Ottawa urges pensions to spend more at home

The feds are hoping Canada’s top pension funds will consider spending a little more of their ~$2 trillion in assets at home. 

Driving the news: Ottawa is enlisting former Bank of Canada governor Stephen Poloz to spearhead a new working group tasked with getting Canadian pension funds to invest more in their own backyard, particularly in housing and infrastructure.

  • Just last month, nearly 100 business leaders signed an open letter urging the feds and provinces to force pension plans to invest more domestically.
  • Investments in public Canadian companies currently make up just 4% of Canadian pension funds holdings, a steep decline from 28% in 2000. 

Why it matters: The feds have a tough balancing act on their hands. While the economy could certainly benefit from the pension funds' cash, forcing domestic investments could quickly sour returns, which would be bad news for, well, every Canadian who wants to retire. 

  • Caisse de dépôt et placement du Québec — one of the few funds with a mandate to invest domestically — has seen its returns suffer as a result. 

Bottom line: By framing the working group as an olive branch and not a threat, Ottawa seems open to changes that could let funds invest in domestic businesses and infrastructure without sacrificing results for their members.—LA