Amendments to the federal Pension Benefits Standards Act must go beyond reporting transparency and clarify how additional disclosure requirements help monitor the health of Canadian pension plans, said the Pension Investment Association of Canada.
In an open letter to Finance Canada, the PIAC said if current data collection processes for federally regulated plans aren’t achieving standardization, then the purpose and effectiveness of additional disclosure requirements in meeting this goal are unclear.
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It noted Statistics Canada already publishes the combined trusteed plans’ market value and book value of Canadian and foreign investments in each asset class targeted by the new requirements and, since federally regulated plans comprise only seven per cent of registered pension plan assets, the information produced by the new exercise will have limited utility.
In addition, increased regulatory oversight and the possibility of added administrative burden would likely discourage employers from offering pension plans, said the letter.
“New data collection efforts may not fully serve as a substitute for meaningful actions in line with regulatory mandates. Importantly, if the ultimate goal is increased supervision, is government suggesting that [the Office of the Superintendent of Financial Institutions] will supervise and govern plan investments?”
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The PIAC also requested the government provide clear guidance on determining jurisdiction of plan investments, specifically their geographic orientation, adding clear and specific guidelines for identifying the geographic origin or jurisdiction of assets will lead to more accurate and consistent reporting outcomes. It also noted defined benefit plan sponsors may be able to access the required information more easily than defined contribution plan sponsors.
“For pension plans to deliver accurate and timely information, reporting requirements should be standardized across all stakeholders in the pension investment sector. Plan sponsors would benefit if investment managers and DC platforms are required to adhere to the same disclosure requirements as all pension plans.”
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