Ontario has exempted American government securities from the pension law 10% diversification limit, according to a Pension Alert from Borden Ladner Gervais.
Pension plans registered in Ontario were prohibited from directly or indirectly investing or lending more than 10% of the book value of the assets of the pension fund in or to any one person, two or more associated persons, or two or more affiliated corporations, subject to limited exemptions.
This restriction has now been removed for securities issued by the Government of the United States of America.
Accordingly, Ontario pension plans will now be able to hold unlimited amounts of U.S. Treasuries and other U.S. government issued securities, subject to compliance with the statement of investment policies and procedures for the pension plan and the standard of prudence.
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