How could Canada’s pension fund invest more at home? Finance committee chair wants to know

Canada Pension Plan managers are under scrutiny as the House of Commons finance committee considers holding hearings to investigate why only a small portion of the CPP’s assets are invested in Canada. Liberal MP Karina Gould, the committee’s new chair, expressed concern over the low level of investment in the domestic economy and emphasized the importance of managing the CPP effectively.

Gould highlighted the need to understand why the CPP invests so little in Canada and how increasing investments in the country could benefit both the Canadian economy and pensioners. She mentioned that while the committee is currently occupied with pre-budget consultations and Bill C-4, which includes a tax cut for Canadians, hearings on the CPP could be scheduled for the fall if committee members agree.

In an interview, Gould emphasized the significance of knowing where pension funds are being invested, especially in the current economic climate. She suggested that the committee could explore aligning the CPP’s mandate more closely with that of the Caisse de dépôt et placement du Québec, which focuses on both generating returns and investing in Quebec’s economic development.

The revelation that only 12% of the CPP’s assets are invested in Canada, with the majority allocated to the United States, has sparked debate. Proponents of the high level of U.S. investments argue that they offer diversification and higher returns, ensuring the sustainability of pension benefits. However, critics question why more investments are not made in Canada to support local jobs and infrastructure projects, particularly amid trade tensions with the U.S.

NDP interim leader and finance critic Don Davies expressed alarm over the low level of Canadian investments by the CPP and called for a review of the CPPIB’s mandate. He advocated for expanding the mandate to include the development of the Canadian economy, citing numerous projects that could strengthen the economy and provide favorable returns for workers and employers.

Davies stressed the importance of transparency in how pension funds are allocated, noting that Canadians may be surprised to learn that their retirement savings are predominantly invested in foreign countries. He welcomed the prospect of hearings on the CPP by the finance committee.

As of now, the Conservatives have not issued a response to the matter. The potential hearings could shed light on the CPP’s investment strategies and spark discussions on the fund’s role in supporting Canadian economic growth and sustainability.