Ontario may turn its largest pension fund, the Ontario Teachers' Pension Plan, into an even bigger entity that could manage money for civil servants, university endowments and other groups.
The province's Liberal government is introducing new legislation that would allow smaller pension plans and "institutional investors in the public sector" to use Teachers to handle their money and administer pensions, for a fee.
The move, contained in the provincial budget Thursday, would give added heft to an organization that is already one of the largest and most influential investors in Canada. Teachers had about $108-billion in assets as of the end of 2007. It will disclose how much that figure declined in 2008 when it unveils its year-end financial results next week.
Allowing other funds to plug into Teachers' investment expertise would lower costs and bring "enhanced investment opportunities for future OTPP clients," the budget documents say. Teachers would even be permitted to manage pension money for groups outside of Canada.
The government also used budget day to announce or confirm other initiatives to help corporate pension funds hit hard by the turmoil in the financial markets.
Provincially-regulated pension funds will get up to 10 years, in some cases, to make the payments needed to make up a solvency deficit. In the meantime, the government will conduct a study to determine the health of its Pension Benefit Guarantee Fund, which pays some pension benefits when companies go out of business and their pension funds are wound up. The fund had a $102-million deficit as of March 31, 2008.
Queen's Park will also change tax law to allow workers who are at retirement age to begin drawing a pension, yet keep working and accumulating pension credits.
And the budget promises the McGuinty government will work with Ottawa and the other provinces to investigate ways to increase pension coverage. About 80 per cent of private-sector employees in Canada do not have a defined-benefit pension from their employer.