Winnipeg Free Press - PRINT EDITION

Keep politics out of pensions, CPP investment boss warns

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TORONTO -- As Quebec politicians debate whether the province's public pension manager should intervene to protect homegrown companies, its federal counterpart says playing with politics risks undermining its primary purpose -- maximizing investment returns for millions of Canadians.

The CPP Investment Board's president said Friday there's no place for public policy in the fund manager's mandate and that its independence from both provincial and federal governments is one of its greatest strengths.

Meanwhile, moves to increase the role of Quebec's Caisse de depot, which has a mandate to help the province's economy, have grabbed attention during the province's election campaign, as politicians pledge to use it to stop foreign takeovers.

CPPIB president and chief executive Mark Wiseman said intervening in public policy could confuse the mandate of the pension fund, which invests on behalf of 18 million Canadian contributors and beneficiaries.

"It would be much more complicated if we were both a public policy body and an investment body," he said in an interview.

"For us, our job is very clear: We leave public policy to those in government and they leave investment activities to us and we've never been influenced or pushed to make investments for political purposes."

The Coalition Avenir Quebec promises to force the Caisse to invest in large Quebec businesses to help protect them from foreign takeovers.

The promise comes as Quebec hardware chain Rona (TSX:RON) fends of a hostile bid from U.S. giant Lowe's that came just days before Premier Jean Charest announced Quebec will go to the polls on Sept. 4. The provincial government has also denounced the proposal.

And Parti Québécois leader Pauline Marois proposed this week -- while standing in front of a Rona store -- to use $10 billion of Caisse money to prevent foreign takeovers.

By contrast, Wiseman said independence is "embedded in the entire structure and governance" of the fund manager, which invests the money not needed by the Canada Pension Plan to pay current benefits under the plan.

"We're not here as an arm of public policy, we have the benefit of having a very clear purpose, which is to try and maximize the risk-weighted returns in the long-run for our beneficiaries," he said.

The CPP Investment board said Friday the CPP Fund earned a return of 0.5 per cent in its latest quarter, as stock markets were battered and interest rates weakened amid concerns about the global economy.

Canada's Chief Actuary has said the fund needs to see an average of a four per cent annual real rate of return for the fund to be sustainable for the next 75 years. The fund's 10-year average rate is about 6.3 per cent.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition August 11, 2012 B6

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