According to a Toronto Globe and Mail news report, one of the prohibitions OMERS would like to see pulled is a bar against a pension plan owning more than 30% of the voting shares of a corporation.
In a submission Friday to the Expert Commission on Pensions, OMERS Chief Executive Officer Michael Nobrega recommended that the government replace its current regulatory scheme with a new system relying more on fundamental principles than quantitative rules.
Nobrega pointed out that two decades have passed since the Pension Benefits Act has faced “meaningful changes” even though pension funds have faced dramatic alterations in the way they invest. “We believe these reforms are not controversial and will strengthen the pension system in Ontario,” he said in his presentation.
The Expert Commission on Pensions was established last November to examine the legislation for pension plan funding and the security of Ontario’s pension system. It is now holding public hearing across on Ontario.
In its submission, OMERS said relief from investment restrictions is so important that a moratorium should be introduced immediately for large pension plans while thegovernment continues to study the issue.
The submission highlights the rules OMERS wants to see scrapped, including:
- The 5% rule, which restricts pension plans to holding no more than 5% of the book value of the fund’s total assets in any single parcel of real estate or Canadian resource property;
- The 15% rule, which restricts pension plans to holding no more than 15% of the book value of the fund’s total assets in Canadian resource properties;
- The 25% rule, which restricts pension plans to holding no more than 25% of the book value of the fund’s total assets in the aggregate of real estate and Canadian resource properties;
- The 10% rule, which restricts pension plans to investing no more than 10% of the book value of the pension fund in any one entity.
OMERS says pension funds would still be safeguarded by other existing standards, including a fiduciary requirement to plan members, a requirement to publish a detailed statement of investment policies, conflict-of-interest rules and oversight by the provincial pension regulator.
The OMERS proposal is here .