Nearly half of national public pension plan is invested in U.S. — and only 12% in Canada

As a former top Finance Department official, Susan Peterson played a key role years ago in creating the stable Canada Pension Plan that we see today. But even she was surprised by the numbers.

A few weeks ago, the Canada Pension Plan Investment Board (CPPIB) revealed that 12 per cent of the CPP's assets are invested in Canada — its lowest level ever. The largest chunk of its $714-billion fund, 47 per cent, is currently invested in the United States — its highest level ever.

Peterson doesn't think she's the only one surprised.

"If Canadians knew out of the $714 billion such a miniscule amount was invested in Canada, I think they would say, whoa, what's wrong with this picture."

The CPPIB is not alone.

Experts say the Canada Pension Plan (CPP) is one of several Canadian pension plans that have been investing far more in the U.S. than in Canada in recent years. The CPP, whose investments are managed by the CPPIB, also known as CPP Investments, is a public pension plan that covers millions of Canadian workers across the country with the exception of Quebec, which has its own manager, the Caisse de dépôt et placement.

Those who support this high level of U.S. investment, including the CPPIB itself, argue the plan's mandate is to make money. They argue U.S. investments offer more diversity and higher returns — which help ensure the plan will be able to pay out benefits for years to come.

Others, however, question why the plan isn't doing more to invest in Canada to create Canadian jobs and infrastructure projects.

They are also concerned about the plan's U.S. exposure at a time when President Donald Trump's administration has made the country a riskier place to invest. 

The Trump administration's "big, beautiful" tax reform bill also contains a section that risks hitting Canadian pension funds that have U.S. investments with a new withholding tax that experts predict could cost Canadians and Canadian companies billions if it is adopted.

Some pension funds, like the Public Sector Pension Investment Board which has 41 per cent of its assets invested in the U.S., have said in recent days that they are reconsidering their U.S. exposure and are looking for more Canadian investment opportunities.

Michel Leduc, head of public affairs and communications for the CPPIB, says it has to invest for the long term, regardless of individual governments or administrations.

"We're investing money for people who aren't even born yet," he said. "That long-term thinking must be the strongest pillar of how we think about our investment strategy."

But he says the CPPIB at the same time isn't "short-term stupid."