Lauren Bailey of Markets Group reports Canada’s airport concessions put pension funds at a crossroads: Buy old or fund new?:

Prime Minister Mark Carney’s proposed airport concessions could open some of Canada’s largest airports to pension investment, raising questions about whether acquiring established infrastructure assets is the most effective way to deploy institutional capital domestically.

The proposal could give Canadian pension funds access to mature infrastructure assets with established cash flows, while allowing governments to recycle capital into new projects, said Sebastien Betermier, associate professor of finance at McGill University’s Desautels Faculty of Management and executive director of the International Centre for Pension Management.

Canadian pension funds have accumulated substantial experience investing in airports in international markets, including the U.K., Brazil and Eastern Europe. Yet Canada’s major airports, operated by nonprofit airport authorities under federal leases, have largely remained outside their investable opportunity set.

“For a long time those assets were not made available to the funds,” said Betermier. “They were not for sale.”

As pension funds face increasing pressure to deploy more capital domestically, particularly in sectors where they already possess investment expertise, the federal government is proposing long-term operating concessions at Toronto Pearson International, Montreal-Trudeau International, Vancouver International and Calgary International airports. Ottawa would retain ownership of the underlying land and assets, while private investors would compete for operating rights, with the terms of the concessions and regulatory oversight still to be determined.

The government has also identified opportunities to direct additional investment toward smaller regional airports and other infrastructure as part of its broader approach.

For pension funds, the concessions would offer exposure to large, established assets with predictable revenue streams and relatively limited development risk, said Betermier. The government, meanwhile, could use proceeds from the transactions to finance new infrastructure projects that pension funds may be less comfortable developing themselves.

Drawing on their international experience, pension funds could bring financial discipline and operational expertise to airport management, potentially improving efficiency, commercial operations and capital allocation, he noted.

He pointed to the Caisse de dépôt et placement du Québec’s Réseau express métropolitain (REM) project, a 67-kilometer (41-mile) light-rail network with 26 stations planned across the Greater Montreal area, as an example of institutional expertise in large infrastructure projects.

Betermier also pushed back against the assumption that private investment would necessarily translate into higher airport fees or diminished service quality.

“It’s a bit of a misconception to think that because it is going to be privatized, suddenly cost is going to go up and quality is going to go down.”

Rather, institutional investment could support terminal expansion, additional transportation connections and new routes, he said.

Whether those benefits translate into attractive investments would depend heavily on transaction structure, regulatory certainty and the allocation of risk between government and investors, said Betermier.

Potential arrangements range from regulated private ownership to long-term concessions and public-private partnerships, he said, noting each offers different degrees of operational control, government oversight and exposure to commercial risk.

A transparent bidding process, clearly defined decision rights and stable contractual arrangements would be essential to attracting pension capital, particularly for concessions extending 20 to 30 years, he added. Political administrations can change several times over such an investment horizon, creating uncertainty about whether contractual rights will be maintained.

“The last thing you want is to start investing left and right and then being told by the next administration, sorry, we’re changing those rights,” Betermier said.

Such uncertainty could materially affect expected returns and valuations, even where airport operations generate relatively predictable cash flows.

Betermier also emphasized the importance of dispute-resolution mechanisms and pricing transactions according to the risks investors assume. Governments would need to establish which responsibilities they intend to retain and which they would delegate, allowing pension funds to assess the resulting cash-flow profile and determine an appropriate price.

A regulatory framework could also limit pricing increases while preserving incentives for operational improvements, he said. The Competition Bureau has noted that airport fees at Canada’s major airports are not regulated, underscoring the importance of how any new oversight framework would be designed.

Beyond transaction structure, the concessions raise a broader question about whether pension funds should prioritize acquiring established infrastructure or financing new projects that expand Canada’s productive capacity.

Jon Shell, chair of nonprofit Social Capital Partners, doesn’t believe monetizing existing airport operations is necessary if the government’s primary objective is to raise capital for infrastructure investment.

Shell estimated that Canada’s four major airports generated approximately C$472 million in annual ground lease payments to the federal government in 2025, with that revenue stream growing by roughly 6% annually over the past decade. Based on government borrowing costs, Shell calculates that the revenue stream could support between C$9 billion and C$16 billion in financing without transferring long-term operating rights to investors.

“If the objective is to raise money, you don’t need to sell the concession at the airport to get that,” he said.

Shell questioned whether creating a new institutional investment opportunity should be a policy objective in itself, particularly when pension funds could finance new infrastructure.

“We don’t build anything by providing an existing investible asset to pension funds,” he said.

He pointed to Australia’s experience with airport privatization and Ontario’s Highway 407 lease as cautionary examples of transactions that can be difficult and expensive for governments to reverse.

Instead, Shell argued, pension funds could make a greater contribution to domestic economic development by financing new infrastructure, including pipelines, ports and port expansions, rather than acquiring operating rights to existing assets.

The broader problem for Canada’s pension sector, Shell said, is the mismatch between the size of institutional investment mandates and the financing needs of smaller domestic projects. He estimates that large Canadian funds have become increasingly reluctant to consider commitments below C$200 million or C$300 million, potentially leaving smaller businesses and infrastructure projects underserved.

“The pension funds also haven’t innovated on how they invest in 20 years,” he said.

He challenged funds to develop structures capable of deploying smaller commitments rather than waiting for governments to create investment opportunities that fit their existing models.

Shell pointed to the Caisse’s Quebec-focused investment mandate as an example of how institutional capital can support regional economic development alongside financial objectives. The Caisse held C$100.1 billion in Quebec assets at the end of 2025, surpassing its C$100 billion target a year ahead of schedule, according to its 2025 annual report. The pension investment manager made C$6.3 billion in new investments and commitments in the province during the year.

Betermier also sees a role for an intermediary investment platform, potentially backed by several major pension funds, to source, underwrite and manage smaller domestic investments. Australia’s IFM Investors offers a potential model for collaboration, he said.

Such a platform could invest in projects and businesses below the scale typically targeted by Canada’s largest institutions, potentially allowing larger pension funds to acquire those assets once they mature.

The debate highlights two potential roles for Canadian pension funds: acquiring established infrastructure assets that provide long-term returns and financing new projects that expand domestic investment opportunities. How Ottawa structures the concessions, and how pension funds respond to the broader demand for domestic capital, will help determine the balance between those approaches.

I recently covered why Canada's pension funds want stakes in our airports here.

This is an excellent, in-depth article by Lauren Bailey that raises a lot of good issues.

First, I agree with Sebastien Betermier, drawing from their international experience, pension funds could bring financial discipline and operational expertise to airport management, potentially improving efficiency, commercial operations and capital allocation.

He is also right that privatization doesn't necessarily lead to higher costs, but it can improve operations, expand terminals and improve the experience for travellers.  

Moreover, for all this to work properly, pension funds require regulatory certainty over successive governments so they can properly plan their investments over the long run.

Jim Leech, OTPP's former CEO, once told me about how they got burned by one of the provinces on an infrastructure investment as the rules were changed. That pretty much killed future infrastructure investments in Canada.

So, you better believe that pension fund lawyers will be pouring over agreements to make sure there are regulatory clauses that ensure certainty no matter which government is in power.

Now, as far as Jon Shell, chair of nonprofit Social Capital Partners, he also raises some excellent points but I'm not in full agreement with him on everything.

Yes, pension funds can invest in more "greenfield infrastructure projects," but they are much riskier and therefore require more government assurances to incentivize them to invest.

People often point out to the success of the REM here in Montreal as proof that a greenfield project can work.

But almost all the key employees that ensured the REM's success have left CDPQ Infra, and that project had major hiccups along the way (as do all greenfield projects).

In short, it takes a special kind of expertise to ensure the success of greenfield infra projects and I can tell you that our pension funds lack it (people like my friend who managed the Site C project in British Columbia from the get-go and then was recruited to CDPQ Infra to get the REM off and running have actual project management experience and he's been recruited to Europe to manage a toll road there for a German company).

The other reason why pension funds prefer operational, brownfield infrastructure projects is they're less risky, cash flows exist and can be projected with certainty over many years.

In the article above, Jon Shell estimated that Canada’s four major airports generated approximately C$472 million in annual ground lease payments to the federal government in 2025. 

That's a big chunk of change, long-term, inflation-adjusted cash flows that match nicely with the long duration of the liabilities of our large pension plans. 

That's why they want to bid on the concessions of our airports.

Where I agree with Jon Shell is the Canadian model hasn't changed in 20 years, and too many smaller opportunities are falling by the wayside.

I get it, it's too cumbersome and costly to devote resources to smaller opportunities. It's much better to focus on large-scale investments, but it doesn't mean they cannot take a different approach to invest in them either through a third-party fund or directly if they all band together to do so and figure out a structure that works and where investment managers are accountable to all entities.

Again, from the article above:

Betermier also sees a role for an intermediary investment platform, potentially backed by several major pension funds, to source, underwrite and manage smaller domestic investments. Australia’s IFM Investors offers a potential model for collaboration, he said.

Such a platform could invest in projects and businesses below the scale typically targeted by Canada’s largest institutions, potentially allowing larger pension funds to acquire those assets once they mature. 

Alright, let me end it there. I hope we hear more about how our airports will be privatized very soon.

Below, a new report from the University of Calgary is warning that the federal government’s plan to privatize four of Canada’s largest airports could cost air traveller’s even more. The report, released last Thursday, says rules around fees charged by private investors must be made law before bids open.

Vancouver International Airport could be the first candidate of privatization, with indigenous groups at the table for a possible stake.

Global News' Heather Yourex-West reports on how flyers could be footing the bill every time they book a ticket — possibly paying higher prices and receiving a weaker range and quality of services.

Also, during the October 8, 2026 Senate Question Period, Senator Yonah Martin confronted Government Leader Pierre Moreau over reports that Vancouver, Toronto Pearson, Montreal Trudeau, and Calgary could be leased out through long-term private concessions. With travelers already facing record costs, critics warn this move could trigger higher passenger fees and less accountability—all without proper parliamentary oversight.

Lastly, Prime Minister Mark Carney is proposing transforming Canada's biggest and busiest airports from user-pay, not-for-profit models to money-making businesses. Andrew Chang breaks down how the country's airports rely so heavily on passengers to fund operations and explains the potential risks and benefits of Carney's proposal. 

Like I stated above, I do not agree with these anti-privatization arguments. We need to improve our airports, and they will be better managed by private investors over the long run. 

Season Four of the OMERS Pension Blueprint podcast recently kicked off with host Celine Chiovitti, OMERS Chief Pension Officer, interviewing Blake Hutcheson, OMERS President and CEO. 

Blake is always worth listening to, he's an eternal optimist and explains why he remains positive on OMERS and Canada.

He explains why everything they do centers around their liabilities and why they have a consistent, high-quality portfolio for the long term. 

Instead of going through this discussion in detail, I urge you to take the time to listen to Blake. He explains it very well.  

I also want to commend Celine Chiovitti for doing these podcasts. It's seems easy but it's not. there's a lot of preparation that goes into them, and she has done a great job.

You can watch more interviews on The Pension Blueprint website here (I have not seen them all but the ones that interest me are all excellent). 

Below, OMERS President and CEO Blake Hutcheson returns to The Pension Blueprint to share his perspective on navigating global economic and political uncertainty, the importance of diversification and long-term thinking, and why OMERS is seeing greater investment opportunities here in Canada. 

He also discusses the value of a defined benefit pension in uncertain times and how OMERS remains focused on delivering its pension promise for members today and for generations to come.

Also, Paul Tudor Jones, Tudor Investment Corporation founder and CIO and Robin Hood Foundation founder and board member, joins 'Squawk Box' to discuss the latest market trends, 2027 outlook, state of the AI boom, AI safety concerns, and more. 

I will admit that October has been rocky thus far, but I take everything Tudor Jones and Ray Dalio warn about on CNBC with a grain of salt. There are tons of great trading opportunities out here if you know where to look. Let's see what earnings season brings our way.

Tom Saunders of The Telegraph reports pensions ‘superfund’ doubles in size to take on Wall Street:

Britain’s only pensions “superfund” is poised to double in size after striking a string of deals to acquire underfunded retirement schemes.

Clara, the first of a new type of vehicle targeting defined-benefit (DB) schemes, has agreed to take on the pensions of 3,300 members of Marelli UK, a global automotive parts supplier. The pensions are worth roughly £250m.

It is Clara’s fourth deal this year, with two more to complete before the end of 2026.

Together, these deals will almost double Clara’s assets under management to £2.5bn from roughly £1.3bn at the start of the year.

Clara is the only British superfund currently operating and acts as a bridge to an eventual “buyout” by an insurer. The American investment firm Sixth Street backs it.

Superfunds target companies often in financial trouble and want to offload their pension funds to free up cash.

Marelli, for example, entered bankruptcy proceedings in June 2025, and Clara’s acquisition of the pension schemes is part of broader efforts to restructure the company.

Simon True, Clara’s chief executive, said the company was starting to target similar companies such as Marelli.

“We’re just widening the areas with which a super fund transaction can be applicable. We’ve worked with charities, and we’ve created a small-scheme solution.

“It’s all around momentum, and it’s around creating case studies that [pension scheme] trustees can get themselves comfortable with.”

In recent years, vast numbers of DB schemes have been acquired by US-backed insurers in buyout deals known as “pension risk transfers”.

This is where a business pays an insurance company to take on responsibility for managing and paying out its pensions.

More than half of the most active insurers in the UK market have either launched a partnership or are partially owned by some of the largest overseas private investors, many of which are on Wall Street.

However, the Government has long sought to cajole the 5,000 defined-benefit schemes that cannot afford a buyout into a superfund so they can invest more productively in the UK.

Pension insurers are also major UK investors, and some of Clara’s competitors have called on the Government to make it easier to invest in British infrastructure assets before the Oct 28 Budget.

Pension Insurance Corporation (PIC), backed by Wall Street giant Apollo, called on Andy Burnham to follow Singapore’s lead by giving cities such as Manchester and Birmingham the power to fast-track planning approvals.

“Planning delays and the huge costs related to them are a major barrier [to investment],” Hayley Rees of PIC said.

“We should learn from what works in countries such as Singapore and help deliver a pipeline of projects that allow more investment in the infrastructure the country needs.”

I must admit, I never heard of the UK's Clara Pensions, but this article got me curious:

We believe retirement should be something to look forward to, not fret over. So when employees sign up to a job with defined benefits, those benefits are precisely what they should go on to receive.

This obligation can weigh heavily on employers and pension trustees, especially where there is risk of a shortfall. As the UK’s leading member-first pension consolidator, Clara is here to remove that worry.

When a scheme joins our superfund, our expert team works diligently and efficiently to prepare it for eventual buyout in the insured market. Members receive their promised income, while trustees meet their obligations and employers are freed up to focus on growth. No one loses out. Everyone wins.

This pension 'superfund' is actually a great idea, one Canada should look into. 

It's not a superfund in terms of size, relatively small, but the idea behind it makes a lot of sense. 

It's basically member-first consolidator for defined benefit pension schemes, and the first and only consolidator. 

You can read more news on Clara Pensions here. 

Its CEO, Simon True, was appointed back in 2022, and the superfund is growing.

That's all for today, I just wanted to bring this fund to your attention and see if Canada should look into the same idea, on top of what CAAT Pension and OPTrust are doing.

Below, learn more about Clara Pensions through this presentation.