TLDR:
- Business leaders are urging the government to require Canadian public pension funds to invest more within the country to boost productivity.
- Detractors argue that this move could compromise the pension funds’ mandate of providing secure retirement income for Canadians.
Canadian business leaders are advocating for more domestic investment by public pension funds to enhance the nation’s productivity. They argue that this would provide businesses with greater access to capital. However, opponents, including the pension funds themselves, express concerns that such a mandate could jeopardize the funds’ obligation to ensure secure retirement income for Canadians.
John Ruffolo, founder and managing partner of Maverix Private Equity, emphasizes that the strength of pension funds lies in their independence from government control. He believes that forcing investments within the country could undermine this separation and ultimately weaken the funds’ performance.
Stéfane Marion, the chief economist and strategist at National Bank of Canada, has highlighted the need for private capital influx to address Canada’s lagging productivity levels. Despite having a highly educated workforce, Canada’s productivity growth has been slower compared to its OECD peers. Marion attributes this to the lack of private investment, leading to decreased investments in productivity-boosting assets like machinery and software.
While some pension funds have defended their commitment to Canadian investments, others have expressed reservations about the potential risks of overexposure to one country and the benefits of diversification. The debate reflects broader concerns about the balance between national economic development and pension fund stability.
