As former official of the Finance Department, Susan Peterson played a key role in the creation of the Stable Pension Plan of Canada that we see today. But even she was surprised by the numbers.
A few weeks ago, the Investment Board of the Canada Pension Plan (CPPIB) revealed that 12 percent of CPP assets are invested in Canada, its lowest level. The largest part of its $ 714 billion fund, 47 percent, is currently invested in the United States, its highest level.
Peterson does not believe it is the only surprised.
“If the Canadians knew for the $ 714 billion, such a lowercase amount was invested in Canada, I think they would say, Whoa, what is wrong with this image.”
The CPPIB is not alone.
Experts say that the Canada Pension Plan (CPP) is one of the several Canadian pension plans that have been investing much more in the United States than in Canada in recent years. The CPP, whose investments are administered by the CPPIB, also known as CPP Investments, is a public pension plan that covers millions of Canadian workers throughout the country with the exception of Quebec, which has its own manager, the Caisse de dépôt et placement.
Those who support this high level of US investment, including CPPIB itself, argue that the plan of the plan is to make money. They argue that US investments offer more diversity and greater returns, which help ensure that the plan can pay the benefits in the coming years.
Others, however, question why the plan is not doing more to invest in Canada to create Canadian infrastructure jobs and projects.
They are also worried about the American exposure of the Plan at a time when the administration of President Donald Trump has turned the country into a more risky place to invest.
The Fiscal Reform Law “Grande y Bella” of the Trump administration also contains a section that runs the risk of reaching Canadian pension funds that have US investments. UU. With a new retention tax that experts predict that they could cost billions to Canadian and Canadian companies if adopted.
Some pension funds, such as the Public Sector Investment Board that has 41 percent of its assets invested in the US.
Michel Leduc, Head of Public Affairs and Communications for the CPPIB, says he has to invest in the long term, regardless of individual governments or administrations.
“We are investing money for people who are not born yet,” he said. “That long -term thought must be the strongest pillar of how we think about our investment strategy.”
But he says that the CPPIB at the same time is not “stupid in the short term.”
“We continue thinking about what some of the greatest impacts could be,” he said.
Leduc said that the US percentage has grown despite the fact that the fund has been diversifying away from the United States because existing investments have grown in value.
“American actions have risen,” he said. “It’s just because we make good investments.”
Is it time to invest at home again?
The CPPIB is also open to Canadian investment opportunities, said Leduc.
Prime Minister Mark Carney has announced plans to invest and build in Canada. He has mentioned pension funds as a possible source of money.
Finance Minister François-Philippe Champagne said the government plans to organize pension funds interested in investing at home.
“People see Canada as the place to invest,” Champagne told CBC News. “Then, we will always talk to them and investors around the world.”
There was a time when the CPP invested mainly in Canada.
Initially, it was operated as a payment model for use with investments in Canada, largely in government bonds.
However, in the late 1990s, the pension plan faced a crisis: the main auditor of Canada predicted that it will run out of money for 2014 unless something was done.
Headed by the then Finance Minister Paul Martin, and helped by officials such as Peterson, the Federal Government and the provinces agreed a package of reforms, including the creation of the CPPIB.
While CPPIB is a Crown Corporation, it operates independently of the government.
For years, a foreign property rule limited the amount that pension funds could invest outside Canada. Entering 1971, it limited investments for pension funds to 10 percent of its assets that go abroad. That rose to 20 percent in the 1990s and then 30 percent in 2001.
In his 2005 budget, the Minister of Finance, Ralph Goodale, repealed that rule, saying that the measure had the potential to increase risk capital investments by pension plans in Canada.
Since then, there has been a constant reduction in the value of CPP investments in Canada and a constant increase in US investments.
US actions increase in value
In 2005, 74 percent of CPP assets were invested in Canada. For 2015 it got down to 24.1 percent. During the last two years it has remained at 12 percent.
At the same time, the plan assets have grown, from $ 81.3 billion in 2005 to $ 714 billion on March 31. Its assets are expected to reach $ 1 billion in the coming years, which makes it one of the world’s largest pension plans.
However, as the proportion of CPP investment in Canada has decreased and its assets in the United States have increased, so it also has questions about where money is going.
In March 2024, dozens of the best Canadian executives wrote an open letter to the Minister of Finance, Chrystia Freeland, and the provincial finance ministers, concerned about “the decrease in Canadian investments for pension funds and their impact on the Canadian economy.”
They asked the ministers “to amend the rules that govern pension funds to encourage them to invest in Canada.”
“Investments made in Canada do not only affect pension portfolios; they also have a considerable impact on the country’s economy; generate jobs, improve income and increase contributions to retirement plans,” the executives wrote.
In April 2024, the Federal Government appointed the former governor of the Bank of Canada, Stephen Poloz, to analyze how “catalyze greater national investment opportunities for Canadian pension funds.”
That resulted in the Autumn Economic Declaration, including measures to facilitate that pension funds invest in Canadian companies, public service corporations of municipal property, airports and AI data centers.
Daniel Brosseau, co -founder of Montreal’s investment firm, Letko Brosseau, is concerned about “long -term erosion” in the investment in the Canadian pension fund in Canada and its impact on the economy.
“It has been a long -term decrease, and we are basically investing very little in Canada now,” he said.
Brosseau doubt that the measures in the economic update of autumn will make a big difference.
“They do not allow pension funds to distinguish between a Canadian investment and a foreigner in any way,” he said. “They will not have any effect.”
Instead, Brosseau suggests that the government imposes foreign income from pension plans.
“They could clearly see a difference between a Canadian investment and a foreign investment, and that would change their behavior,” he said.
Chris Roberts, director of Social and Economic Policy of the Canadian Labor Congress, says that the role of CPP in the Canadian economy is an important debate that is about to warm up, and wants all Canadians to participate.
“These are people who pay on the CPP every day and will get a CPP benefit when they retire,” he said. “They are often the opinion that the CPP Investment Fund should invest more in the home and create economic jobs and opportunities here in Canada.”
Quebec lessons
Unlike Quebec HuntHe has a double mandate to earn money and also invest in the economic development of Quebec, the only mandate of the CPP is to make money, Roberts said.
Senator Clément Gignac, economist by profession and former Quebec cabinet minister, has asked questions in the Senate procedures about where the CPP is investing. He says that Quebec has earned money successfully for the retirement fund of the province and at the same time reinforce economic development.
Gignac said that Carney’s promise to invest in infrastructure could create opportunities for CPP and other pension funds to invest in Canada.
“Do we need to change the mandate officially, or will it come naturally?” said.
Gignac would like a Senate committee or a special commission to analyze more closely how Canada’s largest pension plans, called Maple Eight, are investing their assets abroad.
“If something happens and geopolitics deteriorates, or we have a hostile foreign country that suddenly took advantage of our assets, just as we have seized Russia’s assets … or we changed the rules of the game on taxes, just as Mr. Trump wants to change them, it would be important if we have a solid risk management analysis.”
Trish Mcauliffe, president of the National Federation of Pensioners, said that its members would like to see the prudent ethical investment by the CPPIB, as well as a greater investment in Canada.
“We don’t love anything better than seeing great investments here …
Mcauliffe said that the Federation attends the meetings of the interested parties with the CPPIB, and although in the early stages, he hopes that the question will be part of the Federation Convention in October.
“We have hopes … that they will make the right decisions,” he said.
“But don’t be wrong, people are looking.”
