On June 29, 2012 OCUFA met with Bill Morneau, the Government of Ontario’s advisor on joint asset management, to present its brief on pooling the assets of Ontario public pension plans. The brief highlighted seven principles OCUFA believes are essential to any asset consolidation process:
- The interests of plan members must be of primary consideration.
- The ultimate scope of a pooled asset management system should depend on best practices in pension plan investment, management, and governance. Growth should not be an end in itself.
- Risk-bearing parties (employees) should have representation in the governance of any new investment entity.
- Any consolidated asset entity should be established as a not-for-profit corporation to control costs.
- The fund must provide a sufficient range of cost-effective investment options to accommodate the asset allocation requirements that flow from the different demographic and risk tolerance characteristics of the participating pension plans.
- Participation in the consolidated investment fund must be voluntary and exit from the fund in the future must be possible.
- Transition timelines should be long enough to ensure that any necessary changes to collective agreements can be made through the normal course of bargaining, and no existing asset positions need to be wound up to the disadvantage of the pension plan.
OCUFA’s brief also makes it clear that, the government’s short time frame on pension reform makes it difficult to thoroughly canvass the many issues that must be carefully reviewed and analyzed before the proposed single investment fund is established. In order to have the confidence of participating funds and their members, such a thoroughgoing analysis must be conducted.