PSPIB: U.S. Treasury Exception and Market‑Value Rule

Summary#

These final regulations amend the Public Sector Pension Investment Board Regulations to give the Public Sector Pension Investment Board (PSPIB) more flexibility in its investments. They let PSPIB hold more than 10% of its assets in U.S. Treasury Securities and change how that 10% limit is measured. The rules came into force on August 12, 2021.

What it does#

• Creates an exception to the 10% limit so PSPIB can hold securities issued or fully guaranteed by the Government of the United States (referred to as U.S. Treasury Securities) even if those holdings exceed 10% of the fund.
• Changes the way compliance with the 10% limit is measured from book value (original purchase price) to market value (current price in the market).
• The amendments are part of the Regulations Amending the Public Sector Pension Investment Board Regulations and took effect on August 12, 2021.

Who's affected#

• Public Sector Pension Investment Board (PSPIB) — the organization that manages the federal public sector pension assets.
• Members, contributors and beneficiaries of the federal public sector pension plans, including the federal public service, Canadian Armed Forces (CAF) — Regular Force, Royal Canadian Mounted Police (RCMP), and CAF — Reserve Force. These plans are the assets PSPIB manages.
• The federal plan sponsor and oversight bodies such as the Asset‑Liability Committee (ALCO), which will continue to monitor risk and allocations.
• The Canada Gazette notice says there are no expected costs to businesses or the general public. It also notes PSPIB manages over $204.5 billion in assets and expects operational savings (about $10 million per year) from lower use of higher‑cost synthetic strategies. The source cites synthetic exposures of around $3.2 billion and a cost estimate tied to 30 basis points.

Why it matters#

• It lets PSPIB use the large and liquid U.S. government bond market more freely. That can help the fund protect itself during market stress and better match pension liabilities that are sensitive to inflation.
• Measuring the limit by market value gives a more current picture of how big each holding really is. That can free up investment choices and reduce odd constraints caused by historical purchase prices.
• The change is expected to lower PSPIB’s operating costs (estimated savings $10 million per year) by reducing reliance on swaps and other synthetic products.
• According to the regulatory note, this is an internal change to how federal pension assets are managed and is not meant to affect the general public or businesses.