(September 21, 2012) — Canada could be in line for even more mega-funds as the Ontario government is investigating building two superannuation schemes for public sector workers.
The country’s most populous province already boasts two of its largest pension funds, Ontario Teachers’ Pension Plan and Ontario Municipal Employees’ Retirement System, but its government needs a solution to funding public sector pension deficits, according to newspaper The Globe and Mail.
Should the project go ahead, Ontario would launch two funds to manage around C$60 billion, the newspaper said, with one of the funds holding C$46 billion.
The move would pool various pension funds from across the province that are currently managed separately. By bringing these assets together, they could benefit from economies of scale on administration cost and push for better deals from investment professionals, which could lead to better returns.
The smaller fund would be created by pooling the pension assets of four of Ontario’s electricity companies the newspaper said quoting unnamed sources.
The second, larger fund would pool assets belonging to university and college employees, along with other municipal employees.
The Canadian government has warned public sector workers that taxpayers are not going to be liable for deficit reduction to their pension funds as investment returns – due to harsh economic conditions – and ever-growing liabilities serve to increase shortfalls.