Federal government is seeking $500 billion in new financing, amid era of "economic nationalism"
The federal Liberal government is intensifying calls for Canada’s pension plans, who manage more than $3 trillion in assets, to play a central role in revitalizing the national economy through increased domestic investment, as reported by the Financial Times.
As part of a broader push to reduce economic reliance on the United States, Ottawa is seeking upwards of $500 billion in new financing to support infrastructure, innovation, and industrial development at home.
Prime Minister Mark Carney has further signaled his government’s commitment with a new “Buy Canada” strategy aimed at strengthening domestic supply chains and bolstering procurement from local producers. The initiative comes amid a shrinking economy, with GDP contracting more than expected in Q2 and a 7.5 per cent drop in exports.
In an interview with the Financial Times, Industry Minister Mélanie Joly underscored this policy direction, emphasizing that a new era of “economic nationalism” requires Canadian institutions, including pension funds, to rethink their investment strategies.
“For a long time, pension funds have said that they need to provide yields to their beneficiaries… but they can have a discussion with their beneficiaries about their impact in their own country, their own environment, where beneficiaries live,” she said. “There’s a sentiment that we need to think about Canada first and that we need to put capital where our mouth is.”
Despite government pressure, the country’s major pension funds remain focused on global diversification. The Canada Pension Plan Investment Board (CPP Investments), the largest pension fund in the country with $714 billion in assets, currently allocates nearly half of its assets to US-based holdings. Meanwhile, OMERS, with $141 billion in assets, had just 16 per cent invested in Canada and 55 per cent in the US as of mid-year.
Yet, CPP Investments recently committed $225 million to a new data centre in Cambridge, Ontario, and maintains a $1.7 billion stake in Canadian Natural Resources, the country’s largest energy firm.
“Dozens of policymakers have frequently commented in recent years about welcoming more investments into Canada and our approach remains unwavering and steadfast,” CPP Investments said in a statement to the Financial Times. “We act in the best interests of contributors and beneficiaries in line with the pension promise.”
Still, data from the CPPIB, reveals a continued tilt toward global markets. Its allocation to Canadian assets declined to 12 per cent in March 2025 from 14 per cent two years earlier, even as the absolute dollar value of domestic holdings increased.
Meanwhile, other Canadian pension plans maintain a higher domestic exposure. The Healthcare of Ontario Pension Plan (HOOPP), with $123 billion in assets, has more than 55 per cent allocated to Canadian investments. The Ontario Teachers’ Pension Plan (OTPP), managing C$270 billion, holds 36 per cent in domestic assets.
To create more attractive conditions for local investment, the federal government has launched a new Major Projects Office aimed at streamlining infrastructure approvals and facilitating participation from large institutional investors, including pension plans. It is also reviewing existing ownership restrictions on municipal utilities that currently limit private ownership to 10 per cent.
Last December, Ottawa also eliminated the 30 per cent cap on pension fund investments in Canadian entities. The change was included in the federal Fall Economic Statement, which stated, “This will make it easier for Canadian pension funds to make significant investments in Canadian entities.”
Original reporting by Ilya Gridneff in Toronto and Mary McDougall in London for the Financial Times
