New federal group to boost pension fund investments in Canada

Former Bank of Canada governor Stephen Poloz will head a group focused on increasing Canadian pension funds' local investments

New federal group to boost pension fund investments in Canada

Ottawa has appointed former Bank of Canada governor Stephen Poloz to lead a new federal working group.  

This group is aimed at boosting domestic investment by Canadian pension funds, particularly in digital infrastructure and airports, as reported by The Globe and Mail. 

Announced in the recent budget document, the working group will explore ways to encourage greater investment within Canada, with Finance Minister Chrystia Freeland and various pension leaders participating.   

The initiative addresses a growing debate over whether Canada’s largest pension funds, which manage over $2tn in assets, are investing enough domestically.  

Business leaders have urged for changes in pension fund regulations to foster more local investments, while pension fund executives advocate for maintaining their investment independence to ensure sustainable pensions.   

The working group will also review whether to remove a rule limiting pension funds from holding more than 30 percent of voting shares in a company. This is seen as outdated by some and is often circumvented by larger funds.   

In support of domestic investment, the budget also outlines measures to make pension fund investments more transparent.  

The Office of the Superintendent of Financial Institutions will be required to publicly disclose detailed investment data, showing the proportion of assets Canadian pension funds invest domestically and abroad.   

Moreover, the budget emphasizes enhancing the roles of the Business Development Bank of Canada and Export Development Canada in supporting new and high-growth businesses and riskier investments, particularly in competitive markets.   

This push for increased local investment by pension funds aligns with broader government efforts to catalyze economic growth and manage investment risks through better-aligned opportunities, highlighting a strategy of risk-adjusted returns and economic development.