Public Sector Union Asks PSP and All Canadian Pensions to Drop Tesla
A federal public sector union representing more than 27,000 members is asking the Public Sector Pension Investment Board to divest any holdings in Tesla Inc. from its $264.9 billion portfolio.
In a public statement, the Canadian Association of Professional Employees is calling on PSP Investments and “all pension funds in Canada” to ditch the electric car maker.
“It is deeply concerning that Canadian public sector pension funds are being used to support a corporation whose owner is directly attacking the federal programs and workforce that deliver essential services for millions of ordinary Americans,” said Nathan Prierm, CAPE president and public service pension advisory committee member, in a press release.
Tesla’s chief executive officer Elon Musk has aligned himself with U.S. President Donald Trump as an advisor. Trump drew the ire of Canadians when he slapped the country with import tariffs while repeatedly calling for Canada to join the U.S. as the 51st state.
In an emailed statement to Benefits Canada, a spokesperson at PSP Investments said the organization is proud to be a Canadian pension investor trying to achieve a maximum rate of return without undue risk of loss.
“We are continually monitoring global trade conditions and market developments, evaluating how they may impact our portfolio and adjusting when necessary. Our diversified strategy and long-term focus help us navigate market fluctuations as we continue to fulfill our mandate.”
CAPE said divesting from the electric car manufacturer would send a message indicating Canadian public sector workers and taxpayers won’t support the leader of a company involved with the U.S. administration at a time they’re threatening to annex Canada.
This isn’t the first time Tesla exposure has been the source of difficulties for a pension fund. Earlier this year, Dutch civil worker pension fund Stichting Pensioenfonds ABP sold its entire stake in Tesla, consisting of 2.8 million shares valued at US$585 million. Similarly, the New York City comptroller — an elected official overseeing the management of five public pension systems — said he’s seeking securities litigation against Tesla for significant financial losses and mismanagement.
Here is the statement the Canadian Association of Professional Employees (CAPE) put out last week:
Ottawa, April 9, 2025 – Today, the Canadian Association of Professional Employees is calling on the Canadian Public Sector Pension Investment Board, and all pension funds in Canada, to divest from all Tesla holdings.
Elon Musk, Tesla’s owner and the richest person on the planet, has been using his corporate influence to destroy government and public services in the U.S. He is using his unelected role heading up the Department of Government Efficiency (DOGE) to dismantle essential public services and slash jobs without accountability.
“It is deeply concerning that Canadian public sector pension funds are being used to support a corporation whose owner is directly attacking the federal programs and workforce that deliver essential services for millions of ordinary Americans,” said CAPE President and Public Service Pension Advisory Committee member Nathan Prier. “CAPE and its members stand firmly in solidarity with our siblings south of the border and against corporate interference, naked conflicts of interest, and indiscriminate job cuts that weaken critical public services ordinary Americans rely on.”
Divesting from Tesla would send a clear and principled message: Canadian public sector workers and taxpayers will not support companies that put profit over public service, particularly when the administration those companies support is threatening to annex Canada. We urge the CPSIB to act now.
CAPE has also been warning against any attempt by current or future Canadian federal governments to implement a DOGE-like approach to public services. Canadians need much more than tax cuts, deregulation, and a race to the bottom to defend themselves against American attacks on our economy and sovereignty. A new federal government mandate should deliver for working people to get us through this crisis, and that will mean strong federal and provincial programs, such as EI and health care, backed by a strong public sector.CAPE has put forth recommendations that would save taxpayers’ dollars while not impacting service delivery to Canadians, including reducing the reliance on expensive outside contractors, which recently reached record levels, and implementing a flexible telework policy to free up more office buildings to be sold or converted to much-needed housing.
About CAPE
With more than 27,000 members, the Canadian Association of Professional Employees is one of the largest federal public sector unions in Canada, dedicated to advocating on behalf of federal employees in the Economics and Social Science Services (EC) and Translation (TR) groups, as well as employees of the Library of Parliament (LoP), the Office of the Parliamentary Budget Officer (OPBO) and civilian members of the RCMP (ESS and TRL). Read more.
This is a good hump day topic to discuss so let me get right to it.
First, even though I don't particularly like Elon Musk or Tesla, I am 100% against any divestment at our large pension funds except for tobacco which is a global killer.
All of Canada's large pension funds have divested from tobacco and even there, you will have some critics who claim that tobacco shares offer attractive and stable yields.
Tesla is a major US company, part of many stock indices.
Divesting from it can be done but is it worth the tracking error risk and potentially losing out on long-term performance through your passive index exposure?
Moreover, even if you don't like Musk or Tesla's prospects, there is a strong argument to be made that remaining an investor gives you a seat at the table to criticize him through shareholder proxy votes.
I'm not particularly bullish on Tesla shares but some analysts keep reminding me "it's not a car company, it's an AI company".
Whatever, the chart below tells me it's a car company that is experiencing significant challenges:
Clearly Tesla isn't immune to tariffs, a slowing US and global economy and Musk has done more damage to its brand than you can possibly imagine.
Still, it might pop and rally and if you're not invested in it as a pension fund, you can lose serious long-term performance.
It's also worth noting that PSP Investments, CPP Investments and other large Canadian pension funds are governed independently and while they take their members views into consideration, they have a clear mission and objective and operate at arm's length from governments and unions.
In short, pension fund managers need to "maximize returns without undue risk of loss" and in order to do this properly, the laws that govern them are designed not to allow outside influence on their investments.
Notice PSP Investments' email response was a polite and reminded members they are focused on their mandate and Tesla is only a small part of a well diversified portfolio:
“We are continually monitoring global trade conditions and market developments, evaluating how they may impact our portfolio and adjusting when necessary. Our diversified strategy and long-term focus help us navigate market fluctuations as we continue to fulfill our mandate.”
So, forget about PSP and other large Canadian pension funds divesting from Tesla, it's not in the best interests of their members no matter how disgusted they are with Musk and his antics at DOGE.
I personally think Musk hit a low back in February when he took to the stage at a conservative conference outside Washington wielding a chainsaw, a gift from Argentina's libertarian President Javier Milei:
"This is the chainsaw for bureaucracy," said Musk, holding the gleaming power tool aloft at the Conservative Political Action Conference in National Harbor, Maryland.
We can discuss whether there is a legitimate case to cut the size of US or Canadian civil service, but the approach should be a lot better than DOGE.
I have some friends in the private sector who strongly think we need a DOGE here in Canada, they need to retire people early and pay them out, make drastic cuts and rebalance the civil service where "people are well paid and get a DB pension.".
If you read the CAPE press release above, it ends on this note:
CAPE has put forth recommendations that would save taxpayers’ dollars while not impacting service delivery to Canadians, including reducing the reliance on expensive outside contractors, which recently reached record levels, and implementing a flexible telework policy to free up more office buildings to be sold or converted to much-needed housing.
You might agree or disagree but they make a good point, there has been rampant abuse of contracts over the last ten years and all that real estate can be converted to housing as people work form home.
The truth is you need to have healthy debates but we need to rein in federal spending, that's for sure.
Lastly, Federal Reserve Chair Jerome Powell on Wednesday reiterated the long-held view of Fed chairs going back decades that growth in the US federal debt needs to be reined in, but he suggested that politicians are going about it the wrong way:
"We're running very large deficits at full employment, and this is a situation that we very much need to address" Powell said at an event at the Economic Club of Chicago.
"All of this domestic discretionary spending, which is essentially where 100% of the conversation is, is small as a percentage of federal spending and is declining ... When people are focusing on cutting domestic spending, they're not actually working on the problem."Powell did not specifically mention Elon Musk's Department of Government Efficiency, which has drawn headlines for large cuts to the federal government workforce, among other efforts to reduce the federal government's discretionary spending. But his remarks appeared to dismiss that kind of push as largely irrelevant to federal debt and deficit reduction."So much of the dialogue that the politicians offer is about domestic discretionary spending, which is not the issue," Powell said.To make real headway on reducing government debt and deficits, Powell said, politicians must reduce spending on the largest parts of government outlays: Medicaid, Medicare, Social Security and the rising cost of interest payments."Those are issues that can only be touched on a bipartisan basis," Powell said. "Neither party can figure out what to do without both parties being at the table. So that's critical."
Also, Bank of Canada Governor Tiff Macklem spoke Wednesday after the central bank decided to hold interest rates steady as US President Donald Trump’s trade war with Canada intensifies.
The central bank held its benchmark rate at 2.75 per cent on Wednesday, ending a streak of seven consecutive rate cuts and stated US tariffs could trigger deep recession:
Citing the high level of uncertainty, the central bank did not issue its regular quarterly economic forecasts. Instead, it provided two scenarios as to what might happen.
In the first scenario, most tariffs are negotiated away, and Canadian and global growth weaken temporarily. Canadian inflation falls to 1.5% for a year and then returns to the bank's 2% target.
In the second scenario, the tariffs spark a long-lasting global trade war. Canada enters a significant recession, inflation spikes above 3% in mid-2026 before returning to 2%.
The bank, which stressed that many other scenarios were possible, estimated annualized first quarter GDP was 1.8%, down from the 2.0% it forecast in late January.
Lastly, Dan Ives, Wedbush Securities global head of technology research, discusses how the future of Tesla wil be determined in the next 90 days.
Update: After reading this comment, James Infantino, Pensions and Disability Insurance Officer at the Public Service Alliance of Canada (PSAC) shared these concerns and insights:
Thank-you very much for reporting on the call of Canadian Association of Professional Employees (CAPE) for PSP Investments to divest its holdings in Tesla Inc.
Members of the Public Service Alliance of Canada (PSAC) are equally concerned regarding the corrosive impact of the antics of Elon Musk on Tesla Inc. shareholder value and, in turn, the security of their pension benefits.
In fact, according to the attached charts, it would appear that PSP Investments has significantly ramped up its position in Tesla Inc. coincident with the election of Donald Trump as President of the United States. As of December 31st, 2024, Tesla Inc. shares represent the 12th largest single equity holding of PSP Investments!
Many members of large pension funds in the U.S.A. are also calling for a review of investments in Tesla Inc. in the interests of protecting their pension benefit entitlements.
My understanding is that a number of shareholder resolutions have been prepared and submitted in advance of the Tesla Inc. annual meeting in June of this year that demand Telsa Inc. Board of Directors take corrective action to address plummeting share value, up to and including the removal of Elon Musk as CEO.
Of course, it is unfortunate that the Tesla Inc. Board of Directors is comprised of relatives and close personal friends of Elon Musk and sits at the bottom of the independence scale of all listings on the NASDAQ exchange (which is saying something)!
I trust the foregoing to clarify the concerns of pension plan members on the investment of the pension funds in Tesla Inc. and the need for organizations such as CAPE to take action to protect their pension benefits.
I thank James for sharing this with my readers and I have a few comments to add.
First, I completely understand the concerns of CAPE and PSAC, Tesla shareholder value has plummeted since founder and CEO Elon Musk got involved with running DOGE, however, to be even more accurate, it accelerated when Trump released his tariffs on April 2nd and all the Mag-7 and Nasdaq stocks got hit (Musk has lost billions in net worth recently).
Second, I don't know enough about Tesla's board of directors but I will take James' comment about it sitting on the bottom of the independence scale on the Nasdaq as true which is a concern.
Last year, Tesla's board approved an egregious pay package of $56 billion to Musk despite the disapproval of global pension funds and sovereign wealth funds led by Norway's GPIF. However, I did note his friend, billionaire Larry Ellison, left the board in June 2022.
Third, on PSP's holdings of Tesla, I suspect it's mostly due to passive exposure to US equity indices and some active management from their internal and external active managers. I wouldn't read too much into that.
Lastly, divesting out of Tesla or any company comes with risks, especially when that company has a big weighting in the indices. It's basically an active management decision and that decision-making authority must remain the responsibility of pension fund managers.
This doesn't mean that unions and members can't express their concerns openly, it means they have to trust their pension fund managers are doing their best to fulfill their mandate in obtaining the highest risk-adjusted returns possible during these turbulent times.
Ultimately, that's the most important outcome, and they all take responsible investing seriously and will voice their concerns through proxy votes at Tesla's annual shareholder meeting.
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