While the housing market is cooling, pension plans continue to see investment opportunities in real estate. Pension fund investment rules in Atlantic Canada have been revised to meet that demand.
A recent amendment to the Newfoundland and Labrador Pension Benefits Act Regulations (filed on March 5, 2013, and available here) adopts the investment rules in the federal Pension Benefits Standards Regulations (referred to as the federal investment regulations). This follows provinces such as Ontario that previously adopted the federal investment regulations.
While the existing rules were already almost the same as the federal investment rules, the former Newfoundland rules set limits on investing in a single parcel of real estate property (5% of plan assets), in Canadian resource properties (15%) and total real property and Canadian resource properties (25%). The federal investment regulations were amended to repeal similar prohibitions in 2010. The adoption of the federal rules in effect removes these limits and means that the Newfoundland rules will change automatically with any changes to the federal rules.
The changes are also consistent with Nova Scotia’s recent draft Pension Benefits Regulations that also do away with same (see our summary of other portions of Nova Scotia’s draft Regulations here). Nova Scotia has not proposed to explicitly adopt the federal rules so will need to amend them if that province decides to follow any changes to the federal rules.
While pension legislation reform has been far from consistent across the country, it is good for plan sponsors that at least pension investment rules continue to move towards a more harmonized approach.