The Portfolio Management Association of Canada is endorsing the Ontario government’s plans to do away with rules that cap pension fund investments.

In a submission to the Ontario Ministry of Finance on Friday, PMAC says that it supports the provincial government’s proposal to eliminate the rule prohibiting plan administrators from making investments that give pension funds more than 30% voting control in a corporation.

The proposed rule change “is a welcome development for large Ontario pension funds that engage in direct investing as well as for Canadian investors,” the PMAC letter says.

The industry association has previously called for eliminating these sorts of quantitative limits on the basis that they are “outdated and unnecessary”. Instead, it says that “prudent person standards” are a better way to limit pension investments. “This method allows managers and plan administrators to use their expertise and discretion in constructing their portfolios,” the PMAC letter says.

However, the group also recommends that the removal of Ontario’s rule wait until after federal consultations on investment limits, which were announced in the latest budget, have taken place.

“We would support the removal of all quantitative limits on a harmonized basis in Canada,” the PMAC letter adds. “In our view, investment rules should be set out as broad principles and most of the prescriptive quantitative restrictions should be abandoned as they do not address all of the portfolio diversification issues nor risks inherent in investments included in a pension plan.”