Canada’s Business Leaders Want Pension Funds to Invest More In Canadian Companies
Over 90 business leaders and CEOs from Canada’s biggest companies across different sectors have initiated a campaign advocating for greater investment in Canadian businesses by pension plans. This push for increased domestic investment is being challenged by several of the country’s largest pension fund managers.
The proponents of the campaign, coming from diverse sectors such as automotive, energy, aviation, telecommunications, finance, and retail, sent an open letter addressed to Finance Minister Chrystia Freeland and her provincial counterparts on Wednesday.
They are urging the government to modify pension fund regulations to foster investments within Canada, emphasizing the role of pension funds, which manage trillions of dollars for retirees, in the country’s economic future. Despite holding a significant portion of institutional capital, these funds invest a mere 4% of their capital in publicly traded Canadian stocks.
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The letter underscores the unique position of pension funds as patient, long-term equity investors and highlights the government’s duty to regulate the savings regime due to its foundational support and tax incentives provided to these funds.
“Pension funds should not fear but rather embrace with enthusiasm the challenge of investing in Canada. The positive impact these investments have on their memberís incomes and development should not be ignored,” they wrote.
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Organized by Peter Letko and Daniel Brosseau of Letko, Brosseau & Associates Inc., the campaign does not seek to impose specific investment mandates on pension funds but advocates for regulatory adjustments that would encourage a preference for domestic investments.
“We do not want to tell pension funds where to invest, or how to invest, or in what to invest,” Brosseau said. It’s basically an attempt to leverage the substantial economic impact of pension fund investments without prescribing the extent of domestic allocation.
“Canada has great companies, true global champions. These competitive businesses deserve our support, and we must create many more. Increasing investments in Canada should be a national priority,” they said in the letter.
Pension funds, however, don’t completely agree.
“These are pension liabilities. They’re not institutional savings,” Michel Leduc, global head of public affairs and communications at the Canada Pension Plan Investment Board (CPPIB), told the Globe and Mail.
“The fund exists for one reason: To help maintain the financial sustainability of the Canada Pension Plan. There is absolutely no carve-out for other goals identified by the business community.”
The discussion could extend to the federal government’s intentions, outlined in the 2023 Fall Economic Statement, to collaborate with pension funds in enhancing investment opportunities within Canada. However, critics caution against hasty policy changes without thorough economic analysis, fearing unintended consequences.
Information for this story was found via the Globe and Mail, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
