The Portfolio Management Association of Canada (“PMAC”), through its Industry, Regulation & Tax Committee, is pleased to have the opportunity to comment on the proposed regulatory amendments to the quantitative investment limits that apply to registered pension plans in Ontario, specifically the amendments that would modify the “10 per cent rule” (the “Proposed Amendment” or “10% Rule”).
PMAC is supportive of providing pension plan fund managers with greater flexibility to pursue investment strategies that mitigate risk, optimize return and allow appropriate diversification to meet plan liabilities. In this regard, we support the objective of the Proposed Amendment and the inclusion of securities issued and guaranteed by the U.S. government. However, we note with concern that the Proposed Amendment introduces an exception from the investment rules set out in Schedule III to the regulations under the Pension Benefits Standards Act (Canada) (“PBSA”), applicable only to Ontario-registered plans. This is a significant shift from the desired harmonization of pension standards legislation in Canada. In our view, it would be ideal that the 10% rule be aligned both provincially and federally and become uniform across those jurisdictions that adopt the PBSA. This would alleviate the compliance burden on plans that have to comply with the rules in other jurisdictions and decrease complexity overall.