In its 2012 Budget, the Ontario government announced its
intention to introduce a legislative framework in the Fall of 2012
to improve efficiencies in the investment management of
Ontario's defined benefit public sector pension plans (DB
Plans) by the pooling of pension fund assets. The Budget papers
indicate that the government is focussing its attention on the
"small" Ontario DB Plans, noting that approximately 50
such plans each have assets of less than $1 billion.
The Budget indicates that the government is contemplating
achieving its goals either through a newly formed investment
management entity (like bcIMC or AIMCo) or through building on
existing large Ontario public sector pension plan(s). Given the
complexity of the undertaking, the Budget indicated that the
government would appoint a special advisor to "work with plans
and other stakeholders to develop recommendations on a model for
managing these pooled assets."
In a press release issued on May 31, 2012, the
government announced the appointment of Bill Morneau as the special advisor. The May
31 press release indicated that interested stakeholders have one
month (until June 30) to make written submissions to the advisor,
with 8 specific questions to be addressed.
Although the May 31 press release focused on pension funds
maintained by the 20 publicly funded universities in Ontario, the
contemplated framework appears to be broader and to be concerned
with potentially all Ontario single-employer DB Plans. There are,
of course, many Ontario defined contribution public sector pension
plans, and the May 31 press release hints at the possibility of
these plans participating in the new model.
Transition of the type and scale being contemplated by the
Ontario government has not been attempted before in Canada. Beyond
the myriad of issues that the actual transition process itself will
raise, what is being proposed will, over time, bring major change
to the industry in the context of "winners" and
"losers" as the public sector pooling project moves from
an idea to reality.
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