The Portfolio Management Association of Canada (“PMAC“), through its Industry, Regulation & Tax Committee, is writing to comment on an issue of impact to member firms arising out of the province of Ontario’s 2018 finalization of legislation and regulations regarding funding rules for defined benefit pension plans (the “DB plan funding rules”).
Overview
As background, PMAC represents over 270 investment management firms, collectively managing over $1.8 trillion in assets, all of whom are registered to do business in Canada as portfolio managers. PMAC members manage investment portfolios for, among others, private individuals, foundations, universities and pension plans.
PMAC was pleased to provide the Ontario Ministry of Finance (Finance) with a submission in response to the January 2018 consultation with respect to DB plan funding rules.
PMAC supports efforts to ensure that DB plans’ solvency funding approaches are appropriate and that pension legislation encourages the establishment and maintenance of workplace DB plans that ensure secure retirement benefits for their beneficiaries.
This submission is being made to alert Finance to what we view as a negative and unintended consequence to investors, as well as of unnecessary regulatory burden and cost, of an interpretation of subsections 11.2(8) to 10 of the Pension Benefits Act Regulation 909, regarding the provision for adverse deviations (PfAD) calculation.
It is our belief that the issue set out below arose unintentionally and is the result of newly introduced language in the DB plan funding rules not working in concert with existing language in the rules.