How Your Pension is Invested, and Why it’s Built to Last

As we covered in our last article, the Municipal Pension Plan (MPP) is a defined benefit (DB) pension plan. That means it provides stable, predictable retirement income that isn’t affected by the ups and downs of the market.

But what actually happens to the money you put into the plan?

Let’s start with the numbers. At the end of fiscal 2023, the MPP was in great shape and with more than enough to cover future pensions. It had a funding ratio of 105.3 % and a surplus of $3.76 billion. The fund returned an average of 7.8% per year over the last five years. When you consider what has happened since 2020 – that’s a strong record.

Since 1999, the BC Investment Management Corporation (BCI) has served as the exclusive investment manager for the province’s public sector pension plans—including the Municipal Pension Plan (MPP). Formed under the Public Sector Pension Plans Act, BCI was explicitly created to deliver professional, arm’s‑length investment services to BC pension clients.

The MPP Board of Trustees sets the strategic direction and approves responsible-investment objectives, while the BCI implements those goals under clear policies, risk tolerances, and fiduciary mandates.

With approximately CA$295 billion in assets under management, BCI ranks among Canada’s “Maple‑8” — the eight largest public pension funds across the country, known for following a high-governance, internally managed, direct-investment model.

When BCI decides where to invest, it looks at both traditional financial analytics and environmental, social, and governance. (ESG) factors. This dual‑lens approach enables the MPP to pursue positive risk‑adjusted returns while aligning with responsible investment principles.

BCI also issues annual climate disclosures aligned with the International Sustainability Standards Board and pushes for better environmental and social outcomes by engaging directly with companies through proxy voting, participating in policy advocacy, and serving on corporate boards.

The MPP has also formally pledged to transition to a net‑zero greenhouse gas (GHG) emissions portfolio by 2050, consistent with the Paris Agreement’s 1.5 °C target. This means the plan’s assets, in aggregate, will no longer contribute net emissions by mid-century. In the interim, a key milestone for the MPP is to reduce its portfolio’s emissions intensity by 55% by 2030, compared to 2020 levels. As of 2023, it had already cut that intensity by 23%.

Rather than relying on divestment or carbon offsets alone, the plan emphasizes active engagement with companies, strategic asset selection, and decarbonization through investment choices. Its Statement of Investment Policies and Procedures integrates climate risk considerations—including climate scenario analysis during the asset‑liability review process, proxy voting, and policy advocacy—supported by BCI’s climate-aligned stewardship activities. In short, addressing climate risks is a formal part of MPP’s investment policy.

Your pension, and the contributions you put into it, are working every day to secure your future, while helping build a more sustainable world to retire into.  

Want to read more? Start by checking out the MPP's 2024 Annual Report.