About the Resisting Pension Fund Capitalism Project
About This Project
Labour unions and social movements in Brazil have been fighting a pitched battle to the ongoing drive to privatize many of the country’s most important public assets. In 2022, the far-right Bolsanaro government achieved a major breakthrough when they sold off the country’s largest public water utility to a Brazilian private company.
It soon emerged that this particular “Brazilian” company was in fact 85% owned by two of Canada’s largest pension funds. Several unions in Canada were outraged to learn that Canadian workers’ deferred wages were being used to privatize an essential public service in Brazil, which serves 30 municipalities with a population of 13 million. Several labour organizations called for these pension funds to pull out of the deal.
But this was far from an isolated incident. Canada’s pension funds are also deeply involved in a massive land grabbing drive in Brazil’s biodiverse Cerrado region, as are pension funds from the US, Europe and Asia. The reality today is that pension funds are involved in pretty much every form of predatory financial capitalism affecting the planet — whether it is fossil fuel extraction, for-profit health care, real estate speculation, farmland and water grabbing or the privatisation of essential public services.
Today, the world’s top 22 pension funds have nearly US$56 trillion in assets under management, making them, collectively, the biggest single source of money for financial investment. Moreover, pension funds depend on high, or at least decent, returns in order to provide workers with pensions in their retirement. As a result, an increasing share of pension fund money is being invested into such things as private equity, real estate, farm and timber land, and other so-called “alternatives” to more traditional investments in stocks and bonds. Pension funds are even playing an active role in lobbying for policies and regulations to privatise more public goods and services as part of creating more lucrative investment opportunities.
Pension funds have seen this growth in size and power without establishing significant roles for the workers who are beneficiaries of the funds in their actual investment. Workers have, in fact, become dependent on the financial returns that pension fund investments bring, and the conditions that create those returns, such as privatization. The governance of pension funds has generally been structured in a way that leaves the small number of worker representatives with only a very limited capacity to influence investment decisions, even in cases where the investment is runs clearly against the interests of working people.
It is also clear that only a small percentage of workers around the world participate in financially invested pension funds. According to the OECD, just seven countries (Australia, Canada, Japan, Netherlands, Switzerland, UK, US) account for over 92% of all assets held by pension funds. And even for workers in these relatively high income countries, only a fraction of them will receive a liveable pension from the funds they are helping to build. Over recent decades, there has been a significant shift away from social security plans and defined benefit pensions (where workers are guaranteed a percentage of their annual salary upon retirement) to more precarious pension and savings systems where the risks from financial investments are borne by individual workers.
This shift in pension security for workers has coincided with the lifting of legal restrictions on what pension funds can invest in, making it possible for pension funds to invest in riskier financial asset categories like real estate and private equity, and moves to give private financial companies more control over public pension fund management. Several countries with large pension funds, like China, India, Japan and South Africa, are now moving further in this direction.
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The Resisting Pension Fund Capitalism project was established to recognize these challenges and the near absence of organized efforts to come to terms with their implications. In particular, we aim to report on these evolving dynamics while also convening dialogues and discussions among social movement and worker activists that can debate strategies for fundamentally changing the path that we are on. This may include strategies for building a social challenge to specific, individual projects or investments. Ultimately, the project sets out to map these issues as a larger international problem that needs to be discussed, debated, and subjected to bolder and more ambitious strategic interventions.
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