CPP Investments CEO: The Canadian Model, Public vs Private and Investing for 22 Million Canadians

Hi, everyone. I'm Nicola Tangen, the CEO of the Norwegian sovereign wealth fund. And today, I'm joined by John Graham, the CEO of CPPIB, which is the Canadian pension fund, basically looking after the savings of 22,000,000 Canadians. Now, CPBIB is one of the most respected pension funds in the world, and the Canadian model has become a blueprint globally. Now, what makes John stand out is that he is a scientist first who found his way into one of the world's great financial institutions. And I'm really curious to dig in what your scientific mindset brings to investing, John. So big thank you for joining us. Well, thank you for having me. A lot to cover. Absolutely. Now, first of all, could you help us understand just what the Canadian pension plan is? Just how is it different from a fund like ours? Sure. So, CPP Investments were the third party asset manager for the Canada Pension Plan. The Canada Pension Plan is the, mandatory program that all working Canadians contribute to. So for it'd be somewhat similar, people in The US, to to to Social Security. So it's it's meant to provide a inflation protected, you know, defined benefit for for working Canadians. How big is it? Today, the fund, the CPP fund is around $800,000,000,000, but it actually is a hybrid plan. So just one of the things in I think is important to to appreciate because it really has a big influence on how we manage the money, is about thirty years ago, the Canadian government realized that the CPP, at its current contributions and benefit rates was on a path to be exhausted. And this was because it was a pay as you go program. Money comes in, immediately goes out, and demographics were changing. You know, you you had a aging population. You had people having fewer kids, people living longer. People living longer is obviously a good thing. But the plan was on a path to being exhausted. So they restructured the plan. They increased the contribution rate, modified benefits, and they created CPP investments as the money manager to invest the funds, the surplus funds that aren't immediately needed to pay out benefits. And I think what's, you know, when we started out, that plan is it was about 15% funded. So, really, it was still a pay as you go plan. And over time, our very first check was $12,000,000. So we got a check for $12,000,000, about twenty seven years ago. Today, the plan sits about 800,000,000,000, and the plan is partially funded, meaning And you are and you are independent from the Canadian government? Yeah. So How how how hard is that to protect that independence? Yeah. We're created to be independent with respect to investment decision making, but we're still accountable. We still have accountabilities because we're accountable to to all Canadians. And I think this is something that the Canadian governments recognize is important, to have both …