The Agenda with Steve Paikin (Audio) - Should Pension Funds Help Build Canada's Future?

Episode Date: April 9, 2026

The federal Liberals are pitching big, costly bets such as nuclear power, critical minerals, and high-speed rail as central to Canada's economic future, raising questions about who pays and whether pension funds should help finance projects tied to economic sovereignty. Matthew Mendelsohn and Keith Ambachtsheer examine the risks and rewards of tapping pension capital. Then, economist Kaylie Tiessen looks critically at the surge in "Buy Canadian" policies and whether they actually deliver on their economic promises.See omnystudio.com/listener for privacy information.

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and series that made navigating life in Ontario a little easier, TVO's commitment to lifelong learning has stood the test of time. Renew your support now and help preserve this legacy. Visit TVO.com.me slash 2026 renewal to make your donation today. When Prime Minister Mark Carney gave his history-making speech of the World Economic Forum in January, Canada's pension funds got a shout-out. Our pension funds are amongst the world's largest and most sophisticated investors.

And he's not wrong. By the end of 2024, Canadian pension funds managed assets totaling nearly $2.5 trillion. That's trillion with a T. But here's the part that has some raising eyebrows. A lot of that money isn't being invested here in Canada. Take the Canadian pension plan, the largest pension fund in the country. 47% of its investments, which overall total more than $780 billion, are invested in the U.S. Just 13% are invested here at home. And a CBC analysis found, that's not unusual. As we try to build up our economy through big-ticket projects, should Canadian pension funds be investing more in Canada? And what can we do to make that happen?

Then, we look at how to close loopholes in buy Canadian policies so we can keep the economic benefits right here at home. Welcome to the rundown. Nuclear power, critical minerals, high-speed rail. The federal liberals have a long list of big, expensive projects they say, will help Canada realize its economic potential. But should pension funds, their very, very deep pockets play a role in making them happen.

Matthew Mendelsohn is the CEO of Social Capital Partners, and Keith Ambikshir is the co-founder of KPA Advisory Services and Director Emeritus of the International Center for Pension Management at the University of Toronto. Matthew, great to have you in studio. Keith, great to have you on the line from Fonte Hill, Ontario, Niagara. I want to start things off with a breakdown of assets owned by Kemp. Canadian trustee pension funds, almost $2.5 trillion worth held around the world. And as you can

see, domestic assets are at almost a trillion dollars, while the combination of foreign and unknown nationality assets are a little more than a trillion. Keith, I want to start with you. What does this chart tell you about the interest of Canadian pension funds in investing in home here in Canada? One word that comes to mind is diversification. This, the people that manage this money have a fiduciary obligation to think about risk and to manage both risk and return. And so when you get to the kind of sizes that we're looking at here, obviously you can't all invest in one country. You have to seek diversification around the world.

And so the discussion becomes, you know, either optimal amounts as to what you invest at home versus what you invest outside the country. And that's part of a live discussion that's ongoing. But I think the key principle here is that you can't stick all this money in one country. It has to be invested globally around the world. And our funds have gotten very good at doing that, especially at the big end where they actually have offices around the world to do this investing globally on behalf of Canadian pensioners. Matthew, Canadian pensioners are well served by pension funds. And other countries use us as a model.

We can talk about, you know, this speech in Davos, where Mark Carney gave a shout out to the pension funds there. Why should the obligation of pension funds go beyond simply the best return? Well, it's a big question. Keith is right. I agree with everything Keith said. It's really important that our pension funds are diversified, that they invest across asset classes, that they invest across geographies. They are very sophisticated, well respected. But I would add that at this moment, given what has happened over the last two years, we all recognize that the world has changed. The nature of risk has changed. Our largest trading partner has clearly changed.

And there's a lot more risk in investing in the United States. And the United States is also seeking to do us harm at the moment. So we have seen from our governments a deep belief that it is important that governments, that governments, rethink geopolitical strategy, how we invest, how we build the economy. As you know, the Canadian government is out there trying to attract $500 billion of investment. So I think at this point, in our history, it's really important that all institutional investors, pension funds, but others as well, big family offices, charitable foundations, endowments, all of us think about whether there are additional things we need to be thinking about

other than just market-adjusted returns. And I'm not saying those aren't important. Risk-adjusted market returns are very important. But there are some other things to be considering as well. When you look at the Canadian landscape, would a lot of these funds be a little nervous to change course, even if the surrounding environment is changing? If it's working, why change it?

Well, they certainly would be nervous. And that's an important piece to remember about how they're organized, how they work, how they incentivize their fund managers, how they organize themselves around their committees. So they would, over the last 20 years, have added climate risk committees, right? And so they're thinking about climate risk in ways that they didn't 20 or 30 years ago. Should they be thinking about sovereignty in ways that they would? weren't 20 or 30 years ago? Should they be thinking about the long-term value and investments that they are building here in Canada in ways that they did in 20 or 30 years ago? You can see that the federal government is looking at a whole bunch of different things, allowing pension

funds to own more than 30 percent of a company, invest more in our infrastructure. And the federal government is actually incenting by putting in some money, trying to crowd in investment in mid-sized Canadian businesses, in venture capital. So there are lots of ways that the Canadian government and others can incent different kinds of investments. All right, let's take a little broader look outside of this province as well. I want to look over to our neighbors to the east in Quebec. Keith, the CAS has a dual mandate to also invest. invest in Quebec itself. What has been Cass's experience with investing in Quebec's infrastructure particularly?

Let me just back up a little bit. The previous question, a lot of the way things are done depends on the governance and organization design of these plans. So dynamically over time, they have to be organized so that there's a board that oversees to make sure. that the organization has the right talents, but then on a dynamic basis, you know, the kind of things you're discussing and that Matthew's discussing, you know, that's part of an ongoing discussion. It's called the total portfolio approach, where the kind of things that come along with

the passage of time, you know, get integrated into potentially adjusting the asset mix the portfolio over time. So a good example of that is like I said. depot, one of the largest institutional investors in Canada. Actually, they were in the global mail this morning. They've just made a $1 billion commitment in Australia to a particular power plan that they're going to be funding. So it's a classic example of the around the world aspect of how these funds are managed

through time and how they make decisions over time. It has to be done in their risk or reward sense, but you also have to, especially when you go into private markets rather than just buying bonds and stocks, where you really need to have some good infrastructure intelligence and experience inside that organization to make those kinds of decisions. So they're very much integrated into the economies and they know what's going on. and that's part of their dynamic, ongoing decision process. Keith, I'll stick with you, but what infrastructure do other Canadian pension funds currently own here in Canada? Give us a sense of the picture here. Well, an obvious one that you may be driving on is a 407, owned by CDP Investment Board

to a significant degree. There are other examples, but one of the interesting things that we've learned over time is that it's more difficult. Canada currently to make those kinds of investments than it is in other countries. An example for example is Heathrow. Heathrow is owned by pension funds around the world in London. Pearson, not so much because it's very difficult for pension funds to sort of wrap their heads around how they would invest in Pearson.

It can't be done right now. So there's sort of a whole interesting discussion about how welcome this kind of capital is, how easy it is to make these kinds of investments. And that's an area where I think Canada still needs to do some work in terms of, you know, creating the environment that welcomes capital from around the world to make infrastructure investments in Canada. We should be doing more than what we're currently doing. Matthew, I'll get you on there. Should we be doing more? You know, we're talking, I'm mentioning airports. Well, we've got potential expansions here at Billy Bishop. Got expansions happening at Pearson. Talk to me a little bit about the challenges there.

and getting the infrastructure. So I won't speak particularly about that project. I'm not an expert on that project. But an important consideration that I think that the Canadian government should be thinking about is how we mobilize our institutional investors, yes, to invest in infrastructure, yes, to expand these kinds of big projects, but also how to invest to build new things as well. the federal government right now is seeking investors from around the world to build new resource projects, new energy projects, new infrastructure projects.

So I think it's really important that we use our huge resources to build new things as well. And from my perspective, our pension funds are amongst the most trusted, well-resourced, respected investors globally. And it strikes me that we should be doing more with them because we are at a moment where the returns are important. There's no doubt returns are important, but we see what the Quebec pension plan, they also have an economic development mandate.

I'm not saying our pension funds should have a dual mandate necessarily. But it is certainly possible to get really high returns. while also thinking about the long-term economic development that is taking place. And I think most Canadians, and many pension fund leaders will say the only thing Canadians care about is the returns. And as long as the returns are strong, everyone's happy. I just don't think that's true anymore. I just don't think that if the Canadian pension funds can get equally high returns,

but investing in Canada in our... growth companies in our resource projects, in our energy transition, or even in newer asset classes like affordable housing or community infrastructure, I just don't think Canadians, all Canadians will say the only thing that matters is getting the highest returns. I think they care about the long-term sustainability and growth and sovereignty of the country. And the pension funds do as well. Like they are trying to think this through. We are at a key moment here of rupture and change, I believe,

and I think we have to have this conversation more directly. Keith, let me get you in on there. Do you think pension plan members would be willing to sacrifice some return if they knew their contributions would be spent to strengthen the economy at home? It's a really tough question to put to someone who relies on a pension, to say, oh, yeah, I'll give up some of my pension. I think the interesting question is, is that really necessary?

Do we really need to go in that direction? I don't think we do, actually. A couple of things. There's an interesting concept in all this called, you know, the home bias. Pension plans around the world have a natural home bias to invest more in their own country than in other countries on a proportionate basis. So that's their why. Information. You have more information at home.

You know more people at home who to trust, who not to trust. So there's a natural home bias that's already in the cards. Should it be more than it currently is? My sense is that if that happens, it should happen for the right reasons, not to give up returns, but to facilitate and create the opportunities to make. those investments and part of that relates to the kind of people that are part of these investment organizations. And I think the staffing there is tremendously important as to the kind of people that are there with the assets and with the potential opportunity to make those investments.

We want them to be to have an entrepreneurial mindset. And again, as we were saying earlier, we're lucky in Canada to actually have these, especially the making people eight, the really big organizations, Kestepo, CPP investments, that have those kinds of people on staff. So we're actually quite well positioned to take advantage of, you know, home-based opportunities when they exist. And I would just say that I believe that it is very possible for large pension funds and other institutional investors to think about their governance and their committee structure. and how they are building funds and what kinds of investment opportunities they are looking for and achieve just as high returns by investing more domestically. And I'm certainly not saying they shouldn't be investing globally.

But putting aside the question that I believe that the evidence is very strong that you can be looking domestically and organizing yourself for particular kinds of opportunities that may require a bit more work to find, even though I believe that you can find, just as high returns investing domestically. I genuinely believe for most Canadians, if they are investing in Palantir or Elon Musk or crypto, there are a whole bunch of things in private prison system. If you actually engage with Canadians about whether they would accept half a percent,

because these are not big differences. It's not like you'd be getting 12% versus 0%. You don't have to invest in Palantir. You don't have to invest in Elon Musk. You don't have to invest in the building of private prisons for ICE and data collection. You don't have to invest in those things. It doesn't mean you can't find other investments and find other returns. So I think that at this time, I would also add, you don't want to be investing in companies that you know,

medium term, long term, are going to be hurting the country, are going to be hurting your sovereignty, are going to be extracting wealth from Canada and preventing smaller Canadian businesses from growing and thriving and not getting access to the capital and not becoming more productive. So I think you can get very high returns investing in Canada, but I also think that we have to think about questions

like sovereignty and our long-term economic growth much more than we have. All right. I want to talk a little bit about the Protect Ontario Account Investment Fund. Not a lot of details yet so far. This was announced in the Ontario's budget earlier this year, $4 billion. Keith, how should it work? You know, there's still some details out there that we need to know,

but how should it work in order to attract private capital such as pension fund investments? Well, if you read the Globe of Mail, I actually had an op-end piece on that topic just a couple of days ago. My concern with what I understand to be the current intent is that the Ontario government made it very clear that this new capital fund needs to be managed by a private sector manager. And so my question was in my op-ed piece, why? We have such a great reputation and we have this great ability to get these assets. managed at a much lower cost than typically what's being charged in the commercial private equity space. Like rather than three or four percent of assets, it's 0.4% of assets that can, you know, through

which you can be on through these public funds. I agree that we have extraordinarily well respected, competent large public sector pension managers, the federal government with the Canada Growth Fund right now, and this is getting a bit into the weeds, but they have a public pension manager who is investing those funds, partnering with government. So we are at a time where, you know, it's not just let the market decide, let capital decide all around the world. Governments and private sector are coming together to build projects, co-invest. I mean, that's been one of the things that Canada has been focused on the last 18 months, how do we make it less risky for pension funds or others to

invest in big things that are going to build our sovereignty, that are going to build housing, that are going to build infrastructure here in Canada? And we are at a moment where, you know, a lot of our public sector fund managers can be managing other initiatives and other pools of capital and working with government to build our sovereignty, strengthen our food system, all the kinds of things that we're talking about rather than just passively look around the world for the best possible return on our dollar.

Gentlemen, we are going to have to leave it there. Matthew, Keith, thank you so much. A wealth of knowledge at the table here. Really appreciate it. Thank you so much. Okay, given everything that's been happening south of the border and around the world, quote-unquote, by Canadian policies have taken off. but not all of them deliver what they promise.

Kay Lee Tieson is Chief Economist with the Canadian Shield Institute for Public Policy. And she joins me in studio. How are you doing? I'm doing great today. How are you? I'm doing well. All right. The Institute came up with something called the Sovereignty Score.

Help us understand what is it and what's the methodology behind it. Yeah. Okay. So the Sovereignty score is, you know, exactly what it says is in a nutshell. We're looking at government policy decisions based on whether. or not, it's actually delivering the sovereignty that our governments say they're trying to sort of advance at this particular moment. Sovereignty is not simple. When we first started out, we thought, oh yeah, this is so easy. Something is either sovereign, it's not, or it's not. You either

have control or you don't. But in fact, there's a constellation of factors that come with sovereignty. Our score is divided into sort of two categories. There's sovereignty, which is about governance and control. And then there's economic prosperity, which is about delivering value add to Canada's economy, basically. And we look at these 10 factors underneath these two categories and then score every policy for whether or not it's actually delivering. We think about things like jobs. So jobs is a really important piece of sovereignty. Absolutely an important piece, and it's an important piece of value ad. But we found so far that it's basically one of the only things that governments focus on and we should be focusing on more than just jobs,

though jobs is incredibly important. So then we move on to talking about skills, whether or not we're utilizing the skills that Canadians are developing or improving the skills of Canadians as we're creating more jobs. Actually, thinking about things like IP ownership and delivering profit to and building Canadian companies instead of delivering sort of government investment to foreign firms that then sort of leak that value to other countries and other economies instead of building even more strength and prosperity in Canada. That's the economic prosperity side. We also think about things

like diversifying the supply chain and capturing the value chain, reducing reliance on foreign firms. And another one on the Shield score, I haven't listed them all, but another one is making sure we're not sort of entrenching monopolies. Are we making sure we're building many companies instead of just one that could eventually have enough power to influence government in a way that makes us not sovereign much as we've seen the tech industry in the United States. And when we talk about the methodology, we're talking about a score out of 10. Is it a checklist if they've crossed off all of those, sort of some of the points that

you mentioned? Yeah, absolutely. So it's just a yes or no. We had talked about doing half points, and then we realized that every single one would get a half point all the time because there's like, oh, we got it a little bit of the way there, you know, two out of 10 or like, you know, 10 per 20% out of the full 100. So just making sure we're going yes or no with every point is what we decided on in the end. All right.

Your Institute assessed some sovereignty-related policies that are encouraging growth in domestic companies. We'll start off with the defense industrial policy. This came out just this year in February 2026. Got eight out of 10. Yeah. What is it doing well? So the government has, the federal government has the intention of growing Canadian companies, creating jobs in Canada, increasing skills of Canadians and utilizing the skills that many of us have developed over time, but maybe aren't able to utilize in the current labor market.

And so making sure that those things go, are moving forward. Also has a focus on IP retention and building Canadian companies is another piece of the puzzle. It's certainly going to increase security. security of Canada, as well as avoiding entrenching monopolies because the intention is to look more at smaller Canadian companies and start to grow them instead of just delivering all of the money to American firms in the American military-industrial complex. Unfortunately, what we've seen so far with the investments that have gone into the defense industrial strategy is that they're not necessarily living up to their potential. So we analyzed a recent

a recent announcement, which was money into creating ammunition, building ammunition in Canada. And that move underneath the defense industrial strategy only got a three out of 10. So the intention of the policy got an 8 out of 10, and then the execution is getting a 3 because it did not increase, did not decrease our reliance on foreign firms. There's a billion dollar investment into an American company that will be building the shells and creating the inputs into the ammunition as one example. of what got missed. Okay.

Let's look at another one that did quite well. The Online Streaming Act. This was introduced in late 2023 under the Trudeau government. Nine out of ten. This is where we're talking about Netflix, YouTube here. What's working with that policy? Yeah. So the intention, again, of the policy is to make sure that the industrial activity

that is occurring to produce all of the things that we stream is actually occurring in Canada. And so there's very, very in-depth and sense. specific policies about how many jobs need to be created, what the skills are that are required. So it's making sure that jobs across the whole skill level of the industry are created in Canada, and that activity is done here. In addition, we also see that there are requirements for IP to be retained in Canada by the writers. It's not something that just immediately Netflix owns the rights to your ideas anymore,

but in fact some of that stays in Canada. And that means that then as, you know, there's spin-offs and other things that also is going to be based in Canada. That's some of why the policy got such a high score. Let's talk about the bi-Canadian policy. This was a federal policy given six out of ten some work to be done there. What's the weakness of this plan? Yeah, the weakness there is, first of all, the bi-Canadian policy delivers it. It assumes you're a Canadian company as long as you have a Canadian address.

It's all you need, an address. Yeah, and there are so many foreign subsidiaries that have a Canadian address, but actually are owned and controlled by an American company. And so right away, we see, you know, there's this idea that, oh, yeah, we're delivering all of this value to Canadian companies, but in fact they are American companies. So that's one of the big weaknesses. All right.

In the budget, the 2026 Ontario budget, the province announced an initiative called the Protect Ontario Account Investment Fund. The Ford Government says it will invest $4 billion into it. How should this plan work so that it can have its maximum effect when we talk about a capital investment, but also from a sovereignty score too well? Yeah. So when we heard about this fund, we thought right away like, oh, this would be great for a sovereignty score.

And then we read the budget more deeply and found that there aren't details yet. So we don't know how it's going to operate. We do know that the Protect Ontario account, there's sort of two. pieces under that already and they define in Ontario or Canadian a company as a company that has 250 employees or more and has a head office or main office in Canada or in Ontario. And that means that as long as you have that foreign subsidiary with a main office in Canada, they can they can qualify to get money under this fund. We are saying that that isn't good enough. We should actually be focusing all of that money. It's billions of dollars focusing that money on growing Canadian

companies that then can expand their reach in Canada, create jobs, higher skills, utilize the skills capacity of Canadians, reduce reliance on foreign firms, diversify the supply chain, focus on the supply chain in Canada. That would do a lot to actually increase the score that they could get, but we couldn't score it because we don't have any details yet. Fair enough. All right. Well, we'll have to wait until we get more details and we'll look forward to your score. Kala Dyson, we're going to have to leave it there. But thank you so much for your time. I really appreciate it. Thank you.

It's been great. I'm Jay-N. Thanks for watching The Rundown. We'd love to know what you think. So send us your suggestions and feedback at tbO.org slash rundown feedback. Or as always, you can leave us a comment on YouTube. Until then, I will see you tomorrow.