Canadian Public Pension Plans: Putting Ideology Above Fiduciary Duty
Pension funds exist for the exclusive purpose of providing benefits to participants and beneficiaries. This being so, they have a responsibility to order their investments so as to provide the returns necessary to pay members’ pensions now and into the future. In other words, a public pension plan is a fiduciary, and as such it has a duty
to act solely and exclusively in the interests of its beneficiaries, who will one day become retirees and begin collecting their pensions. This fiduciary duty requires that the public assets be invested solely to maximize financial return.
Unfortunately, over the last decade, maximizing financial return has taken a backseat to other goals. Banks, Corporations, University Endowment Funds, and Public Pension Plans have increasingly succumbed to pressure to politicize their funds, favouring the pursuit of fashionable environmental and social goals above fiduciary ones.
In this report, InvestNow has used two public pension plans, Alberta Investment Management Corporation (AIMCo) and Ontario Teachers’ Pension Plan (OTPP),
as case studies to illustrate how Environmental, Social, and Governance (ESG) principles, and ideological concerns more generally, are being prioritized in pension plan investments, over and above returns and fiduciary duty.
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