Canada Pension Plan is a mess of "woke" nonsense

Liberals appoint managers who squander return to promote left wing ideology

Canada Pension Plan Investment Board (CPPIB) is a disgrace in my opinion. The board misrepesents the actual cost of managing the $400 billion fund by outsourcing much of its management and keeping the costs opaque to scrutiny. Fraser Institute exposed this facade not that long ago. The fund pretends it has enough money to meet pension obligations but that pretense is based on adding new members - if the fund solvency is measured based on existing members alone it comes up about $900 million short, according to actuarial reports prepared for the Fraser Institute.

Studies by the Fraser Institute support the benefits to Alberta from withdrawing from CPP and setting up an Alberta pension plan free from Ottawa’s oversight and meddling.

The CEO of CPP is paid an enormous amount to produce sub-par returns and tout them as achievement. In 2019, CEO Mark Machin was paid $5.3 million and the fund returned 8.9%.

By comparison, the Standard & Poor’s index returned 28.8% in 2019 and has widely outpaced the CPPIB’s returns in each year since.

For his $5 million compensation, the CPPIB CEO hires third party managers to manage most of the CPP fund, and keeps the actual management costs from public view unless you take the time to dig them out. In the words of a Fraser Institute report, CPPIB is not a model of efficiency.

No wonder Alberta wants out. I would as well. In a recent Twitter exchange there were many tweets from apparent leftists defending the lacklustre returns of the CPPIB as reasonable give the size of the fund. Blackrock manages about $10 trillion in assets and earns better returns than CPPIB. The Spider S&P 500 ETF (ticker SPY) is about the same size as the CPP fund and earned over 31% in 2019.

CPPIB’s poor performance reflects its embrace of ESG and left wing “woke” ideology. Current CEO John Graham says he will cut ties to companies that don’t commit to NetZero goals and take ESG seriously. This is a disgraceful statement from a fiduciary whose duty is to manage pension funds on behalf of pensioners and seek the best returns rather than promote the Liberal government talking points.

ESG is not free and every penny spent pursuing ESG goals that do not improve a business corporation’s return on invested capital comes directly from the pockets of the funds beneficiaries. Graham has no business squandering opportunity because he wants to “save the planet”. The planet is in no danger. CO2 is demonstrably harmless and NetZero if achieved would see atmospheric CO2 levels fall below the 150 ppm needed to support plant life within a few decades.

Alberta should exit Canada Pension Plan as quickly as it can. Rampant and thoughtless spending by the Trudeau government has put the Canadian economy in danger of collapse and when the chickens come home to roost and Canadian bonds can’t find buyers anywhere, the CPP will be unsustainable.