The business economist at work: Ontario Teachers' Pension Plan Board

Business Economics, April, 1998 by Leo de Bever

Governments on occasion are tempted to suggest how pension funds should invest their money. For example, it has been suggested that pension funds fund more small hi-tech companies to reduce unemployment. Sounds plausible. Small and hi-tech do indeed present long-term economic opportunity, which is why my department helped establish a $100 million Venture Capital program. However, hi-tech draws on a super-heated labor market segment of high-skill workers. Most unemployed workers have less than high school education. Whatever the merits of channeling money to hi-tech, it does not solve the short-term jobless problem.

Pension fund liabilities have been and will be growing rapidly. Large liabilities require large assets, to lower the odds that taxpayers will have to help seniors maintain a reasonable standard of living. As an economist and an inveterate puzzle solver, I am attracted by the variety of issues involved in this process.

Leo de Bever is Vice President, Research and Economics, Ontario Teachers' Pension Plan Board, Ontario, Canada.