The Ontario Teachers’ Pension Plan (OTPP) says the federal government’s plan to limit institutional investments in income trusts is unfair and discriminatory.

The proposed 1% cap, contained in Finance Minister Ralph Goodale’s budget speech Tuesday, “seriously discriminates against the 250,000 teachers and the millions of Canadian workers whose retirement income is managed by pension plans,” OTPP CEO Claude Lamoureux said in a news release. “This proposal would unfairly exclude them from benefiting from the growth and stable cash flows income trusts are expected to provide.”

The cap would not apply to RRSPs, investment funds, mutual funds or foreign investors including foreign pension plans — just to Canadian pension plans.

OTPP said it has more than $1 billion in income trust investments, already exceeding the 1% limit suggested by the government.

“Income trusts are also an important tool to help us diversify risk and find additional value to pay teachers’ pensions. Income trusts are attractive investments,” Lamoureux said. “They give investors greater control over the cash flow generated by businesses.

“This proposal would seriously handicap our ability to make money for teachers and would put us at a severe disadvantage in competing for investments against other Canadian and foreign investors.”

In 2003, income trusts earned OTPP almost $800 million in income, mainly from capital gains.

The $75 billion plan administers the pensions of Ontario’s 155,000 elementary and secondary school teachers and 93,000 retired teachers.