The Canadian model of pension investing refers to the approach pioneered by Canada's largest public pension funds — including CPP Investments, Ontario Teachers', CDPQ, and OMERS — of building internal investment teams to invest directly in private equity, infrastructure, and real assets rather than delegating capital to external fund managers. By capturing fees, building long-term expertise, and taking an active ownership role, these funds have outperformed most peers globally over multiple decades.
The Canadian model means pension funds build their own internal investment teams to invest directly in private equity, infrastructure, and real assets — bypassing external fund managers and their fees. Pioneered by Canada's largest public pension funds in the 1990s and 2000s, it has become the most influential template in institutional investing. In 2024-2025 it faced its first major stress test as direct private equity holdings were written down across the sector — but the model is being refined, not abandoned.
What Is the Canadian Model?
The Canadian model of pension investing describes an approach to institutional asset management in which a pension fund builds large internal investment teams — organized like a private equity firm or infrastructure fund — and uses them to invest directly in private companies, real assets, infrastructure, and real estate. Instead of writing a cheque to an external fund manager, the pension fund is the fund manager.
The model was not designed by committee. It emerged from a governance reform in the 1990s when several Canadian public pension plans were restructured to operate more like independent investment businesses:
- Boards were made independent of government political interference
- Internal deal teams were hired from the private sector at market-competitive compensation
- Investment mandates were broadened to include the full spectrum of asset classes
- Long time horizons were formalized — these funds have no liquidity pressure because they have long-duration liabilities and relatively young member bases
The result was a set of pension funds with the scale, independence, governance, and internal capability to compete directly with the global alternative investment industry for ownership of the same assets — at lower cost, with better information, and over longer time horizons than most GPs can sustain.
The Maple 8
The term "Maple 8" refers to Canada's eight largest public pension funds, all of which operate some version of the Canadian model:
- CPP Investments — manages the Canada Pension Plan; over $680 billion CAD
- Ontario Teachers' Pension Plan (OTPP) — covers Ontario's public school teachers; C$279 billion
- CDPQ — manages 48 Quebec depositors including the QPP; C$473 billion
- OMERS — covers Ontario municipal employees; $145 billion
- PSP Investments — Public Sector Pension Investment Board; over $280 billion CAD
- AIMCo — Alberta Investment Management Corporation; approximately $175 billion CAD
- BCI — British Columbia Investment Management Corporation; approximately $250 billion CAD
- OPTrust — Ontario Public Service Employees' Union pension; approximately $23 billion CAD
Together, the Maple 8 manage well over $1.5 trillion CAD in assets — comparable in aggregate size to the sovereign wealth funds of Abu Dhabi or Saudi Arabia.
What Direct Investing Means in Practice
The core of the Canadian model is replacing external GPs with internal capability. What does this mean operationally?
In private equity: Rather than committing $500 million to a buyout fund that charges a 2% management fee and 20% carry, a Maple 8 fund deploys that $500 million directly into portfolio companies. It identifies acquisition targets, negotiates terms, closes transactions, installs board members, works with management teams on value creation, and ultimately manages the exit — all with internal staff. Ontario Teachers' executes approximately 75% of its private equity capital through direct deals.
In infrastructure: Rather than paying a 1.5% management fee to an infrastructure fund, OMERS's infrastructure arm owns and operates airports, toll roads, utilities, and digital networks directly. OMERS Infrastructure employs asset management professionals with engineering and operations backgrounds who manage the underlying assets. CDPQ does similarly.
In real estate: Rather than allocating to REITS or commingled real estate funds, CDPQ's Ivanhoé Cambridge and OMERS's Oxford Properties own and operate commercial and residential properties globally, employing local property management teams.
The fee math: On $100 billion in alternative assets, a 1.5% management fee alone costs $1.5 billion annually. Over a decade, at the compounding values involved, internalization of investment management represents tens of billions of dollars in cost savings — before accounting for the share of profits the pension fund captures rather than paying as carry.
Why the Canadian Model Outperformed
The model has outperformed for three interconnected reasons:
Fee elimination. The savings from not paying external managers' fees and carry — both significant in private markets — compound dramatically over multi-decade investment horizons. CPP Investments has estimated that its private equity program contributed 52% of total fund returns over five years, a result partly attributable to capturing the full returns of direct ownership rather than sharing them with GPs.
Information and alignment. As a direct owner, the pension fund has more complete information about its portfolio companies and assets than a fund investor would. It can act faster, make capital allocation decisions with full portfolio visibility, and align management incentives directly with long-term ownership objectives.
Competitive positioning. Large pension funds can offer certainty and speed to sellers that external funds sometimes cannot — particularly in large infrastructure and real estate transactions where certainty of close matters. Being a known, credible direct investor opens deal flow that fund LPs do not access.
Long time horizon. Unlike a private equity fund with a 10-year life that must return capital, a pension fund has perpetual capital. It can hold assets through market cycles, invest countercyclically, and avoid the pressure to exit assets prematurely that creates return drag for fund managers.
2024-2025: The Model's First Major Stress Test
The Canadian model performed well across the 2010s — a decade of low interest rates, rising private market multiples, and strong infrastructure valuations. 2024-2025 has been more challenging:
OTPP marked down its private equity and real estate holdings by approximately C$10 billion in 2025, reflecting elevated rates pressuring both real estate cap rates and growth-stage technology valuations. In response, OTPP announced a narrowing of its direct PE focus to three sectors — financial services, technology, and services — concentrating expertise rather than maintaining broad-sector coverage.
CDPQ is two years into a deliberate plan to reduce its direct private equity concentration from 75% to 65% of its PE portfolio, shifting more capital into external GP relationships where specialized expertise is hard to replicate internally.
CPP Investments and others have similarly increased co-investment alongside GPs — a middle path between full direct investing and fund investing — allowing them to retain cost advantages while reducing the operational demands of running a fully independent deal machine.
These are strategic refinements, not retreats. The structural case for the Canadian model — scale, alignment, long horizon, fee capture — remains intact. What is being recalibrated is the degree of internal capability versus GP partnership appropriate for each sub-market.
What the Canadian Model Means Globally
The Canadian model has become the dominant reference point for institutional investor governance reform worldwide. Pension funds in Australia (Future Fund, AustralianSuper), the Netherlands (ABP, PFZW), Scandinavia, and Japan have all studied and partially adopted elements of the Canadian approach.
Sovereign wealth funds — which face similar scale and time-horizon constraints to Canadian pensions — have also adopted direct investing in infrastructure and private equity. Abu Dhabi's ADIA and Mubadala, Singapore's GIC and Temasek, and Norway's NBIM all operate significant internal direct investing programs.
The model has also drawn scrutiny from policymakers who question whether large pension funds directing capital toward international assets — rather than domestic equity markets — serves their home economies. This tension is particularly acute in Canada, where some observers argue the Maple 8's global diversification may under-serve Canadian infrastructure and business investment needs.
Sources and Further Reading
- Chronograph — The success of the Canadian model and Maple 8.
- Pensions & Investments — Canada pensions scale back direct private equity (2025 pivot coverage).
- PE Insights — Canadian pension funds pivot to partnerships as direct investing pressure mounts.
- Mergers & Inquisitions — Canadian pension funds career guide and model analysis.