On July 1, 2016, after many years of joint work between OPB, the Workplace Safety and Insurance Board (WSIB) and the Government of Ontario, the Province of Ontario established the Investment Management Corporation of Ontario (IMCO). A professional investment organization that will invest the pooled assets of its member organizations, it is a compelling example of OPB’s commitment to protecting the long-term health of the Plan.
Through IMCO’s scale, we will be more competitive and have greater access to investment and partnership opportunities, in a stronger position for negotiating terms and agreements and better able to attract and retain top-tier investment professionals. Simply, IMCO allows OPB to create more value for our members.
The initial pooling of assets from OPB and WSIB will provide IMCO with more than $50 billion of assets under its management. This initial pool of assets will continue growing with the growth of OPB’s and WSIB’s assets and as other Ontario public organizations, plans and funds choose to join IMCO. We believe asset pooling will boost investment returns compared to what we could earn on our own, and even a small increase could have a significant impact. For example, if OPB were able to increase its annual investment returns by 25 basis points (1/4 of 1%) above the Plan’s discount rate, this would add approximately $2.0 billion to the funded status of the Plan at the end of 15 years.
It is important to keep in mind that OPB is still responsible for overseeing IMCO as the investment manager for its existing and future assets. We will continue to own our assets and will only be responsible for PSPP liabilities (i.e., we will not assume the liabilities of any other IMCO clients). Most importantly, we have policies and people in place to ensure our members’ best interests are always effectively represented.
The OPB-IMCO Relationship
What OPB is responsible for:
- Continuing to own its assets and be responsible for only the PSPP’s liabilities
- Establishing the Plan’s asset mix (such as private markets, public equities, etc.) through the Strategic Asset Allocation (SAA) so that IMCO can invest in accordance with it
- Conducting a triennial asset/liability (A/L) study to ensure the Plan’s asset mix is keeping pace with the Plan’s liabilities and is still the right blend of investments by asset class such as real estate, infrastructure or fixed income
- Overseeing IMCO’s management of OPB assets by establishing IMCO performance benchmarks and targets
- Appointing a Head of Investments at OPB to oversee IMCO’s management of our assets
What IMCO is responsible for:
- As OPB’s investment manager, investing the Plan’s assets in accordance with OPB’s investment beliefs, policies and legislative requirements
- Investing and reinvesting OPB’s assets by following the asset mix outlined in OPB’s Strategic Asset Allocation (SAA) policy
- Acting honestly and in good faith in the best interest of IMCO members such as OPB
- Providing quarterly compliance certificates to OPB
- Building a strong relationship team to address the requirements and needs of IMCO members such as OPB
IMCO is expected to become fully operational in June 2017
Outstanding first Board is appointed for IMCO, including two of OPB’s longest-serving Board members, Vincenza Sera and Hugh Mackenzie
The IMCO Board includes experts like Robert Bertram, the architect of the Ontario Teachers’ Pension Plan’s investment approach and success
Bert Clark, former president of Infrastructure Ontario, has been named CEO of IMCO