More than a dozen Canadian and Australian pension giants have signed a first-of-its-kind agreement to increase investment between the countries, home to two of the largest retirement systems in the world.
The initiative was announced in Sydney on Wednesday during Canadian Prime Minister Mark Carney’s visit to Australia. Under a memorandum of understanding – the first between the two systems – the 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.
Signatories include AustralianSuper, which manages A$410 billion ($289 billion), and the Canada Pension Plan Investment Board, with 781 billion Canadian dollars ($571 billion) in assets, along with eight other major Canadian funds.
Canada operates the second-largest pension system in the world, while Australia, with its A$4.5 trillion fund, ranks fourth, according to the statement. The Canadian system is projected to reach CAD$8 trillion, while the Australian system will reach CAD$11 trillion by 2040.
Carney’s government is seeking funding for large-scale infrastructure projects such as ports, railways and pipelines, as Canada seeks to protect its economy from U.S. President Donald Trump’s protectionist policies. The Canadian leader has traveled the world in recent months in search of capital to finance these ambitions.
The new agreement “underlines support for continued cooperation between Canada and Australia in the interests of mutual value creation,” CPPIB said in a separate statement.
Australian funds, with a large influx of capital from mandatory retirement contributions, set at the equivalent of 12% of salary, they are constantly increasing their investments abroad. About half of the country’s pension assets are invested abroad, a percentage that is expected to increase as managers seek larger deals.
There is “fertile ground” for investment between Canada and Australia, according to the statement from the Australian funds, and the agreement will facilitate dialogue with governments on policy barriers to improve the business environment for investment.
The memorandum of understanding “will free up greater long-term capital for private investment on behalf of millions of working and retired people,” he added.
