Debate heats up over Canadian pension fund investments

Daniel Brosseau sparks national discussion on investing more pension funds domestically to boost Canada's economy

Debate heats up over Canadian pension fund investments

Daniel Brosseau, co-founder, and partner at Letko Brosseau, has emerged as a key voice in promoting more domestic investment from Canadian pension funds, highlighting a significant debate concerning the best interests of Canada's pensioners and the economy.  

In an interview with BNN Bloomberg, Brosseau described the situation as a "clash of titans," with two distinct economic theories driving the discussion. 

Brosseau's firm gained national attention after writing an open letter to Finance Minister Chrystia Freeland last month.  

The letter called for policy changes to encourage pension funds to invest within Canada. Despite some pushback from the business community, who prefer that government not influence pension investment decisions, Brosseau argues that this narrow view overlooks broader macroeconomic impacts

He explains that portfolio management theory suggests Canada, representing about three per cent of global GDP and markets, should only constitute a similar proportion in a diversified investment portfolio.  

Conversely, macroeconomic theory advocates for significant domestic investment to bolster national productivity, incomes, jobs, and overall wealth. 

Currently, the Canada Pension Plan (CPP) invests approximately two per cent of its capital in Canadian equities, both private and public, with the majority placed in international markets.  

According to Brosseau, this approach risks foreign control over Canadian companies and could undermine the economy over time. 

Brosseau emphasizes the need for a national dialogue on this issue, pushing for informed decision-making on where Canadians' retirement savings are invested. He stresses that the outcome of such discussions should not be left to chance. 

Adding to the momentum of this debate, the federal Liberals, in their recent budget announcement, appointed former Bank of Canada governor Stephen Poloz to explore strategies to encourage more domestic investment by pensions.  

Brosseau views this development positively, noting Poloz's expertise and understanding of the critical issues at play.