Evidence of meeting #94 for Government Operations and Estimates in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was plan.
A recording is available from Parliament.
Vice-President, Policy Portfolio and Asset Liability Management, Public Sector Pension Investment Board
Exactly.
Some organizations look very favourably on these investments because they aren't required to meet with shareholders every quarter, for example, which they would have to do on the public market. Given that we have a very long-term view as far as our investment horizons go, we are a very patient investor. That very long-term outlook is an advantage for some organizations.
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
When you say real estate assets, do you mean residential buildings, shopping centres and land?
Vice-President, Policy Portfolio and Asset Liability Management, Public Sector Pension Investment Board
The real estate portfolio is extremely diversified.
Vice-President, Communications and Government Relations, Public Sector Pension Investment Board
It covers all kinds of buildings, including Canadian office buildings. We have real estate assets in 28 countries, and they run the gamut from residential and retail property to office buildings.
Conservative
Jacques Gourde Conservative Lotbinière—Chutes-de-la-Chaudière, QC
Do you deal with realtors or do you deal directly with the companies and governments in question?
Vice-President, Communications and Government Relations, Public Sector Pension Investment Board
In most cases, we deal with realtors.
Conservative
NDP
The Chair NDP Pat Martin
Merci, Jacques.
Now we welcome Judy Sgro for the Liberal Party. Welcome, Judy.
Liberal
Judy Sgro Liberal York West, ON
Thank you very much. I'm very glad to be here.
We thank you all for being here.
To Mr. Leroux first. You know we have a huge challenge when it comes to infrastructure in Canada—transit, bridges, roads, and all the things that many of our municipalities are facing. In your asset allocation strategy, how much do you allocate for infrastructure, public infrastructure in particular?
Vice-President, Policy Portfolio and Asset Liability Management, Public Sector Pension Investment Board
The target allocation for infrastructure is currently set at 13% of our portfolio, but right now the allocation is probably closer to 5%, I think, so it's really in a ramping-up phase. In terms of the allocation, it's diversified in many regions of the world. I think we do have a presence in Canada.
Vice-President, Communications and Government Relations, Public Sector Pension Investment Board
Yes, we do. I would say that when you look at our peers in Canada—whether it's us, the CPPIB, or the teachers—we are renowned around the world as some of the most sophisticated infrastructure investors, but unfortunately we don't find many assets in Canada. For all of us, we are mostly invested in infrastructure outside of Canada. We own airports in Australia, we own ports in the U.K., and we own pipelines in Norway, but we find there is a very limited supply of attractive infrastructure assets in Canada.
Liberal
Judy Sgro Liberal York West, ON
As an example, if you're going to get up to 13% in infrastructure, and I appreciate the fact that you're investing the money wisely, I hope, in many of these other countries.... We have a huge challenge here when it comes to our own infrastructure needs. How would our municipalities approach you for an investment? Through which division would they be applying for the partnership in P3s and those kinds of things in Canada? Do you get involved in those at all, whether it's a hospital being built or some other part of the infrastructure system?
Vice-President, Communications and Government Relations, Public Sector Pension Investment Board
I think we are most attracted to assets in infrastructure such as ports, airports, those types of assets.
Vice-President, Communications and Government Relations, Public Sector Pension Investment Board
Overall, we find that with those types of assets the cashflow is very predictable; they are recession proof. That's why those assets are most coveted by infrastructure investors.
Liberal
Judy Sgro Liberal York West, ON
How are the decisions made as to your investments? I'm still back on infrastructure.
Vice-President, Communications and Government Relations, Public Sector Pension Investment Board
Yes.
Liberal
Judy Sgro Liberal York West, ON
You're trying to ramp up to 13%. I'm very interested in reallocating money that's put into pensions back into our own country. You have a board of directors, I assume, that does all that analysis and then comes forth with a recommendation as to where it's a good investment for your money—our money.
Vice-President, Policy Portfolio and Asset Liability Management, Public Sector Pension Investment Board
For all of our private investments we have a dedicated team for each asset class. In the case of infrastructure, we have a team of about 20 people who are dedicated to finding the investment opportunities, whether in Canada, the United States, or in Europe.
Larger deals need to be presented to the board, where they will be accepted or.... The board needs to basically decide on the investment.
Vice-President, Policy Portfolio and Asset Liability Management, Public Sector Pension Investment Board
Yes.
Vice-President, Communications and Government Relations, Public Sector Pension Investment Board
That's right.
Liberal
Judy Sgro Liberal York West, ON
Mr. Ménard, on the unfunded liabilities of obligations from the Government of Canada, can you tell me what the amount is?
Chief Actuary, Office of the Chief Actuary, Office of the Superintendent of Financial Institutions
As stated by Kim Gowing earlier, the public service pension plan deficit as at March 31, 2011, is $4.4 billion.