\u201cFor a long time pension funds have said that they need to provide yields to their beneficiaries\u2009.\u2009.\u2009.\u2009but they can have a discussion with their beneficiaries about their impact in their own country, their own environment, where beneficiaries live,\u201d she said.<\/p>\n
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M\u00e9lanie Joly wants pension funds to focus on domestic investment and major infrastructure projects \u00a9 Bess Adler\/Bloomberg<\/p>\n
Like the UK<\/a>, Canada has been examining how to channel more pension assets to domestic targets to combat weak productivity and poor business investment.<\/p>\n Last year more than 90 Canadian corporate executives signed an open letter calling on the government to amend rules which would allow them to increase domestic investments, saying the amount they allocated to Canadian equities had dwindled from 28 per cent in 2000 to 4 per cent by 2023.<\/p>\n Ottawa in December lifted its 30 per cent cap for investments in Canadian entities at a time when Trump was threatening tariffs<\/a> and trade wars against its major trading partner.<\/p>\n \u201cThis will make it easier for Canadian pension funds to make significant investments in Canadian entities,\u201d said the finance ministry\u2019s Fall Economic Statement.<\/p>\n The Canada Pension Plan Investment Board, the country\u2019s largest fund with C$714bn of assets, revealed its total allocation to Canadian assets dropped to 12 per cent of the fund in March from 14 per cent two years earlier, although the total value of Canadian assets still increased.<\/p>\n But Paul Beaudry, a former Bank of Canada deputy governor, warned forcing funds to invest locally was \u201cvery dangerous\u201d as it risked creating \u201ca type of crony capitalism\u201d.<\/p>\n Beaudry said the government could identify either socially beneficial projects or mid-level companies that big funds overlooked for investment.\u00a0<\/p>\n \u201cI\u2019m not against pushing it but I like it to be more on the incentive part than on the idea of kind of forcing it,\u201d he said.<\/p>\n Prime Minister Mark Carney launched a \u201cBuy Canada<\/a>\u201d campaign last month that prioritises local products for procurement as a way to make Canada \u201cthe strongest economy in the G7\u201d.<\/p>\n It is an ambitious goal considering the country\u2019s economy shrunk more than expected in the second quarter while exports fell 7.5 per cent compared with the first three months of the year because of the tariffs, according to Statistics Canada.<\/p>\n