Ontario Adopts Changes to Federal Investment Rules
Effective March 25, 2011, Ontario amended the regulations under its Pension Benefits Act (the Regulations) to adopt the federal investment rules “as they may be amended from time to time.”
Previously, Ontario had adopted the investment rules as they read on December 31, 1999 – requiring any changes to the rules made by the federal government to be specifically adopted by the Ontario government. This change to the Regulations means that Ontario registered pension plans will now be subject to the most recent amendments to the federal investment regulations, and any future changes to these regulations will automatically apply to Ontario plans.
As reported in an earlier post, the federal government amended the investment rules in June of 2010 to eliminate the 5%, 15% and 25% quantitative investment limits in respect of resource and real property investments. As a result of the recent amendments to the Regulations, these changes will now apply to Ontario pension plans.
Future amendments to the federal investment rules will also apply to Ontario plans. For example, the regulatory impact statement that accompanied the amendments to the quantitative investment limits also indicated that the federal government intended to propose further modifications to the investment rules in respect of the 10% concentration limit (which, according to a previous government announcement, is to be updated to reflect market, rather than book value) and the general prohibition on pension fund investment in the shares of its sponsoring employer.
Administrators of Ontario plans will want to watch for any further amendments to the federal investment rules, as their plans will now be directly and immediately impacted by any future changes.
