Canada Gazette, Part I, Volume 146, Number 25: Regulations Amending the Public Sector Pension Investment Board Regulations

June 23, 2012

Statutory authority

Public Sector Pension Investment Board Act

Sponsoring agency

Treasury Board Secretariat

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issue and objectives

Section 1 of the Public Sector Pension Investment Board Regulations (PSPIBR) defines “related party” as including a director, officer or employee of the Board, a person responsible for holding or investing the assets of the Board, as well as contributors and survivors under the Canadian Forces Superannuation Act, the Royal Canadian Mounted Police Superannuation Act, and the Public Service Superannuation Act.

The purpose of the “related party” definition in the PSPIBR is to identify individuals who may have a real or apparent conflict of interest with respect to their dealings with the Public Sector Pension Investment Board (PSPIB) and to regulate their transactions with the PSPIB.

The Reserve Force Pension Plan Regulations have been in place since March 1, 2007. Since that date, the PSPIB has managed amounts transferred on behalf of the contributors and beneficiaries of the Reserve Force Pension Plan. However, the “related party” definition in section 1 of the PSPIBR does not include participants and survivors under the Reserve Force Pension Plan.

While no conflict of interest with respect to section 1 has occurred, an amendment, the Related Party Amendment, would expand the definition of the “related party” in the PSPIBR to ensure that it captures all individuals including the participants and survivors under the Reserve Force Pension Plan.

Effective July 1, 2010, section 10 of Schedule III of the Pension Benefits Standards Regulations, 1985 (PBSR) was repealed. This PBSR provision placed limits on the amount of a pension plan’s assets that could be invested in real estate or Canadian resource properties. The amendment was made to the PBSR in order to provide more flexibility for plans to choose the investment options that best suit their investment needs. In particular, the objective is to adopt flexible, prudent and effective principles-based investment rules.

An amendment, the Investment Rules Amendment, would align the rules that apply to the PSPIB with the recent change to the PBSR, which would allow the PSPIB to rely on the prudent person standard, as well as have the same investment flexibility as is currently available to PBSR-regulated pension plans.

Description and rationale

The Related Party Amendment would expand the definition of “related party” in the PSPIBR to include those individuals entitled to benefits under the Reserve Force Pension Plan Regulations. This proposed housekeeping amendment seeks to ensure that the definition of “related party” captures all relevant individuals.

The Investment Rules Amendment would repeal section 12 of the PSPIBR, which sets out quantitative investment limits in respect of real estate and Canadian resource property. This amendment would allow the PSPIB to rely on the prudent person standard when deciding on real estate and Canadian resource investments. Given that sections 16 and 32 of the Public Sector Pension Investment Board Act already require the PSPIB to act in accordance with a prudent person standard, section 12 of the PSPIBR is unnecessary and overly protective. The amendment would align the PSPIBR with the PBSR and allow the PSPIB the same investment flexibility with respect to real estate and Canadian resource properties as is enjoyed by federally regulated pension plans operating under the PBSR and provincially regulated pension plans operating under regulations that are influenced by the PBSR.

The Related Party Amendment has no impact on cost, as it only amends the definition of the “related party” in the PSPIBR to include all participants that are entitled to benefits under the Reserve Force Pension Plan. The Investment Rules Amendment is limited to the operations of the PSPIBR and is expected to minimally reduce the compliance costs to the organization.

Consultation

In 2009, the Government undertook public consultations regarding the recent changes to the PBSR. During public meetings held in cities across Canada, there was a wide degree of support from plan sponsors and industry experts for eliminating all quantitative investment rules and to rely exclusively on a prudent person standard. Certain unions and plan members advocated retaining the quantitative limits for benefit security purposes. Repealing the real estate and Canadian resource property investment limits for private pension plans represents a balance between these two points of view.

Given the results of the 2009 public consultations, the amendment to repeal section 12 of the PSPIBR is expected to be supported by most stakeholder groups. Therefore, only the PSPIB has been consulted most recently with respect to this proposed amendment.

Contact

Joan M. Arnold
Senior Director Legislation, Authorities and Litigation
Management Pensions and Benefits Sector
Treasury Board of Canada Secretariat
Telephone: 613-952-3119

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to paragraph 50(b) of the Public Sector Pension Investment Board Act (see footnote a), proposes to make the annexed Regulations Amending the Public Sector Pension Investment Board Regulations.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part Ⅰ, and the date of publication of this notice, and be addressed to Bayla Kolk, Assistant Deputy Minister, Pensions and Benefits Sector, Office of the Chief Human Resources Officer, Treasury Board of Canada Secretariat, Ottawa, Ontario K1A 0R5 (tel.: 613-957-6410; fax.: 613-946-6200; e-mail: Bayla.Kolk@tbs-sct.gc.ca).

Ottawa, June 19, 2012

JURICA ČAPKUN
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE PUBLIC SECTOR PENSION INVESTMENT BOARD REGULATIONS

AMENDMENTS

1. Paragraphs (c) and (d) of the definition “related party” in section 1 of the Public Sector Pension Investment Board Regulations (see footnote 1) are replaced by the following:

• (c) a contributor within the meaning of subsection 2(1) of the Canadian Forces Superannuation Act, subsection 3(1) of the Public Service Superannuation Act or subsection 3(1) of the Royal Canadian Mounted Police Superannuation Act or a participant or former participant in the Reserve Force Pension Plan established by the Reserve Force Pension Plan Regulations;
• (d) a survivor within the meaning of subsection 2(1) of the Canadian Forces Superannuation Act, paragraph 36(1)(b) of the Reserve Force Pension Plan Regulations, subsection 3(1) of the Public Service Superannuation Act or subsection 3(1) of the Royal Canadian Mounted Police Superannuation Act;
  

2. Section 12 of the Regulations is repealed.

COMING INTO FORCE

3. These Regulations come into force on the day on which they are registered.

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