On November 10, 2014, the Pension Policy Branch of the Ontario
Ministry of Finance released for public comment a proposed
amendment to the Regulations under the Pension Benefits
Act (Ontario) (the PBA) that would provide an exemption from
the so-called "30% Rule" for pension investment in
The 30% Rule is a quantitative limit on investments by pension
plans found in the federal Pension Benefits Standards
Regulations, 1985 that is incorporated by reference into the
PBA. The 30% Rule provides that the administrator of a plan shall
not, directly or indirectly, invest the moneys of the plan in the
securities of a corporation to which are attached more than 30% of
the votes that may be cast to elect the corporation's
directors. There currently are exemptions to the 30% Rule for
investments in "real estate corporations", "resource
companies" and "investment corporations", provided
certain requirements are met.
Many stakeholders have advocated the elimination of the 30% Rule
over the years. In October 2008, the Ontario Expert Commission on
Pensions headed by Harry Arthurs released a report entitled A
Fine Balance that recommended, among other things, that:
the Ontario government should consider establishing its own
investment rules, and
any plan with some recognized form of joint governance and with
the requisite capacity to make complex investment decisions be
allowed to adopt a resolution claiming an exemption from the 30%
Despite widespread support for these recommendations, the
federal government announced in May 2010 that it had no intention
of changing the 30% Rule, stating that it remained appropriate at
the time for prudential reasons.
In the 2013 Ontario Economic Outlook and Fiscal Review,
the government of Ontario announced that it would propose
regulations to allow pension plans to invest further in local
infrastructure by exempting investments in Ontario public
infrastructure projects from the 30% Rule. The proposed amendment
to Regulation 909 would implement this proposal by extending the
existing exemptions to the 30% Rule for Ontario pension plans to
include investments in "infrastructure corporations".
For the purposes of the exemption:
an infrastructure corporation would be required to limit its
activities to "acquiring, constructing, holding, developing,
maintaining, improving, managing, operating, leasing, or disposing
of public infrastructure"
"public infrastructure" would be defined as "the
physical structures and associated facilities by or through which a
public service is provided in Ontario", including (but not
road, highways, and bridges
health care facilities and hospitals
administration of justice, including courthouses and
educational facilities, including primary, secondary and
power generation, transmission and distribution networks
water and waste management systems
land registry systems
medical or research institutes
recreational or cultural facilities
lottery and gaming facilities
provided the infrastructure is located exclusively in
As with the current exemptions for real estate, resource and
investment corporations, a pension plan administrator could only
benefit from the exemption to the 30% Rule if it filed with the
Superintendent a prescribed form of undertaking by the
Stakeholders are invited to comment on all aspects of this
proposal, a copy of which is available at the
Service Ontario website. Comments are due by January 9,
The content of this article does not constitute legal advice
and should not be relied on in that way. Specific advice should be
sought about your specific circumstances.
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