Canadian Asset Owners Seek Scale and Opportunity via Consolidation, According to New Research from CIBC Mellon Français
CIBC Mellon releases the third chapter of its "In Search of New Value" Canadian pension research
TORONTO, April 29, 2021 /CNW/ - Canadian Pension Plans have built a global reputation on a foundation of strong governance, sound leadership, advanced investment strategy, innovative organizational design and more. The emergence of Canadian pension consolidators and the move by some Canadian leaders to take on outside assets represents a new industry chapter that is likely to generate considerable discussion within and beyond Canada, according to CIBC Mellon's survey of 50 leading Canadian pension funds entitled, "In Search of New Value: How Canadian Pension Funds are Preparing for a Post-COVID-19 Environment."
The third instalment of the research, "Rise Of The Consolidators: Asset Owners As Asset Managers," explores how Canadian pension plans are seeking scale via consolidation, and in some cases transforming into asset managers who compete for external mandates. The ongoing evolution of Canadian pension plans as asset managers will bear close observation by industry participants and by global pension industry watchers – particularly given the significant disruption to markets in 2020 and into 2021.
Whether moving investment, pension or operations activities out to a larger provider, or looking to grow by consolidating in assets from outside pension entities, organizations on both sides of the consolidation equation cite the same three concerns: greater scrutiny, visibility, culture changes and technology challenges.
"The Canadian pension model has become known around the world for delivering out-sized results for stakeholders built around key factors such as independent governance, joint sponsorship by employers and employees, greater portions of in-house asset management, significant investment in talent, a long time horizon, and most recently higher portions of investment into private market assets," said Alistair Almeida, Segment Lead, Asset Owners at CIBC Mellon.
"Pension plan sponsors, pension asset managers, OCIO providers, insurers and other Canadian pension industry participants are leveraging their leading talent, advanced governance models, and investment expertise as they compete in a challenging market, seek to more efficiently access scale, and above all, work to deliver better results for their stakeholders," said Darlene Claes-Mckinnon, Executive Director at CIBC Mellon. "In addition to in-house expertise, many participants are engaging third-party experts for insights, advice, independent oversight and even hands-on participation in aspects such as governance, transformational project management, complex investment and operational strategies, and plan member services."
Download the Chapter 3 of the study at www.cibcmellon.com/insearchofnewvalue clients can also contact their CIBC Mellon relationship manager to learn more or arrange a detailed discussion of the findings.
Additional findings include:
- Currently, 24% of pension funds report that they manage assets on behalf of external organizations, while a further 16% plan to do so in the future or are at least considering such a move.
- More than half of funds (61%) point to the possibility of securing economies of scale in a merged entity as a potential benefit of consolidation. Some 44% suggest that larger funds may also be able to manage their regulatory responsibilities more effectively.
- Among those funds considering incorporating or merging other pension assets, liabilities or operations into their plan, 50% point to the need to cope with greater scrutiny and increased demands for visibility.
Methodology
The survey of 50 leading Canadian pension managers was completed in 2020. Half of respondents had between C$600m and $1.2B under management, half had more than $1.2B under management, and the average AUM in the study was $31B. Respondents were located across Canada; 26% of respondents were private plans, and 74% public.
About CIBC Mellon
CIBC Mellon is a Canadian company exclusively focused on the investment servicing needs of Canadian institutional investors and international institutional investors into Canada. Founded in 1996, CIBC Mellon is 50-50 jointly owned by The Bank of New York Mellon (BNY Mellon) and Canadian Imperial Bank of Commerce (CIBC). CIBC Mellon's investment servicing solutions for institutions and corporations are provided in close collaboration with our parent companies, and include custody, multicurrency accounting, fund administration, recordkeeping, pension services, exchange-traded fund services, securities lending services, foreign exchange processing and settlement, and treasury services. As at March 31, 2021, CIBC Mellon had more than C$2.3 trillion of assets under administration on behalf of banks, pension funds, investment funds, corporations, governments, insurance companies, foreign insurance trusts, foundations and global financial institutions whose clients invest in Canada. CIBC Mellon is part of the BNY Mellon network, which as at March 31, 2021, had US$41.7 trillion in assets under custody and / or administration. CIBC Mellon is a licensed user of the CIBC trade-mark and certain BNY Mellon trade-marks, is the corporate brand of CIBC Mellon Global Securities Services Company and CIBC Mellon Trust Company, and may be used as a generic term to refer to either or both companies.
For more information, including CIBC Mellon's latest knowledge leadership on issues relevant to institutional investors active in Canada, visit www.cibcmellon.com.
SOURCE CIBC Mellon
Media Contact: Brent Merriman, Corporate Communications, CIBC Mellon, 416-643-5065, [email protected]
Share this article