Here’s how Canada’s big pensions can earn the word ‘public’

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Canada’s securities regulators are being told they should impose a far more rigorous disclosure regime on short-sellers that would require they provide daily updates of their short positions.

Spurred by this, I’ve previously offered some thoughts on improving disclosure requirements for institutional investors’ stock ownership. Here’s another place we should reassess disclosure rules: Canada’s major public pension funds.

We don’t know a whole lot about the public-company holdings of institutional investors, both in the private and public sectors. Those regulatory shortcomings contribute to the lack of information about the holdings of Canadian public pension funds.

With no universal regulation or requirement that applies to these funds, it’s up to them what they say about the investments they hold. Members of the plans, who participate in them as a condition of their work, have less knowledge about what their plans are investing in than the typical mutual-fund investor, who gets a full list of holdings twice a year.

All of The “Maple Eight” large pensions, of course, follow regulatory requirements in the countries where they invest – such as in the United States, for example, where they file their 13F lists of holdings. But once those rules are followed, they’re all over the place in their discretionary policies.

Three – Canada Pension Plan Investment Board, Caisse de dépôt et placement du Québec and British Columbia Investment Management Corp. – produce an annual list of investments, including real estate and most of their other private investments. All three ascribe a market value to each of their stock holdings as of year-end.

CPPIB updates its real-estate list quarterly, but like the Caisse and BCI, it does not provide any real-estate values in the disclosure. CPPIB and the Caisse provide additional valuation data on private-equity investments. The Caisse also lists mortgages of $5-million or more and details on its ownership interests in subsidiaries and joint ventures.

From there, it’s a drop-off. Once a year, Ontario Teachers’ Pension Plan lists public and private investments that exceed $200-million in value – but not lesser ones.

Teachers, Ontario Municipal Employees Retirement System and Alberta Investment Management Co. have investment departments that list a selection of large private holdings, but not typically the amount invested. But OMERS and AIMCo don’t list any of the stocks they own.

If a new private deal is big enough, like one pumping tens or even a few hundred million dollars into the purchase of a new company, a Canadian pension plan will likely issue a press release. Maybe they will disclose the amount committed, maybe not.

The federal Public Sector Pension Investment Board and Healthcare of Ontario Pension Plan provide no regular, meaningful disclosure of holdings to the public.

HOOPP spokesperson James Geuzebroek says “HOOPP is singularly focused on our mission and fiduciary duty of delivering pensions to the health care workers of Ontario, and we do not believe revealing our investment holdings and strategies beyond what is required will support that mission.”

AIMCo manages money for multiple pensions and government funds in its home province. Spokesperson Sabrina Bhangoo says AIMCo’s commitment “is to its clients, with whom it provides visibility into its holdings in both public and private asset class portfolios.” As for the public or ordinary members who might not get that information, AIMCo “regularly highlights” private investments in press releases and its annual report.

I’d argue that all Canadian public pension plans have a commitment to the public – hence the phrase, “public pensions.” But the Canadian pension industry isn’t quite wired that way.

It is, to be certain, a global success story that arguably doesn’t get enough love in its home country for being well-governed and well-funded, unlike public pensions in the United States. But part of the Canadian industry’s mindset is that the openness and transparency of the U.S. pension industry makes it subject to political meddling and other distasteful interference from the hoi-polloi.

“Can you imagine,” I was once told by a Canadian pension executive, that one of the large California public pensions “actually televises its board meetings!” Well, yes, I can – and I have rarely flummoxed a person as much as I did when I asked Mark Machin, former CEO of CPPIB, when his next board meeting was, so that I could attend.

I could not, of course. Much as I, and you, cannot figure out what the plans are regularly investing in. At the risk of opening a few scabs, it would have been nice to know how much the Caisse had invested in Celsius, and Teachers had invested in FTX, before the crypto scandals forced them to offer up some details. Or all the plans’ Russian investments. Or their investments in certain Chinese enterprises.

So here’s the proposal: The provincial and federal regulators should agree that plans with $100-billion or more in assets – these Maple Eight – should do annual disclosures similar to CPPIB, Caisse and BCI. Then all can work on placing both a book value and market value on all the investments, as the California Public Employees’ Retirement System does each year. (CalPERS also publishes an estimate of its total assets every single trading day of the year.)

That would truly put the “public” into Canada’s public pensions.