Millions of Canadians Have Pension Funds Abroad – Unknowingly: Report

Millions of Canadians have had their pension funds allocated in offshore funds – without being properly informed, according to a report released yesterday.

Canadian news organization Radio-Canada conducted an investigation based on the Paradise Papers leak which says it discovered that millions of ordinary Canadians have an interest in money parked in tax havens – almost certainly without knowing it.

According to the Paradise Papers offshore financial documents leak, seven of the country’s so-called “big eight” pension funds, representing more than 25 million workers, have used tax havens to invest the retirement savings of the nation. Canadians.

The CBC report questions whether Canadians ‘retirement money funds an offshore industry that undermines tax fairness and transparency, which Hassan Yussuff, the president of the Canadian Labor Congress, said that Canadians’ pensions simply should not be invested in tax havens because of their notoriety. as epicenters of tax evasion.

“We want the tax system here to be credible,” Yussuff told the CBC. “This is absolutely unacceptable in view of what is expected of pension funds, in terms of their ethical investment.”

The Canadian federal government has said it wants to make the tax system fairer – in part, the Canadian finance department says on its website, by working “to end the use of tax havens.”

‘Contradictory’

Yussuff said it is contradictory to continue to promise tax fairness and transparency while, simultaneously, the CPP – the federal pension plan – is embroiled in some of the tax havens that are the targets of fairness campaigns and tax transparency.

The CBC said high-profile overseas pension plan transactions include Highway 407 north of Toronto, in which the Canada Pension Plan Investment Board bought a 40% stake, in party through an entity in Bermuda. Or the high-speed rail line from London, England, to the Channel Tunnel, which two Canadian pension funds held until the start of the year through a shell company in Jersey, a tax haven in the Channel Islands. .

None of the pension plans would say exactly how much of their income is generated by investing in tax havens. In response to questions from CBC, almost all pointed out that Canada does not tax pension plans on their investment income, so their use of tax havens makes no difference in the coffers of the federal or provincial government.

Canadian pension fund management organizations mentioned in the Paradise Papers include:

  • Canada Pension Plan Investment Board
  • Quebec deposit and placement fund
  • Ontario Teachers’ Pension Plan
  • Ontario Municipal Employees Retirement System (OMERS)
  • Public Sector Pension Investment Board (PSP Investments)
  • British Columbia Investment Management Company
  • Alberta Investment Management Corporation

Some Canadian pension funds have recognized that overseas investment structures help them legally minimize their overseas tax burden. Some even said it was their duty to do so in order to maximize the savings available to retirees, CBC reported.

“We are structuring our investments abroad to maximize the after-tax return for CPP contributors and beneficiaries,” the Canada Pension Plan Investment Board (CPPIB) said in a statement, noting that 85% of its assets are located abroad.

“The CPPIB has a responsibility to over 20 million contributors and beneficiaries to seek a maximum rate of return to help maintain the CPP fund for generations.

To read the full CBC report Click here.