Key Takeaways
- • John Rapley, a Globe and Mail contributing columnist, argues in an opinion piece that Canada's pension funds, which manage roughly $2 trillion in assets, should take on a national-development mandate and effectively operate as sovereign wealth funds, even if pensioners' returns suffer.
- • Rapley's case rests on the view that Canada has redistributed future wealth to the present since the 2008 financial crisis, and that wealth concentrated in real estate and dividend stocks is weighing on productivity and growth.
- • The piece contrasts Canada's proposed sovereign wealth fund, which Prime Minister Mark Carney announced with $25 billion initially, with Norway's fund at US$1.7 trillion in assets.
- • Rapley cites the Caisse de dépôt et placement du Québec's existing dual mandate as proof that a development objective need not be controversial or undermine returns relative to the Maple Eight funds.
- • The column is an opinion piece; it reflects the author's position and is not a reported news event.
Summary
In a Globe and Mail opinion essay published as part of its Prosperity's Path series, John Rapley argues that Canada's pension funds should be expanded into sovereign wealth funds that invest more domestically, even if pensioners take a hit. According to the column, the Bank of Canada's post-2008 policy of cutting rates and buying government debt boosted borrowing and economic activity without improving long-term productivity, effectively shifting future income into the present.
Rapley says the resulting concentration of capital in real estate and in established, dividend-paying companies has raised fixed costs, slowed new business formation and depressed labour productivity. He describes this dynamic as the "Icarus effect." He frames the policy response as a reversal of that transfer so future generations share in the benefits.
The author notes that Prime Minister Mark Carney recently announced a sovereign wealth fund to invest in nation-building projects, but argues it does not go far enough, given its initial $25 billion capitalization against Norway's US$1.7 trillion fund. Rapley's proposed next step is to expand the mandates of Canadian pension funds, which together manage about $2 trillion, so they invest more in Canada. He acknowledges the idea is controversial; a 2024 letter from industry executives to then-finance minister Chrystia Freeland drew pushback from the pension industry, which argued it would hurt returns.
Rapley points to the Caisse de dépôt et placement du Québec, which already has a dual mandate including Quebec's economic development, and argues its returns are in line with other Maple Eight funds. He also cites Singapore's Central Provident Fund as an example of pension assets directed toward housing, education and local equities. The column further criticizes the Canada Pension Plan's purely fiduciary mandate, noting heavy fossil fuel exposure and that about half of CPP's holdings are in the U.S., and argues that an expanded mandate could address both issues.
Rapley says the resulting concentration of capital in real estate and in established, dividend-paying companies has raised fixed costs, slowed new business formation and depressed labour productivity. He describes this dynamic as the "Icarus effect." He frames the policy response as a reversal of that transfer so future generations share in the benefits.
The author notes that Prime Minister Mark Carney recently announced a sovereign wealth fund to invest in nation-building projects, but argues it does not go far enough, given its initial $25 billion capitalization against Norway's US$1.7 trillion fund. Rapley's proposed next step is to expand the mandates of Canadian pension funds, which together manage about $2 trillion, so they invest more in Canada. He acknowledges the idea is controversial; a 2024 letter from industry executives to then-finance minister Chrystia Freeland drew pushback from the pension industry, which argued it would hurt returns.
Rapley points to the Caisse de dépôt et placement du Québec, which already has a dual mandate including Quebec's economic development, and argues its returns are in line with other Maple Eight funds. He also cites Singapore's Central Provident Fund as an example of pension assets directed toward housing, education and local equities. The column further criticizes the Canada Pension Plan's purely fiduciary mandate, noting heavy fossil fuel exposure and that about half of CPP's holdings are in the U.S., and argues that an expanded mandate could address both issues.
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