Microsoft word - teachers_sipp _01apr2013_accepted redline - 2013-03-19.docx

TABLE OF CONTENTS
Section 2: Plan Structure and Funding / Plan Description . 3 Section 7: Use of Derivative Instruments . 11 Section 8: Performance Objectives and Reporting . 12 Section 11: Responsible Investing & Voting Rights . 16 Section 12: Conflict of Interest and Code of Ethics . 17 Appendix B: Asset Class Policies-Legislative Constraints Teachers’ Pension Plan SIPP
April 1, 2013
Section 1: Overview / Purpose

1.1
The purposes of this Statement of Investment Policies and Procedures (the “Statement”) are: To ensure compliance with the British Columbia Pension Benefits Standards Act, as amended from time to time or replaced (“PBSA”), the Pension Benefits Standards Regulation (“PBSR”), which requires a written statement of investment policies and procedures, as well as the Income Tax Act. To set investment guidelines and direction for the British Columbia Investment Management Corporation (“bcIMC”) that are consistent with the investment policies and objectives established by the Teachers’ Pension Board of Trustees (the “Board”) for the Teachers’ Pension Plan (the “Plan”). To provide objectives, policies and principles for the management of the assets of the Teachers’ Pension Fund (the “Fund”). To set forth investment performance objectives and other criteria to be used by the Board to review and evaluate the investment results of the Fund. The Plan is continued and maintained under the Teachers’ Pension Plan Joint Trust Agreement (“JTA”) and the Teachers’ Pension Plan Rules (“the Rules”). The purpose of the Plan is to provide pension benefits to plan members in accordance with the JTA and the Rules. The Board is responsible for the administration of the Plan and of this Statement. The members of the Board are trustees of the Plan and the Fund. The Board is responsible for ensuring that all investments of the Fund are managed prudently and in accordance with the PBSA, the PBSR, the Income Tax Act and this Statement. The Board has adopted this Statement after considering the benefit obligations of the Plan and a risk profile that the Board believes to be appropriate. The Board will review and confirm or amend this Statement at least annually, as required by the PBSR, but it can be amended at any time by a Board resolution. bcIMC is required to have more detailed investment policies and procedures that detail their specific mandate, and they will acknowledge that these policies and procedures conform to this Statement. Teachers’ Pension Plan SIPP
April 1, 2013
Section 2: Plan Structure and Funding / Plan Description

2.1
The Plan is a combination of a contributory defined benefit final average earnings pension plan and negotiated cost arrangements for providing contingent inflation adjustments. It is funded by plan member and employer contributions. Benefit entitlement is based on the provisions of the JTA and the Rules. Normal retirement age is 65 for all members. The unreduced lifetime monthly pension payable to a member who terminated employment after April 1, 2000, in the form of a single life annuity with no guarantee, is calculated as the sum of: 2% of the member’s highest average salary (5-year average) multiplied by the number of years of pensionable service accrued before January 1, 1966. the member’s highest average salary, and 1/12 of the YMPE1 for the calendar year immediately before the effective date of the pension, multiplied by the number of years of pensionable service accrued on and after January 1, 1966 not exceeding 35 years, and 2% of the excess of the member’s highest average salary over the amount determined under paragraph (b) (ii), multiplied by the number of years of pensionable service accrued on and after January 1, 1966 not exceeding 35 years. Appendix B provides a general description of the Plan. The Plan is not subject to solvency tests but is required to meet the going concern funding requirements of the PBSR. The Rules establish three accounts for the Plan: a Basic Account, an Inflation Adjustment Account, and a Supplemental Benefits Account. The “Basic Account” provides the non-indexed portion of the pension, based on the provisions in the JTA and the Rules. 1 YMPE = Year’s Maximum Pensionable Earnings, the maximum earnings on which Canada Pension Plan contributions are made. Teachers’ Pension Plan SIPP
April 1, 2013
The “Inflation Adjustment Account” was established in 1982 and provides cost of living increases for retired members. The Inflation Adjustment Account is funded through a portion of ongoing contributions from employers and members, from investment income earned on its own assets, and from excess interest earnings in the Basic Account. Increases to pension payments are not guaranteed but may be provided each January 1 in accordance with the cost-of-living adjustment provisions of the Plan. These cost-of living adjustments are based on the increase in the Canada Consumer Price Index (CPI) as at the previous September 30, subject to availability of funds in the IAA. The Board annually considers all relevant factors and its IAA funding policy to determine if a cost-of-living adjustment will be granted on pensions in pay. Benefits Account” has not been addressed by this Statement because it does not hold any investment funds.
Section 3: Plan Governance

3.1
In accordance with the JTA, the Board has 10 members with equal representation from Plan members and the employers. The Board is responsible for the administration of the Plan and the management of the Fund. Specifically, the Board has the responsibility to establish a written statement of the investment policies and procedures. The Board has a legal obligation to act in the best financial interest of the beneficiaries of the trust and exercise a high standard of care in protecting the Fund and its assets. This must override all other considerations. bcIMC and the Plan Administrative Agent (British Columbia Pension Corporation) are agents of the Board. They must act in accordance with the direction and policies of the Board, subject to their fiduciary duty to the Plan beneficiaries and in the case of bcIMC, other pooled funds participants. The Board meets quarterly with bcIMC to review performance and discuss investment issues. In addition, the Board participates in the Interplan Investment Committee which meets with bcIMC at least three times per year, and there are from time to time ad hoc meetings between the Board and bcIMC to pursue investment issues. The reports set out in Section 8 are reviewed by the Board or committee of the Board. As provided in Section 1.6, the Board performs an annual review and updating of its Statement. Teachers’ Pension Plan SIPP
April 1, 2013
At least once every three years the Board, with professional support from bcIMC, conducts an Asset-Liability review. This process includes a review of investment objectives and risks, and typically results in amendments to the Board’s asset allocations. The Board considers bcIMC performance annually as part of its Governance Review process. The Board has conducted a comprehensive Risk Management Review, which included an assessment of bcIMC’s risk management activities. This review will be revisited annually, and a comprehensive Risk Management Review will be undertaken periodically. The Fund is managed by bcIMC and other investment management firms contracted through bcIMC. In all cases, bcIMC and other investment managers will comply with this Statement, their internal policies, as well as the relevant laws and regulations governing pension fund management in the respective jurisdiction. The following outlines the roles and responsibilities of parties involved with the Plan: bcIMC:  is an agent of the Board, and is responsible for day-to-day investment  ensures the Fund is managed in accordance with this Statement and  hires and manages contract arrangements with the Custodian and other external providers of related services (e.g., external managers, data service providers, etc.) on behalf of the Board and as trustee of pooled funds. bcIMC’s oversight of external public equity managers includes their hiring, monitoring and termination. Oversight of external public equity managers includes an analysis of results, processes, organizational changes, and client needs. Legal obligations are set out in bcIMC’s Investment Management Agreements with each external equity manager;  is responsible for fulfilling all reporting requirements outlined in Section  has a role that goes beyond that of a typical fund manager, effectively functioning as the Board’s internal investment staff. This is set out in greater detail in the Board’s Funds Investment and Management Agreement with bcIMC. Custodian:  responsible for fulfilling all their duties as outlined in their service  fulfills the regular duties of a Custodian as required by law. Teachers’ Pension Plan SIPP
April 1, 2013
Auditor:  audits the Plan to produce audited financial statements reporting on Actuary:  responsible for assessing the financial status of the Plan, including the  fulfills the regular duties of an Actuary as required by law. British Columbia Pension Corporation (“Pension Corporation”):  is an agent of the Board and is responsible for ensuring contributions and payments are made in accordance with the Plan rules;  prepares financial statement, annual reports and other Plan  establishes and manages contracts with external administrative service  has a role that goes beyond that of a typical administrative agent, effectively functioning as the Board’s internal staff. This is set out in greater detail in the Board’s Service Agreement with Pension Corporation.
Section 4: Investment Beliefs

4.1
The purpose of investing the Fund is to grow the asset base and to generate a cash flow to help satisfy the Plan’s current and future payment obligations. As such, understanding the nature and variability of the Plan’s liabilities is critical to devising an appropriate investment strategy. The Plan has a long-term investment time horizon and the Fund is managed accordingly. It is extremely difficult to forecast short-term investment returns. However, over the long-term, capital markets are more predictable and investors should receive additional compensation for taking investment risks. Therefore, it is expected that over the long-term, equities will outperform debt instruments. This proposition is supported by historical evidence. Managing investment risks is just as important as generating returns. Maintaining a well-diversified portfolio is the cornerstone of the Fund’s risk management program. Active management generally entails higher costs than passive investing. Active management should only be undertaken when there is a reasonable expectation of generating higher returns than a passive investment alternative for that asset class. The more efficient a market is, the more difficult it is for active managers to add value. The Board believes that bcIMC is in the best position to make the decision on the weightings between active and passive strategies and has delegated this decision to bcIMC. Teachers’ Pension Plan SIPP
April 1, 2013
When the Plan invests outside of Canada, it is subject to the risk of currency fluctuations which impact the value of any gains or losses for foreign investments. The Board believes that foreign currency exposure provides important diversification benefits and that systematic hedging of the Plan’s foreign currency exposures would result in higher transaction costs and reduced diversification benefits. However, given the material impact that unhedged currency exposures can have on the Plan’s return and volatility of return, the Board authorizes bcIMC, under Section 7.5, to engage in currency hedging for defensive purposes, when it is concerned about the risks associated with a specific currency. The Board believes that currency markets are inefficient and that managers can generate positive returns through active currency management. Therefore, the Board may elect to participate in currency overlay programs that take trading positions in foreign currencies with the objective of adding value. The Board recognizes the Fund's asset mix as the primary determinant of the risk and return of its investments, and this also has an impact on the costs of its investments. The Board has identified two types of asset allocation: policy and tactical. Policy asset allocation is set by the Board and establishes the general framework for managing the Fund. This includes determining ranges for the debt and equity portions of the portfolio, as well as general ranges for individual asset classes (e.g., bonds). Policy asset allocation also establishes the amount of discretion provided to bcIMC and establishes the total fund market benchmark. Tactical asset allocation focuses on short-term conditions and attempts to increase investment return through opportunistic shifts in the portfolio's asset class weighting. Tactical asset allocation decisions depend on shorter term market conditions, and, as such, are delegated to bcIMC. However, these asset allocation shifts must be within the policy ranges specified by the Board in this Statement. The Board believes that the best performing and most profitable companies in the Canadian and world economies maintain high ethical standards, comply with environmental regulations, have a track record of progressive labour relations, do not have business dealings with countries where human rights are violated, and do not have the production of armaments as their primary activity. Teachers’ Pension Plan SIPP
April 1, 2013

Section 5: Asset Allocation

5.1
Meeting the pension benefits promise is the primary objective of the Board. Managing the volatility of contribution rates and providing non-guaranteed benefits are additional objectives of the Board. To achieve these objectives, the Board has adopted the following long-term asset mix and allowable ranges. Policy asset mix and policy ranges for the Fund, effective January 1, 2013 are: Policy Range
Asset Class1
Maximum Asset Mix
Global Equities2
Emerging Markets3
Real Estate4
Private Placements4, 5 0
Infrastructure and Renewable Resources4 0
1 Refer to Participating Pooled Funds table (Appendix A) for asset classification by pool. 2 Global equities may include exposure to Canada and emerging markets. 3 Emerging Market equities may include exposure to developed markets. 4 Due to the illiquid nature of these assets, the upper limit may be exceeded on a temporary basis. bcIMC will use cashflow to rebalance as soon as is practical. 5 Private Placements may be either debt (other than debt described in 6.3.4) or equity. The Fund may be invested in the pooled funds listed in Appendix A, segregated funds, mutual funds, unit trusts, limited partnerships and similar vehicles, provided that they conform to this Statement. The Fund may loan its securities, or participate in pooled funds that lend securities provided that:  as a minimum, the market value of collateral should be equal to 105 percent of the market value of the lent securities;  the loan and collateral are valued daily on a “mark-to-market” basis;  the collateral consists of highly liquid and marketable securities; and  both the collateral and borrowers have been approved by bcIMC. Teachers’ Pension Plan SIPP
April 1, 2013

Section 6: Asset Class Policies

The following asset classes are permitted to be held in the Fund, subject to the
investment policies established below for each asset class and the constraints
imposed by the PBSA, the PBSR and the Income Tax Act, as outlined in
Appendix C.

6.1
Money Market Short-Term Policies
Corporate money market securities should be rated A-1 (Low) or better by Standard & Poor’s (S&P) or have an equivalent rating from another credit rating agency. corporate bonds should be rated A- or higher by (S&P) or have an equivalent rating from another credit rating agency. Up to 1 percent of short-term holdings can be in non-rated debt issued by financial institutions (e.g., credit unions) Mortgage Policies
The portfolio will consist of a broad range of mortgage products, diversified by geographic location, type of mortgage, size of mortgage, and type of real estate. It may include direct mortgage loans and mortgage instruments (e.g., mortgage bonds). All mortgage loans will be eligible investments under the PBSA and PBSR. Fixed Income/Bond Policies
Fixed income portfolios will consist of debt securities other than money market. Publicly traded corporate bonds and other non-government debt securities when purchased must be rated BBB- or higher by S&P or have an equivalent credit rating from another credit rating agency. If any holdings are downgraded to below a BBB- rating, bcIMC will immediately review the downgraded security and determine whether to sell this security immediately or hold to sell at a more appropriate time. Individual bond portfolios, other than real return bonds, must be managed within + 20 percent of the duration of their respective performance benchmark. Teachers’ Pension Plan SIPP
April 1, 2013
Investments in private placements (as part of the bond allocation) are permitted provided they meet the same credit quality standards imposed on other bond investments, and are expected to be readily marketable within 6 months. Illiquid private placements, in addition to 6.3.4, are permitted within the limits of the policy set out in 5.2. Equity Policies
6.4.1
Equity investments consist of common and preferred shares, common stock equivalents, income trusts, exchange traded funds, depository receipts, and equity derivatives (e.g., futures, options, equity swaps). Not more than 10 percent of the total equity holdings will be in the shares of any one corporation or its related companies. Equity private placements are permitted within the limits set out in the policy as specified in 5.2. Real Estate Policies
Real estate investments consist of direct real estate holdings, units in real estate pooled funds, and real estate securities including trust units, shares in real estate companies, and debt. Not more than 20 percent of the real estate portfolio by appraised value will be invested outside of Canada. Real estate investments will be well diversified by property type, property location and property risk. No debt will be assumed or created if, as a result, it caused the debt to market value of the overall real estate portfolio to exceed 25 percent. However, another 5 percent is allowed for the assumption or renewal of existing debt. No direct investment in real estate will be made without the benefit of a professional opinion regarding known or possible environmental contamination of the property. Private Placement Policies
Private placement investments are long-term, debt or equity investments that are made primarily outside of the public market. Investments may be made directly by bcIMC or indirectly through external managers. These are long-term commitments made on behalf of the Fund. Teachers’ Pension Plan SIPP
April 1, 2013
Infrastructure and Renewable Resources Policies

6.7.1 Infrastructure and Renewable Resource investments are tangible
long-life assets with potential for strong cash flows and favourable risk-return characteristics that provide an attractive match with pension liabilities. Infrastructure investments typically include physical assets that provide essential services such as utilities and transportation systems. Renewable Resource investments typically include timberland, farmland, and energy production assets such as wind and solar.
Section 7: Use of Derivative Instruments

7.1
The use of derivatives is only permitted for the following purposes: Synthetic Indexing - Passively investing in an attempt to replicate the returns of an index. Risk Control - Managing interest rate, equity or currency market risk through the use of hedging strategies. Lower Transaction Costs and Liquidity Management - Reducing the transaction costs on trading, custody and brokerage costs through use of index futures. Substituting one combination of securities for another with the same net exposure to market variables for the purposes of exploiting pricing inefficiencies. Asset Mix Shifts - Reduce market movement and transaction costs of shifting asset weights or rebalancing by allowing instantaneous implementation of the shift through derivatives. Their use within the Currency Overlay Program. All derivative uses are to be structured to ensure that the aggregate amount of market exposure of the Fund does not increase as a result of derivative transactions. Derivatives include: forward contracts, futures, options, and swaps. The above derivatives can have equities, interest rates and currencies as underlying instruments. When a swap or an option contract is entered into with a counterparty (e.g. a financial institution), the counterparty will have at least an AA- credit rating by S&P or an equivalent credit rating from another credit rating agency, unless otherwise approved by the Board. Forward contracts are restricted to financial institutions having a credit rating of A- or higher by S&P or an equivalent credit rating from another credit rating agency. Teachers’ Pension Plan SIPP
April 1, 2013
bcIMC may use derivatives to hedge the Plan’s exposure to a specific foreign currency for defensive purposes. This hedging is independent of the Plan’s participation in the Currency Overlay Program. The use of any additional derivative products other than that stated above, will require the prior written consent of the Board.
Section 8: Performance Objectives and Reporting

8.1
The long-term (10 years) investment objective of the Fund is to meet or exceed, net of all expenses incurred in the investment process: the annual rates of return used in the actuarial report (CPI + 3.5 percent and 6.5 percent nominal); and the rate of return that would have been achieved if the Fund had held its policy asset mix and each asset class had earned the return of their respective market index as outlined in Table 1 below. The short-term investment objective (5 years) is to earn the rate of return, net of all expenses incurred in the investment process, for the liquid assets (i.e., excluding real estate, private placements, infrastructure, and renewable resources), assuming that each liquid asset class had earned the return of its respective market index as outlined in Table 1 below. The primary investment return objective of individual asset classes is for the rate of return, net of all expenses incurred in the investment process, to meet or exceed the respective market indices over 5-year periods. Certain asset classes such as real estate, private placements, infrastructure, and renewable resources do not lend themselves to good market indices, and it is more appropriate to evaluate their performance over longer periods such as 10 years. The benchmarks (indices) used for each asset class are listed in Table 1 below. Teachers’ Pension Plan SIPP
April 1, 2013
Table 1 – Updated April 1, 2013
Asset Classes
Benchmark Weightings
Benchmarks*
Pooled Funds
Total Fund
Short Term
DEX 91 Day Treasury Bill Index
Mortgages
Fixed Term
DEX Short Term Bond Index + 100 bps
Construction
DEX One Year Treasury Bill Index + 100 bps
DEX One Year Treasury Bill Index + 250 bps Nominal Bonds
DEX Universe Bond Index
DEX Long Term Government Bond Index JP Morgan Government Bond Index (GBI) Global Real Return Bonds
DEX Real Return Bond Overall Index
Canadian Equities
S&P/TSX Composite Index
S&P/TSX Small Cap Index
Morgan Stanley Capital International
Global Equities
(MSCI) World ex-Canada Net Index
Enhanced)
Global ESG Indexed
MSCI Europe, Australasia and Far East Net Index MSCI All Country Asia Pacific ex-Japan Net Index Emerging Markets
MSCI Emerging Markets Net Index
Real Estate
CPI plus 4%
Private Placements
MSCI All Country World Net Index plus 2%
Infrastructure and Renewable
8% nominal return
Resources
8% nominal return
7% nominal return
*Benchmarks in bold type are used to measure Fund performance (on a total fund as well as liquid asset class basis).
1. To be removed upon completion of transition.
Teachers’ Pension Plan SIPP
April 1, 2013
The returns of the Fund are calculated using market values derived from independent pricing sources. Returns are time-weighted so that cash flows have a minimal effect on return numbers. All income is included on an accrued basis. Return calculations follow the standards established by the CFA2 Institute. This includes using internal rates of return for private placements and similar type investments. The return from foreign indices or benchmarks applicable to asset classes will be calculated in Canadian dollar terms on an unhedged basis. bcIMC will provide the Board with reports on the performance of the Fund. These reports will include the following information:  investment returns for the total Fund and individual pooled funds as  signed compliance certificate confirming compliance with this  key changes in investment personnel;  investment  investment management fees (including external manager fees, The compliance certificate will report any breaches of this Statement as well as any material breaches of bcIMC’s internal pooled fund policies. The Board will compare the pooled fund's investment performance relative to the appropriate index return, and where appropriate will compare actively managed asset classes to a universe of managers with similar mandates, at least once a year. bcIMC will advise the Board quarterly of the portion of total public equities and of each equity asset class that are managed under active, indexed, and enhanced indexed strategies. bcIMC will advise the Board quarterly of the return of each equity asset class relative to its policy benchmark. Once a year, bcIMC will provide a more comprehensive report outlining the performance of the Fund. This annual review will include an attribution analysis. Attribution analysis quantifies the impact of specific active management decisions (including security selection and tactical asset allocation) for the liquid assets relative to the liquid asset benchmark. bcIMC will advise the Board quarterly of the diversification of the mortgage and real estate pools in which the Fund participates, and advise the Board annually of the diversification of the private placement pools in which the Fund participates. Teachers’ Pension Plan SIPP
April 1, 2013
8.10 International Real Estate is not valued quarterly due to cost and complexity of valuation. At least once a year, bcIMC will provide the Board with a report on the domestic and international real estate programs in which the Fund participates. 8.11 Private Placements, Infrastructure, and Renewable Resources investment programs are valued less frequently than liquid assets due to the cost and complexity of valuation. At least once a year, bcIMC shall provide the Board with a report examining the performance of the pools in which the Fund participates. 8.12 bcIMC will inform the Board of any substantial change in the investment policy underlying any pooled fund in which the Fund is invested. 8.13 bcIMC will report to the Board quarterly on whether its securities lending policies adhere to the OSFI guidelines and whether it has made any changes to its securities lending policies.
Section 9: Risk Management

9.1
The Board seeks to mitigate risk exposure of the Fund by maintaining a well-diversified portfolio. To reduce credit risk, the aggregate amount of the Fund that may be invested in the fixed income instruments or securities of, or loaned to, any one company or person shall be limited to 10 percent of the total market value of the Fund at the time the investment is made, unless the securities are issued or guaranteed by the Government of Canada or a province of Canada. This is in addition to the diversification requirements under the PBSA as outlined in Appendix C. The Fund may not sell short or borrow securities or purchase securities on margin. The Board, or Pension Corporation, will inform bcIMC at least annually of anticipated liquidity requirements. The Fund will maintain sufficient liquidity to meet its financial obligations as they come due. In the event of unanticipated withdrawals or cashflows, bcIMC may run a temporary overdraft, rather than liquidate investments, if it is considered to be in the best financial interest of the Fund. Teachers’ Pension Plan SIPP
April 1, 2013

Section 10: Valuation of Assets

10.1 As a general rule, all investments should be priced based on external
sources on an ongoing basis. However, in some cases, obtaining on-going market pricing may be prohibitively expensive (e.g. certain illiquid investments such as real estate and private placements). These assets will be valued less frequently, but at a minimum, at least once a year. 10.2 Any assets that cannot be marked-to-market on a regular basis (e.g., real estate and private placements) shall have their value determined in accordance with the valuation policies established by the external managers, in accordance with standard industry practices. These values will be reviewed by bcIMC.
Section 11: Responsible Investing & Voting Rights

11.1 At all times, this policy will be conducted within the framework of fiduciary
responsibility. It will therefore be implemented in a manner which does not interfere with the efficient investment of the Fund to achieve investment return objectives, which are in the best interests of the Plan’s current and future beneficiaries. 11.2 Pursuant to section 4.8 and subject to Section 11.1, favourable consideration is to be given by bcIMC and its investment managers to investment opportunities in corporations which maintain high ethical standards, comply with environmental regulations, have a track record of progressive labour relations, do not have business dealings with countries where human rights are violated, and do not have the production of armaments as their primary activity. 11.3 In keeping with the Board’s fiduciary responsibilities and framework, the Board believes that environmental, social, and corporate governance (ESG) issues can affect investment performance to varying degrees across companies, sectors, regions, asset classes and through time. In this regard, the Board supports the UN-led Principles for Responsible Investment, introduced in April 2006 (http://www.unpri.org/principles/). By doing so, the Board recognizes that applying these Principles may better align investors with the broader objectives of society. 11.4 The Board delegates its voting rights to bcIMC and instructs bcIMC to act in the best financial interests of the Fund. The goal of this proxy voting process is to influence corporate behaviour and encourage change to their practices when they do not meet the expected standards as outlined in 11.2. 11.5 bcIMC will provide the Board with copies of its corporate governance guidelines and at least once a year the Board will review bcIMC’s voting record. Teachers’ Pension Plan SIPP
April 1, 2013
Section 12: Conflict of Interest and Code of Ethics

12.1 These guidelines apply to:
refrain from using their knowledge of the Fund’s investments, or of investment decisions made on behalf of the Fund, to benefit anyone other than the Fund; and make disclosure, in accordance with section 12.2, if they, or any person over whom they have influence, may be reasonably thought to materially benefit by an investment of the Fund or by an investment decision made on behalf of the Fund. An example of such a material benefit would be if a Trustee owned, or had a significant financial interest, in real estate property that was acquired on behalf of the Fund. As bcIMC and its investment managers are involved in the ongoing management of the Fund, they are required to have a more comprehensive and thorough conflict of interest policy. These will meet or exceed the standards established for the investment industry by the CFA Institute. bcIMC will make disclosure in accordance with section 12.2 if any of its employees or agents materially breach their internal conflict of interest guidelines. 12.2 Procedure on Disclosure of Conflict of Interest Any persons listed above will disclose the nature and extent of their actual or perceived conflict of interest to the Chairperson of the Board within 14 days of becoming aware of the actual or perceived conflict. Disclosure should also be made at the first Board meeting following discovery. Such disclosure will be made whether the person’s actual or perceived conflict of interest arises before or after the transaction giving rise to the conflict of interest has been completed by the Fund. Unless the person discusses the actual or perceived conflict of interest at a Board meeting, the disclosure will be made, in writing, to the Chairperson of the Board, and the Chairperson will immediately advise all Board members in writing of the conflict. As soon as the actual or perceived conflict is disclosed, the Chairperson of the Board will, through a meeting of the Board or by taking other appropriate steps, decide upon a suitable course of action to resolve the conflict. Except in unusual circumstances, abstention from any decision or discussion on the topic in question will be deemed to be a suitable course of action. Teachers’ Pension Plan SIPP
April 1, 2013
In case the actual or perceived conflict of interest involves the Chairperson of the Board, the Chairperson will immediately advise all other Trustees of the conflict in writing or at a Board meeting, as the case may be. The Trustees will then designate an acting Chairperson for the purposes of any matter coming before the Board involving the conflict of interest (including the resolution of such conflict) and the same procedures relating to the resolution of the conflict will apply. Any person having an actual or perceived conflict of interest will thereafter abstain from the deliberations and decision making with respect to the matter giving rise to such conflict, unless otherwise determined permissible by the Board. The failure of a person to comply with the procedures described in this section will not itself invalidate any decision, contract or other matter pertaining to Fund investments. The Board will satisfy themselves that bcIMC and its investment managers maintain and follow an appropriate policy regarding codes of conduct and ethics. As a minimum, the Code of Conduct and Ethics established by the CFA Institute will be expected to apply to such investment managers.
Section 13: Implementation

The Board has decided to implement the investment policy through investments
managed by bcIMC in accordance with section 5. The pooled funds in which the
Board has agreed to participate are listed in the attached Appendix A.
By participating in a particular pooled fund, the Board acknowledges it has
reviewed the pooled fund’s internal investment policy and finds it acceptable. If
bcIMC makes any material change to the investment policy of a particular
internal pooled fund listed in Appendix A, it will disclose the change to the Board
and, subject to the pooled portfolio rules, the Board will decide whether it wishes
to remain invested in that pooled fund.
Teachers’ Pension Plan SIPP
April 1, 2013
APPENDIX A
Participating Pooled Funds
Asset Class Categories Under Section 5.2
Participating Pooled Funds
Canadian Money Market Fund (ST1)
Canadian Money Market Fund (ST2)
Short Term
US Dollar Money Market Fund (ST3)
Short Term Bond Fund
Fixed Term Mortgage Fund
Mortgages
Construction Mortgage Fund
Mezzanine Mortgage Fund
Indexed Government Bond Fund
Long Term Bond Fund
Nominal Bonds
Canadian Universe Bond Fund
Global Government Bond Fund
Real Return Bonds
Canadian Real Return Bond Fund
Indexed Canadian Equity Fund
TSX Ex Equity Fund
Canadian Equities
Enhanced Indexed Canadian Equity Fund
Active Canadian Equity Fund
Active Canadian Small Cap Equity Fund
Indexed U.S. Equity Fund
Indexed U.S. Value Equity Fund
U.S. Social Index Fund
Enhanced Indexed U.S. Equity Fund
Active U.S. Equity Fund
Active U.S. Small Cap Equity Fund
Indexed EAFE Equity Fund2
Enhanced Indexed EAFE Equity Fund2
Active EAFE Equity Fund2
Global Equities
Indexed European Equity Fund
Enhanced Indexed European Equity Fund
Active European Equity Fund
Indexed Asian Equity Fund
Active Asian Equity Fund
Indexed Global Equity Fund
Indexed Global ESG Equity Fund
Enhanced Indexed Global Equity Fund
Active Global Equity Fund
Thematic Public Equity Fund
Indexed Emerging Markets Equity Fund
Emerging Markets
Active Emerging Markets Equity Fund
Realpool Investment Fund
Real Estate
Realpool International Vintage Funds
Private Placements
Private Placement Vintage Funds
Infrastructure Funds
Infrastructure and Renewable Resources
Renewable Resource Investment Funds
Other1
Currency Hedging Funds
Currency Overlay Fund
1 The Currency Hedging Funds and Currency Overlay Fund do not represent separate asset classes
and are therefore not reflected in Section 5.2.
2. To be removed upon completion of transition.
Teachers’ Pension Plan SIPP
April 1, 2013
APPENDIX
Asset Class Policies – Legislative Constraints

Federal Pension Benefits Standards Act,1985 Constraints

The PBSR requires investments to be made in accordance with the federal Pension
Benefits Standards Regulations, 1985, which include the following quantitative rules:
1.
Maximum investment in one company's securities Maximum proportion of the voting shares of any
Income Tax Act and Canada Revenue Agency Constraints

1.
No money is to be borrowed by the Fund, except for the purpose of acquiring real property or occasionally for 90 days or less as provided in Income Tax Regulation 8502(i). No prohibited investment (see Income Tax Regulation 8514) may be purchased, such as the securities of a participating employer, if the shares of that employer are not listed on one of the stock exchanges prescribed in Income Tax Regulations 3200 or 3201.

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