Canadian public pension funds scooped up private debt as market upheaval from Covid-19 left borrowers willing to offer appealing terms.

Their private debt allocations ticked up more than 5% to $46.9 billion between Dec. 31 and Sept. 20, according to Preqin data. It was the biggest increase in percentage allocation in five years, from about 3% of total fund holdings to 4%.

Unlike the publicly traded bonds that have been a staple of pension fund portfolios for decades, these investments typically consist of private loans made to companies, either by a pension fund directly or through an investment manager.

“It’s been a very good year as far as deployment is concerned,” said Jérome Marquis, a managing director and head of corporate credit at Caisse de dépôt et placement du Québec, which manages $333 billion on behalf of six million workers and retirees in the province.

The increase in private debt is part of a larger push by U.S. and Canadian pension funds into privately held investments coveted for their high projected returns. But U.S. pension funds’ overall private debt holdings haven’t grown during the pandemic, Preqin found.

U.S. state and local government pension plans’ holdings fell $2.7 billion to $93.7 billion from the end of 2019 through Sept. 20, according to Preqin data, and private debt allocations stayed at about 3%. The data reflect a sampling of major pension plans surveyed by Preqin and don’t include all plans in either country.

Private debt assets lost 8.9% in the first quarter of 2020 and gained 5.7% in the second quarter, based on more than 750 funds tracked by Burgiss, a private capital data and analytics firm.

As post-financial crisis regulations have deterred banks from taking on riskier debt, pension funds have been eager to collect more interest than they can with



a group of people walking down the street: Ruby Tuesday's restaurant in Times Square in 2016. Mary Altaffer/AP Photo


© Mary Altaffer/AP Photo
Ruby Tuesday’s restaurant in Times Square in 2016. Mary Altaffer/AP Photo

  • In August, retiree Mark Potter suddenly stopped receiving his pension payments from Ruby Tuesday.
  • Documents show that Ruby Tuesday advised its trustee, Regions Bank, to stop paying pensions to at least 112 retirees on July 21, months before declaring insolvency on September 2.
  • But the agreement between Ruby Tuesday and Regions stated the chain had to notify the bank of its insolvency before it could cease pension payments.
  • On September 28, Regions filed a lawsuit against Ruby Tuesday, asking a court to determine whether the chain’s actions were legal.
  • In the meantime, Potter and the other retirees are stuck in pension purgatory, with no idea of when or if their payments will resume.
  • Visit Business Insider’s homepage for more stories.

Mark Potter did everything he was supposed to.

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After 28 years working his way up the ladder at Morrison’s Cafeterias to become a district manager, Potter retired in 1999 with the knowledge that his pension plan was a lifelong one.

Morrison’s Cafeterias had acquired Ruby Tuesday in 1982 before splitting into three companies: Ruby Tuesday, Morrison Healthcare, and Morrison’s Fresh Cooking — a cafeteria company that was later bought by rival chain Piccadilly Restaurants. When Morrison’s split in 1996, the three entities entered a legal agreement to divide their retirees’ pensions, James Holland, a former Morrison’s Cafeterias vice president, told Business Insider.

Holland also explained that if one company filed for bankruptcy, the other companies assume responsibility for its portion of the pension payments. For example, when Piccadilly filed for bankruptcy in 2004, Ruby Tuesday and Morrison’s Healthcare split Piccadilly’s share of the payments.

In August, Potter’s pension payments from Ruby Tuesday suddenly stopped coming. He called Ruby Tuesday repeatedly to ask why,