Loss of retirement income fund

Approved (reviewed and confirmed) by the Board of Directors of the Workplace Safety and Insurance Board on December 12, 2025

Effective December 31, 2025

Statement of Investment Policies and Procedures

This Statement of Investment Policies and Procedures (“SIPP”) applies to the assets (the “Fund”) held on behalf of the Loss of Retirement Income Fund of the Workplace Safety and Insurance Board (“WSIB”) as continued under the Workplace Safety and Insurance Act, 1997 (the “Act”) as amended from time to time. The Board of Directors of the WSIB (“Board of Directors”), the Investment Committee of the Board of Directors (“Investment Committee”), the Investment Manager as hereinafter defined, and any officer, employee, agent or advisor providing services in connection with the investments of the Fund shall accept and adhere to the SIPP.

1. Purpose

The purpose of the SIPP and related policies is to describe the WSIB’s essential investment policies, define permitted investments for the Fund and describe the governance structure of the Fund. For greater certainty, annuities purchased to provide benefits from the Fund in accordance with elections made by injured workers are outside the scope of the SIPP.

In formulating the SIPP, the Investment Committee and the Board of Directors have considered all factors that may affect the Fund’s ability to meet its financial obligations, including:

1. The nature of the liabilities and obligations;
2. The investment horizon;
3. The net cash flow position;
4. Historical and expected capital market returns;
5. Risk factors and the WSIB’s risk appetite;
6. Potential benefits and risks associated with alternative investment policies; and
7. Applicable statutory and regulatory requirements.

2. Fund characteristics and background

Under section 43 of the Act, injured workers receive Loss of Earnings (“LOE”) benefits. Under section 45 of the Act, an injured worker who received LOE benefits for 12 continuous months or more is entitled to receive Loss of Retirement Income (“LRI”) benefits at age 65. For the purpose of funding the LRI benefit, the WSIB is required to set aside an amount equal to 5% of each LOE payment paid to the worker. Injured workers may also elect to contribute 5% of each LOE payment they receive to fund the LRI benefit (“Voluntary Contributions”).

For workers injured prior to January 1, 1998, the Workers' Compensation Act ("WCA") continues to apply. Under section 43 of the WCA, injured workers receive Future Economic Loss ("FEL") benefits to compensate for the future loss of earnings that result from work-related injuries. The amount to be set aside to fund the LRI benefit for these workers is equal to 10% of every FEL payment. Under the WCA, workers are not entitled to elect to make Voluntary Contributions.

As required by the Act, the WSIB has established and maintains the Fund into which all the foregoing amounts are deposited and invested in accordance with provisions of the Act and this SIPP. The ownership of the Fund’s investments rests with the WSIB.

Contributions by the WSIB are accumulated and invested up to the earlier of the time the injured worker turns age 65, or dies. Depending upon the amount involved, accumulations are paid out in the form of lump sum payments or in monthly payments according to the payment schemes defined in O.Reg. 562/99 under the Act or in O.Reg. 715/94 under the WCA for pre-1998 injuries. The Voluntary Contributions are accumulated and paid in a similar manner.

The net cash flow (contributions minus payouts) of the Fund, excluding net investment income, will, for the foreseeable future, be negative each year given that the level of contributions is less than the payouts.

The investment performance of the Fund is critical because LRI benefits are the sum of the amounts set aside by the WSIB and the Voluntary Contributions, if any, plus the accumulated investment income on those amounts.

There are administrative practices in place that are reviewed on an ongoing basis to reduce investment volatility as workers approach age 65. When an injured worker attains 60 years of age, 20% of the LRI account balance maintained in respect of the injured worker is liquidated and invested in a separate portfolio consisting of short-term money market instruments. This separate portfolio is referred to as “LRI 60-65 Cash”. Each year thereafter, a further 20% of the LRI account balance maintained in respect of the injured worker is liquidated and invested in “LRI 60-65 Cash”. At age 65, the injured worker will receive the cash balance as a lump sum or that sum will be applied to the purchase of an annuity, all as determined in accordance with prescribed rules.

As of the date of this SIPP, the average age of the worker on whose behalf funds are set aside by the WSIB is 54.

Workers cannot select investment options.

3. Regulatory standards

The Act provides that the Fund must be invested only in such investments as are authorized under the Pension Benefits Act (Ontario) (“Pension Benefits Act”) for the investment of money from pension funds and shall be invested in the same manner as is authorized for those pension funds. This includes the requirement to invest the assets of the Fund with the care, diligence, and skill that a person of ordinary prudence would exercise in dealing with the property of another person and using all relevant knowledge and skill that the person possesses or, by reason of their profession, business or calling, ought to possess.

Pursuant to Section 166 of the Act and the Memorandum of Understanding between the WSIB and the Minister of Labour, the WSIB is required to provide annually a statement of its investment policies and goals to the Minister of Labour, Immigration, Training and Skills Development and, to that end, shall annually provide a copy of this SIPP to the Minister.

4. Governance

4.1. Administration of the Fund

The WSIB, through its Board of Directors, is responsible for the prudent management of the Fund’s investments. Where it is reasonable and prudent in the circumstances to do so, the Board of Directors may employ one or more agents to carry out any act required to be done in the administration and investment of the Fund. The Board of Directors, however, retains overall responsibility for the administration and investment of the Fund, including the selection and supervision of delegates.

The Board of Directors has delegated certain aspects of the administration and oversight of the Fund's investments to the Investment Committee, the President and Chief Executive Officer (“CEO”) and, through the Board of Directors’ appointment of the Investment Management Corporation of Ontario (“IMCO”), to IMCO.

The specific roles, responsibilities, and authorities of the Board of Directors, the Investment Committee, the President and CEO, the Senior Vice President and Chief Investment Officer, and IMCO in the administration and oversight of the Fund are documented in the Investment Committee Charter, in the Delegation of Investment Authority, and in other documents, which are reviewed periodically and amended as required by the Board of Directors or its delegates.

The Fund’s performance, risk, and compliance, including in relation to the objectives and Policy Asset Mix (defined in section 7) set out in this SIPP, are reviewed at least quarterly. IMCO’s performance is reviewed at least annually.

4.2. Fund Structure

The assets of the Fund may be held directly or indirectly through interests in one or more corporations, trusts, partnerships or other entities formed for the purpose of holding investments permitted in Section 6 of this SIPP (“Investment Holding Vehicles”). Investment Holding Vehicles will be administered or overseen by the WSIB or IMCO.

4.3. Mandate & Authority of the Investment Managers

“Investment Manager” means IMCO and its authorized delegates.

IMCO shall have full authority, acting as a “prudent person” within the provisions of this SIPP and such additional restrictions as are contained in the Investment Management Agreement between the WSIB and IMCO for the Fund (“IMA”), to manage all aspects of the investments of the Fund or the applicable Investment Holding Vehicle or portions thereof.

4.4. Review of the SIPP

The SIPP shall be reviewed by the Board of Directors at least once in each fiscal year and confirmed or amended as required.

No less frequently than every four years, this review shall include a detailed review of the Policy Asset Mix (defined in section 7) through an asset-liability study to ensure that the Policy Asset Mix and other provisions of the SIPP remain relevant.

5. Fund Objectives and Return Expectations

5.1. Investment Objective

The long-term investment objective is to earn a rate of return (net of investment expenses) that enhances the LRI benefit balanced with an acceptable level of risk.

1. Total Return Expectations 

   Given market volatility levels and capital market assumptions, as of June 30, 2025, the Fund’s realized rate of return is expected to range between 4.6% and 7.9% annualized over 15 years, 50% of the time. Over shorter periods, the Fund’s realized rate of return may be significantly above or below this range. As an example, over one-year, the Fund’s realized rate of return is expected to range between -0.4% and 11.2%, 50% of the time.

2. Benchmark-related 

   he Fund, its investment strategies and its individual portfolios are expected to generate returns over rolling periods of five years or longer, as may be appropriate for a particular strategy, that meet or exceed the returns of relevant benchmarks. Benchmarks may be comprised of market indices, economic indicators, peer group data, or based on other industry-recognized practices. IMCO establishes benchmarks and relative return/risk targets for each of its strategies and derives the total Fund benchmark for the WSIB based on those benchmarks and the Policy Asset Mix with appropriate adjustments. IMCO will advise the WSIB of changes to the total Fund benchmark and the WSIB will raise any necessary concerns or suggested changes with IMCO, as appropriate.

6. Investment Categories

The following sections outline the permitted investments for the Fund.

6.1. Asset Classes

The Fund is invested in a diverse range of asset classes. Investments may be made directly or indirectly by holding shares or units of pooled, segregated or mutual funds, unit trusts, exchange- traded vehicles, corporations, companies, partnerships or other entities invested in securities or property.

Permitted investments include investments made in and through IMCO pooled funds and IMCO joint co-investment vehicles, provided that: (a) each IMCO pooled fund conforms to the applicable IMCO investment policy statement; and (b) the WSIB has provided a written consent, or otherwise contractually agreed, to the investment of the assets of the Fund in each such IMCO pooled fund and IMCO joint co-investment vehicle.

The asset classes are:

1. Cash and Money Market: This asset class is comprised of cash and cash equivalents and seeks to provide liquidity and safety for the Fund. Returns are expected to be lower than other asset classes.

   The minimum credit rating for investments in this asset class is R-1 Mid by DBRS Morningstar, or a comparable rating given by a credit rating agency recognized by a competent authority.

2. Fixed Income: This asset class provides exposure to government bonds and seeks to provide interest rate sensitivity, liquidity, safety and diversification for the Fund, particularly when economic conditions are weak, or when market or economic shocks precipitate a flight to lower risk investments. Nominal bonds mitigate deflation risk while inflation-linked bonds mitigate inflation risk. Returns are expected to be higher than Cash and Money Market, but lower than other asset classes.

   The minimum credit rating for investments in this asset class is BBB- by S&P Global Ratings, or a comparable rating given by a credit rating agency recognized by a competent authority.

3. Global Credit: This asset class is intended to provide broad exposure to global credit markets. Investments may include public and private investments and may be rated investment grade or non-investment grade. Although these investments could be considered a form of fixed income, for purposes of the Policy Asset Mix they are separately classified as their performance tends not to be highly correlated with high-quality government fixed income assets. Credit investments are expected to enhance the Fund’s returns and diversification.
4. Equities: This asset class is expected to provide higher investment returns than Fixed Income or Global Credit over the long run and the opportunity to participate in the long-term growth of the global economy but is expected to exhibit higher variability in returns.
   1. Public Equity: This asset class provides broad exposure to global, publicly-traded equity markets.
   2. Private Equity: This asset class seeks to generate long-term capital appreciation and aims to outperform Public Equity by investing in a diversified set of private operating companies and providing value-add through strategic, operational and financial improvements. Private Equity is a higher risk asset class involving long-term investments in generally illiquid assets.
5. Real Assets: Real assets consist of Global Real Estate and Global Infrastructure, both of which are generally illiquid, and returns are expected to be higher than Fixed Income.
   1. Global Real Estate: This asset class includes holdings in real estate properties and investment funds diversified across global geographies, sectors and property types. Real estate is expected to provide a stable source of income and to keep pace over time with inflation, thus mitigating the risk of unexpected inflation over the long term.
   2. Global Infrastructure: This asset class includes assets that provide essential services and facilities, many of which operate with regulated or strategic competitive advantages. Revenues are often generated under long-term contracts, which offer stable cash flows and may offer inflation sensitivity.
6. Allocations to asset classes that have been removed from the Policy Asset Mix may exist until such time as the Investment Manager determines that the associated investments can be disposed of prudently.

6.2. Derivative Investments

Financial instruments that derive their value from other financial instruments, economic or financial indicators, including but not limited to derivatives of equity, fixed income, commodities or currency-related investments, futures and/or forward contracts, swaps, options, warrants, depositary receipts, rights or other similar instruments, are all permitted to:

1. Obtain desired market exposures and manage investment risk;
2. Provide an additional source of return through active management or the replication of an index return;
3. Improve liquidity; or,
4. Manage allocations to asset classes or investment strategies, including, but not limited to, rebalancing.

6.3. Other Investments

Investments in commodities (e.g., gold) and annuities, deposit administration contracts or other insurance contracts issued by entities authorized to issue such instruments by the Insurance Companies Act (Canada), or any successor legislation, or comparable laws are permitted.

6.4. Short Selling of Securities

Short selling is generally undertaken by borrowing a security and selling it, with the obligation that it must be later repurchased and returned. The typical purpose of short selling is to enhance returns by buying the security back at a lower price. Short selling can also be used to manage risks associated with other security positions in the portfolio. When engaging in short selling the Investment Manager shall consider the related risks. Margin may be posted as required to effect a short sale.

6.5. Leverage

The Fund may use leverage to enhance returns, manage liquidity and optimize portfolio diversification while maintaining targeted risk levels. Leverage can be obtained from the use of financial instruments (e.g., derivatives), use of repurchase agreements, or borrowed capital.

7. Policy Asset Mix

The Fund has two distinct components. The first component represents a diversified long-term reference portfolio and excludes the LRI 60-65 Cash. It is the desired end-state allocation to a diversified set of asset classes and is the most important determinant of whether the Fund meets its long-term return objective with a level of risk that is acceptable for the WSIB. This risk is measured by the volatility of investment returns and by other measures.

The second component is the LRI 60-65 Cash, a portfolio of short-term money market instruments as described in Section 2 of this policy.

Actual allocations may be below the minimum or above the maximum ranges due to:

1. Illiquid nature of private assets such as Real Estate, Infrastructure, and Private Equity. Deviations from the desired allocation ranges for private assets are not violations of the SIPP; however, if actual allocations deviate outside of the target ranges IMCO should outline its plan to reach targets. Any over or underweights to private asset classes will be remapped to public assets in accordance with IMCO’s policies, with corresponding adjustments to target allocations and ranges for public assets.

2. Asset mix transitions due to changes in the Policy Asset Mix. During these transitions, actual allocations may be outside the minimum and maximum levels shown above and such deviations will not be considered violations of the SIPP provided that they are consistent with transition to the new Policy Asset Mix.

   Actual allocations may also be above or below target due to asset price fluctuations, cash movements and IMCO’s portfolio management decisions.

The WSIB considers currency risk when developing the Policy Asset Mix.  Section 11.3 provides further details of WSIB’s currency strategy.

¹PBA Regulation 909 subsection 76(12) categories corresponding to the target allocation for each of the asset classes are shown to provide the disclosure required by subsection 78(7) of Regulation 909 under the Pension Benefits Act (Ontario). To the extent any conflict arises between the target allocations shown in this column and any other provision of the SIPP, the other provision of the SIPP will prevail. Actual allocations within each asset class may differ from target.

The Policy Asset Mix (excluding LRI 60-65 Cash) emphasizes diversification and mitigates but does not eliminate fund return volatility. It strikes a reasonable compromise between achieving the long-term return objective and taking moderate investment risk.

8. Liquidity of Investments

The Fund will require liquidity from time to time for various reasons including payment of benefits, funding of capital calls, rebalancing, and posting of collateral. The expected liquidity requirements of the Fund, as well as the expected contributions to the Fund and the liquidity of various asset classes were considered in the development of this SIPP. The Policy Asset Mix was chosen to ensure sufficient liquidity will be available to meet operational and investment obligations as they come due. Liquidity coverage shall be monitored at least monthly.

9. Lending of Cash and Securities

The Fund may not lend cash other than through the making of investments permitted by this SIPP and through deposits to one or more accounts of the Fund.

The securities of the Fund may be loaned to third parties for the purposes of earning additional income for the Fund or for liquidity management, in accordance with industry best practices and applicable policies established by the WSIB and/or IMCO.

10. Proxy Voting

Voting rights acquired through the Fund’s investments shall, whenever possible or practicable, be exercised by Investment Managers or by an independent proxy voting service (or by a combination of the foregoing), and shall generally be voted:

1. In favour of any proposal that will maintain and enhance the value of the investment to which the voting right applies, and against any proposal that would unduly increase the risk level or reduce the value of the relevant investment; and,
2. In accordance with the Investment Manager’s or the independent proxy voting service’s standards or the principles expressed therein.

The WSIB has delegated the exercise of voting rights to IMCO.

11. Risk and Risk Management

11.1. Overview

Risk is inherent in the generating of investment returns and in each element of the investment decision-making process; therefore, risk measurement and risk management are integral to prudent investing and the investment management program.

The primary inherent risk of the Fund is that investment returns may not enhance the value of accumulated contributions as expected. This risk may reduce the amount of LRI benefits available to beneficiaries compared to expectations. The WSIB considers this risk in developing the Policy Asset Mix.

11.2. Diversification

The principal way to manage investment risk is through diversification of investment return sources, including both market returns and active management returns. The investment program will consider return sources from a broad range of:

1. Asset classes;
2. Investment strategies;
3. Investment manager styles;
4. Geographic regions;
5. Sectors;
6. Currencies;
7. Securities;
8. Liquidity; and,
9. Investment cycle time horizons.

Broad risks include fiduciary, operational, asset/liability, asset allocation and investment markets and implementation. Macroeconomic risks include monetary policy, inflation, economic growth and geopolitics. Market risks include interest rate, equity, currency and commodity. Other investment risks include liquidity and credit. Operational risks include custody, counterparty, collateral, regulatory, compliance, valuation and monitoring.

Measurement, assessment and management of risks will be done using robust and diverse tools and analysis, including:

1. Asset-liability studies;
2. Measures of total portfolio risk (typically volatility, the standard deviation of returns);
3. Measures of active risk (typically tracking error, the volatility of returns relative to a benchmark);
4. Sensitivity analysis and stress testing; and,
5. Tools that decompose risk into its market risk factors.

These risk management activities will be executed with due consideration of the overall investment portfolio and prevailing market environment.

11.3. Currency Hedging

Currency positions inherent in Fund investments and in investment return benchmarks can provide diversification against the risk of exposure to the Canadian dollar. However, for asset classes where underlying investments tend to have low volatility, currency exposure can dominate the risk/return profile. These factors are considered in applicable policies established by the WSIB and/or IMCO.

11.4. Environmental, Social and Governance Risks

The WSIB believes that environmental, social, and governance ("ESG") issues can affect investment performance to varying degrees across companies, sectors, regions, asset classes and through time.

The WSIB believes that skilled investment managers are best positioned to generate positive risk adjusted returns when they are permitted to apply their skills to a wide breadth of opportunities with a minimum number of mandate constraints. As IMCO has been appointed as the sole and exclusive Investment Manager for the investment assets of the Fund, including the selection and oversight role of all other external Investment Managers, the WSIB believes that IMCO is best positioned to consider ESG factors in the context of the investment of the Fund.

To ensure this activity is carried out effectively, the WSIB reviews IMCO’s approach to incorporating ESG factors into its investment decision-making processes and asset management practices on at least an annual basis. This includes a review of IMCO’s own policies relating to ESG. IMCO’s approach has the following key components:

• ESG factors are considered by IMCO as part of management of risk and investment into opportunities in a manner that is consistent with fiduciary responsibilities;
• ESG factors are considered by IMCO, where relevant, in due diligence and monitoring of external managers and direct investments across asset classes;
• Either directly or through its external managers, IMCO raises concerns with disclosure or performance on ESG factors with corporate boards or management teams;
• IMCO takes ESG considerations into account in proxy voting activities and votes proxies in the best interest of clients and to enhance long-term sustainable value creation;
• IMCO engages collaboratively with other institutional investors to promote standards and best practices;
• IMCO takes steps to identify and manage climate change risks and opportunities with the aim of managing risk and enhancing long-term risk-adjusted returns;
• IMCO researches and considers sustainable investing opportunities that benefit from powerful trends and have a positive impact on society; and,
• IMCO is a signatory and is committed to the United Nations-backed Principles for Responsible Investment.

The WSIB incorporates ESG factors into the SIPP on the basis set forth above.

11.5. Other Risks

Other risks, such as operational risks, are managed through strong governance, effective internal controls and a diversity of skill (internal and external to both the WSIB and IMCO) and other risk control mechanisms as appropriate.

12. Valuation of Investments

Investments, whether held directly or indirectly, are valued consistent with the International Financial Reporting Standards (“IFRS”). Fair value, as defined by IFRS 13, represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Estimates of the fair value of investments not traded on an active market shall be made at least annually and shall be reviewed at least quarterly. They may be determined by a variety of generally accepted valuation techniques applied on a consistent basis, including, without limitation, by:

• Independent expert appraisal;
• Discounting estimated future cash flows at market rates of return which reflect the risk of achieving the forecast cash flows; or,
• Comparison with the value of similar investments for which there are demonstrably comparable transaction data.

Valuations must be reviewed and approved by personnel who are qualified and independent of those responsible for transacting or managing the investment. Valuations provided by a third party to IMCO must be reviewed and assessed for reasonableness by IMCO and valuations on WSIB segregated assets made available for review by WSIB.

Publicly-traded investments shall be valued at least monthly.

Unit values for pooled fund investments are determined by using the above valuation methodology.

13. Conflicts of Interest and Related Party Transactions

13.1. Conflict of Interest Policy

In all aspects of carrying out their respective responsibilities with respect to the investments of the Fund, the Investment Managers shall always abide by the relevant provisions of codes of ethics and standards of professional conduct as promulgated by applicable professional associations and regulatory bodies.

In addition, Investment Managers as fiduciaries are bound contractually by their own organization’s code of business conduct in dealing with the WSIB, which code sets a standard not less than the industry standards set out above.

The Board of Directors and all members of the Investment Committee (including the external expert advisors who are members of the Investment Committee) are fiduciaries. They and the WSIB employees must comply with the WSIB’s Corporate Governance Policy and Ethics Framework, which includes the Code of Business Ethics, the Disclosure of Wrongdoing and Protection from Reprisal Policy, and the Conflict of Interest Policy.

13.2. Related Parties and Related Party Transactions

The Fund may, directly or indirectly, enter into a related party transaction provided that the transaction would be permitted for a registered pension plan under Schedule III of the Pension Benefits Standards Regulations, 1985 (Canada), as amended from time to time. For this purpose the terms ‘related party’ and ‘transaction’ have the meanings given to such terms in Schedule III of the Pension Benefits Standards Regulations, 1985 (Canada), as amended from time to time.

For greater certainty, permitted related party transactions include:

1. transactions required for the operation or administration of the Fund where (i) the terms and conditions of the transaction are no less favourable than market terms and conditions at the time of the transaction, and (ii) the transaction does not involve the making of loans to, or investments in, the related party; and
2. transactions where the value of the transaction is nominal or immaterial to the Fund. For these purposes, a transaction shall be considered nominal or immaterial if, together with other transactions with the same related party, the transaction is for an amount that is less than 3% of the market value of the Fund at the time that the transaction is entered into or completed.