With over $3 trillion in assets, Canadian pension funds are renowned around the world for being well-funded and well-managed, ensuring their long-term ability to provide financial security and dignity to retirees across Canada. By creating a more attractive investment environment for pension funds, we can grow our economy and boost productivity, while strengthening the robust retirement incomes for Canadians.
In Budget 2024, the government announced that Stephen Poloz, former Governor of the Bank of Canada, would explore how to catalyze greater domestic investment opportunities for Canadian pension funds. Since then, the former Governor has actively consulted and engaged with pension funds, equity investors, academics, unions, and industry representatives on ways to facilitate domestic pension investment.
In connection with that work, in the 2024 Fall Economic Statement, the government is moving forward with a suite of measures to facilitate increased pension fund investment in Canada. These measures include:
- Removing the current rule limiting investments in Canadian entities by pension funds to no more than 30 per cent. This will make it easier for Canadian pension funds to make significant investments in Canadian entities. During the development of regulatory amendments, the federal government will consult with provinces on the treatment of provincially-regulated pension plans.
- Crowding in private venture capital by launching a fourth round of the Venture Capital Catalyst Initiative with $1 billion in funding in 2025- 26, on a cash basis. To leverage more private venture capital, this round will include more enticing terms for pension funds and other institutional investors.
- Bolstering mid-cap companies' access to capital, by providing up to an aggregate of $1 billion, on a cash basis, to invest in mid-cap growth companies. The government's investment will be structured to be concessional and equal to 25 per cent of net new private investments, in order to crowd in additional private capital into the growth equity market.
- Securing Canada's AI advantage by unlocking up to $45 billion in aggregate loan and equity investments for AI data centre projects. To access these loans or project equity, Canadian pension funds must invest at a ratio of 2:1 of their own capital, via debt or equity, and become significant shareholders in an AI data centre project. Seven pension funds have expressed interest in working with the government on detailed project parameters.
- Helping airports attract the investment needed to improve, by engaging with airports and pension funds on ways to further incentivize investment and development on airport lands. This includes exploring potential changes to airport authority ground leases.
- Exploring lowering the 90 per cent threshold that currently limits municipal-owned utility corporations from attracting more than 10 per cent private sector ownership. Lowering this threshold for Canadian pension funds would allow them to acquire a higher ownership share in these entities. For example, municipally-owned electricity utilities would be able to access more capital to meet future demand and expand electricity production and distribution grids.
By creating a more attractive investment environment, we are helping to grow our economy and boost innovation, while generating returns that will strengthen the robust retirement incomes of Canadians. More details will be announced in the 2024 Fall Economic Statement.
