What the UK can learn from the Maple 8 to boost growth: Reeves meets Canada’s biggest pension funds

Rachel Reeves met with the so-called ‘Maple 8’ pension funds yesterday and urged UK funds to learn from Canadians.

The Finance Minister held a roundtable with the heads of Canada’s biggest retirement funds in Toronto (pictured), launching an effort to get British funds to follow suit and use their pension pots to “boost the UK economy”.

Canada’s largest plans, known as the Maple 8, collectively manage about £1.1 trillion in taxpayer-backed pension plans for people such as teachers, municipal employees and health-care workers.

The eight pension funds, which are among the largest in the world, have invested billions in the UK.

These include the giant C$250bn (£143bn) Ontario Teachers’ Pension Plan, whose chief executive is Jo Taylor, and the C$630bn (£361bn) Canada Pension Plan, run by John Graham.

They own stakes in British infrastructure, including utilities, the gas network, airports and ports, as well as offices and shopping centres.

Reeves is hoping to receive advice such as consolidating the £360bn local government pension scheme, which is made up of 86 individual funds in England and Wales.

As a mega-fund, the scheme, which has more than six million members, would be among the ten largest in the world.

Reeves wants to copy the Canadians and have retirement funds invest in listed and unlisted companies, and back large infrastructure projects.

Many of Maple 8’s members are long-term investors. With Britain’s major infrastructure projects open to private funding, Canadian giants have had the opportunity to grab a slice of the pie. And the size of the funds means they can invest in huge projects.

“I want British plans to learn the lessons of the Canadian model and boost the UK economy, which would deliver better returns for savers and unlock billions of pounds of investment,” the Chancellor said.

An alignment could trigger £16bn of investment in UK infrastructure projects, according to analysts at Local Pensions Partnership Investments.

Richard J Tomlinson, its chief investment officer, believes looking at Maple 8 is “a good starting point”.

And Helen Morrissey, director of retirement research at Hargreaves Lansdown, said adopting such a plan could transform the local government pension system into “an international pensions giant”.

Jon Greer, head of retirement policy at Quilter, said it could also boost the London stock market.

“Historically, UK pension funds and insurers held a significant share of shares listed on the London Stock Exchange – 39 per cent at the turn of the century,” he said. “However, this share plummeted to just 4 per cent in 2020.

Reeves’ vision is to reverse this trend, but he warned that “any changes in asset allocation must be executed carefully to avoid damaging the interests of savers.”

Recent events have shown that investing in Britain’s infrastructure is a strategy that does not always pay off.

The Ontario Municipal Employees Retirement Plan, known as OMERS, invests the pensions of government employees in the Canadian province that bears its name.

It made headlines in the UK this year when it was forced to reduce its stake in utility Thames Water, effectively saying its investment in Britain’s biggest water company is worthless.

Another Canadian pension fund, British Columbia Investment Management Corporation, has also become involved in the fortunes of Thames Water as a major investor.

A whopping 14.4 percent of its total assets under management are in the UK, including its stake in the British gas transmission network, which it owns together with Australian investment bank Macquarie.

And CPP, Canada’s state pension fund, has invested in the UK’s troubled water industry, owning 32 per cent of Anglian Water, which serves 7 million customers.

CPP’s portfolio also includes Associated British Ports, which owns 21 ports in the UK. However, the pension fund is reportedly trying to offload its 34 percent stake.

Around 12 per cent of the UK’s largest airport, Heathrow, is owned by the Caisse de depot et placement du Quebec, which has more than £14bn of assets under management in the UK.

The fund, which manages public pensions in Quebec, also has a stake in London Array, which operates a wind farm off the coast of Kent.

In 2019, CPP helped privatise Merlin Entertainments (behind Alton Towers and Madame Tussauds) in a £4.8bn deal.

It also supports some of Britain’s largest shopping centres, including Westfield Stratford in east London.

The crown jewel of the Ontario Teachers’ Pension Plan’s UK investments was Camelot, which operated the National Lottery since its launch in 1994.

It was dealt a blow when the Gambling Commission handed the license to Allwyn Entertainment starting this year.

The pension fund sold Camelot to its rival in 2022, in a deal estimated to be worth around £100m.

And the scheme made headlines in 2022 after it emerged that he was a major backer of now-disgraced cryptocurrency mogul Sam Bankman-Fried.

Its existing UK investments include Bristol and Birmingham airports and energy company SSE.

Alberta Investment Management Corporation (AIMco) was behind the redevelopment of the BBC Television Centre in west London. It is also one of the five owners of Porterbrook, one of the UK’s three main train leasing companies.

The Ontario Health Care Pension Plan has partnered with the Crown Estate to develop St James’s Gateway, a massive real estate project in London.

And PSP Investments has stakes in Forth Ports, a life sciences campus in Cambridge, and Hoxton Campus, a development in east London.