29 Questions
What must a DB pension plan administrator consider when preparing a SIP&P?
Current investments, future contributions, and liabilities
How often must SIP&Ps be reviewed and confirmed or amended by the plan administrator?
At least once each plan year
Which filing requirement do Ontario-registered pension plans have to comply with regarding SIP&Ps?
Filing annually with the Ontario pension regulator
What is a key consideration for the DB pension plan administrator regarding financial risks?
Tolerance for risk
Why is it important to assess how liabilities and investments would respond to plausible economic events?
To prepare for potential financial impacts
Which type of debt instrument allows the holder to convert bonds to common stock?
Convertible bonds
What type of shares provide a preferential ownership interest in a company?
Preferred shares
Which investment plan can make direct equity investments in commercial real estate projects?
Pension funds
What type of instruments are secured by specific real property and provide repayments blending principal and interest?
Mortgages
Which type of shares usually receive dividends before common shareholders?
Preferred shares
What kind of funds purchase and own a portfolio of securities directly?
Individually managed funds
What is the main focus of the 'prudent person rule'?
Exercising care, diligence, and skill in property management
What does the 'prudent portfolio rule' primarily address?
Overall reasonable level of risk for the fund
How can a plan administrator manage conflicts of interest as per the text?
By establishing a written policy on conflicts of interest
What is the initial step in the manager selection process according to the text?
Determining the manager structure
How are potential investment manager candidates narrowed down according to the text?
Detailed quantitative and qualitative analysis
What is the ultimate goal of the review process mentioned in the text?
Selecting a suitable investment manager
What does the OSFI's Guideline for the Development of Investment Policies and Procedures for Federally Regulated Pension Plans suggest SIP&Ps should identify?
Responsibilities and accountabilities
What must a SIP&P for a DB pension plan disclose regarding investments?
Diversification and asset mix
In Ontario, DC pension plans registered under PBSA should prepare SIP&Ps according to what standard of care?
Plan administrator's required standard of care
What aspect does Ontario require DC pension plans to disclose regarding their investment policies and procedures?
Environmental and social factors incorporation
What does a SIP&P for a DB pension plan need to address concerning conflicts of interest?
Protection from conflicts of interest
What is an essential requirement for member-directed DC pension plans outside of Ontario according to the text?
Disclosure of investment risks
What are some examples of alternative investments mentioned in the text?
Private equity and commodities
Which of the following is NOT a benefit of alternative investments?
Low cost assets
What is a potential pitfall or challenge associated with alternative investments according to the text?
Emerging strategy risk
What is the primary purpose of Liability-driven investing (LDI) according to the text?
Matching all future cash payments owed to plan members in retirement
Why should emerging strategy risk be acknowledged when dealing with alternative investments?
Due to short histories and lack of robust data
What type of infrastructure assets are mentioned in the text as part of alternative investments?
Gas distribution networks and power generation facilities
Test your knowledge on investment rules such as the 'prudent person rule' and the 'prudent portfolio rule', as well as conflicts that can arise within the investment function.
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