Federal Budget 2025: Pension & Benefit Related Highlights
November 07, 2025
On November 4, 2025, Prime Minister Mark Carney’s Government released its first budget, Budget 2025. The Budget, titled Canada Strong, was tabled by the Minister of Finance and National Revenue, François-Philippe Champagne. Below are pensions and benefits related highlights.
Qualified Investments for Registered Plans
Budget 2024 invited stakeholders to provide suggestions on how the qualified investment rules for seven registered plans – RRSPs, RRIFs, TFSAs, RESPs, RDSPs, FHSAs, and DPSPs – could be modernized. The qualified investment rules govern the investments permitted in these plans. Based on feedback received through the consultation process, Budget 2025 proposes to simplify, streamline, and harmonize the qualified investment rules. In particular:
- Small Business Investments: Budget 2025 proposes streamlining the current qualified investment regime with respect to investments in small businesses. This involves removing eligible corporations, small business investment limited partnerships, and small business investment trusts from the list of qualified investments. However, Budget 2025 notes that the intention is that shares of eligible corporations would continue to be qualified investments under the rules relating to specified small business corporations. Budget 2025 also proposes to extend the qualified investment rules with respect to small businesses to RDSPs so that RDSPs would be permitted to acquire shares of specified small business corporations, venture capital corporations, and specified cooperative corporations. These amendments would apply as of January 1, 2027, but interests in small business investment limited partnerships and small business investment trusts that are acquired before 2027 under the current qualified investment rules would continue to be qualified investments.
- Registered Investment Regime: Registered investments are qualified investments for all registered plans. For a corporation or trust to be a registered investment, it must be registered with the Canada Revenue Agency. Stakeholders suggested that the registration process does not add sufficient value to justify its associated compliance and administration burdens. As such, Budget 2025 proposes to replace the registered investment regime with two new categories of qualified investments trusts which do not require registration. The registered investment regime would be repealed as of January 1, 2027 and the new qualified investment trust rules would apply as of November 4, 2025.
- Technical Amendments: Budget 2025 also proposes to make certain technical amendments to the qualified investment rules.
Pension Fund Investments
To create incentives for pension funds and other institutional investors to invest in private venture capital, Budget 2025 proposes to provide $1 billion over three years for the Business Development Bank of Canada to launch the new Venture and Growth Capital Catalyst Initiative.
Budget 2025 provides no update on the Government’s previous announcements that it would explore removing the “30% rule” for investments in Canada. The 30% rule restricts pension plans, with limited exceptions, from investing in the securities of a corporation to which are attached more than 30% of the votes that may be cast to elect directors. Budget 2024 confirmed that a working group led by Stephen Poloz (former Governor of the Bank of Canada) would consider the benefits of removing the “30% rule” for domestic investments.
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