Federal Government Plans to Remove Pension Funds’ 30 Percent Investment Cap

Minister of Finance and Deputy Prime Minister Chrystia Freeland listens to a question from a reporter during a press conference at the National Press Theatre in Ottawa on Dec. 3, 2024. The Canadian Press/Spencer Colby

The Liberal government is going to remove the cap that restricts Canadian pension funds from owning more than 30 percent of the voting shares of Canadian entities.

Deputy Prime Minister Chrystia Freeland said the upcoming fall economic statement will remove the cap on pension funds holding over $3 million in assets, allowing them to invest in Canadian entities with greater ease. Ottawa plans to consult with the provinces on how to treat provincially regulated pension plans.

Freeland also announced there will be a fourth round of funding for the Venture Capital Catalyst Initiative, designed to encourage investment in Canada’s startup sector. Ottawa will also invest $1 billion in mid-cap growth companies and unlock up to $45 billion in aggregate loan and equity investments for certain AI data centre projects.

Ottawa is also considering lowering the 90 percent threshold that limits municipal-owned utility corporations from attracting more than 10 percent of private sector ownership, which would allow them to acquire higher ownership shares in the entities. These utilities would be able to access more capital and meet future demand.

The government will also consult with airports and pension funds on ways to further incentivize investment on lands owned by airports, which could include changing rules around airport authority ground leases.

Freeland said Canada is currently in a “global fight” for capital, particularly with the incoming U.S. administration under Donald Trump threatening 25 percent tariffs on Canada. She said the administration is attempting to create “economic uncertainty outside the United States as a strategy to discourage investment anywhere other than the United States.”

“Our government is fighting for Canadian jobs, our government is fighting for capital, and the measures I’m announcing today on ... pension funds are part of that,” she said.

Freeland will present the government’s Fall Economic Statement on Dec. 16, a day before Parliament is dismissed for the winter break. The statement is likely to include measures to increase border security and double the loan limit to $80,000 for the Canada Secondary Suite Loan Program, which helps homeowners create rental units in their properties.

The deputy prime minister will also reveal to Canadians whether the government met its economic targets of a 42.1 percent debt-to-GDP ratio for the 2023–2024 fiscal year and will keep the deficit below $40.1 billion. During a Dec. 10 press conference, Freeland said the government will have met the debt-to-GDP ratio goal but did not answer whether it would meet the second promise.