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Ontario Seeks Feedback On Fund Pooling

The Ontario government will start asking individual pension plans, affected stakeholders, and others to provide their feedback on a recommendation that there is a significant opportunity for pension funds to realize benefits from the economies of scale and other advantages that a pooling framework would generate. That recommendation comes from a report by Bill Morneau, executive chair of Morneau Shepell. He was appointed last spring to pursue a 2012 Ontario budget proposal to create a framework that would facilitate the pooling of pension fund asset management and, if appropriate, a path to implement this. Morneau estimates that a pooling framework could save up to $100 million annually by reducing duplication and costs. It could also broaden access to additional asset classes and enhance risk management practices. "To the extent that these advantages support more diversified portfolios among participating institutions, pooled asset management may also help realize improved investment returns over the long term," says his report. To implement the pooling, he calls for the development of a pooled asset manager to oversee investments on behalf of Ontario's public sector pension and other investment funds. Participating plans would retain ownership of their assets, but invest them with the pooled asset manager through a family of unitized pooled funds, similar to mutual funds. Employees and retirees would remain members of their existing plans; the relationship between pension plans and their members would not change; and institutions would maintain their current plan designs including benefit levels and contribution rates, as well as funding policies and approaches to administration.

Courtesy of Benefits and Pensions Monitor website News Alerts

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