Politically Immune: CPPIB

Ashby Monk

Throughout the world, cash strapped governments have been looking to their SWFs to provide money for government stimulus packages. In the case of Argentina, the pension system was nationalized. In other countries, such as Ireland, the pension reserve fund was pushed to recapitalize banks (to the tune of some $18 billion). The list goes on.

The glowing exception comes in the form of the Canada Pension Plan Investment Board. While I wouldn’t technically call this a SWF (for reasons explained here), it is a government sponsored institution. As such, one might think that it would be vulnerable to political interference. It isn’t.

“…Canada’s governments, both federal and provincial, can’t force the CPPIB to use any of its assets – $109-billion as of Dec. 31 – to fund stimulus projects because of the arm’s-length manner in which the pension plan was set up a decade ago.”

Indeed, the CPPIB operates as a quasi-independent entity. The result: government has absolutely no influence over the investment process. In fact, if any CPPIB employees or board members are approached by government officials for any reason, they are ethically required to report it. The point? To ensure that the assets in the fund maximize the welfare of pension beneficiaries; not recapitalize banks…

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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