect investments in two Chinese firms, Hikvision and Dahua Technology, which supply surveillance technology to the Chinese government used to repress Uyghurs in China's western Xinjiang region.NEWS, 2019-05-30, CPPIB challenged to divest from Chinese firms tied to abuses against Uyghurs, Financial Post,weblink The Canadian Press, 2020-07-02, en-CA, CPPIB CEO Mark Machin stated that the holdings are part of indices which CPPIB invests in and that those investments had been red-flagged for potential future divestment.The firm's former CEO Mark Machin resigned following a controversy surrounding his choice to receive the COVID-19 vaccine in the United Arab Emirates, whilst Canada was still struggling to acquire vaccines.NEWS, McNish, Jenny Strasburg, Summer Said and Jacquie, 2021-02-25, WSJ News Exclusive {{!, Top Pension Fund Head Beat Canada's Covid-19 Vaccine Queue by Getting a Shot in Middle East |language=en-US |work=Wall Street Journal |url=https://www.wsj.com/articles/mark-machin-head-of-canadas-biggest-pension-fund-traveled-to-middle-east-and-received-covid-vaccine-11614294557 |access-date=2022-06-15 |issn=0099-9660}}

See also

• Caisse de dépôt et placement du Québec
• Public Sector Pension Investment Board
• OMERS

References

{{reflist}}

External links

• Official website

{{Private equity and venture capital}}{{authority control}}