"Financialization" of Government Pension Programs

In the 1990s the international financial oligarchy and their institutions pushed governments to restructure their pension systems so the funds could be invested in financial markets where it was said higher returns could be obtained than was possible by parking the money in low-risk but more secure instruments like government bonds. 

Along with this push to "financialize" pensions came the pressure to convert pensions from defined benefit plans that guarantee a certain level of benefits to workers after they retire, to defined contribution plans, where the level of benefits one receives upon retirement depends on how well the plan is doing in the financial markets and on returns from other types of investments at any given time. 

A big reason for these changes, in addition to reducing governments' responsibility to provide for workers' retirement security, was to put at the disposal of the financial oligarchy a vast new pool of money to invest in order to amass even greater private wealth for themselves.

In 1997 the Canada Pension Plan Investment Board was created by federal legislation to operate at arm's length from the government. The mandate of the new entity established as a vehicle for the financialization of the CPP was to exercise its "fiduciary duty" to Canadians by first and foremost maximizing the return on investments made on their behalf. The Alberta Investment Management Corporation, established in 2008, operates in a similar way and under a similar mandate.

This article was published in

September 17, 2021 - No. 84

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