Investing for your future

Why Municipal Pension Plan investments are important for your pension.

Pension investments matter

The contributions you, as a plan member, and your employer make are pooled and invested over your working life. When you retire, about 75 per cent of the cost of your pension will come from these plan investments.

Investment governance

The Municipal Pension Board of Trustees oversees about $71.5 billion in the plan’s investment portfolio and focuses on the long-term sustainability of the plan. As the plan administrator, the board is responsible for the administration of the plan and the investment of the fund. This authority comes from legislation, the plan’s trust document and common law. The board has adopted a high-level investment strategy, the Statement of Investment Policies and Procedures (SIPP), which includes statements of investment beliefs and performance objectives, strategic asset mix, and investment policies for each major asset class. Trustees have a legal obligation under pension legislation and governance policies to act in the best financial interest of all plan beneficiaries and exercise a high standard of care in protecting the pension fund and its assets.

Member and employer contributions are pooled in the plan fund and the plan’s fund is pooled with other funds and invested. The plan’s investment management agent, British Columbia Investment Management Corporation (BCI), invests on behalf of the plan. BCI is one of Canada’s largest pension fund managers. Its work on behalf of the plan is guided by policies set by the board.

The board’s investment committee monitors the plan’s investments and BCI’s investment management services on behalf of the plan. The committee also makes recommendations to the board about policies and coordinates studies, such as asset allocation reviews. In 2019, the board added two non-trustees as voting members to the investment committee, both with institutional investment industry expertise. Their presence strengthens the committee’s investment knowledge and expertise to oversee plan assets in today’s complex market environment.

The board’s approach to investing

The board believes that the purpose of investing is to build on member and employer contributions to ensure there is enough money to pay current and future pensions. Recognizing that more than 420,000 members depend on the plan for retirement income and that 75 per cent of the cost of pensions comes from investment returns, the board takes its investing responsibilities very seriously.

The board’s SIPP states: “The plan’s primary investment objectives are meeting its pension obligations to the plan’s members and beneficiaries; minimizing volatility in contribution levels; and providing sustainable cost of living increases.”

As members can participate from age 18 through 108 or older, the plan has a long- term investment time horizon.

The board believes that managing investment risks is just as important as generating returns, and maintaining a well-diversified portfolio is the cornerstone of the fund’s risk management program.

The board believes that companies that take environmental, social and governance (ESG) matters into account have less risk and generate long-term value for investors compared to companies with less robust practices.

By applying these principles, the board recognizes that effective research, analysis and evaluation of ESG issues are fundamental to assessing the value and performance of an investment over the long- term.

Core principles of the investment approach

  • Pooled funds: The plan has about $74.2 billion as at December 31, 2021. The real investment effect comes when plan funds are pooled with other public sector pension plan funds, insurance funds and other government funds. Combining these assets and investing them in pooled funds creates efficiencies. In addition, BCI has access to investments that aren’t available to individual investors.
  • Diversified assets: The plan invests in a broad range of assets to cushion against lower returns in any one type of asset. By diversifying, the plan investments are more likely to reach a higher return at a lower risk level compared to a less diversified fund.
  • Long-term investing: The plan takes a long-term view of investments, so members benefit from more steady, reliable returns
  • Responsible investing and climate action: Responsible investing is central to the plan’s investment approach. The plan and BCI believe that weighing and managing environmental, social and governance risk over the long term is a cornerstone of responsible investing. This helps the board meet its goal to secure the basic pension for every member.

Ensuring the plan’s longevity

In light of the turmoil in the financial markets, the board continues to take steps to ensure the plan’s longevity. The COVID-19 pandemic occurred at a time when BCI had been preparing for a market correction for many years. As a result, the board had taken steps to adjust the pension fund’s investments to reduce risk. The plan is strong, and the board’s good governance is focused on keeping it sustainable. This long-term view ensures the security of the basic lifetime pension for every member, from long-time retirees to newly contributing active members.