Canada’s largest pension schemes have been investing in private markets for years. But are the returns as good as UK politicians would have us believe? Christopher Marchant takes a deep dive into the figures
Chancellor Rachel Reeves has been banging the drum of the ‘Maple 8’ — Canada’s largest DB pension schemes that manage around C$2 trillion of assets (£1,079bn). She has highlighted the impressive returns they
have made from investments into private markets, and would like this replicated across the UK pensions landscape.
At first glance, these investment returns do look exceptional. In 2024, the year Reeves visited Canada to learn more from these funds, the Canada Pension Plan Investment Board generated a five-year net return of 13.9 per cent from its private equities portfolio, which contributed 52 per cent of the fund’s total returns.
This prompted Reeves to comment that UK pension schemes could “learn lessons from the Canadian model and [help] fire up the UK economy.”
As the UK DC market scales towards a smaller number of larger asset owners, there are a number of lessons to be learned from these more consolidated Maple 8.
Ben Lewis, head of DC investment proposition at Mercer, says: “By pooling capital and achieving scale, the Maple 8 are able to manage a significant portion of their investments in-house, whilst accessing a broad range of private market opportunities, across direct deals, primaries, secondary transactions and co‑investments.
“That scale improves access to managers and their ability to negotiate with them and ultimately allows them to build a diversified basket of private market assets.”
Recent dip
However, when it comes to said private assets, the performances of the ‘Maple 8’ isn’t always as sweet as it may first seem. In fact, the downturn began almost as soon as Reeves landed in Canada to preach the benefits of such an approach.
In its 2025 results, Ontario Teachers’ Pension Plan recorded a drop in private equity of 5.3 per cent, its worst performance in this asset class since 2009. The Ontario Municipal Employees Retirement System also saw a 2.5 per cent fall in private equity value in 2025, equating to a net loss of $700 million.
Meanwhile AIMCo’s infrastructure portfolio returned 3.3 per cent over 2025. In contrast to these returns the S&P 500 posted returns of 17.9 per cent over 2025 – despite ongoing geopolitical volatility.
These for now short term, but nevertheless disappointing performances in private equity were representative of a more global widespread downward trend across returns in the asset class, made all the starker by the relatively good performance of equities since 2021.
In February of this year, Allianz reported that private equity was at a “critical inflection point”. While worldwide exit activity rebounded strongly in 2025, with global deal value reaching $905bn, 78 per cent was concentrated in mega exits, leaving mid-market inventory “effectively stagnant”.
For the year ending 31 Dec 2025, Caisse de dépôt et placement du Québec (CDPQ) had assets of C$517bn, after a 9.3 per cent one year return. But, according to chief executive Charles Emond, its strong yearly performance was driven by activities in public equity markets.
In 2025, CDPQ’s private equity portfolio only posted a 2.3 per cent return. According to CDPQ, this was the result of slowing earnings growth for portfolio companies and lower multiples in the technology and health care sectors. Furthermore, CDPQ says some investments “experienced a setback that weighed on performance during the year”, despite a good overall performance of companies in the industrials sector.
However, over a wider time period, CDPQ’s private equity portfolio has posted extremely strong returns, with 15.4 per cent annualised returns up to 2024.
Lesley Ann Morgan, global head of DC at Legal & General, is attuned to the wider benefits that private assets investment could offer to the UK sector: “The bigger you get, the more you can do in-house, and the more you can do in terms of co-investments, and that generally brings lower fees to members. If we only have a handful of master trusts left in the UK, inevitably, we’ll have a quite sizeable private markets sector
to manage.”
With the Pension Schemes Act now law, there will be an obligation for the UK’s DC multi-employer schemes to have a main default arrangement with at least £25bn in assets under management by 2030 — or to be at least £10bn by this date, with a credible plan to reach this ‘mega-scale’ target by 2035.
A key justification from the government for this move echoes Morgan’s position.
Pensions secretary Torsten Bell has said scale will be a boon for trustees, who are now being asked to develop additional skills and knowledge around both private market investment and sustainability.
But there are questions as to whether large scale investments into private markets might secure the same returns going forward as have been achieved in the past.
Of last year’s performance in the asset class, Justin Lord, CIO at AIMCo, says: “Despite the challenging year for private markets, these asset classes continue to offer important diversification for our clients over the long term.”
Lord makes the point that portfolio diversification is proving increasingly critical amid a more volatile geopolitical environment. In April, Bank of England deputy governor Sarah Breeden argued that global stock markets were too high relative to global risks and were likely to fall in value.
Also, at Canada’s PSP, private equity makes up 13.6 per cent of assets, and showed returns in 2025 of an impressive 16.6 per cent, bucking a trend across Maple 8 performances in the asset class for the year. This was ascribed by PSP to “the favourable economic conjuncture in the first three quarters of the fiscal year, as well as positive currency dynamics, to record robust returns.”
Thames Water
Maple 8 pension schemes often directly invest into private markets, helping reduce fees, a common issues raised by UK DC schemes when discussing diversification into these assets.
Direct management of assets requires scale and in-house capabilities, often competing for talent with large asset managers, so in the UK will typically only be accessible to larger DC arrangements.
Yet this direct approach has also led to serious mis-steps in the past. This notoriously includes the Ontario Municipal Employees Retirement System and British Columbia Investment Management Corp investing into utility Thames Water, buying direct stakes of 31.5 per cent and 8.7 per cent respectively in 2017.
Following allegations of mismanagement, financial losses and fines for improper disposal of wastewater, Thames Water has been in talks with insolvency administrators since 2025 and government re-nationalisation has also been considered.
OMERS wrote off its entire equity stake in the utility in 2024, at a loss of £990m from the investment’s peak value (UK investor USS also wrote off the entirety of its £1bn investment). At these rates, the BCI loss is estimated to be at least £200m.
There are also reputational as well as financial drawbacks to a failed investment such as this. Environmental pressure group Shift Action even went so far as to single out the BCI and OMERS investments in Thames Water as “a challenge to the reputation of some of Canada’s largest public pension funds as responsible investors with a record of due diligence, strong corporate governance and environmental oversight.”
Thames Water was not directly mentioned in the latest results for OMERS. Its fall in private equity performance was ascribed to the net result of transaction activity and net investment losses, including currency impacts (in contrast to PSP), dividend recapitalisations across several portfolio companies and various follow-on investments across the existing portfolio.
In February last year, BCI’s private equity division also opened a London office targeting investments across the European continent, showing that the Thames Water experience has not scared the pension fund off international PE deals in the future.
Real Estate
One particular asset class within private assets, commercial real estate, has in recent years very clearly underperformed uniformly across the Maple 8.
At CDPQ, chief executive Charles Emond identified areas such as US office real estate in which the pension scheme had fared poorly. In 2024, CDPQ’s real estate portfolio fell 10.8 per cent, and had only a 0.2 per cent return in 2025, with the scheme labelling the investments as “weakened by changes in working habits following the 2020 pandemic.”
Across such holdings, the Maple 8 pensions saw heavy losses in 2023, including a 5 per cent loss by the CPP Investments, and a 16 per cent loss by the Public Sector Pension Investment scheme. AIMCO’s real estate portfolio.
In PSP’s latest results, as of March 2025, real estate, which made up 8.9 per cent of total assets, achieved only a 1.8 per cent return over the last five years, and there was a huge 16 per cent loss for commercial real estate in 2023. In its 2025 results, OTPP also saw a fall of 3.1 per cent in its real estate portfolio.
Yet with the Pension Schemes Bill giving the UK government reserve power to compel pension funds to invest in domestic private assets, it is unlikely that Reeves will be disavowing the Canadian model over a year of underperformance in the sector, or of certain collapses within the asset class.
Looking more widely at the Maple 8, in its 2024 results CDPQ showed that over five years, the annualised return was 6.2 per cent, above the 5.9 per cent returns of the benchmark portfolio.
“During this period, our performance was driven by our equity market, private equity and infrastructure activities,” says Emond.
Wider PE performance
After being impacted by the high interest rate environment in 2023, the CDPQ private equity portfolio rebounded in 2024. For the one-year period, it generated a 17.2 per cent return, thanks to sustained growth in the profitability of portfolio companies, particularly in the industrials and consumer goods sectors. Its index recorded a higher return, at 20.8 per cent, reflecting its greater exposure to public markets driven by large tech companies.
The Healthcare of Ontario Pension Plan, which has C$132bn in assets, in 2025 delivered a net return of 7.7 per cent, supporting HOOPP’s long-term funding objectives in a year marked by elevated macroeconomic uncertainty and shifting monetary policy. HOOPP’s real return was 5.3 per cent, within the 4.5 per cent–6.5 per cent real return target set out in the 2030 strategic plan.
The private market performance was muted, reflecting valuation pressures, particularly in private equity and real estate. Specifically, net investment returns for total private markets was 2.1 per cent for the year, an asset class that makes up 35 per cent of the total HOOPP portfolio.
As shown, pension schemes would be remiss to focus on a single year, however. It must be noted for example, that in 2023 HOOPP’s private equity returns were 15.9 per cent, and in 2024 it was 12.7 per cent.
“Private markets will not outperform public markets over all time periods, particularly where public equity market returns are exceptionally strong as they have been in recent years,” says Lewis.
“The time horizon for investment needs to be genuinely long term, and investments should be spread across strategies and vintages, but even then patience is required for returns to be realised. Investors need to continue to reassess and refine their strategic allocations to private markets on an ongoing basis.”
Even outside of private assets per se, there are also other areas in which UK schemes may want to emulate the Maple 8. For example, Canada has topped the Global Pension Transparency Benchmark for five years in a row, assessing public disclosures against areas such as governance and organisation, performance costs, and responsible investing.