Public Canadian investment funds have robust regulatory disclosure requirements, but not our pension funds, Rachel Wasserman.Prasong Maulae/iStockPhoto / Getty Images
Rachel Wasserman is the founder of Wasserman Business Law and a fellow at the Canadian Anti-Monopoly Project and Social Capital.
When the average pensioner receives the 2026 Canada Pension Plan Investment Board’s glossy annual report, released Thursday, many won’t look closely enough to realize that it mysteriously no longer discloses a key figure: since-inception annualized value.
This figure shows how much the fund outperformed the market after costs since its inception in 2007, representing how well the pension has performed since switching to active management.
Last year, that figure, the annualized value-add since inception, was negative 0.2 per cent. The 2026 figure, had they included it, would show that since-inception annualized returns would be even worse, given by how much they missed their own self-imposed benchmark this year.
They’re not breaking any rules in removing the figure. Public Canadian investment funds have robust regulatory disclosure requirements, but not our pension funds. Other jurisdictions face the same challenge. Unlike Canada, California already has disclosure requirements and is proposing to enhance them even further.
CPPIB earned 7.8% for year on boosts from stocks, energy and infrastructure investments
The State of California mandates certain disclosure requirements for public pensions, such as investment-level disclosure for private funds, rather than just a summary of the asset class. Even though California already has enhanced disclosure requirements, a coalition of California unions is pushing for even more disclosure on these relatively opaque asset classes, including benchmarks against public securities, after controlling for risk, liquidity, and expenses.
Dubbed The Private Equity Sunshine Act, these regulatory amendments would help shed light on an industry rife with conflicts of interest and extractive investment practices. Susan Minato, co-president of UNITE HERE Local 11, one of the bill’s sponsors said these amendments ensure that “Californians have access to basic information about private equity firms that charge high fees to our public pension plans and often abuse private sector workers.”
But critics of the proposal, who have been largely successful in lobbying legislators in the hopes of killing the bill, say that the opacity of private equity is an essential element of its success and that they outperform the market. But private equity’s actual market performance is widely disputed and reported results may be too good to be true.
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One of the industry’s biggest critics, Ludovic Phalippou, Professor of Financial Economics at the Saïd Business School, Oxford University, has showed in his research that commonly reported performance measures do not reflect the actual accumulation of investor wealth. In his letter of support for the bill to the California Senate, Mr. Phalippou highlighted the need for after-fee comparisons to public market benchmarks to help evaluate whether investments “deliver value commensurate with their cost and risk.”
The California Public Employees Retirement System has a private equity allocation of approximately 17 per cent of their total portfolio, whereas CPPIB’s is even bigger: Around 22 per cent (down from 31 per cent after massive portfolio sell-offs at undisclosed discounts).
The Canadian pension model was groundbreaking for its private sector approach to investing. For example, the Ontario Teachers’ Pension Plan gained early notoriety for their private equity investment in Maple Leaf Sports and Entertainment. But many of the market conditions that enabled this success no longer hold true, so rather than growing the businesses they invest in to deliver returns, some firms have resorted to financial engineering, such as dividend recapitalizations from debt rather than profits.
There are real advantages to the Canadian pension model approach of direct investing, but with any reward comes corresponding risk. In addition to financial risk, when our pensions make bad direct investments internationally, our reputation as Canadians is compromised.
For example, after OMERS and BCI (two of the largest pension plans in Canada) overpaid for Thames Water, a U.K. wastewater company with crumbling infrastructure, they decided to limit their losses and not invest the money required to stop sewage spills and other issues. OMERS wrote off the full value of its investment in 2024 ($1.7-billion) and the utility remains in dire straits.
While there are many instances where they go fantastically right, those opportunities are becoming increasingly fewer and farther between as the private equity market matures. Canada’s pension funds are amongst the world’s largest investors in private equity. But with limited public disclosure, we don’t really know how well those investments actually perform.
Whether or not the California act passes, it is a model for essential legislation for Canadian pension beneficiaries. As many Canadians struggle to put food on the table, we’ve awarded handsome salaries and bonuses to our pension stewards, all while they’ve missed their own self-imposed benchmarks, let alone generic portfolio benchmarks, with most people left none the wiser.
Governance is at the root of these issues and disclosure is the only way to hold the proper people to account and show how great Canada’s Maple 8 public pension funds truly are.