CDPQ Adopts CFA’s Asset Manager Code | Chief Investment Officer

Canadian pension fund Caisse de dépôt et placement du Québec has signed on to the CFA Institute’s Asset Manager Code , which establishes ethical and professional responsibilities of companies managing assets for clients. [Source]

The C$391.6 billion ($287.3 billion) CDPQ said it is the first pension fund in Canada to adopt the code, which is based on the ethical principles of the CFA Institute and the CFA program. The code outlines the responsibilities for asset managers committed to ethical behavior and protecting investors’ interests.

By adopting the code, fund managers are committing to the CFA’s general principles of conduct, which include:

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Acting in a professional and ethical manner at all times;
Acting for the benefit of clients;
Acting independently and objectively;
Acting with skill, competence and diligence;
Communicating with clients in a timely and accurate manner; and
Upholding the applicable rules governing capital markets.

“Integrity and responsibility are at the heart of our activities to create value for our depositors and for our communities,” Maarika Paul, CDPQ’s executive vice president and chief financial and operations officer, said in a statement. “The adoption of the CFA Institute standards is another step that demonstrates the CDPQ’s leadership in terms of best practices.”

Under the code’s guidelines, managers of portfolios or pooled funds must take into account only investment actions that are consistent with the stated objectives and constraints of the portfolio or fund. They are also expected to provide adequate disclosures and information so investors can consider if any proposed changes in the investment style or strategy suit their investment needs.

When managing separate accounts, managers are required to evaluate and understand the client’s investment objectives, tolerance for risk, time horizon, liquidity needs, financial constraints, unique circumstances—such as tax, legal, or regulatory considerations—and any other relevant information before providing investment advice or taking investment action for a client.

The CFA Institute says more than 1,000 organizations have adopted its code of ethics so far, including BlackRock, Janus Henderson Investors and JP Morgan Asset Management. The code includes sections covering client loyalty; investment process and actions; trading; risk management, compliance and support; performance and evaluation; and disclosures.

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Tags: Caisse de dépôt et placement du Québec (CDPQ), Canada, CDPQ, CFA Institute, code of ethics, fund managers, Pension Funds

The Department of Labor announced changes to Forms 5500 and 5500-SF (short form) and released updated instructions on December 8.

The DOL updates Form 5500 annually to keep it up-to-date with various regulatory changes. Every defined contribution and pension plan sponsor is required to file a 5500 to the IRS and DOL annually. The form discloses information about a plan’s finances and operation. 5500s are required under Title I and IV of the Employee Retirement Income Security Act of 1974 and are used both to ensure compliance by and to gather data on pension plans.

Form 5500 received changes in five areas: multiple employer plans, administrative penalties, Schedule MB, Schedule R and Schedule SB.

For MEPs, new codes have been added to Line 8a of Part II to identify different types of MEPs, such as pooled employer plans, association retirement plans, professional employer organization MEPs and other MEPs. For administrative penalties, the instructions have been updated to reflect an increase in the maximum civil penalty amount assessable under ERISA.

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For Schedule MB, used by multiemployer defined benefit plans and certain money-purchase plan actuarial information, instructions for Line 3 have been changed to require an attachment that shows total withdrawal liability payments made to the plan while separating periodic and lump sum withdrawals. Line 8b(1) was updated to increase the projection period in the attachment to 50 years for plans with 1,000 or more participants. Line 8b(3) has been changed to require plans with 1,000 or more participants to attach a 10-year projection of employer contributions and withdrawals.

For Schedule R, for Line 13 of Part V was changed to require plans to report identifying information about any participating employer who either contributed more than 5% of the plan’s total contributions or was one of the 10 highest contributors.

For Schedule SB, Line 26 of Part VI now requires an attachment of a projection of expected benefit payments.

Form 5500-SF received changes to two areas: MEPs and administrative penalties. The changes to penalties are the same for 5500-SF as they were for 5500.

The changes to MEPs differ slightly. New plan codes have been added for the plans eligible to fill out a 5500-SF: association retirement plans, PEO MEPs and other MEPs. A caution note has been added to signal that pooled employer plans are not eligible to file Form 5500-SF.

Tags: Form 5500, MEPs, United States Department of Labor (DOL)