Feds to revisit so-called ’30-per-cent rule’ governing pension investment

OTTAWA – The federal government will examine whether to scrap a rule that restricts the percentage of voting shares federally regulated pension plans are permitted to hold in a company.

The Finance Department will launch public consultations to explore a rule that prevents pension plans from holding more than 30 per cent of the voting shares of a firm.

The process will explore whether to keep the so-called 30-per-cent rule, relax it or eliminate it altogether.

The department says the 30-year-old rule was intended to keep pension plans in a more passive role by restricting them from acquiring controlling stakes in companies.

The rule was also established to lower pension plans’ exposure to risk.

But in recent years, large Canadian pension plans have urged the government to abandon the rule as low interest rates have chipped away at their returns.

The Liberals promised to hold the consultations on the rule in their March budget. Last year, their Conservative predecessors also said they would undertake the same process.

A government document noted Friday that Ontario has announced plans to ditch the 30-per-cent rule.

Ottawa also says the consultations invite individuals and organizations to share their opinions on tax-policy issues linked to the growth of active investments by pension plans.

It says submissions are requested by Sept. 16.