A friend points me to a post by a Canadian who has quite a story to tell.

The problem is that when a successful organisation (in this case the investment house CPP) get to manage a fund this large, they lose sight of the fundamental job, which is to deliver the best possible retirement income. This is a summary of the Substack article from Matthew Kaminski, once of the outfit and now an outsider looking in in horror.

I am not saying this is happening in the UK (yet). But it could. Dr Chris Sier is dead but his legacy lives. Iain Clacher in Leeds, Con Keating in Coventry and Chris’ company in London keep an eye on the largest funded DB plans, most especially LGPS, but there are others who have the capacity to follow CPP. Most obviously the large DB plans who do not have capped charges and for whom a fraction of growth can be a fortune.

There are also megafunds developing in the defined contribution sector. Already Nest, People’s, WTW and L&G are there just with their master trusts. Others such as Standard Life, Fidelity and Scottish Widows can boast scale in their default funds if they include the “historic” GPPs and “heritage” in AVCs, personal pensions and 226 plans.

There are IGCs, advisory boards and trustees who should stop what seems to be happening with CPP. I am not close enough to Canadian fund management, of techniques such as benchmark abuse, but I know of many opportunities funds have in the UK to secrete profits into the hands of a few executives and the temptation to do this is always there.

So long as the legacy of Dr Sier and the presence of Clacher and Keating and of others who pay attention is there, it should not happen. So long as friends of mine who know better, point to examples of bad practice at home or abroad, there will be an awareness that people are being watched. But in this country, these huge funds are not always owned by their members, for the most part they are owned by insurers who are owned by banks and finance houses, many of these are from America and Canada. The consultancies who own master trusts are owned by Americans.

Of the large DC “megafunds” only Nest and People’s Partnership report first to the people whose pensions they manage. Money cannot pass into the nebulous world of finance where money can be lost. Transparency is the word that Agethangelou, Sier, Keating and Clacher called out when the Transparency Task Force was set up in 2015 and its spirit must live on, even if its founders have dispersed. I chronicled the TTF’s early days and will continue to chronicle what goes on in this blog. We need people in this country doing what Matthew Kaminski’s doing in Canada. If you have the interest read the whole report hear.

Read about CPP’s “slush multiplier”. Most of all be aware that executives, delivering under-performance are being paid what most would consider a fortune. Here is what is happening.

I can think of at lease one large DB fund who suffers the same underperformance but pays the executive well.

Now we have a  VFM framework, let’s make sure it stops this  underperformance being called  “value for our money”.