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Pooling pension assets of public-sector workers in Ontario urged

Ontario Finance Minister, The Honourable Dwight Duncan spoke to the media and answered questions during a pre-budget press conference in his office in Toronto on March 26, 2012.

Deborah Baic/The Globe and Mail/Deborah Baic/The Globe and Mail

The Ontario government has been advised to follow the lead of other jurisdictions within Canada and internationally by creating a massive pension fund to manage the retirement savings of public-sector workers.

A report commissioned by the government says pooling various pension plans together under one roof would create economies of scale, reduce administration costs and broaden investment opportunities, particularly for smaller funds.

The report, released on Friday, recommends that the new pension fund manage at least $50-billion in assets. "There is strong evidence to suggest that large pension funds outperform smaller and medium-sized funds," says the report, written by William Morneau, executive chairman of consulting firm Morneau Shepell.

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Ontario already has three large funds – the Ontario Teachers' Pension Plan, the Ontario Municipal Employees Retirement System and the Healthcare of Ontario Pension Plan, which together manage just over $212-billion in assets.

But it also has dozens of tiny funds that each manage less than $1-billion in assets. The report says a group of funds that together manage assets of $100-billion on behalf of a diverse group of public-sector workers – ranging from university professors to hospital custodians and public transit employees – should be considered for the pooled arrangement. It recommends that the government introduce legislation making participation mandatory.

Finance Minister Dwight Duncan was not available for comment on Friday. He asked Mr. Morneau to look at pooling pension-fund assets to help the cash-strapped province curb spending and erase a projected deficit of $14.4-billion.

Mr. Morneau estimates that creating a pooled fund would produce annual savings of between $75-million and $100-million. British Columbia and Alberta both have investment firms that manage pooled assets from several public-sector pension plans. Britain is looking at similar measures.

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About the Author

Karen Howlett is a national reporter based in Toronto. She returned to the newsroom in 2013 after covering Ontario politics at The Globe’s Queen’s Park bureau for seven years. Prior to that, she worked in the paper’s Vancouver bureau and in The Report on Business, where she covered a variety of beats, including financial services and securities regulation. More


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