Ottawa to remove investment cap for Canadian pension funds

Finance Minister Chrystia Freeland announced that the fall economic statement, set to be released on Monday, will have significant implications for Canadian pension funds. One key change is the removal of the current cap that limits Canadian pension funds from owning more than 30 percent of the voting shares of a Canadian entity. This move is aimed at making it easier for pension funds, which collectively hold over $3 trillion in assets, to make substantial investments in Canadian businesses.

In addition to lifting the ownership restriction, the government plans to engage in consultations with the provinces to address the treatment of provincially-regulated pension plans as regulatory changes are developed. This collaborative approach will ensure that all stakeholders are considered in the decision-making process.

Furthermore, the government is launching the fourth round of the Venture Capital Catalyst Initiative, with $1 billion in funding earmarked for 2025-26. This initiative aims to provide financial support for mid-cap growth companies, potentially unlocking up to $45 billion in loan and equity investments for AI data center projects. These investments are crucial for driving innovation and growth in key sectors of the Canadian economy.

Another key proposal is the potential lowering of the threshold that restricts municipal-owned utility corporations from attracting more than 10 percent private sector ownership. By allowing Canadian pension funds to acquire a higher ownership share, this change could open up new opportunities for investment and collaboration.

The government is also looking to engage with airports and pension funds to explore ways to incentivize investment in airport lands. This could involve making changes to airport authority ground leases to encourage greater private sector involvement in airport development projects.

Freeland emphasized the importance of attracting capital to Canada, especially in light of global economic uncertainties. With the incoming Trump administration adopting a protectionist stance, it is essential for Canada to position itself as an attractive destination for investment. By implementing these policy changes, the government aims to create a more conducive environment for investment and economic growth in Canada.

In conclusion, the fall economic statement holds promising prospects for Canadian pension funds and the broader economy. By removing ownership restrictions, providing funding for growth initiatives, and incentivizing investment in key sectors, the government is taking proactive steps to stimulate economic activity and ensure Canada remains competitive in the global market.