© Copyright 2006 Rogers Publishing Ltd. The following article first appeared in the April 2005 edition of BENEFITS CANADA magazine.
 
BENEFITS CANADA’s special report on the removal of the Foreign Property Rule(FPR)looks at the impact of this long-awaited announcement.
 

Federal Finance Minister Ralph Goodale lived up to his name on Feb. 23, 2005 – the day he released a good news budget, abolishing the Foreign Property Rule(FPR) investment limit for taxdeferred retirement plans. “I do think it was the right thing to do at this time,” said Goodale.

Plan sponsors couldn’t agree more. They met the news with surprise and enthusiasm; with the removal of the 30% restriction, many will now have greater opportunities to diversify in both traditional and alternative asset classes.

Money managers with global and international products also supported the FPR’s demise. With just under 13% of the Top 40’s pension assets in non-domestic specialist mandates, the open-door investment policy will likely bring dividends. But there are also losers. Synthetic investment vehicles, which are no longer needed in an unrestricted investing environment, are on their way out. And money managers that factored them into their sales equation will have to regroup.

BENEFITS CANADA’s special report, which this year incorporates the Top 40 Money Managers report, examines the FPR’s demise and the potential impact on the industry. While a clearer legislative picture will emerge in coming months, industry analysts, sponsors and consultants weigh in on the benefits— and the potential side-effects—of this important announcement.

Anna Sharratt

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