Pension funds are rarely thought of as exciting institutions, let alone arenas of class warfare. However, the development of pension funds has been deeply shaped by different class interests. They continue to be a constant focal point of struggle, not only here in Canada, but around the world.

This is not only because of workers fighting for better pension benefits, but also because pension funds themselves represent large pools of money and assets, which can be used by capitalists to exploit other working people. Today, Canadian pension funds invest domestically and internationally in the exploitation and dispossession of workers across the world. To understand the current system, we must understand how we got here in the first place.

The story of modern pension funds has its origins in the historic post-war comprise in countries like Canada and the US between capital and labour. Labour unions essentially agreed to a truce with capitalists in return for consistent increases in their wages and other benefits such as pension contributions. These pension agreements were usually defined benefits, meaning the employer would owe the worker a fixed amount per year based on the factors like the length of employment. From the 1950s onwards there was a massive increase in the assets of major pension funds form millions, to billions, and trillions.

On paper this doesn’t sound like a bad thing. Workers were getting more money, and that’s a good thing, right? Well, the growth of these pools of money led to a sequence of events that strengthened the capitalist class at the direct expense of the workers.

With the growth of pension funds came the rise of money managers who, as the name implies, manage all the savings of future retirees. They couldn’t just keep money in the bank, as due to inflation, the value of idle money diminishes over time. Therefore, they needed to invest in assets that would pay interest or appreciate in value to combat inflation. Initially most pension funds in the world were only allowed to invest in very safe securities that paid a guaranteed fixed sum, mainly government debt. —–

These practices started to change with crises of 1970s that led to the restructuring of the neoliberal period (our current era, characterized by governments cutting public services and the unchecked dominance of big corporations). Pension funds started to invest in more risky ventures, such as non-government debt and more important, corporate equity (i.e., shares of companies). This “unseen revolution” led to pensions funds in America, for example, being the largest sole-owners of corporate equity.. These funds would increasingly act capitalistically, pressuring corporations to maximize shareholder value and thus financial returns.

This might seem good for the workers, but this simply meant the system was using workers savings to intensify exploitation. At the same time, plans were changing and often becoming worse for workers in Canada and the U.S, with companies paying out much smaller pensions that they would in the past.

This all culminated into the 21st century, where large pension funds act as pillars of exploitation, providing the funding for and benefiting from the exploitation of workers around the world. Canadian pension funds were the pioneers of the contemporary pension system and are themselves referred to as the “Maple Revolutionaries”. Despite Canada being the 38th largest country by population, and 9th in GDP, Canada has the third largest pension fund wealth in the world. The Canada Pension Plan (CPP) alone is the seventh largest pension fund in the world. Despite Canada’s small size, our pension funds are among the most advanced in the capitalist world.

You may be asking what these pension funds do exactly to make money? The better question is what they don’t do. Pension funds are involved in various kinds of profit makings activities, from real estate, natural resources, infrastructure, private equity investments, credit lending and much more. For example, odds are you have been to a Cadillac Fairview Mall, maybe the Rideau Center in Ottawa, Fairview Mall in Toronto or Fairview Point-Claire in Montreal. What you may not know is that the Ontario Teachers’ Pension Plan (which manages $121 billion) has been the sole owner of the commercial real estate company since 2000.

Other examples are even more directly malicious, such as with the case of Mahi Pono. The Public Sector Pension Investment Board (PSP) ($243.7 billion) in December of 2018 acquired 41,000 acres of a former sugar cane plantation and essentially 50% of the local water supply system in central Maui, Hawaii. The purchase made them the largest private landowners on the island. The company Mahi Pono was created by the PSP to allow them to purchase the local land with a native sounding name which ironically means “to farm and cultivate morally and properly”. In reality, they are trying to use indigenous land for intensive capitalist agriculture and also control a large amount of their water supply. There is an ongoing struggle to secure indigenous control of water usage against these foreign aggressors, both the U.S and Canada. It seems everywhere Canadians go they have a habit of depriving indigenous peoples of water.

These are not isolated cases. From working with (at the time President of Brazil) Jair Bolsonaro to privatize water in Brasil, doing the same in Australia, exploiting elderly retired workers in Europe, or building a damn in Colombia which cut off locals from access to water, there is no shortage of ways in which Canadian pension fund capital is being used to exploit people around the world.

But the capitalists are also happy to use that money to exploit workers and retired workers here. The same people who, through our labour, pay into the pension funds. For example, we see pension funds like PSP monopolizing real estate and pushing workings class people out of their homes, fuelling the housing crisis which has been devastating our communities.

The only way out of this is an end to the for profit-system. This system seeks not to maximize well-being but abstract returns, and ultimately translates to the exploitation of everything and everyone for profit.