Investment Rules and Conflicts Quiz
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Questions and Answers

What must a DB pension plan administrator consider when preparing a SIP&P?

  • Weather conditions in the region
  • Historical investment performance
  • Current investments, future contributions, and liabilities (correct)
  • The number of employees in the company

    • How often must SIP&Ps be reviewed and confirmed or amended by the plan administrator?

  • Every 5 years
  • At least once each plan year (correct)
  • Only when there are major economic events
  • Once every 10 years

    • Which filing requirement do Ontario-registered pension plans have to comply with regarding SIP&Ps?

  • Filing annually with the Ontario pension regulator (correct)
  • Randomly filing with different regulators
  • Filing with the federal pension regulator
  • Not required to file any documents

    • What is a key consideration for the DB pension plan administrator regarding financial risks?

    <p>Tolerance for risk</p> Signup and view all the answers

    Why is it important to assess how liabilities and investments would respond to plausible economic events?

    <p>To prepare for potential financial impacts</p> Signup and view all the answers

    Which type of debt instrument allows the holder to convert bonds to common stock?

    <p>Convertible bonds</p> Signup and view all the answers

    What type of shares provide a preferential ownership interest in a company?

    <p>Preferred shares</p> Signup and view all the answers

    Which investment plan can make direct equity investments in commercial real estate projects?

    <p>Pension funds</p> Signup and view all the answers

    What type of instruments are secured by specific real property and provide repayments blending principal and interest?

    <p>Mortgages</p> Signup and view all the answers

    Which type of shares usually receive dividends before common shareholders?

    <p>Preferred shares</p> Signup and view all the answers

    What kind of funds purchase and own a portfolio of securities directly?

    <p>Individually managed funds</p> Signup and view all the answers

    What is the main focus of the 'prudent person rule'?

    <p>Exercising care, diligence, and skill in property management</p> Signup and view all the answers

    What does the 'prudent portfolio rule' primarily address?

    <p>Overall reasonable level of risk for the fund</p> Signup and view all the answers

    How can a plan administrator manage conflicts of interest as per the text?

    <p>By establishing a written policy on conflicts of interest</p> Signup and view all the answers

    What is the initial step in the manager selection process according to the text?

    <p>Determining the manager structure</p> Signup and view all the answers

    How are potential investment manager candidates narrowed down according to the text?

    <p>Detailed quantitative and qualitative analysis</p> Signup and view all the answers

    What is the ultimate goal of the review process mentioned in the text?

    <p>Selecting a suitable investment manager</p> Signup and view all the answers

    What does the OSFI's Guideline for the Development of Investment Policies and Procedures for Federally Regulated Pension Plans suggest SIP&Ps should identify?

    <p>Responsibilities and accountabilities</p> Signup and view all the answers

    What must a SIP&P for a DB pension plan disclose regarding investments?

    <p>Diversification and asset mix</p> Signup and view all the answers

    In Ontario, DC pension plans registered under PBSA should prepare SIP&Ps according to what standard of care?

    <p>Plan administrator's required standard of care</p> Signup and view all the answers

    What aspect does Ontario require DC pension plans to disclose regarding their investment policies and procedures?

    <p>Environmental and social factors incorporation</p> Signup and view all the answers

    What does a SIP&P for a DB pension plan need to address concerning conflicts of interest?

    <p>Protection from conflicts of interest</p> Signup and view all the answers

    What is an essential requirement for member-directed DC pension plans outside of Ontario according to the text?

    <p>Disclosure of investment risks</p> Signup and view all the answers

    What are some examples of alternative investments mentioned in the text?

    <p>Private equity and commodities</p> Signup and view all the answers

    Which of the following is NOT a benefit of alternative investments?

    <p>Low cost assets</p> Signup and view all the answers

    What is a potential pitfall or challenge associated with alternative investments according to the text?

    <p>Emerging strategy risk</p> Signup and view all the answers

    What is the primary purpose of Liability-driven investing (LDI) according to the text?

    <p>Matching all future cash payments owed to plan members in retirement</p> Signup and view all the answers

    Why should emerging strategy risk be acknowledged when dealing with alternative investments?

    <p>Due to short histories and lack of robust data</p> Signup and view all the answers

    What type of infrastructure assets are mentioned in the text as part of alternative investments?

    <p>Gas distribution networks and power generation facilities</p> Signup and view all the answers

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