In an era where data drives decision-making and stakeholder expectations are high, Canadian pension plans are on a transformative journey. Faced with the complexities of managing vast amounts of data, handling stakeholder expectations, and adapting to an increasingly digital world, these plans are moving beyond traditional frameworks to embrace advanced technology. This modernization is not just a shift in tools; it represents a paradigm change in how pension plans operate, manage risks and seek sustainable growth.

The Data Deluge Challenge in In-House Asset Management

One of the primary challenges Canadian pension plans face as they modernize is managing and utilizing the vast volumes of data generated internally. While bringing asset management functions in-house provides greater control and can lead to cost efficiencies, it also comes with unique hurdles. Chief among these is the effective management of data.

The abundance of data from diverse sources - including market insights, financial reports, and environmental, social, and governance (ESG) key performance indicators - presents a considerable challenge. According to asset owner research from CIBC Mellon, 24% of pension plan respondents identified data management as their number one issue in managing assets internally. An additional 22% view it as a significant secondary obstacle. The sheer volume and complexity of data necessitate not only effective organization but also technical and analytical capabilities that allow for data to be extracted, processed, and transformed into actionable insights. Without the right infrastructure, these data stores risk becoming overwhelming and unusable.

For many plans, data challenges underscore the urgent need for investment in technology that can streamline these processes. Failure to address these needs can impede the agility required to respond to market conditions, make informed investment decisions, and fulfill fiduciary duties.

Embracing Technology: A Paradigm Shift

Technology has emerged as a cornerstone in the ongoing modernization efforts of Canadian pension plans, introducing transformative changes that bring both opportunities and complexities. In our research, 60% of respondents reported significant changes in their approach to technology and data strategy, signifying a clear recognition of technology’s role in optimizing investment decisions and meeting modern demands.

This shift is not merely a trend; it is a necessary adaptation to remain competitive and responsive. To support this transformation, 40% of pension plans expanded their in-house technology teams, reflecting an industry-wide commitment to leveraging internal capabilities. These changes signal that Canadian pension plans are prioritizing innovation as they navigate the complexities of today’s financial landscape.

Yet, while technology offers immense potential, it also demands a continuous commitment to upskilling and adapting. With each advancement, new challenges arise, from the need for integration with existing systems to the task of ensuring that data-driven insights are reliable and actionable. Pension plans must balance the promise of technological innovation with the realities of implementation, often requiring significant investment in resources and personnel to achieve the desired outcomes.

Data as the Core of Stakeholder Reporting

Another aspect of modernization is the role of technology in stakeholder reporting. Stakeholders today expect a high level of transparency and accountability, demanding timely and comprehensive reports that reflect the pension plan’s performance, strategy, and compliance with regulations.

However, creating consistent and actionable reports is easier said than done. Data enrichment, which includes processes such as adding insights and conducting trend analyses, remains a significant hurdle. In fact, 26% of respondents identified data enrichment as the greatest obstacle to effective stakeholder reporting. Issues of data tracking, consistency, and integration further complicate this process, with 24% of respondents citing them as key challenges.

These challenges underscore the need for systems that consolidate information from diverse sources, ensuring data accuracy and consistency. Data integration and management technologies, including artificial intelligence and machine learning, are starting to make inroads in this space. However, the adoption of AI remains cautious; only a small fraction of pension plans have incorporated AI tools like ChatGPT for stakeholder reporting, likely due to the early-stage nature of these technologies in the industry.

The move toward automation and intelligent data handling reflects a broader industry shift toward leveraging technology not just as a support tool but as a core component of the reporting process. Pension plans that succeed in this area will be those that can balance the complex needs of regulatory compliance and stakeholder expectations with the technical challenges of data integration.

Bottlenecks in Data Access and the Need for Automation

For Canadian pension plans, the road to modernization is paved with data-related challenges, particularly regarding data accessibility. While collecting and storing data is essential, it is only the first step. The true value of data lies in its availability and usability, especially during urgent decision-making moments.

According to Canadian asset owners, 62% of pension plans identified long processing times as the primary bottleneck in accessing the data they need to support decision-making. This delay in data retrieval can hinder timely decision-making, a critical setback when navigating dynamic capital markets. Additionally, 38% of respondents noted that inconsistency in data hinders their ability to extract reliable insights from available resources.

Manual interventions remain another bottleneck, cited by 26% of respondents. These time-consuming processes not only slow down workflows but also open the door to human error. To combat these issues, there is an industry-wide push toward automation. Automating data-dependent tasks minimizes human input and accelerates data processing, making it easier for pension plans to access and utilize consistent data for reporting and strategic planning.

By addressing these bottlenecks, pension plans can streamline data access and enhance decision-making agility. As the demands for faster and more reliable data access continue to grow, investment in automation and AI will likely become a non-negotiable part of any pension plan’s modernization strategy.

The Path Forward: Balancing Tradition and Innovation

As Canadian pension plans continue their journey toward modernization, they must navigate the fine line between tradition and innovation. Integrating advanced technology offers unprecedented opportunities for efficiency, transparency, and sustainability. Still, it also requires a shift in organizational culture, investment in new skills, and a commitment to continuous learning

To truly succeed, pension plans must adopt a forward-thinking approach, embracing technology not as a temporary solution but as a core component of their operational framework. This journey involves an ongoing assessment of the latest innovations, a readiness to tackle the data challenges head-on, and a willingness to evolve in response to stakeholder demands and market pressures.

Cynthia Shaw-Pereira, Vice President, Head of the Asset Owner Segment at CIBC Mellon

Cynthia is responsible for establishing strategic priorities for CIBC Mellon’s asset owner segment and services for institutional investors active in the Canadian market. In addition, Cynthia works closely with sophisticated clients to understand, identify, and develop new solutions, helping shape CIBC Mellon’s delivery of solutions today and build for the future based on clients’ needs.

She has nearly 20 years of experience in asset servicing. Cynthia’s previous roles across the BNY Mellon global enterprise include client solutioning of performance and risk analytics products and services, and advising on the Environmental, Social and Governance (ESG) space in the Canadian market.

Cynthia holds a Bachelor of Commerce degree from the University of Toronto, and certificates in Investment Performance Measurement (CIPM) and ESG Investing from the CFA Institute.  She is a member of the Responsible Investment Association (RIA) Toronto Working Group.