Ontario establishes new body to manage public pensions, investment funds

The Ontario government has established the Investment Management Corp. of Ontario in an effort to improve the management of public sector pensions and other investment funds.

The new corporation will provide investment management and advice to organizations in the province’s public service, allowing them to pool assets with a view to reducing administrative costs and improving return on investments.

Read: Sounding Board: Canada leads in pension systems for public sector workers

The founding members of the new corporation are the Ontario Pension Board and the Workplace Safety and Insurance Board, which have combined investment assets of $49.3 billion. It can also accept any interested broader public service organization as a member.

“In a global investment environment, scale can be an important contributor to consistently strong investment returns,” said Mark Fuller, president and chief executive officer of the Ontario Pension Board. “We believe asset pooling will enhance our ability to invest directly in a broader array of high-quality opportunities and continue to generate strong returns over the long term.”

When it comes to the question of why the new corporation has just two members at the moment, two major pension funds contacted by Benefits Canada declined to comment on why they hadn’t joined it. The Healthcare of Ontario Pension Plan, however, noted the new corporation “involved some of the smaller plans.”

Read: Ontario Pension Board earned 6.14% return in 2015

While the corporation will be responsible for managing the Ontario Pension Board’s assets, the pension fund will continue to own them and maintain control over its strategic asset mix, according to a news release. At the same time, the plan’s assets and liabilities will remain separate from the WSIB and any other members of the new corporation.

The province said in a news release it expects the new corporation, which will operate at arm’s length from the government and won’t require its financial support, to be fully operational by the spring of 2017.

David Leith, a former deputy chair and managing director at CIBC World Markets, will serve as chair of the board of directors.

Read: How did Canada’s fastest-growing pension funds fight off 2015 market headwinds?