The north star for pension funds, writes David Olive, is to protect contributions received from plan members and to pay pension benefits to them in retirement. That is all — and why politicians should not meddle.
Canada’s public pension funds are under pressure to invest more in Canada. That pressure should be resisted. A March 6 open letter signed by about 90 business leaders calls on Ottawa and provincial finance ministers to “amend the rules governing pension funds to encourage them to invest in Canada.”
The funds already invest about a quarter of their assets in Canada. But Chrystia Freeland, the federal finance minister, would like to see a higher level. Embracing the open letter, Freeland said on March 9 that the feds are committed to “help (the funds) to find more opportunities to invest here in Canada.”
Peter Bethlenfalvy, the Ontario finance minister, seconded Freeland’s call for what would amount to upheaval in the pension sector. Freeland earlier promoted the idea in her fall economic statement in November. And it’s a bad idea.
Of course, governments would like to see the more than $3 trillion managed by Canada’s pension plans used to indirectly advance their goals. So would small mining, energy and tech firms starved for capital because investors regard them as too risky. But that’s not the mandate of pension funds, nor should it be.
For the rest of this column: https://www.thestar.com/business/opinion/public-pension-plans-are-being-urged-to-invest-more-in-canada-why-this-is-a/article_1e4e8846-e567-11ee-b009-1f076b0ee004.html