Canada pension plan faces tough test over its pension fund
Canada’s largest pension plan has warned it will face an “unprecedented” amount of scrutiny from the Canadian Securities Administrators (CSAs) and other regulators over its finances.
The Canada Pension Plan Investment Board said it will be required to disclose any potential conflicts of interest in its investments, which it said could affect the value of the investment in the case of a default.
“We are already in the process of gathering additional information, including the most recent financial statements, and are confident that we will be able to complete this review in the coming weeks,” CSAs chief executive officer Peter Gossen said in a statement.CSAs chief financial officer Richard Lefebvre said the review is designed to ensure the pension plan is compliant with Canadian securities laws and that it is transparent about its investments.
He added that the pension fund has been “fully transparent” with regulators, including releasing its accounts.
“It is important that CSAs review the fund’s assets, as the Fund will be subject to the risk of default if these assets fall into the wrong hands,” he said.
The pension fund is the largest pension provider in Canada, managing about $3.6 trillion in assets, and it has been criticized for not doing enough to ensure its pension plan employees have adequate retirement savings.
Its plans have been hit by an unprecedented wave of retirements and a number of suicides.
Last year, the pension plans annual contribution to the Canada Pension Program was $1.8 billion, which was down from $3 billion in 2015.
The fund also faces a backlog of nearly $400 billion in claims from its retirees, which could cause the fund to fail to meet its obligations, according to a CBC News report.
Gossen, however, said the fund will continue to focus on investments that will help protect Canadians from financial ruin.
“The Canada Fund has a strong record of success in supporting the retirement and economic well-being of Canadians.
It is critical that the Canada Fund invest in projects that will provide long-term security for Canadians,” he added.
In the case the fund fails, the fund could have to file for bankruptcy.