CAP Invest Initiative aims to channel more long-term capital between two top pension markets
Canada and Australia are tying together two of the world’s largest retirement systems through a new investment pact that aims to push more pension capital into both markets.
More than a dozen Canadian and Australian pension giants have entered a first-of-its-kind memorandum of understanding (MOU) under the Canadian-Australian Pension Funds Investment Initiative (CAP Invest Initiative).
CPP Investments said the initiative asks leading pension investors to make a voluntary commitment “to facilitate dialogue on investment environments and policy barriers to generate solutions that unlock greater opportunities for value creation.”
Bloomberg reports that the MOU was announced in Sydney during Canadian Prime Minister Mark Carney’s visit to Australia and is the first agreement between the two pension systems.
Under the arrangement, funds will cooperate to channel more pension capital into opportunities in both markets, according to a statement from eight of Australia’s largest pension funds cited by Bloomberg.
Signatories include AustralianSuper, which manages A$410bn (US$289bn), and the Canada Pension Plan Investment Board, with $781bn (US$571bn) in assets, along with eight other major Canadian funds.
Canada operates the world’s second-largest pension system, while Australia’s A$4.5tn pool is No. 4, and Canada’s system is forecast to reach $8tn while Australia’s is projected to swell to A$11tn by 2040, according to the same statement cited by Bloomberg.
CPP Investments said the CAP Invest Initiative “fosters collaboration among participating pension and investment funds in Canada and Australia, with millions of contributors and beneficiaries in both countries.”
While tailored to these markets, the underlying practices “such as structured engagement, identification of opportunities and shared learnings, are the same disciplines that support success across other regions where CPP Investments operates.”
The organisation added that continuing to build strategic relationships between participants aligns with its commercial activities internationally.
CPP Investments president and CEO John Graham said the fund will use its experience, knowledge and relationships to contribute to the CAP Invest Initiative.
He described CPP Investments as “an established global investor” and said the initiative aims to support stable, investable markets over the long term.
Bloomberg reports that Carney’s government is seeking funding for large-scale infrastructure projects — including ports, rail and pipelines — as Canada looks to cushion its economy against US President Donald Trump’s protectionist policies, and that the Canadian leader has toured the globe in recent months searching for capital to help fund those ambitions.
The new agreement is “underscoring support for ongoing cooperation between Canada and Australia in the interest of mutual value creation,” CPP Investments said in a separate statement, as cited by Bloomberg.
Australian funds, supported by mandatory retirement contributions set at the equivalent of 12 percent of wages, are steadily increasing offshore investments, with roughly half of the country’s pension assets invested abroad and that share expected to rise as managers pursue larger deals.
The Australian funds’ statement said there is “fertile ground” for investment between Canada and Australia and that the agreement will facilitate dialogue with governments on policy barriers to improve the business environment for investment.
The MOU will “unlock greater long term capital for private investment on behalf of millions of working and retired people,” the statement added, according to Bloomberg.
Through its participation in the CAP Invest Initiative, CPP Investments said it supports a collaborative framework for information-sharing among partners that “enhances collective learning and contributes to the prudent deployment of patient capital, in the ultimate service of delivering strong returns for CPP contributors and beneficiaries.”
