Canadian Pension Groups Lobbying For Foreign Investment Rule Repeal

January 9, 2003 ( - Two Canadian pension industry groups are calling for government officials to drop a rule limiting to 30% of assets the amount that pension plans can invest in other countries .

As part of their lobbying effort against the Foreign Property Rule (FPR), the Association of Canadian Pension Management (ACPM) and the Pension Investment Association of Canada (PIAC) also released a study analyzing the law’s benefits and costs.

Prepared by economists David Burgess and Joel Fried, the study found among other things that the government’s move to bump up the FPR limit from 10% to 30% from 1990 to 2001 has already been “highly beneficial” to Canada.

In fact, Burgess and Fried estimated that moving from 20% to 30% during 2000 and 2001 may have added as much as $1 billion annually to the value of Canadian retirement-related savings.

The FPR ceiling governs Canadian Registered Pension Plans and Registered Retirement Savings Plans. The original 10% limit was set in 1971. It was raised to 20% in 2% increments between 1990 and 1994, and further raised to 30% in 5% increments between 2000 and 2001.

Dropping the FPR altogether would provide Canadians with further diversification benefits amounting to between $1.5 billion and $3 billion per year, according to the researchers.