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News Archives - January / February 2011

Monday, February 28, 2011

Boomers Postponing Retirement

Many baby boomers are being forced to postpone retirement by at least one year because of the recession, says the Conference Board of Canada. Its survey of retirement intentions shows about one-third of baby boomers say they have been forced to delay retirement. It says that from 1976 to 2000, the average retirement age in Canada dropped from 65 years to 61.5 years. The trend reversed in 2010 and the average age rose above 62.

PRPPs Only Part Of Broader Solution

Are pooled retirement pension plans (PRPP) the solution to Canada’s retirement savings issue? Christopher Brown, president of the Association of Canadian Pension Management, says they are an excellent step as part of a broader solution. However, he told the Economic Club session ‘The Real Story – Giving More Canadians More Retirement Options.’ they are not for everyone. He said there is no one-size-fits-all solution to retirement savings in Canada. Solutions must be created and permitted which allow employers to design the best plans for their businesses and their employees. And while the PRPP fits perfectly as part of a broader solution, there are some areas which need to be addressed. To start, it must be adopted across the country as the benefits will be lost if only parts of the country opt for it. There is also a question of who should administer it. While financial institutions are ready to do so, he suggested others be allowed to as well. Most of the fear is around the conflict of interest that could arise by having for-profit groups running PRPPs. However, he suggested that regulations could be put in place which provide the disclosure needed so that everything is above board and everyone knows what they are getting into.

Flu/Cold Incidents Up

Incidences for general respiratory conditions such as cough/cold/flu are up 36 per cent from this time last year, says SDI’s ‘Flu Activity Notification (FAN) Canada.’ However, with the cold and flu season still extremely prevalent throughout the country and expected to hold steady throughout March, Canadians are as reluctant as ever to take a sick day says a survey by BENYLIN. It found there are more people (62 per cent) going to work sick than staying home suggesting that Canadians are struggling with work-flu balance.  One reason people aren’t taking sick days is “they feel they aren’t allowed to and that it’ll be frowned upon,” says Nora Spinks, CEO, Work-Life Harmony Enterprises. However, this survey shows that managers want and need their employees to rest and recuperate when they are sick. “Managers know that to do well you need to be well which means some days you need to stay home from work to get well," she says. The survey found Canadians are more willing to stay home and get better if they have the support to do so from their manager and workplace family. Nine out of 10 Canadians that were told to go home sick from work actually did.  But they don’t take the initiative to do so on their own despite the fact that 75 per cent who did call in sick, felt they made the right decision. 

Risk And Costs Concern DB Plans

Defined Benefit plan sponsors appear more concerned about risk and plan costs than returns, says a Vanguard survey. Eighty-five per cent of respondents rated pension risk as ‘very’ or ‘extremely’ important. The importance of risk increased with a plan’s asset size relative to company size, according to a press release. The two risk concerns most cited by plan sponsors were interest rate risk and uncertainty in the equity markets. DB sponsors are managing risk by making changes to plan design and investment strategy. A majority of respondents intend to derisk their plans by implementing liability-driven investing (LDI) strategies, increasing their fixed income allocation and duration, and decreasing their equity allocation.   


Friday, February 25, 2011

Ontario Alone Acts On Drug Costs

Ontario is the only Canadian province trying to protect the public from drug prices, says Marc Kealey, an expert on healthcare reform and governance. Speaking at the International Society of Certified Employee Benefits Specialists Toronto Chapter’s ‘Leveraging the Benefits of Rx Drug Reform,’ he said since Bill 102 in 2006, it has taken measures to ensure the drug costs are transparent and fair for public and private payers. In fact, he said the province plans to appeal a recent court decision by an “uninformed” judge which would allow one retail chain to sell private label prescriptions from a generic drug manufacturer it owns. Part of the problem is that most plan members really don’t understand or care about their drug benefit plan. As long as they can go to the drug store and get a prescription filled, they are content. However, they fail to understand that escalating drug costs are a demotivator for businesses which can lead to layoffs and even businesses closures. “We have to educate the public because this is going to really hurt and if it doesn’t stop, government will step in and try to control it through legislation.” And that, he said, is the last thing that major pharmacy chains want.

Elimination Of Administrative Burden Applauded

Plan sponsors indicate that the most attractive feature of the proposed Pooled Registered Pension Plans (PRPPs) is the virtual elimination of the both administrative burden and the fiduciary liability, says a Morneau Shepell ‘60 Second Survey.’ And about 90 per cent of the organizations that responded already sponsor a retirement arrangement. They said the main reason to consider adopting a PRPP is the ability to offload fiduciary liability and the administrative burden onto a third-party. As well, the promise of lower operating fees is a main appeal. 

Caisse Returns 13.6 Per Cent

The Caisse de dépôt et placement du Québec’s weighted average return on depositor funds was 13.6 per cent for the year ended December 31, 2010. Its net assets stood at $151.7 billion at the end of 2010, compared to $131.6 billion at December 31, 2009. This increase is due to net investment results of $17.7 billion, plus $2.4 billion in net deposits. "In a year marked by turbulence, Europe's sovereign debt crisis and fears of a slowdown in the U.S., the Caisse generated strong results on many fronts," says Michael Sabia, president and chief executive officer. "Our teams successfully repositioned the Caisse to focus on its core business and select quality holdings, while managing the portfolios prudently to take advantage of hard-to-predict market conditions."

Towers Watson Offering Asset Liability Tracker

Towers Watson in the UK is rolling out an asset liability tracker, an online tool that will allow pension funds to take decisions about liability-driven investment strategies in a timelier manner through email communications. The rollout complements its dynamic de-risking service. The tool is aimed at larger and mid-sized pension funds that have a full-time member of staff who is able to make best use of the information.

Accident Markets Discussed

‘Canadian Global and Accident Specialty Markets’ is the topic of the third in a series of five Ontario region CPBI fundamentals lectures. It will explore the broader markets of employee coverages that are not traditionally considered in a group benefits package. Speakers are David Claughton, of Chartis Insurance, and Philippe Kolaczynski, of ETFS. It takes place March 3 in Toronto, ON. For more information, visit

Read Examines Next Wave

Russell Read, chairman and managing partner of C Change Investments, will discuss ‘The Next Wave in Effective Green Investing’ at an EYE4IMPACT session. Prior to founding C Change Investments in 2008, Dr. Read served as chief investment officer for CalPERS. It takes place March 29 in Montreal, QC. For more information, visit


Thursday, February 24, 2011

Dedicated Managers Have Best Returns

Those who ignore currency do so at their own peril, says Adnan Akant, head of currencies at Fischer Francis Trees & Watts, a BNP Paribas Investment Partner. Speaking at a BNP Paribas ‘Information Breakfast Meeting,’ he said currency adds another dimension where returns can be earned. And, with more investors diversifying cross borders, currency hedging becomes more critical as international assets grow. He cited an example of the importance of currency to Canadian investors who were in European equities in 2010. While the asset class earned 11.8 per cent, a failure to hedge currency meant the return for Canadians was almost zero. He also noted that currency cannot be managed passively as holding on to cash means it generates no return. Part of the problem is that currency management is often given to international equity managers whose lack of focus on it generally results in mixed returns. Currency management is a specialty, said Akant, and dedicated currency managers typically have the best track records.

Competition For Assets Fierce

The competition of high quality infrastructure assets is fierce, says Steven Zucchet, senior vice-president, Borealis Infrastructure. He told the ‘Valuing Infrastructure Businesses and Related Assets’ session at the CVCA - Canada's Venture Capital & Private Equity Association’s ‘The Great Valuation Debate’ that high quality assets are those which are the backbone of society. These include electricity, water, and sewers. However, competition has continued to increase with a lot of pursuers going after the few quality assets out there. Borealis started its infrastructure investment program in Ontario and it took a global approach several years ago, partly because of the shortage of opportunities in Canada. Opportunities do exist in this country, he said, but something is needed to free up those assets and he is not sure what that something is. And, infrastructure investors can’t afford to wait for this so they need to seek out opportunities elsewhere.

Prevention, Flex Make Sense

With 80 per cent of drug costs typically coming from just 20 per cent of the population, it’s essential to keep healthier employees from moving into higher-risk, serious-condition categories, says Brian Lindenberg, senior partner, health and benefits business, Mercer. Speaking at the CPBI Ontario region’s ‘2011 Benefit Outlook,’ Lindenberg  explained that most of the top health concerns can be managed through prevention and wellness strategies such as health promotion, life habits assessments, and work-life balance. Given changing demographics and the range of health concerns today, it also makes sense to fit the scope of benefits to your employee population and incorporate the needs of the current and future workforce through flex plans. Cost-effective, taxable flex accounts and non-taxable health spending account plans have been proven to work well in meeting plan objectives and generating positive responses from employees. As well, benefit plan costs are either unaffected or lower with the implementation of flex, Lindenberg said.

Large Employers Required To Prove Efforts

While most employers already comply with many of the accommodation duties raised by the Accessibility for Ontarians with Disabilities Act and its proposed regulations, larger employers will be required to prove these efforts through detailed plans and reporting requirements, says a Heenan Blaikie ‘Labour & Employment in the News.’ It says starting January 1, 2012, private sector employers in Ontario must comply with the first of what will ultimately be five standards to be developed under the act. The first standard – the Accessibility Standards for Customer Service – has been released with the other four, including one targeting the employment relationship, expected to be released this year. Many of the duties set out in the employment related standards of the proposed Integrated Accessibility Regulation are not new. However, the proposed regulation requires employers to go further by formalizing a proactive approach to recruiting and employing disabled individuals. Employers would also have to deliver ‘accessibility awareness’ training to employees; deliver individualized workplace emergency information to disabled employees; take into account the accommodation needs of disabled employees in performance management, career development, and redeployment; and develop procedures for returning employees to work who are absent due to a non-workplace injury or illness, using individual accommodation plans, where appropriate.

Commodity Inflows Remaining Strong

Net inflows to commodity-related investments should remain strong in 2011, with institutional investors poised to dominate that activity, says a report by Barclays Capital. Commodity investments stood at $376 billion as of December 31, 2010, up from $270 billion the year before. While the net inflows of $62 billion were down from a record $72 billion the year before, institutional investors accounted for an ever-greater portion of the total as the year progressed — with a record $8 billion in December alone. For the year, the estimated net institutional inflows were almost $46 billion, or almost three quarters of the total inflows.

Canadian Lenders Differentiators

Canadian lenders may be a differentiator when it comes to private equity deals outside of Canada, says Jim Orlando, managing director, OMERS Private Equity. Speaking on ‘Private Equity-backed and Other Established Businesses’ at the CVCA - Canada's Venture Capital & Private Equity Association’s ‘The Great Valuation Debate,’ he said during the financial crisis when banks in the U.S. and Europe were pulling back on their lending, Canadian banks remained active and they continue to be good lenders. Since Canadian lenders were not hit as hard by the financial crisis, this availability of leverage has been a unique differentiator for OMERS Private Equity.

Munroe-Blum Joins Board

Dr. Heather Munroe-Blum has joined the CPP Investment Board (CPPIB) of directors. She is the principal and vice-chancellor of McGill University. She has extensive experience in a variety of academic and management capacities within the university sector in Canada and internationally. A partial list of her past directorships includes Hydro One Inc., Four Seasons Hotels and Resorts, and Nestle Canada Inc.

Forum Examines Pharmacare

‘Healthcare Pharmacare: Is it Finally Time?’ and ‘The Next Wave in the Future of Index Investment’ will be among the sessions at ‘CPBI FORUM 2011.’ As well, the deadline for the reduced rate ‘early bird’ registration has been extended to this Friday, February 25. It takes place May 18 to 20 in Vancouver, BC. For more information, visit

Pension Law Developments Discussed

Recent developments in pension plan law will be examined at an ACPM British Columbia regional council session. The latest developments in Canadian pension legislative as well as current initiatives from ACPM will be examined. It takes place March 9 in Vancouver, BC. For more information, visit


Wednesday, February 23, 2011

Canadians Back PRPP Idea

Working Canadians overwhelmingly want a program that makes it easier for employers to offer a pension plan, says a poll for the Canadian Life and Health Insurance Association (CLHIA). It shows that 90 per cent of Canadians support the federal government’s proposal for employers to have better access to pension plans through Pooled Registered Pension Plans (PRPPs), which would be administered by regulated financial institutions. Support for PRPPs was highest among people working for a private company at 92 per cent. While Canadians recognize the value of the CPP to the overall retirement savings system, the survey found they also want to have choice in their investment decisions and believe that the private sector provides that choice. Only 13 per cent of Canadians said they wanted to leave retirement savings completely with a public plan.

Pension Assets Top $31 Trillion

Global pension assets rose about eight per cent to $31.1 trillion in 2010, says TheCityUK ‘Pensions Market’ report. It shows the total value of pension assets managed globally recovered by 11 per cent from $25.9 trillion in 2008 to $28.8 trillion at the end of 2009. The U.S. continues to dominate worldwide, with 63 per cent of pension assets. A further five countries, including Canada, account for a third of assets.

Ban On Drug Sales Has No Force

An Ontario Divisional Court has held that an outright ban on the sale of private label generic drugs was of no force or effect because it fell outside the purpose of the legislation, which was to control costs without compromising safety, says an Aon Hewitt ‘Monitor.’ It says recent amendments under the Ontario Drug Benefit Act and the Drug Interchangeability and Dispensing Fee Act phased out professional allowances and prohibited the designation of a pharmacy's private label product as either interchangeable or as a listed drug product. However, Shoppers Drug Mart and its related corporation, Sanis Health, a generics manufacturer, challenged the prohibition on selling private label products in both public and private markets. In its decision, the court said there was no concern about the safety or efficacy of private label products and any profit earned by Sanis was not a rebate and it could not raise the price of generic drugs for consumers which were fixed by the government.

Ambachtsheer Earns CFA Award

Keith Ambachtsheer has earned the CFA Institute’s ‘Award for Professional Excellence.’ The award is presented periodically to a member of the investment profession whose exemplary achievement, excellence of practice, and true leadership have inspired and reflected honor upon the investment profession to the highest degree. His contributions “to our industry have greatly advanced how investment professionals think about and interact with pensions funds globally,” says John Rogers, CFA, president and CEO of CFA Institute. “His research, writings, and educational programs have also indirectly benefited the millions of workers whose retirement funds are invested by a pension fund.” Ambachtsheer is adjunct professor of finance at the University of Toronto’s Rotman School of Management, director of its International Centre for Pension Management, and founder/president of KPA Advisory Services.  Previous recipients include David Swensen, Martin Leibowitz, Jack Bogle, Charles D. Ellis, Warren Buffett, and Sir John Marks Templeton.

Investor Confidence Falls In February

Globally, investor confidence fell 9.2 points in February from January's revised reading of 100.8 to reach 91.6, says the ‘State Street Investor Confidence Index.’ Declines were evident across all regions. The risk appetite of North American institutional investors fell to 92.5, a 6.8 point decline from the January level of 99.3. Confidence among Asian investors fell by a similar margin, slipping 4.3 points from January's revised number of 96.5 to 92.2. In Europe, where the most telling signs of retrenchment are evident, institutional investor confidence declined 13 points, from 92.8 to 79.8. Political turmoil in the Middle East and North Africa, policy tightening in emerging markets, and qualms about the pace of the recent run-up in developed markets equities are likely at the root of this, it says.

Carusone Heads North American Marketing

Rosanna Carusone is head of marketing operations, North America, for BNP Paribas Investment Partners. Within this newly-created position, she will be responsible for building its brand across all of North America. Over the past eight years, she has led its marketing efforts in Canada.

Pension Administration Efficiency Examined

Efficiency in pension administration and creating and maintaining a sustainable pension system will be among the areas covered at the ‘WorldPensionSummit 2011.’ It takes place November 2 to 4 in Amsterdam, The Netherlands. For more information, visit


Tuesday, February 22, 2011

Funds In Period Of Reflection

Canadian pension funds are now in a period of reflection, says Rob Boston, practice leader of asset consulting practice, at Morneau Shepell. Speaking at its ‘Review of Pension Fund Managers' Performance in 2010,’ he said after the roller coaster ride of recent years, plans know what to know how are they are doing and how the structure of their portfolios compares to other plans. And while they shouldn’t be looking at other plans, “at the end of the day they want to know if they are out of whack.” As well, more and more people are asking if their plan is benefiting from active management, he said. They are advising their clients to use it in areas where it makes sense. In fact, one reason plans may want to use passive investment is to free up their risk budget to be used where they get the biggest bang for their buck. Putting active dollars in areas where managers have a hard time beating the index, may be a waste of their risk budget, he said.

CPPIB Buying Into German Mall

The Canada Pension Plan Investment Board has reportedly agreed to buy a 50 per cent stake in Europe’s largest retail complex, CentrO near Dusseldorf, Germany. CentrO has 72,300 square metres of space with more than 200 shops. It opened in 1996 and work started in January on an expansion program. The 83-hectare site has an aquarium, a recreation park, a marina, parking for 14,000 cars, a 12,000- seat arena, a hotel, a theatre exhibition centre and a business park. It attracts about 20 million visitors each year.

Buyouts And PE Show Renewed Vigour

Canadian buyout and private equity (PE) market activity showed renewed vigour in 2010, as both deal and dollar volumes grew for the first time since 2007. This was one of several major conclusions of the CVCA ‒ Canada’s Venture Capital & Private Equity Association’s annual statistical review. Buyout and other PE deals done in Canada totalled 130 last year, up seven per cent from 2009, while disclosed deal values totalled $4.9 billion, up 21 per cent. This year-over-year increase is consistent with private equity developments in North America and around the world in 2010. A handful of major deals in the fourth quarter contributed substantially to year-end numbers in the Canadian market. These included CPPIB’s investment in 407 International and TPG Capital’s acquisition of the property-data unit of MDA Corporation – the two largest deals done in Canada last year. However, most domestic activity reflected a continuing market focus on smaller transactions.


Friday, February 18, 2011

Additional Amounts Should Be Disclosed

The Canadian Coalition for Governance does not object to removing the requirement to disclose non-compensatory amounts that named executive officers may elect to make to their Defined Contribution plan with funds received from their salary. In its response to the proposed amendments to Form 51-102F6 Statement Of Executive Compensation And Consequential Amendments, it says, however, if an employee is allowed to contribute additional amounts to his or her Defined Benefit plan, those amounts should also be disclosed as they may increase the future pension obligations of the company. The coalition stresses the importance of continued disclosure of any payments made by the employer in respect of any DC or DB plan, including employer contributions and above-market or preferential earnings credited on employer and employee contributions and credits for additional years of service beyond an executive’s actual years of service.

White Paper Analyzes Accumulation Strategies Inc. has collected various strategies including asset allocation strategies (strategic, age based, target date, rebalancing methods, effect of alpha), fixed index annuities, and other similar products in a white paper. In ‘Capital Accumulation Efficiency (CAE),’ these are analyzed using a non-Gaussian approach. It measures how effectively a method, a strategy, or a product measures against an optimized investment portfolio for accumulation purposes for different time horizons. It can be found at

Case Law Littered With Stock Options

The last thing employers want is for employee stock options to find their way into a wrongful dismissal claim, but it happens regularly, says a Fasken Martineau DuMoulin LLP ‘HR Space.’ It says case law from across the country is littered with decisions that include employee stock option plans in calculating the compensation due for wrongful dismissal. From the outset, this presents problems as damages are always paid in cash. This means that one of the goals of equity compensation – conserving cash – is thwarted when employee options find their way into claims decided in the courtroom. Worse, case law acknowledges that there is no standard way to calculate damages arising from lost equity compensation. But if an option plan is a significant part of an employee's compensation and is part of a claim for wrongful dismissal, the court has little choice but to try and assess the damages.

Tool Reports On Health System

The people managing and delivering healthcare in Saskatchewan ‒ and the people using those services ‒ now have easier access to information about the quality of healthcare in the province. An online reporting tool ( was developed by the Health Quality Council in response to demand from providers, health regions, and government for timely information about how the health system is performing. This new provincial resource displays results for various indicators of healthcare quality in Saskatchewan. An indicator is a tool for measuring, monitoring, and comparing factors that influence the quality of healthcare.

AIMCo Looks At Development Possibilities

Alberta Investment Management Corporation (AIMCo) has retained Hines as development manager to explore future development possibilities for a downtown Edmonton, AB, property that it owns. The property currently contains a 502-stall underground parking garage and a two-storey podium connected to the downtown pedway system that could be further developed by adding an office tower.  Work at this stage is preliminary and development will depend on market conditions.

CAIA Launches Foundation

The Chartered Alternative Investment Analyst (CAIA) Association has launched of a new foundation. The CAIA Foundation will enable individuals and organizations in the finance industry to invest in developing the knowledge and talent base in the field of alternative investments.

18 Asset Adds Yuan

Kerry Yuan is an investment analyst at 18 Asset Management. He will create and run quantitative investment models and make investment recommendations to the CIO.

Bankay Moves To Manulife

Mark Bankay is director of product of development in Canada for Manulife Asset Management. He is responsible for the firm's Canadian institutional and sub-advisory product development efforts. Before joining the firm, he worked at Hartford Investments Canada.


Thursday, February 17, 2011

Ontario Healthcare Needs ‘Honest Broker’

An ‘honest broker’ is needed to represent the views of the public in any discussion about changes to the healthcare system according to the participants of a Healthcare of Ontario Pension Plan’s (HOOPP) Think Tank. HOOPP invited 40 key healthcare stakeholders ‒ including union leaders, government representatives, and healthcare providers ‒ to participate in the Think Tank. Think Tank attendees learned that the public is generally unaware of the problems facing the healthcare sector with respect to funding. As well, few Ontarians believe that government spends too much on healthcare and even fewer think it should reduce its spending on healthcare. Residents also see it as the most important thing government does and Ontarians want it privileged above other spending priorities.  If government has to cut spending, they want healthcare protected from those cuts as much as possible and more so than any other spending envelope. The Think Tank calls for the creation of an ‘honest broker’ to be a champion for the system and to lead the dialogue between citizens and the government to build awareness of problems and solutions.

Complaints Policy Recommendations Impractical

Some recommendations in a FSCO consultation draft policy on the management by a plan administrator of member and other beneficiary enquiries and complaints may be impractical, says Priscilla H. Healy, of Fogler, Rubinoff LLP.  FSCO’s policy has characterized responsibilities such as dealing with complaints and enquiries promptly and accurately and ensuring members know their avenues of appeal as fiduciary duties of the plan administrator. However, Healy says it is not clear why a FSCO policy, or a policy of the administrator, with the degree of detail that is in the consultation draft is necessary. Many of the suggestions or recommendations are impractical for administrators of smaller plans with limited staff and resources. The problem is that although the policy says that it is not intended to create additional rights of members, obligations, or responsibilities for those involved in the administration of the pension fund, it will probably do just that. “In our pension environment, to mention the word ‘fiduciary’ is almost to create the duty,” she says. As well, “interestingly,” she says the policy makes no mention of member responsibilities to read materials provided by the administrator, to keep important information, and to keep their own detailed written records as to their enquiries or complaints and how they were addressed.

VC Activity Edges Upwards

Venture capital (VC) market activity in Canada edged upwards in 2010 with deals and dollars invested rising compared to 2009. However, continued financing of innovative companies has become increasingly threatened by the ongoing decline in VC fund-raising, says CVCA ‒ Canada’s Venture Capital & Private Equity Association. Canadian VC deal-making increased moderately in 2010, with $1.1 billion invested in total, up 10 per cent from the year before. The number of companies financed grew a moderate five per cent over this period. The year-over-year increase in disbursement levels was the first since 2007. However, VC activity has yet to approach the $1.4 billion invested in 2008, the first year of the most recent market downturn.

Ceridian Invests In Dayforce

Ceridian Corporation has invested in Dayforce to launch the InView Workforce Management (IWFM) solution. The IWFM platform delivers a seamless experience for new and existing clients across the entire spectrum of human capital management functions.

Ihnatowycz Joins AGF Boards

Ian O. Ihnatowycz  has been named to the AGF Management Limited board of directors and the AGF Trust Company board. He was formerly president, chief executive officer, and a director of Acuity Investment Management Inc., and Acuity Funds Ltd. AGF acquired Acuity on February 1.

ACPM President Discusses Retirement Options

Christopher Brown, president of the Association of Canadian Pension Management, will speak on ‘The Real Story – Giving More Canadians More Retirement Options’ at an Economic Club of Canada session. It takes place March 8 in Calgary, AB. For more information, visit

French Language Session Looks At DB

Ensuring the sustainability of Defined Benefit plans will be one of the areas covered at the International Foundation of Employee Benefit Plans’ ‘French Canadian Investments Institute.’ It features speakers who are either academics or individuals directly involved with managing pension assets. It takes place May 26 in Montreal, QC. For more information, visit


Wednesday, February 16, 2011

Shift To Climate Sensitive Assets Recommended

Institutional investors should shift up to 40 per cent of their assets into ‘climate sensitive’ assets in order to mitigate environmental costs, which could increase portfolio risk by 10 per cent over the next 20 years, says a study by Mercer in collaboration with a group of 14 leading global investors with around $2 trillion in assets. The study, which looks at the impact of climate change on asset allocation risks, defines climate sensitive assets as infrastructure, private equity, real estate, timberland, agriculture land, carbon, broad and sector focused sustainable equities, and efficiency/renewable listed/unlisted assets. “The analysis suggests that under certain scenarios, a typical portfolio seeking a seven per cent return could manage the risk of climate change by ensuring around 40 per cent of assets are held in climate-sensitive assets. To manage climate change risks, institutional investors need to think about diversification across sources of risks rather than across traditional asset classes,” says ‘Climate Change Scenarios: Implications for Strategic Asset Allocation.’ “Watch for the February issue of Benefits and Pensions Monitor for an article by Mercer’s Elizabeth Bourqui ‒ ‘Investment And Climate Change’ ‒ which reports on the study.

Caisse Reaches IT Milestone

The Caisse de dépôt et placement du Quebec has reached a milestone in the overhaul of its information technology (IT) business model. "The new model, which is aligned with our new business needs, will make us more cost-effective," says Pierre Miron, senior vice-president, information technology, because it aims to streamline how the group works and provide greater agility, efficiency, and control over its operations, while significantly reducing expenses." The revamped IT business model will reduce the Caisse's overall IT spending by 21 per cent, which represents recurring annual savings of approximately $20 million.

Investors Bullish On Global Equities

Institutional investors are more bullish towards global equities than at any time in the past decade, says a Merrill Lynch survey of money managers. Its ‘Survey of Fund Managers for February’ finds that a net 67 per cent of asset allocators say that they are overweight global equities, the highest reading since the survey began asking this question in April 2001. This represents a significant further increase from January when a net 55 per cent were overweight the asset class and December when the reading was just 40 per cent. At the same time, bond and cash allocations continued to fall. A net 66 per cent are underweight bonds, up from a net 54 per cent a month ago, while a net nine per cent is underweight cash, the lowest allocation since January 2002. Additionally, the survey observed an unusual shift in regional allocations, with only five per cent of fund managers now overweight global emerging markets equities, down from January’s net 43 per cent. This represents the steepest monthly decline in emerging market exposure in the survey’s history.

UK Schemes Committed To De-risking

Almost three-quarters of UK pension schemes are committed to long-term de-risking strategies, but the majority still plan to demand extra employer contributions, says an Aon Hewitt poll. Its ‘Global Pension Risk Survey 2011’ found 69 per cent of respondents said their longer term objective is to take less, or no, risk in the future. It found almost 80 per cent of schemes are also seeking additional company contributions in the next two years, despite having the long-term objective of being self-sufficient. Nearly two-thirds of respondents, as opposed to just one third in 2008, cited a timeframe of more than 10 years as the appropriate time horizon to deliver the scheme's long-term strategy. The survey also confirmed 90 per cent of Defined Benefit schemes are now closed to new members, or soon will be, and the number of plans closed to future accrual has increased, up from 12 per cent in 2008 to 29 per cent in 2011.

Senior Care Tears Families Apart

Sibling dynamics involved in caring for aging parents often tears families apart, says a Home Instead Senior Care survey. It found that conflicts can arise when care is not shared equally among brothers and sisters. Results of the survey show in 41 per cent of families, one sibling has responsibility for providing all or most of the care for a parent and in only three per cent of families do siblings split the caregiving tasks equally. In all other families, the caregiving tends to be shared based on skill sets and other criteria. On average, the primary family caregiver provides 14 hours of care per week, while other siblings provide five hours of care. Among siblings who care for parents, the primary caregiver is a 50-year-old sister caring for an 81-year-old mother or a 50-year-old brother caring for an 81-year-old father, and they’ve been the family caregiver for 3.3 years. As a result of the findings, Home Instead Senior Care has launched a public education campaign called ‘The 50-50 Rule’ that offers strategies for overcoming sibling differences to help families provide the best care for senior parents.

Bauer, Henhoeffer Get New Positions

Rob Bauer is associate director, programs, and Ann Henhoeffer is associate director, business development and operations, at the Rotman International Center for Pension Management (Rotman ICPM) at the University of Toronto's Rotman School of Management. Bauer, a professor of institutional investors at Maastricht University in The Netherlands, has had a long affiliation with Rotman ICPM as a board member since it was founded in 2005. Henhoeffer had held the position of associate director, operations and planning.

Bulloch Promoted At Economical

Dean Bulloch is senior vice-president and chief human resources officer at the Economical Insurance Group. Formerly vice-president, human resources, he started with the firm in 1996 as manager, training and development, and progressed through a diverse set of increasingly responsible human resources leadership roles.

Two Move Up At Burgundy

Kenneth A. Broekaert, CFA, is senior vice-president and Doug Winslow, CFA, is vice-president at Burgundy Asset Management Ltd. Following four years with the Boston Consulting Group, Broekaert joined the firm as an analyst in 2003 and was appointed portfolio manager for European equities in 2006.Winslow joined the firm in 2007 as an analyst following experience at Hamblin Watsa Investment Counsel, Southeastern Asset Management, and CIBC World Markets.

Record Numbers At Wellness Event

The ‘Canadian Health and Wellness Innovations Conference,’ developed by the International Foundation of Employee Benefit Plans, has reached a record attendance of nearly 200 trustees, administrators and other fiduciaries. The program features 13 speakers, ranging from hospital executives to health plan analysts and other health plan specialists from across Canada. It takes place February 20 to 23 in Las Vegas, NV.  For more information, visit


Tuesday, February 15, 2011

Smaller Asian Economies Expected To Grow

Asset management, private equity, and hedge fund executives expect growth over the next year to come from smaller Asian economies such as Hong Kong, Singapore, and South Korea, says a study by RBC Capital Markets. In a sign that asset managers have adapted to the impact of the sovereign debt crisis in their portfolios, the survey reveals a significant shift in expectations since a similar survey conducted in May 2010. It found asset managers are optimistic about Asian equity markets with 69 per cent expecting a rally over the next year. Asset managers are more optimistic about the performance of European equity markets (only 26 per cent expect the markets to fall, a significant shift from the 40 per cent who expressed this in the previous survey) and the Euro (30 per cent expect a higher valuation, versus 16 per cent in the previous survey). They also are more optimistic about seeing a reduction in inflation in their own countries over the coming year (18 per cent expect it versus seven per cent in the previous survey). Finally, they are less optimistic about the U.S. equity markets (54 per cent expect gains versus 66 in the previous survey) and the dollar (53 per cent expect a devaluation versus 24 per cent in the previous survey).

Investors Can Buy Gold

GoldMoney, a global provider of physical bullion for retail and institutional investors, and Standard Life have joined forces to provide a practical way for Standard Life's self-invested personal pension (SIPP) owners to hold physical gold bullion. They have integrated their respective systems so that Standard Life’s customers can now trade and store physical gold bullion within their SIPPs. Investors worldwide view gold as an effective way to preserve their purchasing power over long periods of time.

Manulife Acquires Optique

Manulife Asset Management has acquired the assets of Optique Capital Management, a registered investment adviser based in Milwaukee, WI. Optique's mutual fund and separate account assets under management were approximately $800 million at December 31, 2010. J-F Courville, Manulife’s president and chief executive officer, says “This addition, together with the new U.S. core value team we established last month, significantly enhances the value equity capabilities we offer to our clients."

ACPM Head Speaks To Economic Club

Christopher Brown, president of the Association of Canadian Pension Management, will speak on ‘The Real Story – Giving More Canadians More Retirement Options’ at an Economic Club of Canada session. It takes place February 25 in Toronto, ON. For more information, visit

Managing Mental Health Issues Examined

Understanding the causes and treatments for common mental health conditions will be among the areas covered at Gowan Consulting’s ‘Managing Mental Health Issues and Return to Work.’ Other sessions will look at discerning the difference between mental health issues and performance issues and writing and implementing sustainable return to work plans. It takes place April 12 and 13 in Mississauga, ON. For more information, visit


Monday, February 14, 2011

Nortel Workers Going To Court

The 40 Nortel employees who were on long-term disability when the company filed for CCAA protection will be asking the Supreme Court of Canada to resolve their situation, says Priscilla H. Healy, of Fogler, Rubinoff LLP.  The 40 employees did not consent to the settlement reached last March. Under the settlement, the employees on long-term disability received payments until the end of December, 2010, and will receive a portion of the $80 million in Nortel's health and welfare trust. Healy says disabled Nortel employees are now facing years of living on social assistance instead of receiving disability benefits. “The disability ‘insurance’ they thought they had, and had paid for in part, was not insurance at all,” she says.

Rules Present Opportunities For DB Plans

For fiscal years starting in 2011, many Canadian organizations that are not moving to International Financial Reporting Standards (IFRS) will be adopting the new Accounting Standards for Private Enterprises of the Canadian Institute of Chartered Accountants (CICA), says a Sibson Consulting ‘Spotlight.’ It says this creates opportunities for organizations that provide employee future benefits through one or more Defined Benefit pension plans. The transitional rules allow an immediate adjustment to retained earnings for existing unrecognized losses or prior-service costs, an option that avoids reporting those amounts on the income statement. For companies that can withstand the balance-sheet hit, this provides an opportunity to eliminate existing pension-related amortizations, thereby increasing reported profits going forward. The other side of this may be more important for benefit plan sponsors with significant borrowing needs or loan covenants. A company with unrecognized gains from DB plan has the option to use those gains to increase retained earnings. Meanwhile a sponsor with unrecognized losses and/or prior-service costs is not required to take a hit.

Temporary Relief Available

Temporary solvency funding relief will be available for eligible single-employer pension plans in Ontario sponsored by public sector entities, says a Hicks Morley ‘FTR Now.’ The Ontario government has released the ‘Details of the Proposed Temporary Solvency Funding Relief for Certain Pension Plans in the Broader Public Sector (BPS).’ These entities include crown agencies, district school boards, colleges, universities, and municipalities. The relief does not apply to multi-employer plans in the public sector. The proposed relief will be provided in two stages. However, in exchange for the relief, eligible plan sponsors would be expected to adopt plan changes that would make their plans more sustainable in the long term. Plan changes could include converting to joint sponsorship for future service; more equitable sharing of the normal cost of providing benefits between employers and members; and linking some future benefits, such as inflation protection, to plan performance.

Chart Shows Impact Of Tax

To assist sponsors of pension plans and other employee benefit arrangements to determine how their plans may be affected by the GST/HST rules, Greg Hurst & Associates Ltd. has published a chart which can be used as a tool by plan sponsors and other stakeholders. The ‘GST/HST Action Decision Tree for Registered Pension Plans and Other Employee Benefits Arrangements’ covers RPPs (both DB and DC), DPSPs, RCAs, Group RRSPs/RESPs/RRIFs/TFSAs, and group employee benefit and health and welfare plans. It can be found at

Lyall Serves As President-elect

Richard Lyall, president of RESCON Residential Construction Council of Ontario, in Vaughan, ON, is president-elect for the 2011 executive committee for the International Foundation of Employee Benefit Plans. Canadian sector representative is David N. Harvey, president and CEO of Benefit Plan Administrators Ltd., Mississauga, ON. The executive committee holds authority over all programs and business affairs for the International Foundation. It administers finances, monitors the progress of projects, and serves as the main conduit in channeling proposals and recommendations for board consideration.

Lane Speaks At Forum

Timothy Lane, deputy governor general, The Bank of Canada, is a keynote speaker at the ‘CPBI FORUM 2011.’ He will discuss ‘The Changing Face of Risk in the Global Financial System.’ The conference will provide insights into what the future holds for the industry and provides a global perspective on trends from around the world and how they may affect Canada. It takes place May 18 to 20 in Vancouver, BC. For more information,

Responsible Investment Conference Date Set

Tom Rand, a venture capitalist, entrepreneur, and author of ‘Kicking the Fossil Fuel Habit: 10 clean technologies to save our world’ will be speaking at the ‘Canadian Responsible Investment Conference 2011.’ It takes place June 20 to 22 in Victoria, BC. For more information, visit

Private Payer Issues Examined

The ‘2nd Annual Private Payer Pulse Conference’ will address a wide spectrum of issues that are affecting the private payer insurance market. Sponsored by Drug Benefit Consulting and Equilibrium Health Consulting, the meeting theme is ‘Drug System Reform & The Emerging Private Payer Model.’ It takes place April 12 in Brampton, ON. For more information, contact Gordon Polk at 905-631-9788 or


Friday, February 11, 2011

Teachers’ Calls For Sustained Focus On Governance

In its annual letter to more than 650 public companies around the world, the Ontario Teachers' Pension Plan advocates for a sustained focus on key governance principles. It says that, fundamentally, Teachers’ believes that the responsibility for a company’s corporate governance lies primarily with the board of directors. The role of the shareholder is to appoint directors and to ensure that a proper governance structure is in place. To effectively discharge their duties, a board must be organized to constructively challenge management’s recommendations and to evaluate corporate performance from an objective perspective. Building a well-functioning board revolves around a few key principles including separating the roles of the chair and CEO and ensuring boards are comprised of independent-minded, competent directors who are elected annually by a majority vote of shareholders.

CPP Fund Up By $1.5 Billion

The CPP Fund ended its third quarter on December 31, 2010, at $140.1 billion compared to $138.6 billion at the end of the second quarter on September 30, 2010. The $1.5 billion increase in assets was the result of investment income of $3.9 billion, representing an investment return of three per cent, offset by seasonal cash outflows of $2.4 billion to pay CPP benefits. Other investment highlights in the third quarter included completion of the $3.4 billion acquisition of Intoll which includes a 30 per cent stake in 407 ETR and a 25 per cent interest in Australia’s Westlink M7. It also purchased a 10 per cent stake in 407 ETR from Cintra Infraestructuras S.A.

Standard Life Using YouTube

The Standard Life Assurance Company of Canada has introduced a series of three short, action-oriented videos on YouTube to help people better understand their group retirement statements and to motivate them to be more involved in their retirement planning. The videos were designed for its clients participating in group retirement and savings plans. They focus on the three key questions that Standard Life believes are fundamental to evaluate one’s financial situation correctly ‒ How am I doing?; Am I on track?; and What could I do to reach my retirement goals?

Written Designation Trumps Other Documents

A New Brunswick Court of Queen’s Bench decision in Tower Estate v. Tower Estate serves as yet another reminder that a prescribed written beneficiary designation trumps other less specific documents purporting to revoke or substitute a named beneficiary, says Douglas Rienzo, of Osler, Hoskin & Harcourt LLP. In the case, a deceased employee of Correctional Services Canada designed his then-wife as beneficiary of his death and pension benefits. However, the couple divorced and while they did reach an agreement over the pension and death benefits, the employee did not change his beneficiary designation. The court held that in order to effect a beneficiary revocation under the PSSA, it is necessary to comply with the relevant statutory requirements, which included filing a prescribed form. Rienzo says as a result of this decision, plan administrators should be wary of administering changes to pension plan beneficiary designations based on separation agreements containing only broad and general language releasing claims to benefits. Instead, they should ensure that plan members file the proper documentation in accordance with legislative requirements and the plan terms.

Institutions Dominate Hedge Fund Manager Assets

Institutional investors accounted for an average of 61 per cent of hedge fund managers’ assets under management at the end of 2010, compared with 45 per cent at the end of 2008, says a report from Preqin. It found about 57 per cent of respondents said that more than half of their assets now are managed for institutional investors. As well, the amount of money they are getting from pension funds, endowments, foundations, and sovereign wealth funds has increased in the past five years.

MSCI Looks At Global SRI Indices

MSCI is to consult with the investment community on the possibility of developing global socially responsible indices. These would build on the 23 environmental, social, and governance (ESG) indices that are the continuation of the KLD indices that MSCI acquired as part of its acquisition of RiskMetrics last year. The proposed indices aim to support the benchmarking and other index related needs of investors who seek to invest in accordance with their values such as religious beliefs, moral standards, or ethical views. They will exclude companies that are inconsistent with specific values based criteria and will target companies with high ESG ratings relative to their sector peers.

Wolfe Responsible For DB

Heather Wolfe is assistant vice-president, Defined Benefit solutions for group retirement services, at Sun Life Financial. She is responsible for all aspects of the DB solutions business including its strategic direction, market segmentation, product innovation, and sales and marketing plan.


Thursday, February 10, 2011

Canadians Want Guarantees And Flexibility

Canadians want retirement income funds which guarantees an income stream and the flexibility to access funds whenever they choose, says a report by the BMO Retirement Institute. It identifies what Canadians believe are important elements of a retirement income plan (flexibility to deal with unexpected events, maintaining current lifestyle, guaranteed income, not outliving their money), and examines why it will be difficult, if not impossible, for most to attain all of these elements without making sacrifices. It found only 40 per cent of those planning to retire in five years are willing to give up control over some of their retirement savings in order to receive guaranteed income for life. As well, 67 per cent believe flexibility to deal with contingencies is more important than ensuring a predictable retirement income for life. However, 32 per cent of pre-retirees and 42 per cent of retirees are not prepared to give up control of their capital in order to receive guaranteed income for life.

Commodities Offer Diversification

Investors benefit from the diversification that direct commodity exposure brings to their portfolio since commodity prices are negatively correlated to stocks and bonds over long periods of time, says Keith Black, associate director of curriculum at the Chartered Alternative Investment Analyst Association. Speaking at the AIMA Canada and the Chartered Alternative Investment Association ‘So you think you know commodities? Think again.’ session, he said “Even though commodities have a similar volatility as equities, adding a commodity futures program to your equity portfolio can serve to reduce portfolio volatility without hurting your returns.” However, he also said it’s important for investors to diversify their commodity holdings since there is generally low correlation between different types of assets and investors who have concentrated on one commodity area such as gold have missed out when food products or energy rally.

Action Needed On Financial Literacy

Urgent action on financial literacy is needed in Canada, says the Task Force on Financial Literacy. It recommends a national strategy to strengthen financial literacy in this country and recommends efforts to educate Canadians on the benefits of getting professional financial advice. The strategy features five priority areas ‒ shared responsibility, leadership and collaboration, lifelong learning, delivery and promotion, and accountability. The strategy would incorporate formal education, federal government programs, online tools and a campaign to raise awareness. Under the plan, the formal education system would provide a foundation for financial literacy, but education would also extend beyond the classroom into workplaces, the financial services marketplace, and online with the creation of a single-source website providing unbiased information.

Benefits Solution Of Future Launched

Mercer has launched what it believes is the “benefits solution of the future” for pension and other workplace savings vehicles. Its new offering to UK employers is intended to address employers’ concerns about the escalating costs and risks of pension provision against a backdrop of auto enrolment, the variable performance of members’ investments, and the need for more flexibility in meeting employees’ wider savings needs. It also addresses regulator concerns that schemes should be going after good member outcomes through appropriate contribution and investment decisions, effective administration, asset protection, value for money, and appropriate decumulation decisions. Employees investing their pension and wider savings funds will get direct access to investments and A-rated funds that, up to now, have mostly been available to institutional buyers through Defined Benefit schemes. They can also choose target-date funds designed by investment professionals.


Wednesday, February 9, 2011

TMX, LSE Merge

A merger of the London Stock Exchange and the TMX Group will create the global stock market leader for mining, energy, and cleantech stocks, and the top exchange by sheer number of listings. The two would have 6,700 listings with a market value of $5.8 trillion. It would also become the top market for small- and medium-sized companies, especially in the resources sector, with 3,600 listings from the exchanges' junior markets. The merger is expected to be completed in the second half of 2011 if the approvals are received.

Fees For PRPPs Must Be Kept Low

For PRPPs to be a part of a real solution to adequate and broad pension coverage, providers must first offer them to employers without pension arrangements so employees can participate. However, unless they are made mandatory, which is unlikely, they will have to be aggressively marketed, says Priscilla H. Healy, of Fogler, Rubinoff LLP. She also says fees and charges for these plans must be low and remain transparent to plan sponsors and members. As well, there must be clear legislated responsibility upon the provider selecting and monitoring investment choices. The employers' potential liability to plan members must also be minimized. However, even with these features, she says they are not ideal as members still bear the risk of the stock market as there does not seem to be an element of risk pooling.

Flexible Arrangements Help Manage Absence

Eighty-five per cent of European employers that provide flexible working arrangements say this is effective in managing absence levels, says the Employee Benefits/Cigna ‘Workplace Absence Research 2011.’ Occupational health and private medical insurance are seen as two of the most effective services in helping respondents to achieve their absence management goals as these can help employees to obtain a timely diagnosis or receive speedy access to treatment, enabling them to return to work more quickly. Creating a culture of clear absence management procedures has also proved to be an effective strategy with 90 per cent of employers citing it as having an effect on managing absence. Enabling staff to have high levels of control over their work and the working environment are also thought to be effective in managing absence.

Manager Hires Rebound

U.S. institutional investment manager hires rebounded in 2010 compared with the previous year, says a report by manager consultant Eager, Davis & Holmes. It found while placements with alternatives managers continued to grow, the year also held some good news for active U.S. equities managers. New mandates won by managers in 2010 increased 16 per cent in number and 37 per cent in dollar terms. The analysis also shows increased hires from 2009 in several asset classes including U.S. active equity, international active equity, alternative investments, and real estate.

Rebalancing Helped Valuations

U.S. funds that have remained diligent in rebalancing their portfolios through the past two years made up considerable lost ground in terms of portfolio valuations, says the Greenwich Associates' ‘U.S. Investment Management Study.’ It found 2010 was a solid year for institutional investment returns, however, despite this strong performance, the funding levels for corporate pension funds improved only modestly last year while the solvency position of public pensions actually deteriorated. The average projected benefits obligation of U.S. corporate Defined Benefit plans increased to 83 per cent in 2010 from 80 per cent in 2009. As well, the funding situation of public DB plans deteriorated from 2009 to 2010 with average solvency ratios declining to 76 per cent from 83 per cent. The other factor preventing a more robust increase in pension funding ratios was the inability or unwillingness of plan sponsors to increase contribution levels. Average cash contribution levels declined significantly from 2009 to 2010.

Global Benefits Examined

Asia Pacific, Latin America, Europe, the Middle East, and Africa will be the focus of the International Foundation of Employee Benefit Plans’ ‘Certificate in Global Benefits Management’ program. The event will provide the latest information on existing, and emerging, international employee benefits. It takes place April 4 to 8 in Monterey, CA. For more information, visit

Insights On Benefit Plan Issues Offered

The CPBI Ontario region’s ‘2nd Annual Benefits Outlook’ will provide insights on emerging benefit plan issues, perspectives on the benefits landscape, and new approaches to consider in managing plan cost. Featured speakers are Brian Lindenberg, senior partner, health and benefits business, Mercer; Sal Cimino, director, pharmacy services, Green Shield Canada; Chris von Heymann, senior vice-president, Cubic Health Inc.; and Diana Deverall-Ross, assistant vice-president, marketing, Sun Life Financial. It takes place February 23 in Toronto, ON. For more information, visit CPBI Ontario Region

Sullivan Joins Teachers’ Board

Daniel Sullivan has been appointed to the Ontario Teachers’ Pension Plan Board. Most recently, he served as Consul General of Canada in New York. He is also a former deputy chairman of Scotia Capital Inc.


Tuesday, February 8, 2011

Pension Assets Hit New High

Assets in the world’s 13 largest pension markets hit a new high of $26 trillion at the end of 2010, up 12 per cent during the year, says Towers Watson research. Assets increased as a result of rising equity markets but are still below 2007 levels when compared to global gross domestic product. Growth in liabilities continues to outpace growth in assets. Liabilities have grown 93.3 per cent since the end of 1998, while assets have grown 45.6 per cent in the same time period. The report shows the assets accounted for 76 per cent of global GDP in 2010, down from 78 per cent in 2007. The U.S. remains the largest market with more than $15 trillion in pension assets. Japan is second with $3.4 trillion followed by the UK with $2.2 trillion. The remaining countries are Australia, Canada, the Netherlands, Switzerland, Germany, Brazil, South Africa, France, Ireland, and Hong Kong.

Increased Allocations To Alternatives Planned

Canadian institutions appear to be planning significant increases in allocation to alternative asset classes including infrastructure, real estate, and private equity, says Greenwich Associates' ‘Canadian Investment Management Study.’ From 2009 to 2010, allocations to alternatives were relatively stable, with a modest increase to private equity investment and a modest decrease to real estate. But nearly a third of institutions plan to increase target allocations to infrastructure over the next three years. Not a single institution participating in the study reported plans to cut allocations to infrastructure. Twenty-eight per cent of institutions expect to increase target allocations to real estate, with only four per cent planning reductions, and 21 per cent expect to increase target allocations to private equity, with only three per cent planning cuts.

Life And Work Unbalanced

One in four Canadian workers are unable to balance life and work demands and as many as 60 per cent of workers are estimated to be struggling significantly with the issue of maintaining a sense of balance, says Banyan Work Health Solutions. Julie Holden, vice-president of employer services, says “employees experiencing a lack of work-life balance and high levels of stress are likely to miss more work days per year, are less committed to the organization, are more likely to consider leaving, and are hesitant to return to work after a disability leave.” To avoid this, she suggests companies consider setting clear work expectations; offer flexible working arrangements to accommodate family and child care commitments; reduce excessive workloads; and detect early signs of stress to create a healthy workplace that is conducive to the employee’s well-being.

Participation Rates Identical

Defined Contribution plan participation and deferral rates are nearly identical for women and men, says a study from LIMRA. However, its ‘Gender Matters’ report found women’s average DC plan balances in the U.S. are only 60 per cent of men’s average. Half of women and 37 per cent of men have $15,000 or less saved in their DC plans. Women are also slightly more likely than men to believe they have not done enough planning for retirement, 62 per cent and 56 per cent, respectively.

Sustainability Quantified

The 'Investing in a Sustainable Future' conference will examine the quantification of sustainability and how environmental, supply chain sourcing, and human rights issues can be measured in strictly financial terms. It will also look at integrated reporting to bring transparency and standardization to CSR initiatives and protecting and creating shareholder value through CSR initiatives. It takes place March 9 in New York, NY. For more information, visit

Drug Pricing Unravelled

‘Unravelling Drug Pricing’ will be the focus of the next Group Insurance Pharmaceutical Committee (GIPC) session. Various stakeholders in the drug delivery chain ‒ from drug development to retail pharmacy ‒ will examine the factors influencing the ultimate cost paid for a drug by the plan member and their drug plan. It takes place April 26 in Toronto, ON. For more information, visit


Monday, February 7, 2011

Domestic Allocations Increase

Allocations to domestic stocks notched a modest increase to 17 per cent of total Canadian institutional assets in 2010 from 16 per cent in 2009, says Greenwich Associates' ‘Canadian Investment Management Study.’ However, it also says the number of institutions reporting plans to cut allocations outnumbered those planning to increase by more than 10-to-one in active domestic stocks and by three-to-one in passive Canadian equities. Allocations to fixed income dropped to 33 per cent of institutional assets in 2010 from 35 per cent in 2009 ‒ a decline that likely reflects both market effect and rebalancing on the part of plan sponsors. In non-Canadian equities, the study results reveal a clear shift in approach. The share of institutions reporting the use of an external manager for an EAFE or international equity mandate has fallen to 65 per cent in 2010 from 76 per cent in 2009, and the share using a manager for a U.S. equity mandate has declined to 64 per cent from 72 per cent. Meanwhile, the share of institutions reporting the use of a manager for a global equity mandate increased to 37 per cent in 2010 from 28 per cent in 2009, and the share using a manager for an emerging markets mandate increased to 16 per cent from 12 per cent.

Plateau Reached In Trade Matching

Although progress has been made in improving trade matching rates in Canada, an operational plateau has been reached, says Omgeo. Its survey found approximately 70 per cent of respondents identified legacy and antiquated systems and processes as roadblocks to increased operational efficiency. The findings also demonstrated that Canadian investment management firms need to further invest in technology, with more than 40 per cent of respondents identifying a need to introduce new technology to improve middle- and back-office processes. The projected increased use of complex products and cross-border trading, a greater focus on risk management, and increased client and regulatory demands for transparency were key factors driving the need for improvement in operations.

BMO GRS Offering ETFs

BMO Group Retirement Services Inc. has expanded its open architecture platform to now offer exchange traded funds (ETFs) in the form of mutual funds. There are 12 new fund additions including four strategic ETF portfolios (target risk funds) and two tactical allocation ETF portfolios (a Canadian and global strategy). As well, the BMO Guardian Lifestage Class Funds (target date funds) now have ETFs as the underlying investment. Plan members will be able to benefit from the lower investment fees and broader diversification ETF portfolios provide. 

U.S. Plan Funding Improves

The stock market rally and a rise in interest rates in January combined to push the funded status of the typical U.S. corporate pension plan up by 3.3 per cent to 87.6 per cent, says BNY Mellon Asset Management’s ‘Pension Summary Report.’ January was the fifth consecutive month of improvement, boosting the funded status for these pension plans to their best levels since October 2008. The funded status of the typical plan has improved 16.3 per cent since August. Assets for the typical corporate pension plan increased 1.4 per cent, due to a 2.2 per cent gain in U.S. equities and a 2.4 per cent rise in international stocks. Liabilities fell 2.4 per cent during the month due to an increase in corporate bond rates.

Managers Expect Return On Equity To Remain Low

A majority of fund managers around the world expect their company's return on equity to remain below pre-crisis levels and a significant number are increasing their focus on cost reduction and product innovation initiatives, says a survey by RBC Dexia and Accenture. More than half (59 per cent) of respondents forecast a return on equity of 15 per cent or less this year and 14 per cent of those respondents expect return on equity to be less than 10 per cent. Prior to the 2008 financial crisis average returns for the funds managed by survey participants was 20 per cent. At the same time, more than three-quarters (77 per cent) of respondents said they believe over the next three years the industry will see an increase in outsourcing, ranging from fund accounting and custody to back-office technology and risk management.

Coxe Provides Keynote

Don Coxe, of Coxe Advisors LLP, will give the keynote address at the ‘1st Canadian Alternative Investment Forum.’ It will also feature panels on topics such as hedge funds, private equity, and niche alternative managers. It takes place April 7 in Toronto, ON. For more information, visit

Wellness Best Practices Presented

‘The International Foundation of Employee Benefit Plans’ ‘Canadian Health and Wellness Innovations Conference’ will present new ideas for wellness initiatives and cover best practices for managing health and welfare plan costs. It takes place February 20 to 23 in Las Vegas, NV. For more information, visit


Friday, February 4, 2011

DB Plan Funding Ratio Improves

A nine per cent increase in portfolio asset valuations over the past 12 months was not enough to improve the funding ratios of Canadian Defined Benefit pension plans, says Greenwich Associates' ‘Canadian Investment Management Study.’ Canadian pension plans in 2010 report an overall average funding ratio of 90 per cent, flat from 2009 levels and down significantly from the 99 per cent average funding ratios reported in 2007 and 2008. However, the funding situation for Canadian pension funds is actually considerably worse than those average ratios might suggest as Canadian pension plan sponsors are not required to revalue their funds every year. Only about 60 per cent of Canadian corporate pension funds and one-third of public funds have conducted a revaluation in the past 12 months. Among these plans, funding ratios average 88 per cent. Among funds that conducted a plan revaluation within the last one-to-two years, average funding ratios are 87 per cent.

ASO Plans Potentially Less Expensive

Employers with more than 100 employees may be better off with ASO (administrative services only) funded benefits plans, says Kevin McFadden, of Sigurdson McFadden Benefits & Pensions. Speaking at the ‘Wake Up and Smell the Benefits!’ session at the ‘HRPA 2011 Annual Conference & Trade Show,’ he said under ASO plans, unlike fully funded plans, the employer can recover any surplus between the premium paid and the actual cost of the claims. This is probably more critical today because the cost of the healthcare component is now 45 per cent of the total benefit cost, up from 35 per cent 10 years ago primarily due to drug cost increases. He did caution, however, that out-of-country drug expenses could be a problem. However, setting a ceiling for drug costs can limit the employer’s exposure to this.

Canadians Back CPP Improvement

Eighty per cent of Canadians believe increasing Canada Pension Plan benefits should be the Harper government’s first priority for improving retirement security and 81 per cent say CPP should be an important issue in the next federal election, says a poll for the Canadian Union of Public Employees (CUPE) following the federal government’s announcement late last year that it intended to delay CPP enhancements. “Most Canadians are against any more stalling on improving CPP,” says Paul Moist, national president of CUPE. “Gradually increasing CPP premiums paid by workers and employers to increase benefits is clearly viewed as the best and most widely supported option to help Canadians save more for their retirement.” Over 50 per cent are against the decision by the government to delay increasing CPP benefits in favour of private pooled pension plans for individuals who can afford to make contributions. Only 38 per cent support the move.

Canada’s Year This Year

This year could be Canada’s, says Veronika Hirsch, chief investment officer of BluMont Capital. Speaking at Integrated Asset Management Corp.’s annual general meeting, she said natural disasters will hinder Australia’s efforts to export its commodities during the first quarter of 2011. This puts Canada in a position to outperform Australia this year. As well, events in the Middle East are prompting investors to move from defensive positions in gold to oil. If this spills over into an oil-producing nation and constrains supply, Canada could benefit.

Quebec SPPAs May Be Captured By Rules

All registered pension plans (RRPs) subject to the Québec Supplemental Pension Plans Act (SPPA), including Defined Contribution RPPs invested under insurance contracts, may be captured by the new Pension Plan Deemed Supply GST/HST rules, the new financial institution GST/HST rules, and the new pension rebate rules, says Greg Hurst, of Greg Hurst & Associates Ltd. This is consequent to SPPA requirements that RPPs are administered by a pension committee which is designated as trustee. “Generally, RPPs invested under insurance contracts are not (yet) captured by the new rules,” says Hurst. “However, where an insurance contract is held under a trust governed by an RPP, the new rules will apply. In carrying out a review of a Québec RPP, we determined that under the terms of the plan and the SPPA the pension committee is a trustee and thus the new rules would also appear to apply to such RPPs even if invested under insurance contracts.”

Caisse Increases Investment

The Caisse de dépôt et placement du Québec will significantly increase its investment in Gaz Métro. The Caisse, alongside its partner Enbridge Inc., will consequently buy out the entire 17.56 per cent Laurentides Investissements stake in Noverco, an investment company that owns 100 per cent of Gaz Metro Inc. Upon completion of this transaction, the Caisse will hold up to 10.7 per cent more in Noverco, which may represent a $227 million investment, pursuant to the exercise of purchase rights by other limited partners.

Flaherty Speaking At Euromoney

James Flaherty, Canada’s minister of finance, and Dwight Duncan, minister of finance for Ontario, will be keynote speakers at the "Euromoney Canada Forum.' The conference will address the key issues facing Canada’s capital markets in light of the ongoing debate over a new international financial architecture and global imbalances. It takes place April 5 and 6 in Toronto, ON. For more information, visit


Thursday, February 3, 2011

Large Cap Growth Beats Benchmark

Canadian large cap growth managers in Canada gained 11.1 per cent last quarter, their highest return since the first quarter of 2009, says data from the ‘Russell Active Manager Report.’ That was well ahead of the S&P/TSX Composite Index's return of 9.4 per cent during the same period and ahead of the median value manager's return of 9.1 per cent. Overall, 52 per cent of large cap managers in Canada were able to beat the benchmark in the fourth quarter of 2010, up notably from only 34 per cent in the third quarter and 37 per cent in the second quarter. 

Sovereign Funds Reassess Strategies

Challenges posed by turbulent financial markets over the past few years have caused many of the world's leading sovereign funds to reassess their investment strategies and risk management, says research by State Street Global Advisors (SSgA). It found that as a result of their new assessment, some are making significant changes including a growing shift from active investment management strategies to passive ones and an increasing focus on the emerging market debt as yields on traditional asset classes have fallen. Greater focus is also being placed on the possibility of accessing different and independent sources of economic value such as land and infrastructure to help diversify sovereign portfolios.

Risk Management Services Offered

UK risk management firm PensionsFirst has launched a division to provide advanced risk management services to public and private sector pension plans in North America. It will offer U.S. and Canadian funds the ability to proactively measure and manage the risk in their portfolios.

Harding Joins Aon Hewitt

Wade Harding is a senior vice-president in Aon Hewitt’s Halifax, NS, office. He is also a member of the health and benefits practice national leadership team. Previously, he was a partner at a large national consulting firm and has managed benefit consulting practices in Halifax, Vancouver, BC, and Toronto, ON.


Wednesday, February 2, 2011

UK Fund Hedges Longevity

A UK pension fund has completed what is believed to the world’s first longevity hedge for non-retired members. The Pall (UK) Pension Fund has entered into a £70 million contract based on future values of J.P. Morgan's LifeMetrics longevity index to mitigate the risk non-retired members of the fund live longer than expected. The agreement results in the fund receiving a payout if life expectancy improves at a greater rate than specified in the contract. This will allow it to offset its liabilities. Previous longevity deals have focused on retired members only as hedging against increased life expectancy of pension plan members who have yet to retire has been problematic due to the long-term nature of the risk and the difficulties associated with accurately hedging pension benefits that have yet to come into payment.

Benefits Norm In One Country, Not In Another

Understanding international benefits arrangements takes a particular mindset, says John Dean, of Punter Southall UK, because what is the norm in your home country may not apply in another. Speaking at the Williamson Group’s ‘Global Benefits Forum 2011’ on ‘International Benefits – Challenging Normal Practice,’ he said the traditional solution is too expensive. Often when a country moves into a new market, it recruits someone to lead the effort and then builds a benefits program. What then happens is the employee is in control and they set up the benefit program they have always wanted. In the case of, for example, a company that moves to the UK this can double the cost of a benefits program as in the UK benefits account for less than 10 per cent of payroll whereas adding a U.S. package to this can increase the cost by 13 per cent of payroll.

Unilever Considers Worldwide Asset Management

Unilever plans to concentrate the management of all its pension assets worldwide in a single in-house unit. A report in the Wall Street Journal says it aims to expand its in-house manager, Univest, to offer investment funds and advisory services to its more than 40 pension funds around the world. Univest was set up five years ago to handle equities and hedge funds, mostly on behalf of Unilever's UK and Dutch pension funds.

Productivity Drives Wellness Efforts

While the top driver of wellness in most countries around the world, including Canada, is improving employee productivity and presenteeism, in the U.S. it is improving the cost of healthcare and insurance, says Kevin Overbey, managing director at ClearPoint. Speaking on ‘Global Strategy & Risk Management’ at the Williamson Group’s ‘Global Benefits Forum 2011,’ he said the reason is that the former cannot be quantified and U.S. employers want something they can measure. He noted that 10 per cent of the population drives 70 per cent of claims cost and 70 per cent of cancers, strokes, and coronary disease, as well as more than 90 per cent of diabetes cases, are due to employee behaviour.  One of the best ways to encourage employees to change behaviour by participating in wellness programs is by rewarding engagement. For example, if an employee participates in a wellness program, it will reduce the cost of their benefits and they can use the cash for other purposes. As well, this encourages employees to be better healthcare consumers and use less expensive tools such as nursing lines as opposed to visiting emergency wards.

Public Disclosure Proposal Distorts Markets

An EU proposal for the public disclosure of the net short positions of individual managers risks distorting financial markets and is not effective in meeting the needs of companies wishing to raise capital, investors seeking efficient risk management, or regulators addressing financial stability, says a report commissioned by the Alternative Investment Management Association (AIMA). It concludes that a regulatory regime based on the disclosure of individual managers’ net short positions above a threshold of 0.5 per cent of outstanding share capital “is not effective in meeting the needs of the public, regulators, or industry participants.” It finds evidence that such disclosure requirements result in, among other things, lower market liquidity and an increased likelihood of short squeezes. Overall, the benefits of these disclosure requirements seem negligible in comparison with the increases in the cost of capital and the associated negative impact on the real economy.

Quality Of Life Future Benefit

The future of benefits for executives will be programs that enhance the quality of life for the executives and their families, says Bill Brown, of The Williamson Group. He told a session entitled ‘Past, Present & Future: Executive Benefits Trends & Best Practices’ at its ‘Global Benefits Forum 2011’ that this will require a proactive approach to keep the executive and their family in good health. And, in the event of illness, it will help them navigate the best healthcare options to ensure proper treatment and access to the right resources to return to good health. This is the only strategy that could help to attract and retain executives, he said, as changes to tax laws have eliminated old benefits such as company cars, mortgage loans, and generous retiree group life, health, and dental plans.

Two Move Up At Burgundy

Ken Jesudian, CFA, is senior vice-president and John Ewing is vice-president at Burgundy Asset Management Ltd. Jesudian was previously with Foyston, Gordon & Payne Inc., joining the firm as vice-president and manager of research in 2005. Ewing joined the firm in 2006 and became an investment analyst focusing on Canadian small-cap equities in October 2007.

CVCA Gathers In Vancouver

‘Renewal. Relationships. Returns.’ is the theme of the CVCA annual conference. With more than 600 limited partners, fund managers, and industry influencers from across Canada, the U.S., and around the world in attendance, it is one of the largest gatherings of the private capital industry in North America. The theme of CVCA 2011 reflects the realities and priorities of Canada's venture capital and private equity industry today. It takes place May 25 to 27 in Vancouver, BC. For more information, visit


Tuesday, February 1, 2011

Backgrounder Sets Out HST Changes

A proposal to relieve non-distributed investment plans with substantially all of their members in non-participating provinces from the SLFI rules is one of the highlights of a Department of Finance ‘Backgrounder’ in respect of the harmonized sales tax by financial institutions, says a Borden Ladner Gervais LLP ‘Tax Alert.’ Its initial response to industry, the ‘Backgrounder’ calls for clarification and modification of proposed draft legislation and regulations. Other highlights include a proposal to include deemed tax as a factor in determining whether a pension entity qualifies as a Qualifying Small Investment Plan and clarification on the application of the specified investor rules. It also identifies a number of issues raised by the industry for which the Department of Finance requires further research, analysis, and consultation. These issues include whether the SLFI rules should apply to entities not subject to them, but that are similar to investment entities that are such as investment trusts and trusts holding assets of SLFI pension entities. The backgrounder and accompanying draft legislation and regulations can be found at

Lowest Earners Most Likely To Retire Completely

About one-quarter of full retirees reported that poor health or a disability was a factor in their decision to retire compared with 16 per cent among the partially retired and 14 per cent among retirees who later returned to work, says Statistics Canada. Many of those who had yet to retire reported that they were not financially prepared to leave work with 40 per cent saying their financial plans for retirement were less than adequate. The partially retired were the most likely to report that they retired because they were financially able to do so. However, full retirement generally corresponded to lower income as 60 per cent of people who had fully retired were in the two lowest income brackets in 2009, compared with less than 30 per cent of workers who had never retired. Retirees who had returned to work were the most likely to be in the top income bracket. The study was based on data from the ‘2009 Healthy Aging cycle of the Canadian Community Health Survey.’

Private Equity Index Ends Higher

The State Street Private Equity Index posted a 6.57 per cent return at the end of last September, 592 basis points higher than the previous quarter and 74 basis points higher than the year ago period.  For the one-year period beginning in the fourth quarter of 2009 and ending in the third quarter of 2010, all private equity recorded a 19.5 per cent one-year end-to-end return; mezzanine and distressed debt funds combined recorded a 20.9 per cent return for the same one-year investment time period, down from 27.9 per cent last quarter. Buyout funds posted 20.8 per cent return for the same time period. “Private equity continued to recover in the third quarter of 2010 since reaching its lowest point in the fourth quarter of 2008,” says Suresh Krishnamurthy, senior vice-president at State Street. “Distribution multiples have recovered nicely from historical lows and are now more in line with historical averages in this asset class. Increased distributions and six consecutive quarters of positive returns demonstrate strong momentum in the sector.”

Conference Looks At Opportunity

‘Growth & Opportunity’ is the theme of the CPBI Saskatchewan Regional Conference. It will feature high profile speakers who will provide in-depth information on the latest developments and opportunities created by pension reform and new trends in employee benefits. It takes place April 19 to 21 in Regina, SK. For more information, visit

Prominent Diseases Examined

Dr. Raymond Fabius, chief medical officer, Thomson Reuters, and author of ‘Population Health: Creating Cultures of Wellness,’ is a featured speaker at this year’s Connex Health ‘Employer Forum’. He will look at areas such as prominent diseases affecting employees and benefit costs, the physical impact of the psycho social environment in the workplace, and drug plan formulary decisions and the impact on benefit plans and employees. It takes place May 11 to 13 in Niagara Falls, ON. For more information, visit

Waldock Looks At Communication

‘Employee Benefits Communication, The Legal Aspects’ is the focus of a Manitoba CPBI Council breakfast seminar. Deron Waldock, a partner at Blake, Cassels & Graydon LLP, will discuss recent developments on the legal front and some of the common pitfalls in communicating with plan members. It takes place February 17 in Winnipeg, MB. For more information, visit

CVCA Offers Valuation Debate

The CVCA - Canada's Venture Capital & Private Equity Association’s ‘The Great Valuation Debate’ will examine topics such as emerging and growth businesses and private equity-backed and other established businesses. Featured panelists include Chris Arsenault, of iNovia Capital; Eric Berke, of TorQuest Partners; and Steven Zucchet, of Borealis Infrastructure. It takes place February 23 in Toronto, ON, and will be broadcast into Vancouver, BC; Calgary, AB; Winnipeg, MB; Ottawa, ON; Montreal, QC; and Halifax, NS. For more information, visit

Interest Rate Assumptions For February

The interest assumptions required to calculate commuted values for an event which occurs in any month up to and including February 2011 are now available at An Excel spreadsheet on the website contains seven worksheets:


Monday, January 31, 2011

Funds Will Rethink Currency Exposures

Pension funds will rethink their exposure to emerging market currencies as they face "new realities" in 2011, says a report by Mercer. Global economic rebalancing is likely to entail currency changes in emerging markets, with the appreciation of those markets' currencies – particularly the renminbi.
At the same time, forecast pressure over the next few years should encourage pension funds to scrutinize their portfolios for robustness within an inflationary environment.

Strong Performance In U.S.

U.S. institutional investment plan sponsors had strong investment performance for the second year in a row in 2010, gaining nearly 14 per cent at the median, says data in the Northern Trust Universe. Corporate pension plans had the strongest performance of three segments in the universe, advancing 13.9 per cent at the median, while the median public fund was up 13.6 per cent and the median plan in the foundations and endowments segment gained 12 per cent for the 12 months ending December 31, 2010. Private equity and hedge funds appeared to have solid performance in 2010. The one-year return for hedge funds was 9.2 per cent at the median while the median private equity program was up 13.7 per cent.

ESG Reporting Service Offered

State Street is teaming up with F&C Investments to provide an environmental, social, and governance (ESG) reporting service to help investors meet their stewardship goals. The ESG reporting service will benefit investors such as pension fund managers and trustees seeking to implement best practice responsible investment and enhance the long-term value of their investments. Clients will also be able to access ESG engagement reports on

Tool Helps Gauge Retirement Age

To help Canadians gauge the ideal age to take their pension, Sun Life Financial has created a CPP/QPP calculator which analyzes responses to demographic and longevity questions to generate the age response. This tool helps Canadians arrive at an educated answer to a complicated question, and adjust their financial plan accordingly. The CPP/QPP calculator is available to all consumers and advisors and can be found at

Hedge Fund Industry Rigorously Regulated

The global hedge fund industry is not un-regulated or lightly-regulated, says the Alternative Investment Management Association (AIMA). It says hedge fund managers are already rigorously regulated in all the main jurisdictions in which they operate and significant new regulation is being introduced internationally. “All the major jurisdictions where hedge fund managers operate ‒ whether in North America, Europe, or Asia-Pacific ‒ have rigorous regulation of the industry. And this already rigorous regulation is being increased by new legislation introduced since the crisis – for example the Dodd-Frank Act in the United States and the Alternative Investment Fund Managers Directive in the European Union,” says Andrew Baker, its CEO.

No Downside To AVC Program

There really isn’t a downside to member participation in the OMERS additional voluntary contribution (AVC) program, says Ian Markham, its plan actuary and Towers Watson’s Canadian retirement innovation leader. In an article at, he says members still need to do their homework and make sure the OMERS fund is the best investment vehicle for them. “The OMERS rate of return can be negative in some years, so it’s not for extremely risk adverse members who want to invest their RRSP contributions in GICs. But if their investment goal is some kind of balanced fund – especially with access to private markets – at a pretty low expense ratio, then the OMERS fund may well be attractive to them.” Since the beginning of this year, all plan members have been permitted to transfer funds from registered retirement vehicles such as RRSPs to AVC accounts.

Vanguard Offers New ETF

Vanguard has introduced the Vanguard Total International Stock ETF (VXUS), which seeks to track the MSCI All Country World ex USA Investable Market Index. The new ETF is a separate share class of Vanguard Total International Stock Index Fund, which was introduced in 1996. Its target index covers 98 per cent of the world’s non-U.S. markets including the European, Pacific, and emerging market regions, as well as Canada. The index includes more than 6,000 issues encompassing stocks of large-, mid-, and small-capitalization companies in 44 countries.

Manulife Makes Appointments

Mark Bishoff is director, client service in Canada, for Manulife Asset Management. Based in Toronto, ON, he is responsible for managing Canadian institutional and sub-advisory client relationships. Previously, he was with State Street Global Advisors, Ltd (Canada), where he was responsible for business development, relationship management, and sales and marketing efforts in Ontario. Gerry Morris is director of equity product management in Canada. He joins the firm from Dynamic Funds where he worked in product management for many years. Les Young is director of fixed income product management in Canada. Previously, he worked as a manager for its marketing group, supporting portfolio management with the development of client marketing collateral.

Panel Discusses Commodities

‘So You Think You Know Commodities? Think Again’ is the focus of AIMA Canada and CAIA panel. The panel is Keith Black, associate director of curriculum, Chartered Alternative Investment Analyst (CAIA) Association; Roland Austrup, president and CEO of Integrated Managed Futures, part of the Integrated Asset Management Group; and Eva Greger, managing director of GMO's Renewable Resources, LLC. It takes place February 9 in Toronto, ON. For more information, visit


Friday, January 28, 2011

Plan Design Needs Bold New Direction

It is time for a bold new direction when it comes to Defined Benefits pension plan reform, says Kevin Sorhaitz, a principal and consulting actuary at Buck Consultants. Speaking at its ‘Pension Plan Redesign,’ session, he said the dilemma is that everyone knows where we are starting from and where we want to be, but they don’t know what to do about everything in between. For years, he said, “we have been playing by the old rules and the results are dismal.” The perfect plan would feature fixed contributions, no volatility in employer costs, and a predictable income. However, that is not realistic, he admits. One solution, in his opinion, is “Dynamic” Defined Contribution plans which would be more robust with investment decisions outsourced because “we can’t expect members to become financially literate.” He also sees the industry pushing for target benefit plans which are a good compromise between DB and DC, but they are “not a panacea,” he said.

Investors Feeling Frozen

Canadian investors are stuck in the snow bank this winter, feeling frozen, helpless and uncertain – even when they expect that the stock market will continue to rise, says research from Franklin Templeton Investments Corp. It found 39 per cent of investors described their investment personality as either suspicious or timid. Only 31 per cent of investors described themselves as analytical, risk-taking, or opportunistic. It’s the fifth consecutive national survey by Franklin Templeton since 2009 to find strong negative sentiment among Canadian investors. The pessimistic pattern is in stark contrast to market returns over the same period. In 2009 and 2010, the Toronto Stock Exchange soared more than 49 per cent in value and is now only 11 per cent below its record peak. “The markets have recovered dramatically, but investor confidence has not,” says Don Reed, president and CEO. “We’ve spent two years studying investor’s attitudes towards the market and it’s clear that emotions dictate action. Many Canadians failed to seize the opportunity and invest in stocks at bargain prices. Even today, with forecasts of continued growth, many investors are still frozen.”

Legendary Investor Passes Away

Legendary investor Peter Cundill has passed away. A recipient of numerous investor awards, he had just completed a book, ‘There's Always Something To Do ‒ The Peter Cundill Investment Approach,’ which is scheduled to be released at the end of February. Born in Montreal, QC, in 1938, he was a chartered accountant before joining the investment business. He worked at Greenshields Inc. in Montreal and the Yorkshire Group in Vancouver, BC, before becoming president of AGF Vancouver Investment Management Ltd. in 1972.  In 1977, he founded his own firm, Peter Cundill & Associates Ltd. In 1998, he entered into a strategic partnership with Mackenzie Financial Corporation.

AIMCo Acquires Australian Forest

Alberta Investment Management Corporation (AIMCo) has partnered with the Australia New Zealand Forest Fund to acquire the timberland assets of Great Southern Plantations. The assets are being acquired out of receivership and represent a diversified rural land portfolio encompassing more than 2,500 square kilometres in prime forestry and agricultural regions across six Australian states. By area, this transaction represents the largest private forestry estate transaction in Australia to date. New Forests Pty Limited, a Sydney-based timber investment management firm specializing in sustainable forestry investments, will manage the estate. Leo de Bever, AIMCo’s CEO, says it “wants to capitalize on growing world demand for timber and agricultural products.”

Study Shows Link To Sustainability

A study by Sustainalytics highlights links between sustainability  performance and shareholder value. ‘Sustainability and Materiality in the Natural Resources Sector’ looked at environmental and social practices in the forestry, mining, and oil sectors and found positive correlation to competitiveness in each sector. “After 20 years of assessing corporate responsibility practices, I know that sustainabilty performance should be factored into valuations. The analysis in this report reveals the extent to which environmental and social factors can impact competitiveness,” says Michael Jantzi, its CEO.

Online Facilities Fail To Meet Expectations

Employee expectations of companies’ online facilities to help manage their pensions, benefits, and general retirement planning is now far outpacing what employers offer, says research by Mercer. It found that only 30 per cent of employees believe their company is doing a good job in helping them plan for retirement and technology is widely referenced as an area that could help. The biggest technology gap surrounds general financial planning tools for pensions and savings. While 86 per cent of employees said they would like to receive these, only 16 per cent of employers confirmed they actually provide them. Employees also want online tools to help them change their benefits allocation.

UK Funds End Year On Positive Note

UK pooled balanced funds ended 2010 on a positive note with a return of 6.8 per cent in the fourth quarter, says BNY Mellon Asset Servicing. The third positive quarter of the year and second consecutive positive quarter resulted in full year performance figures comfortably into double figures achieving returns of 13.8 per cent. Alan Wilcock, performance and risk analytics manager, says “Despite the good overall return of 13.8 per cent in 2010, longer-term returns remain modest. Although pooled balanced funds have achieved double-digit returns in six out of the last 10 years, three negative years mean that over the 10-year period these funds have achieved a median return of 4.5 per cent per annum, ahead of retail price inflation of 2.9 per cent per annum."

HRPA Puts Challenges In Spotlight

HR issues and challenges and opportunities will be in the spotlight at the second largest human resources conference on the planet. The Human Resources Professionals Association (HRPA) conference will feature six keynote speakers and more than 140 sessions on the latest workplace issues and trends ranging from talent management and corporate social responsibility to health and wellness. It takes place February 2 to 4 in Toronto, ON. For more information, visit


Thursday, January 27, 2011

Plan Expenses Proposal Will Add Costs

Ontario’s Bill 120 proposal on allowable plan expenses will add costs for pension plan administrators, says Ian McSweeney, of Osler, Hoskin & Harcourt LLP. He told attendees at its ‘Managing the Impact of Pension Reform’ seminar that a provision to codify what expenses can be paid from a pension fund was a good start. The bill would permit payment of reasonable expenses from the plan unless it is prohibited by the plan documents. However, instead of relying on the current plan language, it requires an historic search of all plan documents and an analysis of what the plan said in the past. This merely adds to the costs for plan administrators, he said.

Dividend Yields Attractive

Standard Life Investments believes equities that generate meaningful dividend yields are an attractive option at this time and its allocation to equities is the highest it has been in three years. Still, people have to be careful not to overpay for companies that might be overvalued simply because of their high dividend yield. Last week, the Bank of Canada was unequivocal: government and bank balance sheets in Europe were a significant source of uncertainty. The Bank of Canada also noted that Canadian government spending is expected to wind down this year. For these and other reasons, government bonds are not attractive at the moment, except for maybe provincial bonds, it says. In contrast, corporate balance sheets are solid, these companies are generating plenty of free cash, and dividend yields for equities are higher than both corporate and government bonds. You have to go all the way back to the ‘50s to witness this unusual phenomenon.

Safe Harbour Problematic

U.S. officials are moving to close a problem with the Pension Protection Act, says Sandra Cohen, of Osler, Hoskin & Harcourt LLP. Speaking at its ‘Managing the Impact of Pension Reform’ seminar, she said the act originally provided for safe harbours for providing investment advice and permitted the use of professional advisors. However, it failed to prevent them from advising about products from which they would benefit. As a result, a proposal has been made which requires professional advisors to offer a level fee arrangement whereby the fee is the same regardless the product chosen by the plan member. The safe harbour also permits the use of independently developed computer programs.

Empire, Aspiria Create EAP

The Empire Life Insurance Company and Aspiria Corp. have created a new employee assistance program (EAP), AssistNow. Designed specifically for Empire’s group benefits customers, it offers expert assistance to employees and their families, as well as to managers and company leaders. It includes confidential counselling, life coaching, health information, self-assessments, interactive training modules, management consultation, and a crisis management service.

EA Rolls Out Home Protection

Europ Assistance Canada (EA) has rolled out a home protection plan which will be available across Canada in 2011. “This plan allows providers to create flexible benefit plans for their members. Most existing conventional plans in the marketplace today do not provide custom plan options and we feel this can be just as useful as health benefits and can be packaged together, “says Brad Loder, director of marketing. It believes home and health should go hand in hand in a flexible benefits plan. In Canada, an average single repair cost for homeowners is estimated at $600 per episode.


Best practices in LDI and a global view from benefits consultants will be among the featured sessions at ‘CPBI FORUM 2011.’ This year’s theme is the ‘Next Wave’ and it follows up on the theme from 2009, the ‘New Normal. It takes place May 18 to 20 in Vancouver, BC. For more information, visit


Wednesday, January 26, 2011

Timberlands Offer Advantages To Pension Funds

Timberlands are a long-term investment that offers many advantages to pension funds and other institutional investors, including long-term, sustainable cash flows with strong risk-adjusted returns, portfolio diversification, and inflation hedging properties, says a report by the Shareholder Association for Research & Education (SHARE). It was produced to assist institutional investors in selecting among the major forest certification schemes available in Canada to mitigate environmental risks and protect the long-term value of their timberland investments. It provides an in-depth comparison between the sustainable forest management standards of the Forest Stewardship Council (FSC), the Canadian Standards Association (CSA), and the Sustainable Forestry Initiative (SFI). The report also found that as investors with very long-term investment time horizons, pension funds have an interest in protecting the long-term value of their timberland investments and future returns by ensuring that timberlands are managed sustainably. Forest certification can be used to verify that forest managers are following a set of adequate predetermined environmental (and social) standards.

OMERS Managing RRSP Funds

The 400,000 members of OMERS now have an even better way to fund their retirement. Since the beginning of this year, all plan members have been allowed to transfer the contents of their RRSPs into an additional voluntary contribution account. These extra savings will not increase the value of the OMERS pension, but can be used to supplement it in retirement. Jennifer Brown, chief pension officer, says the idea came from members who want to invest their money in the OMERS fund and get the OMERS rate of return. They also want to pay lower investment management fees. However, the withdrawal options from the fund are more restrictive than those permitted by RRSPs. For example, plan members cannot take advantage of the Homebuyer’s Plan or the Life Long Learner’s Plan.

Median Plan Posts 10 Per Cent Gain

The median plan in the BNY Mellon Canada Total Fund Universe posted a 4.2 per cent return for the fourth quarter of 2010, leading to a total gain of 10.2 per cent for the year ending December 31, 2010. “All asset classes showed significant gains during 2010,” says Catherine Thrasher, managing director of BNY Mellon Asset Servicing Canada, Performance & Risk Analytics. “Canadian based equity holdings drove the bulk of excess returns in the fourth quarter and throughout the year, posting gains of 9.5 per cent and 16.5 per cent, respectively.”

Great-West Enhances Financial Education

The Great-West Life Assurance Company has enhanced its financial education services offered to its group retirement plan sponsors and their plan members. Since 2004, Acquaint Financial Inc. has complemented Great-West Life’s financial education services with additional options for group retirement plan sponsors to offer plan members. With the enhanced offering, financial education has been extended to employees who aren’t eligible for, or haven’t enrolled in, their sponsor’s group retirement plan. Plan sponsors can now provide members with one-on-one financial counselling customized to suit their retirement plan’s unique needs.

Investor Confidence Slips To Start Year

The State Street Investor Confidence Index for January 2011 fell 3.3 points globally from December’s reading of 104.2 to 100.9, with declines evident across all regions. The risk appetite of North American institutional investors fell to 99.5, a 3.6 point decline from the December level of 103.1. Similarly in Europe, institutional investor confidence decreased 3.9 points to 93.5 from December’s revised level of 97.4. The decline in confidence among Asian investors was somewhat more pronounced, resulting in a decline of 5.4 points in the confidence measure in that region, from 102.9 to 97.5. One reason may be that the indicator window spanned the end-of-year holiday period, a time when investors are often more reticent to deploy new risk.

Employees Miss Out On Vision Benefit

Nearly half of U.S. employees still are not fully taking advantage of their company’s vision benefit, potentially causing their employers to miss out on medical cost savings and productivity gains possible for their workforce through these services, says the annual ‘Employee Perceptions of Vision Benefits’ survey by Transitions Optical, Inc. Overall, 24 per cent of employees do not elect to enrol in their company’s vision benefit and 32 per cent of those who do enrol do not utilize their benefit to receive a comprehensive eye exam. The survey identified even lower utilization of vision benefits among covered children (46 per cent) versus their parents (35 per cent) and lower enrolment among employees with voluntary plans (50 per cent) versus employer-paid plans (86 per cent). Among the 2011 survey results, “not having vision or eye health problems” became the most commonly cited reason for not enrolling in a vision plan (36 per cent) – up from 22 per cent in the previous study.

CPBI Session Examines Benefits Outlook

A benefits landscape overview and a drug plan update will be featured sessions at the CPBI Ontario region’s ‘2nd Annual Benefits Outlook’ session. Brian Lindenberg, senior partner, health and benefits business, Mercer; will provide a new perspective on what is changing in the benefits landscape and the impacts. Sal Cimino, director pharmacy services, Green Shield Canada; will provide insights into the most recent drug claims research. It takes place February 23 in Toronto, ON. For more information, visit


Tuesday, January 25, 2011

Guidelines Outlined For OSFI Intervention

For the first time, the Office of the Superintendent of Financial Institutions (OSFI) has issued guidelines on the interventions admnistrators can expect from it. The ‘Intervention Guide for Federally Regulated Private Pension Plans’ summarizes the circumstances under which interventions may take place. The objective is to promote awareness and enhance transparency of the intervention process used by OSFI for federally regulated private pension plans.

Strategy Based On GDP

Nomura Asset Management plans to launch an emerging market small cap strategy that will determine holdings according to a country’s gross domestic product adjusted for purchasing power parity. The aim is to invest in countries and companies that will generate more wealth than others. The Nomura Emerging Wealth Strategy (NEWS) will launch on February 22 as a UCITS fund.

Income Disparity Shrinking

The career advancement gender gap is closing, says Alice Longhurst, director, mentorship programs, at the Women’s Executive Network. In an article at to mark ‘National Mentoring Month,’ she says while the income disparity between the sexes is shrinking, it is important to recognize and address the remaining barriers to ensure reaching gender parity in the workplace doesn’t take another decade. One possible barrier is access to high-level mentoring relationships, which have always been recognized as a key driver for career advancement. Recent findings indicate that within the selection process of a mentoring relationship, male professionals still have an advantage.

Gabriel President For 2011

Rowena Gabriel, of Standard Life Assurance Company of Canada, is president of the Toronto Chapter of ISCEBS for 2011. Joining her on the executive board are David Myles, Nexans Canada Inc. – vice-president; Joan Bonkowski, Manion, Wilkins & Associates Ltd. – treasurer; and Kathy Bannon, Sun Life Financial – secretary.


Monday, January 24, 2011

Equities Drive Pension Plan Surge

Strength in Canadian equities has helped Canadian pension plans surge ahead of their pre-financial crisis levels of 2008, says a survey by RBC Dexia Investor Services. Within its universe, pension assets earned 4.3 per cent in the quarter ending December 2010, improving the full year performance to 10.4 per cent, making this a second consecutive year of double digit returns. Despite the volatility in the global markets during the past 10 years, Canadian pension plans have achieved an average annualized return of 5.4 per cent. "What the last decade has taught us is that diversification and disciplined investing is key over the long run," says Fay Coroneos, global head of risk and investment analytics.

Politician Pensions Under Review

An independent review of pensions for members of the Nova Scotia legislative assembly will be carried out. Speaker of the House of Assembly Gordie Gosse says "The time is right to review the plan to ensure it provides a pension that's fair for people who leave their careers to enter public service and, at the same time, recognizes that the province has to consider everything in its effort to live within its means." The review will be conducted by an independent panel and be completed and presented in late spring.

Interest Rates To Remain Low

Canada’s top economists and portfolio managers are expecting interest rates to stay below the historical trend over the medium term, which creates an additional burden for the financing of traditional Defined Benefit pension plans, says Towers Watson’s‘30thAnnual Canadian Survey of Economic Expectations.’ Overall, the survey respondents forecast modest growth, low inflation, and low interest rates to continue in the short term. Expectations are for Canadian real GDP growth to hover between two per cent and 2.5 per cent this year, with inflation remaining below two per cent. Despite the generally weak economic outlook, respondents are bullish on stock market performance, with almost 40 per cent of survey participants expecting a return of 10 per cent or more from the TSX and S&P 500 indices in 2011. In particular, demand from emerging markets is seen as a likely driver of economic activity.

Murray Heads Business

Linda Bernard will head Thomas Murray's business in North America.  Prior to joining the firm, she was director of product management for foreign financial institutions at CIBC Mellon. She has previously worked for Citibank Canada and Royal Trust and has chaired a number of industry association working groups.

Drug Reform Benefits Discussed

‘Leveraging the Benefits of Drug Reform in Canada’ is the topic of a Toronto Area Chapter of the ISCEBS session. Marc Kealey, a drug reform advocate, will discuss the changes affecting drug plans in Canada with specific attention to recent legislation in Ontario. It takes place February 24 in Toronto, ON. For more information, visit

Osgoode Session Examines Pensions

As a lawyer, pension professional, CFO, HR manager, consultant, or executive sitting on a pension committee you may be called upon to give advice or make decisions concerning pension issues. It is critical that you have an understanding of the key issues and their implications. The Osgoode Certificate in Pension Law, comprising six one-day modules, spread over six weeks, was devised to provide a review and analysis of the major areas of pension law and practice. The program is taught by experts in the pension field who will provide knowledge, insights, strategies, and tactics needed the day-to-day work of the pension professional. For more information, visit


Friday, January 21, 2011

Pessimism Ahead For DB Plans

Pessimism is on the horizon for Canadian Defined Benefit pension plans, says Ian Markham, of Towers Watson. He told its ‘2011 Economic Expectations’ session that the optimism from last year that increases in long bond yields would result in plans becoming solvent by the end of 2012 failed to materialize. Instead, long bond yields fell, so starting positions at the end of 2010 were somewhat lower. In fact, the decline in long bonds offset the equity market recovery. As a result, he said the projected returns on a typical DB plan will be down by 30 to 60 basis points. As well, the going concern liability will be 10 per cent higher with the solvency funding face two to three per cent increases in liabilities. This may force sponsors to move to a lower discount rate which will also increase liabilities. Despite this, there is optimism for five to 10 years out as long bond yields are expected to eventually reach five per cent.

Securities Lending Now Investment Product

Securities lending is now seen primarily as an investment product with the risks and rewards that entails, and plan sponsors have moved on to other questions including revenue allocation and lending from commingled funds, says a Finadium report. It found sponsors reporting a “new level of nuanced thinking” regarding securities lending, collateral management, and custody providers. When it comes to custody issues, plan sponsors recognize that reporting, performance measurement and accounting services are not free, and that the bill paid today rarely reflects the true cost of service delivery.

Setting Plan Structure Important

Setting a plan structure could be just as important as determining an asset mix or selecting managers, says Janet Rabovsky, of Towers Watson. Speaking at its ‘2011 Economic Expectations’ session, she said having a plan structure in place can help manage the tail risk that can occur as a result of events such as high inflation or increased indebtedness. As well, the evidence is that having a structure in place can add one to two per cent to a fund’s returns.

AIMA Looks At Commodities

“So you think you know commodities? Think again” is the topic of the next AIMA Canada luncheon. A panel of Keith Black, associate director of curriculum, Chartered Alternative Investment Analyst Association; Roland Austrup, president and CEO of Integrated Managed Futures, Integrated Asset Management Group; and Eva Greger, managing director of GMO's Renewable Resources, LLC; will look into the complexities of commodities investing and explore the spectrum of sources of commodity exposure for both retail and institutional investment portfolios. It takes place February 9 in Toronto, ON. For more information, visit


Thursday, January 20, 2011

Plans Move From Traditional Strategies

Pension plans are moving away from traditional investment strategies in an effort to manage risk, says Mercer’s ‘2010 Asset Allocation Survey for Canadian Defined Benefit Plans.’ “The traditional balanced fund is now the exception rather than the rule for Canadian DB plan sponsors,” says Rob Stapleford, principal with its investment consulting business and senior consulting actuary in the Toronto practice. The survey indicates a transition from the 60/40 equity/bond mix toward a 50/50 equity/bond allocation for many institutional investors, with small and more mature plans leading the way. The higher the proportion of liabilities with respect to inactive members, the higher the allocation to bonds and the lower the allocation to equities. It also found alternative investments and currency hedging are more prevalent among larger plans and approximately three-quarters of the plans review their strategic asset allocation every three to five years.

Young Canadians Focus On Other Goals

The number of young Canadians who have a registered retirement saving plan has dropped to its lowest level in almost a decade (39 per cent), says a Royal Bank survey. It found that the majority of people aged 18 to 34 had not yet started saving for retirement. Instead, they are focusing on other goals such as reducing debt, saving for a rainy day, or home ownership. The overall number of Canadian adults who have RRSPs jumped to 61 per cent last year, up from 54 per cent in 2009. In addition, a quarter of Canadians with RRSPs plan to maximize their contribution for 2010 and 35 per cent of all Canadians make regular weekly or biweekly contributions to their RRSPs.

Canadian Hedge Funds Outperformed

Canadian hedge funds outperformed benchmarks last year on a broad basis, says the Scotia Capital Canadian Hedge Fund Performance Index. It finished the year up 20.2 per cent on an asset weighted basis, beating benchmarks such as the S&P/TSX Composite, which was up 14.5 per cent, and the DEX Universe Bond Index, which returned 6.74 per cent. Canadian funds also outperformed those in the U.S. There, the Hedge Fund Research Inc. Fund Weighted Composite Index posted a gain of 10.5 per cent,

Investors Feel Better About Global Economy

Institutional investors are feeling better about the global economy, and stocks, too, says a BofA Merrill Lynch fund manager survey. It reports that a net 55 per cent of asset allocators say that they are overweight global equities, the highest reading since July 2007. This is a significant increase from December when 40 per cent were overweight the asset class. At the same time, bond allocations fell, leaving 54 per cent underweight bonds, up from 47 per cent a month ago. This growing confidence in stocks is being driven by increased confidence in the global economy and corporate profits as 55 per cent of investors expect the world’s economy to strengthen in 2011 with 39 per cent predicting ‘above trend’ growth in the coming 12 months.

Institutions Adding Alternatives

More than 70 per cent of institutions expect alternatives to account for more than 10 per cent of their portfolios over the next five years, says a Morningstar/Barrons survey. It shows 37 per cent (up from 25 per cent last year) expect their portfolio allocation to alternatives to exceed 25 per cent. Further, it found more than half of advisors surveyed expect to see their clients' allocations to alternatives grow by more than 10 per cent a year over the next five years. More than 21 per cent of institutional investors indicated that long-short strategies represent their largest alternative allocation and it was the strategy most commonly cited for possible future investments. Managed futures was most commonly cited by advisors as the strategy that they intend to consider for investment.

Taylor Moves To Mackenzie

Mary C. Taylor is senior vice-president, product and marketing, at Mackenzie Financial Corporation. She will lead the marketing and product development teams for its retail, institutional, and investment funds. She has more than 25 years of strategic leadership, marketing and product development experience in the financial services industry.

Cheshire Joins Triasima

Ron Cheshire is vice-president at Triasima Portfolio Management where he will be involved in strategic growth and business development. Previously, he has served as managing director of Natixis Capital Partners in London (UK), a private equity real estate firm, and as chief investment officer with Presima, a former affiliate of the Caisse de Dépôt du Québec.


Wednesday, January 19, 2011

Greed Threatens Growth

The industry itself may be a threat to the continued growth of the global economy, says Scott Nisbet, of Baillie Gifford. In providing a macro perspective at the CPBI Ontario region ‘Pension Investment Forecast,’ he said growth around the world is exponential and no-one seems to have noticed. The threats to this growth, however, are not Chinese inflation or North Korean arms, it’s something from left field, a random event no-one can predict. However, the other threat is the industry itself making short-term decisions based on greed. He said those were, for example, factors behind the credit crisis. Julian Mayo, of Charlemagne Capital, echoed this theme saying western economic dominance has ended. This is the “last hurrah for the western consumer” as the big theme of last 20 years has been the opening up of the rest of the world. Going forward, the biggest change, he said, and it is for the better, is that the world won’t be depending on a minority of its population to sustain growth. Instead of relying on the UK, the U.S., and Japan as it has since the industrial revolution, emerging markets are starting to make up a substantial portion of global growth.

Health Not At Top Of List

Almost half of Canadians (45 per cent) don’t have health near the top of their priority list and, in some cases, it’s not on the list at all, says the Sun Life ‘Canadian Health Index.’ The analysis of data found many employees fell into two categories – overextended and overconfident. Respondents who fell in the ‘overextended’ category were less likely than others to devote time to staying healthy, creating a health plan and sticking to it, or doing everything they could to maximize their health. When stressors are high, this group was more likely to say they would participate in unhealthy behaviours – eat fast food/take out, skip a meal, cut back on sleep. or skip exercising. On the flip side, the ‘overconfident’ are average in their behaviours around health, but their perception of their health is above average. With the biggest barriers for many Canadians being time, money, and motivation, employers are ideally positioned to help remove these barriers. Workplace health solutions can provide employees with targeted health messages, more convenient access, a supportive environment, or employer subsidized programs in order to help change their behaviour. As well, for employers who know the ‘profile’ of their overall workforce, it could impact what they offer or how they offer health and wellness programs.

Employers Rebalancing Funding

Many U.S providers of retirement plans are reducing the benefits they offer or looking to rebalance funding between employers and employees, says a BNY Mellon/Finadium survey. It found retirement benefits packages continue to be seen as an important part of employee hiring and retention with 50 per cent of private company executives saying the plans made them more competitive as an employer. It also found the attractiveness of Defined Contribution plans for employers lies in the reduction of funding volatility. However, some type of hybrid plan may be the best solution for employers and employees if employer costs can be managed effectively.

Hedge Fund Investment To Increase

Institutional investors are set to increase investments in hedge funds in 2011, but demand greater transparency and risk management from the industry, says a survey by SEI. It found more than half (54 per cent) of respondents said they planned to increase target allocations to hedge funds over the next year. Three-quarters of respondents (75 per cent) also said risk management infrastructure was "very important" in selecting hedge funds, but this ranked second to clarity of a hedge fund's investment philosophy. The study, ‘Institutional Hedge Fund Investing Comes of Age: A New Perspective on the Road Ahead,’ found hedge fund transparency was a growing concern for investors such as pension funds, with 70cper cent saying lack of transparency was their biggest worry, up from 56 per cent in 2009. The report also noted nearly one-third of respondents cited "limited regulation" as a primary concern of hedge fund investing.

Mann Moves To 18

Sunny Mann is legal counsel at 18 Asset Management. Previously a lawyer at Research in Motion, her duties included writing and monitoring adherence to compliance policies as well as interfacing with the regulatory community.


Tuesday, January 18, 2011

DC Sponsors Should Set Objectives

Plan sponsors should consider what ‘success’ for their DC plan means to them. This means setting out clear objectives, says Mercer’s ‘New Year’s resolutions for Canadian DC plan sponsors.’ Other resolutions sponsors should pursue are analyzing whether members take advantage of employer contributions to the fullest and making sure members are aware of the low fees they pay under a plan. Sponsors should also assess whether members are diversifying appropriately, consider newer approaches to investment management, and, well in advance of retirement, provide targeted retirement planning education to members.

Some Losses Reversed

A positive fourth quarter helped reverse some of the losses Canadian pension plans experienced through the first three quarters of 2010, says an analysis from Aon Hewitt. It found that in the fourth quarter, assets increased by four per cent, while liabilities decreased by two per cent. The average funded ratio among companies in the S&P/TSX index increased from 88 per cent at the start of the quarter to 94 per cent by year’s end. However, it cautioned that the positive results were not enough to reverse losses experienced during the first three quarters. As well, volatility continued to be a major concern throughout the quarter, with daily changes in funded ratios of two per cent.

PH&N Offers LifeTime Funds

Phillips, Hager & North Investment Management has launched a series of LifeTime Funds for Canadian institutional investors. These are target date investment solutions that offer a glidepath extending 25 years beyond the target date to support ongoing investment and income withdrawal of Defined Contribution investors into retirement. The fixed income structure is “designed to mirror the duration and term structure of a DC members’ future income stream, in order to moderate the volatility of the future income generated,” says Colin Ripsman, vice-president and portfolio manager. Target date funds are single-fund investment solutions designed to assist DC program investors with managing their retirement portfolios over the course of their employment.


Monday, January 17, 2011

UK Scraps Retirement Default Age

The UK government is scrapping the default retirement age (DRA). The move will make it illegal for firms to force out older workers if they are still capable of performing, while those who want to retire will still be allowed to do so. After October 1, employers will not be able to use the DRA to compulsorily retire employees. Only workers eligible for retirement at age 65 before October 1 who are advised before April 6 can be forced to retire. This phasing in will give firms time to prepare and change their human resources policies. Fewer than a third of UK companies still insist on people retiring on their 65th birthday. Other steps the government is taking to help encourage people to work for longer and combat the pension crisis include raising the state pension age to 66 faster than currently scheduled and re-establishing the link between earnings and the basic state pension.  

Managers Expecting Inflation

Institutional investment managers expect global inflation to increase in the coming months as economic growth accelerates and corporate earnings continue to grow, says a quarterly survey by Northern Trust. The survey for the fourth quarter of 2010 showed that 62 per cent of managers believe global inflation will rise over the next six months. This is up approximately 40 percentage points from the third quarter survey and is the highest level recorded since Northern Trust began its survey in the fourth quarter of 2008. More than half (53 per cent) of managers believe that interest rates will rise over the next three months, up from 20 per cent in the third quarter of 2010, and also the highest level recorded since the survey’s inception. Inflation concerns are likely related to increased optimism regarding the economy and financial markets: 55 per cent of investment managers expect global growth to accelerate over the next six months, up from 33 per cent who held this view in the third quarter.

Update Examines Accounting Changes

Employee life and health trusts and what accounting changes mean to pension funds will be among the topics examined at the International Foundation of Employee Benefit Plans’ ‘2011 Canadian Legal and Legislative Update.’ Sessions will also look pension and benefit cases before the courts and the future of funding and investment guidelines. It takes place May 10 and 11 in Ottawa, ON. For more information, visit

Retaining Talent Examined At Summit

‘Rethinking Your Workforce’ and ‘Re-engaging and Retaining Your Talent’ will be among the sessions at the2011 National Human Capital Summit.’ It takes place March 7 to 9 in Atlanta, GA. For more information, visit


Friday, January 14, 2011

Proposal Fails To Address Coverage Issue

The federal government’s pooled registered pension plan (PRPP) proposal is unlikely to increase pension coverage in Canada, says Paul Forestell, a senior partner at Mercer. Speaking at its ‘Pension Outlook and Fearless Forecast 2011,’ he said it will just squeeze some existing Defined Contribution pension plans and Group Registered Retirement Savings Plans to become PRPPs. To address the issue of pension coverage, something needs to be in place to make employer participation mandatory as there is no incentive for employers to participate, he said. However, the decision to make these programs mandatory rests with the provinces and it is unlikely that any jurisdiction will do so. He said “It’s not hard to support the pooled registered pension plan. If implemented, it will be a positive step for retirement savings in Canada, but probably just a very small step.”

Security Enforcement Needs Changes

Fundamental changes are needed to securities enforcement practices in Canada including an overhaul of the RCMP’s Integrated Enforcement Market Teams (IMET), says ­Margaret Franklin, chair of the board of governors of the CFA Institute. In a speech to The Canadian Club of Toronto, she cited failures in Canada’s enforcement practices while making the case – supported by a series of recommendations – that strong and efficient enforcement of the securities industry should be a priority for government, regulators, and investment professionals. Further, Franklin made the case that effective enforcement is essential to restoring the public’s trust in capital markets and the investment profession. “While investing is often seen as elitist and white collar crime is viewed dramatically differently from gun and gang-related crimes, the integrity of, and confidence in, our financial system is critically important to the well-being of this country and should be as much of a priority as dealing with violence in our communities,” Franklin said.

Interest Rate Hikes To Hurt Returns

The global economies will continue to grow, albeit at a slower pace than 2010; global stock markets will enjoy a solid year; and increases in interest rates will reduce fixed income returns, says Mercer's ‘2011 Fearless Forecast’ survey of Canadian and global institutional investment fund managers. "If the manager’s forecast of expected increase in interest rates and solid equity returns in 2011 occurs, plan sponsors should see improvement in their funded positions," said Mark Fieldhouse, a principal in its investment consulting business in Canada. Managers also forecast the loonie will continue to trade at par with the U.S. dollar at the end of 2011 and the price of crude oil will remain approximately at its current level, $90 per barrel at the year end.

Plan Designed For Small Employers

The Great-West Life Assurance Company has launched a simplified group retirement and savings plan designed for businesses with fewer than 35 employees who want to offer their employees a convenient way to save for retirement. Jeff Aarssen, vice-president, group retirement services, sales and marketing, says many small businesses want access to the same services offered to larger plan sponsors at a competitive cost, but may not have the human resources infrastructure in place to set up and administer their own pension plans. Its ‘Performers’ allows smaller employers to offer their employees an easy way to save, with strong investment options, convenient online services, and a member communications program.

Taing Joins Hicks Morley

Susie Taing is an associate in the pension and benefits practice group at Hicks Morley Hamilton Stewart Storie LLP. Called to the Ontario Bar in 2009, she was most recently a pension and benefits lawyer at an international consulting firm in Toronto, ON.­


Thursday, January 13, 2011

Investors Understand TDFs

While there has been a great deal of speculation about investors’ understanding of target-date funds, most target-date fund investors understand the funds’ basic design and are aware of the accompanying investment risks, says a Vanguard survey. 'Investor Comprehension and Usage of Target-Date Funds: 2010' also found that opportunities exist to improve investors’ knowledge of target-date fund (TDF) mechanics at and around the target date, and the implications of combining TDFs with other assets. Overall awareness of TDFs was substantially higher among IRA owners than among plan participants, regardless of whether the respondent actually owned a fund. The research emphasizes that being unaware ‒ or uninformed ‒ about TDFs is considerably different than being misinformed or misled.

Pension Funds Looking For Asset Classes

A lot of the increased appetite by pension funds for real estate these days comes from top down asset allocators who are looking at a range of different asset classes that they can allocate to, says Russell Chaplin, chief investment officer for the property business, for Aberdeen Asset Management. In an interview with Benefits and Pensions Monitor, he says when you look at property compared to equities, for instance, “what you would find is that property is a relatively good diversifier.” What is now happening is asset allocators are “taking away some of the allocation that they might have traditionally had to the equities market and moving that into alternatives and property would be one of those. That seems to be a key driver.” Click here to read the transcript of that session.

Duo Leads Core Equity Team

Walter T. McCormick, CFA, and Emory W. (Sandy) Sanders, Jr., CFA, will lead a Boston, MA-based Core Value Equity team for Manulife Asset Management. As senior managing directors and senior portfolio managers, they will manage large cap value, large cap core, and all cap core strategies for external institutional clients. Both join the firm from Wells Capital Management.


Wednesday, January 12, 2011

Solution Improves DB Management

Aon Hewitt has introduced a delegated investment consulting solution for better management of Defined Benefit pension plans of all sizes. The starting point for the delegated investment consulting solution is partnering with the plan sponsor to define the plan’s “endgame“ – whether long-term sustainability or termination – and then designing a customized “de-risking glide path” to reach that point smoothly and efficiently. The end result is managed pension plan risk, with decreased balance sheet volatility. “This approach enables us to partner with our client's investment committee and assume investment management and fiduciary operations to effectively manage the cost, risk and governance of their defined benefit plan,” says Rob Vandersanden, a Calgary-based principal with Aon Hewitt.

Merger Forms Financial Services Firm

Blevins Insurance Group has entered into a merger agreement with Jones DesLauriers & Reynolds Financial Services Group Inc. to form a Tier 2 financial services firm. The new consolidated brokerage will take the name Jones DesLauriers Blevins Insurance Group Inc. David Blevins will continue to lead the company as president. “We are pleased to be merging with an established firm that shares our corporate values, customer service standards, and professional expertise,” says Blevins. "This is a decisive move that will accelerate our growth and perpetuation strategy. It will enable us to provide even greater value to our clients and insurance partners.”

Customer Income Protected

The Empire Life Insurance Company has launched a new service for ‘Class Plus’ customers. The Excess Withdrawal Alert (EWA) service will protect customer income from excess withdrawals that could cause their future guaranteed income to decrease. The no-cost, automatic service lets customers know, through their advisor, if a withdrawal they have requested exceeds their annual limit. Advisors will then have the opportunity to explain the consequences of the excess withdrawal so customers can decide whether they want to proceed with the withdrawal or consider other options that wouldn’t affect their guaranteed income.

State Street Enters Collaboration

State Street Corporation, K&L Gates LLP, and the Fletcher School of Law and Diplomacy at Tufts Univeristy have formed a collaborative relationship to provide strategic insight, quantitative, independent research, and thought leadership focused on public policy issues and investment challenges facing sovereign wealth funds (SWFs), institutional investors, central banks, governments, and international organizations. In 2011, the joint initiative will deliver a series of bilateral webinars for select managers and executives as well as thought pieces, research, and focused executive education programs.

Moore Heads Distribution

E. Blake Moore, Jr. is executive vice-president, head of distribution, at Mackenzie Financial Corporation.  In this capacity, he will lead the strategic growth of its retail and institutional distribution businesses. Most recently, he served as CEO of the U.S. retail distribution group of a global asset manager.


Tuesday, January 11, 2011

CIA Makes Assumption Changes

The Canadian Institute of Actuaries (CIA) has made two assumption changes to the Standard of Practice which actuaries use to calculate commuted values for anyone who terminates employment on or after February 1, 2011, says David C. Hart, of Hart Actuarial Consulting Ltd. The first is the interest rate assumption. The interest rates will be calculated using the reported rates of the applicable CANSIM series for the calendar month immediately preceding the month of termination. Currently the interest rates are calculated using the  applicable CANSIM series for the second calendar month immediately preceding the month of termination. The second change is the mortality assumption. The mortality assumption will be the UP-94 Mortality Table with generational mortality projection to better reflect declines in mortality rates.  Currently the mortality assumption is the UP-94 Mortality Table projected to the year 2020. These changes will affect more than just the commuted value calculations since these assumptions are also used to calculate wind-up and solvency liabilities for a pension plan. In addition, plan administrators may use these assumptions for other purposes such as the calculation of optional forms of pension at retirement. The change in mortality assumptions will increase liabilities for younger members and decrease liabilities at older ages. As well, the interest rate change may create a timing issue for plan administrators if the interest rates are only available within a few days of the retirement date.

Electronic Trading Risk Practices Completed

FIX Protocol Ltd. has completed an initial set of guidelines which recommends risk management best practices in electronic trading for institutional market participants.  The objective of the guidelines is to provide information around risk management and encourage firms to incorporate best practices in support of their electronic trading platforms. In today’s volatile marketplace, the automation of complex electronic trading strategies increasingly demands a rationale set of pre-trade, intra-day, and pattern risk controls to protect the interests of the buy-side client, the sell-side broker and the integrity of the market. The objective of applying electronic order risk controls is to prevent situations where a client, the broker, and or the market can be adversely impacted by flawed electronic orders.

Clark, Tuira Join Dexia

James Clark is senior relationship manager and Michael Tuira is a relationship manager for the Canadian office of Dexia Asset Management. They will be responsible for promoting its asset management products and services to Canadian investors. 

Networking Combined With Gourmet Meal

The London Chapter of the CPBI Ontario region is hosting its 3rd annual networking event, ‘The Chef's Club.’ In addition to the network opportunity, it will feature a gourmet meal. It takes place March 3 in London, ON. For more information, visit

Course Looks At Pensions

As a lawyer, pension professional, CFO, HR manager, consultant, or executive sitting on a pension committee you may be called upon to give advice or make decisions concerning pension issues. It is critical that you have an understanding of the key issues and their implications. The Osgoode Certificate in Pension Law, comprising six one-day modules, spread over six weeks, was devised to provide a review and analysis of the major areas of pension law and practice. The program is taught by acknowledged experts in the pension field who will provide knowledge, insights, strategies, and tactics needed the day-to-day work of the pension professional. For more information, visit


Monday, January 10, 2011

CAPSA Amends Funding Rule Exceptions

The Canadian Association of Pension Supervisory Authorities (CAPSA) has amended its proposed agreement on multi-jurisdictional pension plans to set out funding rule exceptions to the general rules regarding applicable pension legislation, says an Aon Hewitt Monitor. The change clarifies that in instances where the pension legislation of a minor authority's jurisdiction requires that a specific benefit be funded, but the legislation of the major authority's jurisdiction would not require funding for that benefit, its funding and any related "additional liability" will be required by the major authority in relation to plan members subject to the legislation of the minor authority's jurisdiction. The extent and manner of funding would include whether the benefit will be funded on a solvency basis, going concern basis or both, how the benefit liability will be accounted for in an actuarial valuation report, the deadline for making contributions in relation to the benefit liability, etc. New and revised examples are also provided.

Plans Recover Second Quarter Losses

Good stock market returns and a slight rebound in long-term federal bond yields in the fourth quarter allowed Canadian pension plans to make up for most of the losses incurred in the second quarter, says the Mercer ‘Pension Health Index.’ It stood at 73 per cent on December 31, up five per cent over the quarter, but down one per cent on the year. “Stocks delivered another strong performance in the fourth quarter and in 2010 overall, both domestically and abroad, with the biggest gains observed in Canadian stocks, signaling continued increase in consumer and investor confidence,” says Yvan Breton, leader of its investment consulting business in Canada and Latin America. Mercer expects that the funded ratio of most pension plans as shown in year-end 2010 corporate disclosures will drop compared to last year, even after employer contributions are accounted for, since corporate bond yields used to value obligations for that purpose have dropped around one per cent since the start of the year, due in part to a continued decline in credit spreads.

Rudderham Heads HR

Richard Rudderham is executive vice-president and head of human resources at BMO Financial Group. He joined the firm in 1989 and was most recently senior vice-president of BMO’s Institute for Learning and deputy head of human resources.

Sessions Look At Investment Outlook, Pensions

The CPBI Pacific region will hold two events on January 20. Its ‘Investment Outlook: From ‘Liquidate Everything’ to ‘Whatever it Takes’,’ will feature Robert Spector, chief economist at McLean Budden Ltd. He will discuss the outlook for the global economy, inflation, interest rates and exchange rates, and analyze expected returns for bonds and stocks. It takes place in Vancouver, BC. An ‘Introduction To Pensions’ session will look at government benefits and employer-sponsored retirement arrangements, with a focus on Defined Contribution versus Defined Benefit plans and the pros and cons of capital accumulation plans and group RRSPs There will also be a full discussion of the role of the pension plan administrator in ensuring plans are compliant with all standards and legislation.  For more information, visit

Atlantic Offers Economic Outlook

CPBI Atlantic region will offer an ‘Economic Outlook’ January 25 in Halifax, NS, and January 26, Fredericton, NB. Sonya Gulati, of TD Economics, will share where she believes we are in the economic cycle and what 2011 will look like. For more information, visit

Global Benefits Certificate Offered

International healthcare systems and trends and offshore retirement plans/international pooling at the International Foundation of Employee Benefit Plans’ ‘Certificate in Global Benefits Management’ course. It takes place April 4 to 8 in Monterey, CA. For more information, visit


Friday, January 7, 2011

Alberta Blocking CPP Enhancement

The Nova Scotia government claims Alberta is standing in the way of expanding the Canada Pension Plan. Graham Steele, its finance minister, was responding to comments made by Canada’s new junior finance minister, Ted Menzies. Menzies said any move to help people save for retirement by enhancing the CPP are a long way off because increased pension plan premiums could hurt the economy. Instead, he said the government plans to proceed with legislation to create the Pooled Registered Pension Plan, a plan for workers and employers who are self-employed, employed on contract, or work for small businesses. Steele says Ottawa is needlessly holding up the proposed expansion of the CPP by insisting it needs unanimous approval from the provinces. This has given Alberta an effective veto. Alberta, he says, doesn’t believe there should be a public response to what it considers a private issue. However, he says the law states Ottawa only requires approval from two-thirds of the provinces representing two-thirds of the population.

Mental Injury Rewards Soaring

Financial rewards for damages caused by mental injury at work have increased over the past five years by as much as 700 per cent, says a report from the Mental Health Commission of Canada (MHCC). A ‘Gowan Consulting Newsletter’ says the 'Tracking the Perfect Legal Storm' report by Dr. Martin Shain, an academic lawyer and leading expert in workplace mental health issues, warns that a perfect legal storm is brewing in the area of mental health protection at work as employers are confronted with a legal duty to maintain not only a physically safe workplace, but also a psychologically safe workplace. Courts and tribunals are scrutinizing behaviour that may cause mental injury to employees and legal actions are being taken in key areas of law including human rights tribunals and Occupational Health and Safety Law.

Wellness Used To Reduce Stress

Reducing workplace stress is the top driver of wellness programs, particularly in Canada, Europe, Asia, Australia, the Middle East, and Africa, says the ‘WORKING WELL: A Global Survey of Health Promotion and Workplace Wellness Strategies’ report from Buck Consultants, A Xerox Company. It found that globally, 66 per cent of respondents have a formal wellness strategy, a significant increase from 49 per cent in 2007. Wellness programs are most prevalent in North America where 74 per cent of responding employers offer them. As well, the fastest-growing components of wellness programs are technology-driven tools. In three years, employers around the world expect a six-fold increase in their use of mobile technology – such as smartphones – to support employee wellness initiatives.

Christian School Using CIBC Mellon

CIBC Mellon Global Securities Services Company has been selected to provide a full suite of asset servicing solutions for the Canadian Christian School Pension Trust Fund including custody, fund accounting, securities lending, and performance and risk analytics. Christian Schools International is the first educational organization to serve Christian schools. Founded in 1920, it serves Christian schools throughout North America and the world.

OMERS Purchases Health Group

OMERS Private Equity, the private equity arm of the OMERS Worldwide group of companies, has partnered with management to purchase CBI Health Group from Callisto Capital LP, a private equity firm. Based in Toronto, CBI is a leading provider of outpatient rehabilitation and community healthcare services in Canada, as well as home health services in parts of Ontario and Alberta. Founded in 1982, it operates an extensive national network of 134 community and hospital based rehabilitation, medical, and healthcare facilities.

Campbell Heads Mawer Toronto Office

Scott Campbell is senior institutional portfolio manager at Mawer Investment Management. He has more than 17 years of experience in the investment management industry and previously worked at Mclean Budden. He will be working in Calgary, AB, for the next three months before opening up the Toronto institutional office, Mawer’s first office outside of Calgary. Peter Dmytruk is an analyst. He previously worked at ATCO Pipelines as a project leader.

Chan At Manulife Asset

Ronald Chan is senior managing director, head of equities, Asia, for Manulife Asset Management. Based in Hong Kong, he has more than 16 years of equity management experience, including almost 10 years overseeing equity teams in Asia.

Magician Examines Leadership

Dan Trommater, a leadership and change speaker and magician, will explore ‘Leadership Magic – An Exploration of Influence, Connection & Empowerment’ at an Employee Assistance Program Association of Toronto session. He will show how leaders can enhance relationships and lead more effectively by applying the philosophy and tactics of professional magicians. It takes place February 3 in Toronto, ON. For more information, visit

Benefit Ball Goes Hollywood

In its six years, the CPBI Benefit Ball has raised more than $700,000 to help fund research to find the cure for Crohn’s disease and ulcerative colitis. This year, the ball will ‘go Hollywood,’ for its theme. It takes place February 10 in Toronto, ON, and tickets are now available. To purchase tickets and for more information, visit

Biologics Development Examined

‘What Every Private Payer Should Know ‒ New Therapies and Patient Care Solutions’ will be the focus of the next Connex Health session. Suzanne Lepage, a private health plan strategist, and Stephanie Marcovitch, a community support specialist for the Gastrointestinal Society as well as a patient managing a chronic disease, will examine areas including the developments of biologics and how they differ from traditional drug therapies, as well as the personal impact of living with a chronic disease. It takes place February 10 in Burlington, ON. For more information, visit


Thursday, January 6, 2011

Canadians In The Dark On Retirement Savings

Nearly half of Canadians (44 per cent) with a group savings and retirement plan do not know what their future retirement income will be and 41 per cent are unaware if their current rate of retirement saving is on target to meet their future income needs, says a survey conducted for Standard Life. It found that 87 per cent of Canadians with workplace retirement plans rarely or never make adjustments to their retirement investment portfolio based on information contained in their financial statements. The study also revealed that workplace retirement plan statements are not widely used because they are hard to understand and lack personalized recommendations and specific suggestions to improve retirement income. Most plan members surveyed (72 per cent) also believe their statement contains insufficient information upon which to base a change in their retirement planning. “What this research is saying is that the status quo is not working, and action is needed to make group savings and retirement statements more relevant and effective for retirement planning purposes,” says Anna del Balso, assistant vice-president, research and intelligence, at Standard Life. “The financial services industry faces a clear communications challenge to fashion easily understood statements that inform, engage, and, when necessary, provoke a change in direction.”

Baby Boomers Think They Won’t Have Enough

While baby boomers are rapidly approaching retirement, a majority (67 per cent) are worried they won't have enough money, says the ‘TD Waterhouse Boomer Happiness Index.’ It found only 15 per cent feel very well-prepared, suggesting that this generation, who also responded that they believe boomers will "redefine retirement," may be going about it the wrong way. Their money concerns appear warranted since only 34 per cent of boomers have a plan in place for retirement. The index found a correlation between having a financial plan and happiness levels: when thinking about their current or future retirement, boomers who have a financial plan are more likely to feel happy (55 per cent versus 31 per cent) or relieved (37 per cent versus 22 per cent) than those without. "Most Canadians recognize the importance of planning ahead to ensure that they are financially ready when they stop working. Yet, it's concerning that even as boomers approach retirement age, many still haven't established a comprehensive plan for achieving a financially-secure retirement," says Patricia Lovett-Reid, senior vice-president at TD Waterhouse. "Planning, saving, and investing for retirement is even more critical now than ever before ‒ we can't afford to ignore it."

Canadians Mis-use TFSAs

Slightly more than half of Canadians have yet to take advantage of Tax-Free Savings Accounts (TFSAs), says an ING Direct survey. And of the Canadians who opened a TFSA since the program was launched in 2009, 87 per cent used it for an emergency fund or left it in a short-term investment such as a savings account. “The finding is not surprising, as the flexibility of the TFSA as a liquid investment vehicle sets it apart from an RRSP. There is no tax implication when you withdraw funds and you don’t lose your contribution room over the long-term,” says Peter Aceto, president & CEO of ING Direct Canada. “But that’s also led to confusion, meaning many Canadians are not tapping the true strength of TFSAs to shield a wide range of investments from taxation as part of a longer-term retirement strategy.” He says the financial industry has to do a better job educating savers. In 2011, contribution limits will rise to $15,000 meaning TFSAs can play a larger role in investment portfolios. But the survey found 47 per cent of respondents unsure of which investments they would use inside their TFSAs and only 13 per cent considering products such as mutual funds that have the potential to generate higher returns.

Average UK Plan Returns 12.5 Per Cent

The average UK pension fund achieved an estimated weighted average return of 12.5 per cent for the year ending December 31, 2010 say estimates released by BNY Mellon Asset Servicing. This is an estimated real return of 7.8 per cent when measured against the Retail Price Index for 2010 and an estimated return of 10.5 per cent when measured against the Average Weekly Earnings Index. This is the second year in succession UK pension funds have delivered a positive return.  In 2009, the average UK pension fund achieved a weighted average return of 14.4 per cent, the best return recorded since 2005.

February Interest Rate Assumptions

The updated interest assumptions required for the administration of pension plans in Canada are now available at An Excel spreadsheet on the website contains six worksheets:


Wednesday, January 5, 2011

Canadians To Work In Retirement

More than two-thirds (69 per cent) of those Canadians who plan to retire say they will work during retirement, primarily to remain mentally (72 per cent) and socially (57 per cent) active, says a Scotiabank study. However, more than a third of Canadians (38 per cent) expect to work after they officially retire out of financial necessity. The study also found that 56 per cent of Canadians think they will need less than $1 million dollars to fund their retirement, with half believing they will need less than $300,000. Three-quarters (78 per cent) of those expecting to retire are currently putting money away for their future and they have been doing so for an average of 15 years. Half of Canadians (55 per cent) who plan to retire report saving less than $20,000 over the past five years. While the bulk of money for retirement will come from RRSP contributions and savings (78 per cent and 68 per cent respectively), many Canadians indicated their retirement would also be funded by money from the government (63 per cent), their work pension (55 per cent), or inheritance (27 per cent). A small number of Canadians expect to have retirement money come from the lottery (five per cent) or their kids (four per cent).

GenXers Have Retirement Vision

More than half of Gen Xers (58 per cent) have a clear vision of their life during retirement and how they will be spending their time, says research from the Investors Group. This co-incides with earlier research which shows 66 per cent of baby boomers have a clear retirement vision. The two generations also display similar approaches to saving and investing for retirement. Sixty-one per cent of Gen Xers have RRSPs with 85 per cent planning to contribute the same or more in the upcoming tax year. This compares to 62 per cent of boomers who have RRSPs with 79 per cent contributing the same or more to their RRSPs this year.

DC Feature Usage Increasing

Defined Contribution plan sponsors in the U.S. intend to implement improvements in company contributions, use of automatic features, and the increased usage of Treasury Inflation-Protected Securities (TIPS) funds, says a survey by Callan Associates. Its ‘2011 Defined Contribution Trends Survey: Positioning the DC Plan for the Future’ report says these steps are being contemplated as part of an effort to strengthen their savings programs after the downturn. Plan sponsors are boosting their use of automatic features. Adoption of automatic enrolment increased from 43.9 per cent in 2009 to 51.3 per cent in 2010. Similarly, automatic contribution escalation soared from 33.8 per cent in 2009 to 46.2 per cent in 2010. It also found that the use of unbundled structures is on the rise. Though partially bundled plans still dominate at 49.4 per cent, fully unbundled plans increased from 29.9 per cent in 2009 to 34.9 per cent in 2010. The unbundling trend may continue as large plan sponsors seek to reduce participant costs, spread fees more equitably, and increase investment flexibility.


Tuesday, January 4, 2011

CIA Wants Taxation Of Contributions Reconsidered

The Canadian Institute of Actuaries (CIA) has asked the Department of Finance to reconsider its position regarding taxation of employer contributions to Employee Life and Health Trusts (ELHTs), says Eckler ‘Group News.’ The CIA proposes that the accumulation of trust assets in respect of claims that have already occurred should be encouraged by allowing tax deductions of sponsors’ contributions.  The CIA states that, as written, the proposed legislation discourages employers from setting aside assets in respect of such claims because of the non-tax deductibility. It noted that premiums paid to an insurance company for long-term disability insurance are tax deductible and those premiums are designed to allow for the accumulation of assets within the insurance company sufficient to fund future payments in respect of incurred claims. The same should apply to funding contributions to an ELHT calculated by an actuary.

AIMCo Acquires Share In Chilean Toll Road

Alberta Investment Management Corporation has signed an agreement on behalf of certain of its clients to directly acquire Skanska AB's 50 per cent interest in Sociedad Concesionaria Autopista Central, a Santiago-based toll road operator. AIMCo is joining the existing consortium of Abertis Infraestructuras S.A. and Santander Private Equity S.A. Autopista Central is a 61-kilometre, six-lane highway running through the centre of Santiago, connecting suburban communities with the downtown business district and the Pan-American Highway. The highway started operations in 2004 and the consortium holds the concession until 2031.

Northern Trust Further Automates Trade Order Platform

Northern Trust has added functionality to its Trade Order Entry platform to further automate private market investments and global funds, while increasing safeguards for trade instructions in all asset classes. Trade Order Entry provides a secure method of delivering trade instructions. The enhancements offer this level of secure transaction processing for alternative assets including private equity limited partnerships, hedge funds of funds, global unitized funds, and commingled funds.

Confidence Up In North America, Asia

Globally, investor confidence rose eight points from November’s revised reading of 96.4 to 104.4, says the State Street Investor Confidence Index for December 2010. In North America, confidence rose 7.7 points to 103.1 from November’s level of 95.4. In Asia, like North America, institutional investors were equally optimistic and confidence in that region increased by 7.4 points from a revised November level of 95.5 to 102.9 in December. However, investor confidence was not as positive among European investors with the index decreasing 10.8 points to 99 from November’s revised level of 109.8. The strong decline of European investors’ confidence shows that the regions’ investors remain quite jittery in the face of intra-European turmoil. European investors are back again worrying that high sovereign indebtedness may prove destabilizing for the region.

Martel Discusses Economy

Louis Martel, managing director and chief client strategist for Greystone Managed Investments, is the featured speaker at the Manitoba CPBI Council’s ‘Economic and Investment Forecast 2011.’ He will review the state of 2010’s capital markets and the economic forces at work behind the scenes – interest rates, inflation, employment, housing, consumer credit, and business conditions. It takes place January 20 in Winnipeg, MB. For more information, visit

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