The 2023 federal budget, which was announced on Tuesday, includes several initiatives related to defined benefit pension plans and the broader institutional investment sector.
The government said it would entrust the administration of a new federal investment fund to the Public Sector Pension Investment Board. “By partnering with PSP Investments, the Canada Growth Fund will be able to move quickly and begin making investments to support the growth of Canada’s clean economy,” said the budget document. “PSP Investments will provide an independent investment team with extensive experience across the range of investment tools that the [fund] will use to deliver on its mandate and attract new private investment to Canada.”
Read: PSP Investments focusing on climate change in updated proxy voting guidelines
The CGF, which received $15 billion from the government in the 2022 budget, is mandated to allocate capital in a manner that catalyzes private sector investments in projects that have the potential to transition the Canadian economy away from a reliance on fossil fuels.
To ensure that workers are represented in the governance of PSP Investments, the budget said the government will consult unions this spring about adding two seats to PSP Investments’ board of directors for representatives of organized labour, a move initially proposed in the 2022 federal budget.
The budget also included proposals for the regulation of cryptocurrency assets held by pension plans and other financial institutions by Office of the Superintendent of Financial Institutions. Under the existing rules, federally regulated financial institutions must disclose crypto exposure when it’s materially relevant for auditing purposes. The proposal would require them to provide disclosures for all crypto-asset holdings.
Read: Cryptocurrency plunge a cautionary tale for U.S. public pension funds
“The government will also work with provinces and territories to discuss crypto-asset or related activities disclosures by Canada’s largest pension plans, which would ensure Canadians are aware of their pension plan’s potential exposure to crypto assets,” said the budget document.
The budget also outlined plans to provide a $2.4 billion to Ukraine, which will be administered by the International Monetary Foundation. A portion of the funds will be to help fulfill outstanding pension obligations from Ukraine’s national DB plan.
“Canada’s financial support for Ukraine has helped its government continue to operate in the face of Russia’s illegal invasion, including by paying pensions and delivering essential government services to Ukrainians, purchasing fuel to get through the winter and restoring damaged energy infrastructure.”
Read: Majority of institutional investors believe Ukraine crisis will lead to stagflation: survey