Managing the future of risk for Canadian public pensions

Canada’s largest public pension funds—often called the “Maple 8”—are internationally respected for their scale, governance, and long-horizon investment models.^1,2 These eight public pensions collectively hold $2.4 trillion in assets under management (AUM) as at fiscal year end 2025. Despite global trade and policy shifts, a weakened labor market, and high interest rates, the Maple 8 are reported to be in a relatively strong financial position with most members of this unofficial group close to, at, or above 100% funding based on their latest disclosures. In fact, the Canada Pension Plan (CPP) Fund’s 2025 annual report stated that the plan is projected to remain financially sustainable over the next 75 years. Maintaining this edge requires the Maple 8 pension funds, and Canadian pensions funds hoping to emulate the group, to apply risk management strategies across their portfolios. 

 

Risks and opportunities for Canadian public pension funds

The formation and rise of the Maple 8 traces back to reforms in the late 1980s and 1990s aimed at improving the management and performance of Canada’s public pension funds.⁴ These reforms included independent governance, professional fund management, retention of top talent, diversification of investment portfolios, and a greater focus on direct investment and international opportunities. The success of these reforms have been studied by academics and the World Bank and emulated by the California Public Employees Retirement System (CalPERS).³

Today, the forces shaping these reforms have changed. We now live in an era of exponential risk, where previously unconsidered and interconnected risks compound. For Canada’s public pensions, this means navigating trade uncertainty, evolving inflation dynamics, shifting interest rate expectations, geopolitical realignments, and more frequent extreme weather events. Demographic pressures from an aging population continue to strain the balance of revenue and payouts, even with strong current funding. These conditions are now standard for risk management.  

Even within this environment, fiscal 2025 brought opportunities that translated into real returns. The latest Maple 8 disclosures show why the Maple 8 model continues to attract global attention: several funds delivered positive one-year returns and asset growth, supported by diversification, internal capabilities, and disciplined governance. For example, the Canadian Public Pension Investment Board (CPPIB) ended fiscal 2025 with $714.4B in net assets and a 9.3% net annual return, while Public Sector Pension Investment (PSP) reported a 12.6% one-year net return and $299.7B net AUM.^5,6

Based on Maple 8 annual disclosures, some of the biggest opportunities ahead include: 

• Diversifying across asset classes: public equities, private equity, private debt, credit, fixed income, and real assets 
• Expanding green investments into renewable energy and transition projects 
• Sector plays in technology, health care, logistics, and sustainable mobility 
• Global, cross-border investments 

To capture these opportunities and mitigate risks effectively, the Maple 8 and other public pension funds may need to adopt innovative strategies and leverage advanced data and tools that can support more informed investment decision-making.  

Canadian pension fund risk management: from frameworks to decision advantage

The Canadian Association of Pension Supervisory Authorities (CAPSA) advises pension managers, including the Maple 8, to create risk management frameworks that identify, evaluate, manage, and monitor material risks, and to regularly review and adapt risk frameworks to their plan’s circumstances and risk tolerance.  

The fiscal 2025 Maple 8 disclosures reinforce that risk management now increasingly means decision advantage: the ability to combine scenario analysis, liquidity planning, and cross-asset exposure into more timely and better-informed portfolio actions. 

British Columbia Investment Management Corporation (BCI)’s annual report, for example, describes actively modelling client portfolios against a range of “what-if” risk scenarios to transact across asset classes.⁷ PSP highlighted a similar risk management strategy, staying within its reference portfolio’s risk limits in fiscal year 2025 through active portfolio management and the constant evaluation of risk scenarios.⁶ The Ontario Municipal Employees Retirement System (OMERS) noted their management of exposures through currency hedging to protect returns while also navigating slower U.S. dollar growth and challenging private equity conditions.¹⁰

Pension fund administrators seeking decision advantage can use scenario modeling and pension valuation tools to inform and support their investment decision-making processes. These tools can help assess the potential impacts of different economic conditions and investment strategies on pension plans, provide continuous micro- and macro-level risk monitoring, and provide access to simultaneous valuations and customizable risk metrics like investment trigger notifications and detailed risk summaries.  

Alternative investments and private markets: still central—but valuation and benchmarks matter more

The Maple 8 have long been leaders in private markets, across private equity, infrastructure, real estate, and private credit. These markets offer long-term value but lack have limited transparency due to a lack of regular valuation data, making careful measurement essential. Fiscal 2025 disclosures show mixed results: two Maple 8 funds, Ontario Teachers’ Pension Plan (OTPP) and the Alberta Investment Management Corporation (AIMCo), underperformed against their benchmarks.^8,12 However, these benchmarks were based on public equities, in which rapid growth may not have accurately reflected the longer-term value of private markets.⁸ PSP, by contrast, revealed private markets as a differentiator through strong underwriting, portfolio governance, and liquidity management.⁶ Because private markets can lag public benchmarks when the latter rises quickly, Maple 8 executives are focusing on ensuring asset valuations are calculated and reviewed with clear oversight and controls.⁸

Canada’s public pensions can support their management of the complex and specific risks of alternative investments by incorporating private market analytics and structured finance solutions as part of a broader assessment process. These solutions include scenario analysis, stress testing, and tranche-level product analysis to support insights into exposures and potential returns, aiding an investment strategy tailored to withstand various market conditions. 

Real estate: recovery is uneven; risk has become more granular

Commercial real estate (CRE), has been a core Maple 8 holding since the late 1990s. For example, OTPP owns Cadillac Fairview, OMERS owns Oxford Properties, the Caisse de dépôt et placement du Québec (CDPQ) owns Ivanhoé Cambridge, and BCI owns QuadReal Property Group. Beyond these wholly owned, branded real estate management arms, other Maple 8 pensions have in-house CRE management groups.  

Property yields and values remain pressured by sustained remote and hybrid policies, high interest rates, and shifts in the retail and logistics.¹³ The Maple 8 pensions’ fiscal 2025 reporting suggests the CRE story is still in transition, with CRE portfolio selections and performance increasingly determined by sub-sector, financing, and geography rather than broad asset class labels. For many of the Maple 8, CRE holdings have slightly declined as a share of overall portfolios.⁷

For example, BCI reported all asset classes generated positive returns in fiscal 2025 except real estate equity, which faced continued headwinds despite modest interest rate cuts.⁷ This suggests that fair price discovery is ongoing and fundamentals remain uneven—some property types and locations are strong while others remain weak. OMERS, by contrast, noted recovery in its real estate portfolio with good office and retail performance as the industry emerged from difficult years, illustrating outcomes can diverge materially depending on portfolio composition, leasing conditions, and financing structure.¹⁰

To better manage commercial real estate investment risk, Canadian public pension funds can use CRE loan monitoring tools and underwriting tools to support frequent, scenario-driven underwriting and stress testing, especially for refinancing windows, tenant quality, cap-rate sensitivity, and local supply-demand. Given CRE illiquidity, assets must be tightly integrated with overall portfolio liquidity and macro scenarios to maintain forward-looking risk management.  

Decarbonization: from ambition to measurable execution

Fiscal 2025 Maple 8 reporting shows a shift toward measuring and report on the real-world environmental and community impacts of investments. 

OTPP’s 2025 annual report shares that the fund exceeded its interim portfolio carbon emissions intensity reduction target and aims to invest up to $70 billion in “Climate Transition Aligned” companies by 2030.⁸ HOOPP’s 2025 annual report also includes 2030 carbon reduction targets and notes underlying data gathering requirements to better track decarbonization progress. CDPQ’s 2025 results news release also reflects this increased focus on sustainable investments, referencing the rollout of a new climate strategy.¹¹

For large, diversified investors like the Maple 8 public pension funds, managing climate risk is about seeing how both physical risks and the economic transition to low-carbon systems could affect vintages. Forward-looking analytics and scenario-led design are increasingly being used to support the execution of sustainable investment strategies. 

Technology and analytics: an accelerating differentiator

Investment in AI has surged, and most Maple 8 pension funds have exposure to AI companies and AI-enabling infrastructure through broader technology holdings. But more broadly, Maple 8 executives are increasingly focused on AI and data for internal operations such as fund management, investment research, and productivity gains. 

As generative AI rapidly improves and adoption grows, AI may help pension funds do more with less. Investment in the right tools may support Maple 8’s efforts to keep pace with benchmarks. An intelligence-grade context layer and vast structured databases containing financial data on millions of rated entities may be a key factor for more consistent execution across complex portfolios. 

The Maple 8 pension fund model endures, but the risk frontier has shifted

The Maple 8 remain globally renowned for their sophisticated governance structures, scale, and internal capabilitiesm, enabling them to pursue long-term value through cycles. Recent fund reports show most delivered positive returns and continued asset growth in their latest audited periods—CPPIB (fiscal 2025), PSP (fiscal 2025), BCI (fiscal 2025 combined pension plan return), AIMCo (calendar 2025), CDPQ (calendar 2025), and large plans like HOOPP and OMERS (calendar 2025).  

But the updated disclosures also suggest that the future of risk is already here: macro uncertainty persists; private market valuations and benchmarking are more consequential; and CRE valuations remain uneven. In this setting, the competitive edge increasingly comes from integrated, forward-looking decision systems: scenario-led portfolio design, liquidity-aware private market governance, and analytics linking macro, climate, and credit dynamics across the total fund.  

Moody’s continues to see growing demand for tools and data that help institutional investors develop a 360-degree view of risk across asset classes and risk types to help public pensions respond proactively to market changes, not reactively. In an era where risks compound faster than traditional reporting cycles, the Maple 8’s continued leadership may depend on how effectively they turn data into foresight, and foresight into action. 

 

References 

• ¹ The “Maple 8” includes the Alberta Investment Management Corporation (AIMCo), the British Columbia Investment Management Corporation (BCI), la Caisse de dépôt et placement du Québec (CDPQ), the Canadian Public Pension Investment Board (CPPIB), the Ontario Municipal Employees Retirement System (OMERS), the Healthcare of Ontario Pension Plan (HOOPP), the Ontario Teacher’s Pension Plan (OTPP), and the Public Sector Pension Investment (PSP). 
• ² https://corpgov.law.harvard.edu/2022/12/08/how-peter-drucker-revolutionized-canadas-public-sector-pension-system-lessons-for-americans/ 
• ³ https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4722747 
• ⁴ https://onlinelibrary.wiley.com/doi/abs/10.1111/fmii.12133 
• ⁵ CPPIB: fiscal 2025 results release and audited annual report  [cppinvestments.com], [cppinvestments.com] 
• ⁶ PSP: fiscal 2025 annual report and results release [investpsp.com], [multivu.com], [prnewswire.com] 
• ⁷ BCI: fiscal 2025 results release and reporting portal [bci.ca], [bci.ca] 
• ⁸ OTPP: 2025 audited annual report and official results statement [otpp.com], [otpp.com]
• ⁹ HOOPP: 2025 audited annual report and official results release [hoopp.com], [markets.bu...nsider.com] 
• ¹⁰ OMERS: 2025 annual report highlights and 2025 results release [omers.com], [omers.com], [omers.com] 
• ¹¹ CDPQ: 2025 results release and reporting pages [lacaisse.com], [lacaisse.com], [lacaisse.com] 
• ¹² AIMCo: 2025 results release and annual report page [aimco.ca], [aimco.ca] 
• ¹³ https://www.gallup.com/workplace/657629/post-pandemic-workplace-experiment-continues.aspx 

 

 

This version refreshes the original Moody’s article, published in November 2024, using the latest audited annual reports available plus official results releases where the next audited report has not yet been published.