The largest pension funds in Canada are among the founding members of a National Pension Hub that will match research topics with academics to search for innovative solutions to industry problems.
Members of the NPH include: Alberta Investment Management Corporation, British Columbia Investment Management Corporation, Caisse de dépôt et placement du Québec, Canada Pension Plan Investment Board, Ontario Municipal Employees Retirement System, Ontario Teachers’ Pension Plan, and Public Sector Pension Investments, plus a diverse group including McKinsey & Co, Mercer and KPMG.
Members of the NPH will have input on the topics chosen for research, along with access to the results and their industry applications.
Barbara Zvan, chair of the hub and chief risk and strategy officer at Ontario Teachers’, said topics under consideration include items related to investments, governance, pension design and regulation; for example, portfolio construction, risk in private assets, liquidity risk and leverage, retirees’ spending habits and the impact of different discount rates.
“We are looking at research that can lead to solutions,” she said. “If we look at how to think of an asset mix for a pension fund with a very long horizon, that will [involve] more than one research piece.”
The pension industry has been grappling with a number of evolving challenges over the last decade, including an ageing population, finite resources in which to invest, more complex regulations, greater market volatility, and the need to generate strong returns in a slower economy. The NPH aims to be an incubator for outcome-based research that addresses these problems.
The hub will be implemented by the Global Risk Institute, which has a proven model for creating value from research, including setting milestones for delivery and governance oversight.
“GRI has the approach and processes down pat; this is one of the reasons we chose them,” Zvan explained. “They know the academic community and will act to match the topics [with] academics. That’s a big difference; this is not a call for papers.”
The 15 members of the NPH had their first meeting in November and the GRI, in consultation with the group, is now ranking the topics in terms of importance. It aims to fund projects in the first quarter of 2018.
Zvan said some of the research would be made available outside the member funds.