Toronto, Canada – Over 90 prominent business leaders and CEOs from Canada’s largest companies have joined forces to advocate for increased Canadian pension plan investments in domestic businesses. This initiative has sparked controversy among some of the country’s leading pension fund managers.
In an open letter addressed to federal Finance Minister Chrystia Freeland and provincial counterparts, these executives, hailing from various industries such as auto parts, oil and gas, airlines, banking, and grocery retail, are urging for policy amendments to encourage pension funds to allocate more capital within Canada. Despite pension funds managing trillions of dollars on behalf of retirees, only 4 percent of their capital is currently invested in publicly traded Canadian stocks, according to the letter.
The signatories emphasize the importance of pension funds being patient, long-term equity investors, which would benefit Canada’s economic development. They highlight the government’s role in regulating the pension fund industry, pointing out that without governmental support and tax incentives, pension funds would not exist.
Some notable signatories include entrepreneurs who have successfully built global businesses, such as Alimentation Couche-Tard Inc.’s co-founder Alain Bouchard, Bombardier Inc.’s CEO Éric Martel, and Maple Leaf Foods Inc.’s executive chair Michael McCain. These leaders emphasize the critical role pension funds play in supporting economic growth and stability.
The letter’s organizers, Peter Letko and Daniel Brosseau of Letko, Brosseau & Associates Inc., stress the untapped economic potential of Canadian pension fund investments. While they do not advocate for government-mandated investments in Canada, they are calling for a new set of rules that would encourage domestic investments without imposing specific quotas.
In response, pension funds defend their investment strategies, prioritizing returns for pensioners while adhering to clear mandates. They highlight their broad investments in Canada, particularly in real estate, infrastructure, and fixed income. However, the majority of these investments are not in public equities, which the letter’s signatories seek to address.
As discussions continue on how to foster more domestic investments, the federal government’s 2023 Fall Economic Statement signals its intent to collaborate with pension funds to create a conducive environment for increased investments in Canada. Despite differing perspectives on the best approach, the overarching goal remains to strengthen Canada’s economy and ensure sustainable growth for future generations.