Canada's largest pension funds reported significant losses on their private equity portfolios in 2025 as the buyout sector downturn continued to weigh on returns. Ontario Teachers' Pension Plan and Ontario Municipal Employees Retirement System posted negative returns of -5.3% and -2.5% respectively, marking the worst performances for these funds in over a decade. The weak results came amid rising interest rates that have increased borrowing costs, constrained exit markets, and created operational complexity for private equity investors.

The disappointing performance extended across Canada's major pension funds. Quebec's La Caisse reported private equity returns of just 2.3%, far below its benchmark index gain of 12.6%. OTPP's private equity portfolio value dropped from C$60.4bn to C$50.8bn, while OMERS recorded a C$700mn net investment loss on its C$25.6bn private equity holdings. These figures stand in stark contrast to the "15 per cent minimum" returns that industry participants expect from private equity investments.

Canada's pension system, which allocates over 20% of public sector pension money to private equity according to think-tank New Financial, faces significant challenges. Dale Burgess of OTPP acknowledged the "increased cost of capital" and "constrained exit markets" as key drags on returns. While overall portfolio returns were bolstered by strong stock markets, the private equity slump highlights the growing pressures on alternative investments in a higher interest rate environment and the strategic shifts funds are making to navigate these conditions.