Canadian pension funds bet big on private equity in recent years — they might now be regretting it.
Driving the news: Several of Canada’s top pension funds posted disappointing earnings or even reported losses in their private equity holdings last year, according to data compiled by the Financial Times.
The Ontario Teachers’ Pension Plan and the Ontario Municipal Employees Retirement System posted annual returns of -5.3% and -2.5%, respectively.
Meanwhile, La Caisse and the Healthcare of Ontario Pension Plan reported 2.3% and 3.6% returns, respectively, well below the 15% rate that’s considered healthy for PE investments.
Why it’s happening: After an extended boom period, PE has been floundering since 2022 when interest rates were hiked, tamping down deal appetite and fruitful IPOs. Now, PE firms are stuck with companies they bought but can’t flip, leading to dismal investor payouts.
Per a Bain and Co. report, PE firms returned only about 14% of the money they managed back to investors in 2025, the lowest since the 2008 global financial crisis
Why it matters: PE is a staple of Canadian pension funds, with over 20% of Canadian public sector pension money put into PE investments. The extended downturn in the sector is now prompting a strategy rethink. This includes offloading PE assets, reallocating investments to other sectors, or investing more through established buyout giants.
Zoom out: Just yesterday, Bloomberg reported that the Canada Pension Plan Investment Board — the body that manages the national fund everyone contributes to — is looking to sell ~US$1.5 billion in Asian PE assets. PE accounted for more than a quarter of the fund’s assets in 2025.—QH