Key Takeaways
- • Saskatchewan's Public Employees Pension Plan (PEPP) has adopted a defined benefit investment approach within its defined contribution structure, offering members daily liquidity access to private equity and infrastructure investments—a hybrid model that bridges traditional DC and DB pension strategies.
- • PEPP targets an eight percent allocation to infrastructure and three percent to private equity, representing a more aggressive and diversified entry into alternatives compared to its companion DB plan (MEPP), which began with five percent infrastructure and two managers in 2005.
- • The Public Employee Benefits Agency (PEBA), which oversees both PEPP and the Municipal Employees Pension Plan (MEPP), aims to build a combined $2 billion alternatives portfolio across both plans, leveraging two decades of MEPP experience in alternative asset management.
- • PEPP commenced its alternatives strategy in 2017/18 following board approval, with first investments executed by mid-2020; the plan currently manages approximately $11 billion in assets across roughly 70,000 members.
- • PEPP expanded beyond its traditional Canadian real estate holdings into global real estate to achieve comprehensive alternatives exposure, demonstrating portfolio diversification beyond single-geography constraints.
Summary
Saskatchewan's Public Employees Pension Plan has successfully integrated alternative assets into its defined contribution pension structure by applying principles traditionally associated with defined benefit plans—a strategic innovation that preserves daily liquidity for members while providing exposure to private equity and infrastructure. The approach was informed by the plan's companion Municipal Employees Pension Plan, which has maintained an alternatives portfolio since 2005, according to Gary Hutch, executive director of investment services for the province's Public Employee Benefits Agency.
PEPP's alternatives strategy formally commenced in 2017/18 following board approval of its first allocations to private equity and infrastructure. By mid-2020, the plan had deployed its initial capital into these asset classes. The plan's target allocations reflect an aggressive posture relative to MEPP's historical trajectory: PEPP aims for eight percent in infrastructure and three percent in private equity, compared to MEPP's eventual 20 percent infrastructure and five percent private equity allocations achieved by 2017/18. Notably, PEPP launched with substantially greater manager diversification than MEPP's initial two-manager infrastructure approach.
The PEPP manages approximately $11 billion in assets for roughly 70,000 members. The Public Employee Benefits Agency is targeting a combined $2 billion alternatives portfolio across both the PEPP and MEPP plans. Beyond traditional Canadian real estate exposure, PEPP has expanded into global real estate markets to construct a comprehensive alternatives strategy, demonstrating a deliberate move toward geographic diversification within the alternatives framework. This expansion reflects institutional best practices in alternative asset allocation while maintaining the daily liquidity features essential to defined contribution plan members.
PEPP's alternatives strategy formally commenced in 2017/18 following board approval of its first allocations to private equity and infrastructure. By mid-2020, the plan had deployed its initial capital into these asset classes. The plan's target allocations reflect an aggressive posture relative to MEPP's historical trajectory: PEPP aims for eight percent in infrastructure and three percent in private equity, compared to MEPP's eventual 20 percent infrastructure and five percent private equity allocations achieved by 2017/18. Notably, PEPP launched with substantially greater manager diversification than MEPP's initial two-manager infrastructure approach.
The PEPP manages approximately $11 billion in assets for roughly 70,000 members. The Public Employee Benefits Agency is targeting a combined $2 billion alternatives portfolio across both the PEPP and MEPP plans. Beyond traditional Canadian real estate exposure, PEPP has expanded into global real estate markets to construct a comprehensive alternatives strategy, demonstrating a deliberate move toward geographic diversification within the alternatives framework. This expansion reflects institutional best practices in alternative asset allocation while maintaining the daily liquidity features essential to defined contribution plan members.
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