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News Archives - May / June 2010

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Wednesday, June 30, 2010

Régie Revises Drug Plan

The Régie de l'assurance maladie du Québec (RAMQ) has revised the financial parameters of the basic drug plan to reflect the rising costs of the plan attributable to persons for whom coverage is provided by RAMQ, says Mercer News. The maximum premium for those persons insured under the basic drug plan is $600 per year, up from $585. The monthly deductible for persons covered by RAMQ is $16, up from $14.95. In private plans, all deductibles, irrespective of their form, are taken into account in applying the maximum contribution. The maximum contribution is equal to the total of the deductible and coinsurance paid by the insured. For private group plans, the maximum contribution is applied on an annual basis and the corresponding annual amount is $963 as opposed to $954 prior to July 1, 2010. While the increase to the maximum contribution may translate into a slight reduction in private drug plan costs, the impact will be negligible.

Decision Could Reduce MEPP Payouts

The Financial Services Commission of Ontario (FSCO) has registered an amendment to an Ontario-registered multi-employer pension plan allowing it to reduce payouts to members who terminate and withdraw their pension benefits when the plan is under-funded, says an Eckler ‘Special Notice.’ The reduction is permanent, with no requirement to pay the balance at a later date, thereby protecting the financial health of the plan for active and retired members. To implement the amendment, the pension plan has followed FSCO’s new policy on commuted value transfers (introduced in 2009), which advises that the plan administrator should monitor the plan’s transfer ratio on a quarterly basis. Its acceptance of this innovative approach to termination benefits has broad implications for all Ontario multi-employer pension plans.

Outlook Dampened

Signs of slower growth, fallout from the Greek government debt crisis, and the Gulf oil spill have put a damper on the outlook for equities in many regions, says Russell Canada’s ‘Investment Manager Outlook.’ However, Canada continues to enjoy most-favoured equity market status, with the number of bullish managers declining slightly from 69 per cent to 63 per cent. The number of bears rose from nine per cent to 19 per cent. Currently, only one-in-10 investment managers believe the Canadian market is overvalued. In terms of what risks might impact Canadian equities in the next 12 months, nearly half of investment managers cited geopolitical activity – everything from oil spills and government debt crises to military conflicts – as the greatest risk facing Canadian stocks.

Cross-border Fund Vehicle Established

Northern Trust has established the Common Contractual Fund as a platform that will allow investment managers to offer proprietary investment strategies in a cross-border fund vehicle designed to appeal to large institutional investors. The Irish-domiciled fund, a vehicle established under the European Union's ‘Undertaking for Collective Investment in Transferable Securities’ directive, will help investment managers gain access to the European market through a fund that also protects the tax status of the underlying institutional investors.

Claymore Offers Bond ETF

Claymore Investments, Inc. has launched an Inverse 10 Year Government Bond ETF. It has been designed to replicate the inverse (opposite) of the daily total return before fees, expenses, and transaction costs of the 10 -year government of Canada bond on a non-leveraged basis. Som Seif, president and CEO, says it “is a tool for investors who are looking to hedge against potential effects of rising interest rates, without necessarily having to sell their current bond investments.”

Slater Gets New Post

James Slater is managing director and chief operating officer for global securities lending at BNY Mellon Asset Servicing. In this newly-created position, he will provide strategic direction for core securities lending functions including securities trading and product development. He has 20 years of experience in the financial services industry and was, most recently, senior vice-president at CIBC Mellon. He will continue to provide strategic direction to CIBC Mellon's securities lending program.  

Benefits Over Next Decade Examined

‘Benefits Over The Coming Decade’ will be examined at the ‘2010 CPBI Western Regional Conference.’ Dr. Jack Mintz, Palmer chair in public policy at the University of Calgary, will present his views for the development of pensions and benefits over the next decade. It takes place October 27 to 29 in Banff, AB. Theme of the conference is ‘Conquering New Peaks.’ For more information, visit

Private Wealth Canada Now Available

A unique new online publication, Private Wealth Canada, is now available at The website is dedicated to providing financial and lifestyle planning information for senior executives at companies across Canada. The national news source will feature a wide range of content to help executives and business owners manage their wealth and estates; keep abreast of developments on essential services from banks, trust companies, and investment managers; and meet their personal lifestyle needs in areas such as vacation planning.


Tuesday, June 29, 2010

Caisse Selling Presima

The Caisse de depot's SITQ real estate subsidiary is selling its portfolio management company Presima Inc. to NabInvest, the investment arm of National Australia Bank, which says the acquisition fits into its strategy to build a global portfolio of boutique investment managers. National Australia Bank is one of the largest financial institutions in the world, with extensive operations in Britain, North America, and New Zealand. Presima has developed a presence in Australia though relationships with large pension funds and investment consultants.

U.S Equity Research Boosted

The loss of Bear Stearns, Lehman Brothers and Merrill Lynch from the ranks of independent competitors in U.S. equity research gave a boost to smaller providers, including mid-sized and regional brokers, sector specialists, and independent research providers. However, Greenwich Associates' ‘2010 U.S. Equity Analysts Study’ says the integration of these research franchises into other large organizations also aided the businesses of the remaining bulge bracket brokers who, as a group, captured a significant portion of the business freed up by market dislocations during the global crisis. The bulge bracket has been steadily ceding "vote" in equity research to smaller competitors since 2008. As recently as 2008, bulge bracket firms captured 73.1 per cent of the research vote in U.S. equities. In 2009 that share fell to 68.5 per cent and in 2010 it dropped to 64.1 per cent. Meanwhile, the share of analysts' research vote captured by mid-sized broker-dealers, regional firms, and sector specialists increased from 23.9 per cent in 2008 to 32.4 per cent in 2010.

Benefits Outsourcing Evolving

How benefits outsourcing has evolved over the last 20 years will be the focus of a session at the ‘2010 CPBI Ontario Regional Conference.’ JF Potvin, outsourcing principal of Hewitt Associates, will also highlight the latest trends and future developments. It takes place October 4 to 6 in Niagara-on-the-Lake, ON. For more information, visit


Monday, June 28, 2010

Regulations Finalized

The Department of Finance has finalized regulations relating to federally regulated private pension plans which enhance protection for plan members, reduce funding volatility, and modernize the rules for investments by pension funds. Under the amendments, a new standard that uses average – rather than current – solvency ratios will be used to determine minimum funding requirements, softening the impact of short-term market fluctuations on solvency funding requirements. The changes will limit contribution holidays unless the solvency ratio exceeds full funding plus a five per cent of solvency liabilities. The regulations offer a modernized investment framework that removes the limits on the amounts pension plans can invest in resource and real property investments.

Healthy Workers Work Longer

Workers with health problems are most likely to retire before reaching the age of 65, whereas the exit rate from the labour force is consistently lower for healthy workers without chronic conditions, says Statistics Canada. About 35 per cent of full-time workers between the ages of 40 and 52 in 1994/1995 who reported poor or fair health, had left work by 2006/2007 when they were at most 64 years of age. About 24 per cent of workers who had been diagnosed with three or more chronic conditions had also left work during this 12-year period. However, among workers who reported excellent or very good health and did not have chronic conditions, just 16 per cent had left the workforce during this period.

Teachers’ Applauds Decision

The Ontario Securities Commission decision that Magna must amend its circular with more robust and relevant disclosure before it can proceed with a shareholder vote sends a clear message to corporate boards that if they do not stand up for shareholder rights, close public scrutiny will follow, says the Ontario Teachers' Pension Plan (Teachers'). Teachers' maintains that controlling shareholders should not be permitted to extract outrageous premiums from a company under the guise of normalizing its governance structure and opposes such transactions. The Ontario Teachers' Pension Plan participated in a group of six Canadian shareholders that made submissions for the OSC hearing into Magna's proposed transaction.

Private Wealth Canada Now Available

A unique new online publication, Private Wealth Canada, is now available at The website is dedicated to providing financial and lifestyle planning information for senior executives at companies across Canada. The national news source will feature a wide range of content to help executives and business owners manage their wealth and estates; keep abreast of developments on essential services from banks, trust companies, and investment managers; and meet their personal lifestyle needs in areas such as vacation planning.


Friday, June 25, 2010

UK Pooled Funds Negative

UK balanced pooled funds posted a month-on-month negative return for May 2010 with a median of -4.5 per cent, says BNY Mellon Asset Servicing. The one-year return which stood at 29.4 per cent in the previous month fell to 20.8 per cent. Over the three-year period to May 2010, the return was -1.0 per cent per annum. The five and 10-year returns provided positive returns, however with 6.3 per cent per annum and 2.7 per cent per annum respectively. Active UK equity managers returned -6.2 per cent for May 2010 matching its index. The one-year return came in positive at 22.5 per cent and only just underperformed its index which returned 22.9 per cent. The three-year return was negative at -4.5 per cent per annum which again matched its index. The five and 10-year returns were both positive with 5.3 per cent per annum and two per cent per annum respectively.

Actuarial Deadline Extended

In light of the government's proposed changes to the funding rules for Defined Benefit pension plans, OSFI will extend the regular deadline of June 30, 2010, for year-end 2009 actuarial reports. The new deadline, which will be announced as soon as possible, will be no earlier than mid-September 2010.

Vanguard Expands Index Funds

Vanguard plans to expand its index fund family, introducing 19 new funds with ETF shares to provide investors with additional stock and bond choices. The firm will also launch ETF shares of its Vanguard 500 Index Fund. On the equity side, it is adding a suite of seven funds with ETF shares to offer exposure to value, growth, and blend segments of the U.S. stock market based on the large cap Russell 1000 Index and small cap Russell 2000 index series. A broad market fund and ETF seeking to track the Russell 3000 Index will also be offered. In addition, it will complete its S&P lineup with eight new equity funds and ETFs targeting the growth and value segments of the S&P 500 Index and the growth, value, and blend segments of the S&P MidCap 400 and SmallCap 600 Indexes. On the bond side, it will offer three new municipal bond index funds with traditional and exchange-traded shares, tracking benchmarks in the S&P National AMT-Free Municipal Bond Index series. The new real estate fund will be benchmarked to the S&P Global ex-U.S. Property Index. The Global ex-U.S. Real Estate Index Fund will offer investor shares, institutional shares, signal shares, and ETF shares.


Thursday, June 24, 2010

‘Elegant Approach’ On Table

Canada has a potentially ‘elegant approach’ to pension reform now on the table, says Keith Ambachtsheer, K.P.A Advisory Services LTD. He told the ‘CPBI FORUM 2010’ session ‘The State of Retirement Savings and Pensions in Canada’ that the idea that came out of the federal/provincial pension reform meeting in Prince Edward Island to increase CPP benefits and change regulations to allow the private sector to move in and provide pension coverage solutions could be the route to go. He asked why it has to be either one or the other, why can’t it be both? Malcolm Hamilton, of Mercer, said while retirement saving is important, it should not become a national obsession. In fact, with young couples, imposing forced retirement saving could mean they have to chose between saving for retirement and having a family which could, over the long term, have a more serious impact on the country. Robert Brown, a University of Waterloo professor, said the coverage issue may not be as serious as some think. Part of the problem is that the labour force is growing faster than pension coverage as more women enter the workforce. However, this means that in most households, one of the wage earners does have an employer pension plan.

DC Risk Must Be Managed

If plan members are unhappy with their retirement savings when they retire, the plan sponsor will be the natural one to blame, says Janice Holman, a principal at Eckler Ltd. In the session ‘Capital Accumulation Plans (CAPs) – Managing the Risks on Plan Exit’ at ‘CPBI FORUM 2010,’ she said this is why Defined Contribution pension plan sponsors must understand the risk associated with these plans. These risks can range from a lack of member knowledge about the plan to a sponsor’s failure to have them sign a waiver when employees chose not to join the plan. Managing these risks requires lifestyle planning, education, financial planning, simple communication, and competitive pricing.

Governance Can Be Problem

It’s better to have no governance plan that to have a plan and not follow it, says Ronald A. Pink, of Pink Breen Larkin. Speaking on ‘The Emerging Pension and Benefit Landscape from a Governance Perspective’ at ‘CPBI FORUM 2010,’ he said governance plans are trouble – if you have one you have to follow it and you can’t get rid of it. As an advocate of target benefit pension plans as a solution to the pension coverage issue in Canada, he said good governance is the key to the success of these plans. If they are not managed properly, there will be problems, especially in this day and age where pension plans are going to be sued for failing to follow their governance practices.

Algorithmics Acquires VIPitech

Algorithmics has acquired VIPitech, an actuarial software solution with broad financial modeling capabilities, from Towers Watson. The acquisition is part of its’ overall corporate strategy to grow its portfolio of risk-aware business applications that support client decision-making and business growth strategies. It is getting VIPitech’s software solutions, intellectual property, infrastructure and team.

Tompkins Leads Regulatory Affairs

Julie Tompkins is vice-president, regulatory affairs and corporate communications, at the Empire Life Insurance Company. As a member of the strategic leadership team, she will be responsible for leading the company’s regulatory and industry affairs, corporate communications, and community investment and relations programs and activities. Since joining the company in 1998 with a background in broadcast media, public relations, and marketing, she has held progressively senior management roles in both marketing and communications, most recently as director, corporate communications and ombudsman.

Changes In Cancer Treatment Discussed

Potential Solutions to the Emerging Changes in Cancer Treatment’ will be the focus of a CPBI Ontario session. Suzanne Lepage, a private health plan strategist, will examine how government and private coverage shifts will impact patient access and why Canadians need to prepare themselves for the financial burden of a cancer diagnosis. Andrea Roth, assistant vice-president, business development, direct distribution, Sun Life Financial, will look at how critical illness insurance works, common features in these products, and the types of costs it can cover. It takes place July 20 in Toronto, ON. For more information, visit


Wednesday, June 23, 2010

Philosophy Everything In Benefits Design

What we do going forward will be different and bring long-term savings when it comes to ‘Controlling The Cost of Prescription Drugs,’ says Barbara Martinez, of Mercer. Speaking at the ‘CPBI FORUM 2010,’ she said, however, sponsors need to remember philosophy is everything in benefits design. Sponsors need to know what they want to achieve and what they want to pay. For example, do they want a plan which is designed to help them compete better for employees? As well, when it comes to plan design, they need to know the demographics of their workforce, the cost of the plan, and the cost drivers. These means they need to know what is going on the industry and they need someone to help them negotiate the best deal for their plan. Once these are in place, their plan design should also call for performance management and benchmarks which will require them to monitor data. Finally, they will need to communicate with their employees in new ways to make them appreciate their plans.

Reform Requires More Than Lip Service

Canada's federal and provincial governments must heed the expectations of Canadians for meaningful improvements to public pension plans, says the United Steelworkers (USW) union. "Our federal and provincial governments are finally acknowledging the need to expand the Canada Pension Plan," says Ken Neumann, its national director for Canada. "It is now incumbent on our political leaders to follow through with significant pension reform that will ensure retirement security for Canadians." He says minor improvements, implemented over the long term, will do little to address Canada's pension crisis. As well, "Canadians deserve more than lip service. They want genuine reform to ensure they will not spend their retirement years in poverty." The USW is a key partner in the Canadian Labour Congress campaign to double Canada Pension Plan payouts. It also proposes an immediate 15 per cent increase to Guaranteed Income Supplement benefits.

De-risking Hampered By Funding Status

Pension plans are currently so far under the water that they are unable to do what they need to do to de-risk, says David Service, of Towers Watson. In the session ‘The Times Are a Changing’ at theCPBI FORUM 2010,’ he said, however, moving to dynamic asset allocation may help them get to where they need to be. Under this de-risking process, they decrease the pension risk as funding levels increase. These changes are built into the plan design with triggers in place to prompt the necessary changes. Eventually, plans should get to a point where they are sustainable and be in a position where they can, for example, use practices such as buying annuities to create more cost certainty for the sponsor.

Less Liquid Strategies Benefit From Shift

Less liquid strategies and asset classes are poised to be the main beneficiaries of a continued shift in global institutional investor allocations, says bfinance’s ‘Pension Funds & Insurance Asset Allocation Survey.’ The leading beneficiary is infrastructure with 16 per cent of respondents indicating they will increase their allocation. This is set to rise over a three-year period with 30 per cent indicating their intention to increase their allocation. Property and private equity are also favoured asset classes for the short and medium term with 20 per cent and 10 per cent intending to increase allocations over the next six months. Over three years, nine per cent of investors indicate their intention to increase their allocation to property while 19 per cent plan to increase their allocation to private equity. Equities appear to be out of favour with investors planning a 17 per cent decrease over the next six months and 37 per cent over three years. 

Management Undergoing Evolution

Asset management is undergoing an evolution which will see traditional long-only managers converging with alternative investment managers, says Eric Bushell, chief investment officer, Signature Global Advisors, CI Investments. In a session titled ‘Hedge Fund Implosion’ at the ‘CPBI FORUM 2010,’ he said indications of this can be seen in some of the changes taking place in each area. Alternative managers are increasing their transparency, restricting the amount of leverage they use, increasing their liquidity, and using third parties for valuations. Long-only managers are looking at their performance fees, importing alternative strategies into their portfolios, and making their mandates more flexible by removing constraints on style and market cap. Many of these changes are a result of increased regulatory reform arising from the recent financial crisis, he said.

OMERS Invests In Future Economy

Stichting Pensioenfonds ABP, of the Netherlands, and the Ontario Municipal Employees Retirement System have launched INKEF Capital, a joint initiative to invest in start-ups in the knowledge economy of the future. They plan to invest almost $250 million over the next five years. The investment vehicle will target early-stage companies in areas such as technology transfer offices of universities, informal investors, regional funds, and spinoffs of new technologies by existing companies. INKEF is the acronym for ‘Investing in the Knowledge Economy of the Future.’

Funds Assessing Risk Relative To Liabilities

More pension funds are assessing their risk relative to their liabilities, says Jim Cole, of Phillips Hager & North. He outlined this and a number of other trends in the CPBI FORUM 2010’ session ‘Investing For Your Liabilities.’ He said there is also a trend towards reducing risk through strategic policies such as increasing allocations to fixed income. Risk exposures are also being adjusted by reducing interest rate risk and reducing exposure to equities as well as adding alternative investments. This shift into hedge funds is not just about moving to hedge funds, he said. Funds are turning to absolute return strategies and adding real assets such as real estate and infrastructure.

Poirier Appointed To Committee

Claude Poirier, president of the Canadian Association of Professional Employees, has been appointed to the Public Service Pension Advisory Committee. The committee's mandate is to review matters and make recommendations related to the administration, benefit design, and funding under the Public Service Pension Plan. Poirier began a three-year term as president of the association in 2009.


Tuesday, June 22, 2010

Investors Re-commit To Alternatives

Institutional investors across the world – including pension funds, endowments, foundations, and insurance providers – expect to re-commit to alternative investments despite the market stresses experienced during 2008 and 2009, says Russell Investments’ ninth global survey on alternative investing. It found institutional investors expecting (on average) an increase of over a third (from 14 per cent to 19 per cent) in their allocation to alternatives over the next two to three years. Real estate, private equity, and hedge funds remain the preferred alternative types, although commodities and infrastructure are expected to make meaningful gains, albeit from their current low allocations.

Drug Utilization Should Be Reviewed

The best way to determine the impact of the Ontario government regulations on generic drug pricing is to review current drug utilization trends and costs, says a Krieger + Associates ‘News Bulletin.’ It says while some are speculating a reduction of up to five per cent in drug plan costs, the amount by which a plan will be affected is dependent on factors such as current drug usage and the percentage of the employee population in Ontario. However, if a plan does not use a drug card, it may be more difficult to obtain specific data about the plan.

Kremer Joins Arrow Hedge

Brian Kremer is managing director of sales for Arrow Hedge Partners Inc. He will share the responsibility for developing and servicing investment advisors in the Ontario region and provide wholesale coverage to professional advisors in Quebec and in Atlantic Canada. He has been working in the investment fund industry, holding senior sales roles, since 1997.

Entrepreneurs Share Perspectives

Successful entrepreneurs will share their perspectives on dealing with private equity and venture capital investors at a CVCA breakfast. Razor Suleman, founder and CEO, I Love Rewards; Anthony Lacavera, chairman, Globalive; and Stuart Lombard, president and CEO, ecobee; will discuss challenges they have faced, as well as opportunities they have been able to capitalize on to grow their respective companies to where they are today and what the future holds. It takes place July 6 in Toronto, ON. For more information, visit


Monday, June 21, 2010

UK Firms Lack Communications Policies

More than 60 per cent of UK firms either don’t have a communications policy for their Defined Contribution schemes or do not document it, says a Mercer survey. It found that 68 per cent of survey participants rated "limited member understanding" as one of the greatest challenges currently faced by DC plans and nearly 90 per cent want to improve member education and understanding in the next 12 to 24 months. The survey also found that 34 per cent of sponsors have no formal objectives for their DC plan and 46 per cent have no defined success measures.

BP Dividend Decision Has Minimal Impact

Pension savers in the UK need not worry too much about their retirement savings funds following BP's decision to suspend dividends for a year, says the National Association of Pension Funds (NAPF). The long protracted method of saving into a pensions scheme should cushion the decrease in funds following BP's announcement. Joanne Segars, chief executive at NAPF, says "We estimate that BP accounts for around 1.5 per cent of a typical pension fund portfolio, so the damage done by the fall in the share price and the dividend decision is not material to the provision of pensions in the UK." As well, she said the company's reasons for cutting back on dividends this year were valid in light of the significant costs that will be incurred to clean up the oil spillage in the Gulf of Mexico.

Dutch Firms Have Positive Impact

Twenty Dutch multi-nationals have made a positive impact on more than 8.2 million people in developing countries, says the ‘2010 Business Impact Report.’ The Sustainalytics and NCDO study shows that the private sector plays a larger than expected role in contributing to the Millennium Development Goals (MDGs). It revealed that these companies contributed to the MDGs through job creation and commercial activities as well as community involvement. The study also says that commercial initiatives have a significant impact on alleviating poverty, more so than community investment activities alone. Approximately 2.5 million people benefited from business activities versus 607,000 from community investments.

Hofer Heads New Client Development

Erika Hofer is director and head of new client development for Citi Private Bank in Canada. Based in Toronto, ON, she was, most recently, a director and private banker with UBS in Toronto, having joined UBS predecessor firm, Swiss Bank Corporation, in 1997.  Prior to that, she was a member of the Toronto Real Estate Board. 

Focus Put On Pension Administration

‘Prudence in Pension Administration – An Increased Focus’ will be the focus of a session at the ‘43rd Annual Canadian Employee Benefits Conference.’ Joan S. Tanaka, president of Prudent Benefits Administration Services, Inc., will provide an overview of the latest published material, the implications for the administrator, and the impact on the operations of the pension plan and the pension fund. It takes place November 21 to 24 in San Diego, CA. For more information, visit


Friday, June 18, 2010

Framework Values And Measures Liquidity

An RBC Dexia paper has introduced a new framework for valuing and measuring liquidity, while reflecting the specific liquidity needs of the institution concerned. The paper provides insights into the notion of liquidity against the backdrop of the liquidity constraints faced by asset managers. It says while classical VaR (Value at Risk) measures may provide useful indications of portfolio risk in liquid markets, the recent crisis showed that they do not address risk in the presence of less than perfect market liquidity or portfolio liquidity constraints. So while regulators currently call for VaR measures as part of a robust overall risk management process, there is a desire from the industry to further refine this measure. The paper brings all these concepts together and defines an approach to value portfolios based on the external liquidity of the portfolio constituents and the internal constraints to which the portfolio owner is subject.

Investors Must Pay Attention

Investors cannot simply rely on the manager or custodian to execute FX trades efficiently, says the Russell Research report ‘Are your FX fees too high?’ It says too often the lack of attention has led to uncompetitive execution which has had a material impact on costs for investors. Best practice dictates that all investment decisions should be reviewed periodically and FX execution is no exception. Such a review would help investors to understand and better control costs, and may help them to consider more cost-effective solutions. It would also help to close the responsibility gap which is common today.

OBA Honours Solursh

John Solursh, partner emeritus in the pension and employee benefits group at Blake, Cassels & Graydon LLP, has been awarded the Ontario Bar Association's ‘Award for Excellence in Pensions and Benefits Law.’ It recognizes his distinguished career and contributions to the development of pension law in Canada. He is also chair of the Financial Services Commission of Ontario and the Financial Services Tribunal and chair of the Canadian Institute of Actuaries' Actuarial Standards Oversight Council. He also served on the executive of the Canadian Bar Association (Ontario) pension and benefits section, as a member of the legal advisory committee to the Pension Commission of Ontario, and on the executive of the International Pension and Employee Benefits Lawyers Association. Cited in The Canadian Legal Lexpert Directory 2008 as a leading practitioner in pensions and employee benefits law, he is also listed as the only Canadian lawyer specializing in the pension and benefits area in the Guide to the World's Leading Labour and Employment Lawyers.

Néemeh Heads CLHIA

Alain Néemeh is chairman of the board of directors of The Canadian Life and Health Insurance Association Inc. (CLHIA). The president and CEO of RGA Life Reinsurance Company of Canada, he has served as chairman elect at the CLHIA, chair of the board’s standing committee on government relations, chair of the reinsurance committee, and as a member of the standing committees on resources and Quebec affairs. He joined RGA Canada in 1997, became chief financial officer in 1998, and executive vice president operations in 2001. In 2006, he was appointed president and CEO of the firm.


Thursday, June 17, 2010

Sceptre, Fiera Merge

Sceptre Investment Counsel Limited and Fiera Capital, Inc. have signed a definitive agreement to merge the two companies. The new company, Fiera Sceptre, is a publicly traded, independent money manager with $30 billion in assets under management. It also becomes a full service, multi-product investment firms, offering clients equity and fixed income management as well as in asset allocation and alternative investments. Jean-Guy Desjardins, controlling shareholder of Fiera, will become chairman, chief executive officer and chief investment officer of Fiera Sceptre. Fiera president and chief operating officer Sylvain Brosseau will become president and chief operating officer of the combined firm. David Pennycook, currently president and interim chief executive officer of Sceptre, will become vice-chairman and executive vice-president.

Sovereign Acquirers Look For Profit

Cross border acquisition activity involving government controlled acquirers over the past 20 years is substantial and growing. However, despite fears about their motivation, the only motivation behind these acquisitions seems to be profit, says G. Andrew Karolyi, professor of finance and global business alumni chair in asset management at the Johnson Graduate School of Management, Cornell University. Speaking at the Dimensional Investment Forum on ‘Sovereign Acquirers: A New Force in Global Markets,’ he said his study of sovereign acquirers looks at whether the motives and the consequences of such deals are different from those of corporate acquirers. It found while there is significant cross-country variation in country led acquisitions, it is difficult to explain much of it and it is also hard to distinguish differences in target firm characteristics.

Drug Cost Increase Slows

Although the trend in expected increase of prescription drug costs has slowed in 2010, drug cost inflation remains the highest of all of the health costs and future drug costs remain a top concern for employers, says the ‘Buck Health Care Trend Survey.’ Overall, the results of this year’s survey show that health benefit costs are continuing to increase at rates that well exceed the cost inflation on most other business expenses. It says the good news is that many of the expensive blockbuster drugs are losing their patent protection in the next few years, opening the door to lower-cost generics. Provinces are also beginning to address the excessive margins in the retail pricing of generic drugs, with Alberta and Ontario introducing legislation to lower the price of generic drugs for all residents. On the other hand, there is the growing issue of catastrophic drugs (drugs that cost in excess of $10,000 per patient per year in Canada). While the incidence is still relatively low, many of these drugs have an annual cost of between $20,000 and $500,000 for just one patient, and are being used to treat chronic conditions. As well, the number of high-cost biologic drugs being covered by private plans is increasing.

Rebalancing Can’t Overcome Spikes

Risk based rebalancing can help reduce portfolio rebalancing during persistent times of volatility, but cannot protect portfolios when markets spike, says James L. Davis, vice-president, Dimensional Fund Advisors. In a research update, he told its ‘Investment Forum’ that they are currently looking at managed volatility strategies. They have had a number of clients in recent years who, considering what has happened over the last couple of years, believe it doesn’t make sense to have target allocations which remain fixed, when the level of risk is not going to remain fixed. He said they are not talking about forecasting returns, they are talking about managing the risk they are incurring. While there are a number of ways to approach this, he said they tend to use a market based approach to risk such as risk based rebalancing. Preliminary results of their study suggest this is an appropriate action.

Amundi Comes To Canada

Amundi, a new international group in asset management, has established business in Canada. Formed by combining the asset management expertise from major banking groups Crédit Agricole and Société Générale, the new entity ranks among the top 10 worldwide players. The decision to merge was based on a desire to compete with the top managers in the world, says Laurent Bertiau, deputy head of the institutional investment division in charge of marketing and development. In Canada, it will provide an alternative to U.S.-based managers in all global assets classes including fixed income, emerging markets, and absolute return products. Louis Fortin is president and managing director of Amundi Canada inc.

Returns Don’t Justify Fears

Countries such as India and China which were feared to take over the world, don’t seem to be doing so if you look at their recent returns, says Robert T. Deere, investment director, senior portfolio manager, and vice-president, Dimensional Fund Advisors. At its ‘Investment Forum,’ he questioned the overwhelming propensity of people to invest in emerging markets because over the long term they expect better returns. He expects to see only normal returns from these markets over the next couple of years. The best opportunities for returns, he said, appear to be in value and small cap investing.

Staric At PIPSC

John Staric is the pension and benefits advisor to the Professional Institute of the Public Service of Canada, a bargaining agent for more than 57,000 public service professionals. He provides professional and technical expertise on pensions and benefits to members, management, and elected officials.

Investors Can Meet Managers

Fund managers and investors from across Canada will hear Canadian managers presenting on their funds and discussing current topics within Canada's alternative investment arena at the Hedge Fund Hotel’s ‘5th Investors Meet Canadian Fund Managers Forum.’ The forum will conclude with the ‘3rd Hedge Funds Award Gala!’ which recognizes the achievement of up-and-coming hedge funds. It takes place October 5 in Toronto. For more information, visit


Wednesday, June 16, 2010

Real Estate Securities Offer Benefits

The ongoing credit crisis and the volatility it has generated have served to emphasize the benefits real estate securities offer to investors, says Matthew Hoult, chief investment officer, global real estate, at BNP Paribas Investment Partners. Speaking at its  Information Breakfast Meeting, ‘Built to last ... the case for real estate securities,’ he said these benefits include high liquidity, price transparency, diversification potential, duration and inflation hedging characteristics, and low transaction costs. Looking ahead, he said the market opportunities are that listed companies look reasonably valued, profitability has improved, and portfolio write-downs have taken place. As well, property markets are improving which is helping to boost portfolio values. As well, credit is more widely available for listed companies and equity raising is restoring balance sheet health. There are, however, some macro risks. The credit crisis has moved into sovereign debt territory and while the economic recovery has gathered pace, inflation could lie ahead.

Jantzi Earns SIO Award

Michael Jantzi, CEO and founder of Jantzi-Sustainalytics is the inaugural winner of the Social Investment Organization’s first ‘Lifetime Achievement Award for Responsible Investing.’ The founder of Jantzi Research, he has been active in the social investment field since 1990. A Canadian thought leader on social investment and corporate social responsibility issues, he contributes articles about social investment and related topics to publications throughout the country and was co-author of ‘The 50 Best Ethical Stocks for Canadians: High Value Investing.’ In June 2001, he was the recipient of an Ethics in Action Award in recognition of his significant contribution to corporate social responsibility and social investment in Canada.

Pillars Must Be Maintained

Canada’s holistic three-pillar approach to retirement savings must be maintained, says Towers Watson. In a response to the end of the federal/provincial meetings on Canada’s pension crisis, it says there are a number of issues that must form part of the discussion around the reform of Canada’s pension system. Maintaining the three pillars – the Old Age Security (OAS) and Guaranteed Income Supplement (GIS) systems, the Canada Pension Plan (CPP)/Quebec Pension Plan (QPP), and private savings including Registered Pension Plans (RPP) – must start, it says, with taking steps to reinforce the weakest pillar, RPPs. However, the appropriate role of government-sponsored plans in retirement savings must also be considered, as should the broader impact of possible changes to Canada’s system of bankruptcy priorities to protect employee pension plans. 

Disclosure Of Social Practices Recommended

York University’s Jay and Barbara Hennick Centre for Business and Law and Jantzi-Sustainalytics have submitted recommendations to the Ontario Minister of Finance on how the Ontario Securities Commission (OSC) can begin to improve corporations’ disclosure of their social practices. The report, ‘Corporate Social Reporting Initiative, addresses the reasons and scope for and the regulation of corporate social reporting, which applies to topics such as human and labour rights, employee health and safety, local community development, and product safety. It recommends that the OSC clarify existing disclosure obligations to indicate the need to consider the materiality of social issues to investors’ decisions and long-term corporate performance. It also wants the OSC to facilitate continued dialogue among relevant stakeholders in order to support a shift toward more standardized metrics and reporting in this area.

Hedge Fund Assets To Recover

The hedge fund industry’s assets should surpass the $1.9 trillion record it reached in mid-2008, as early as this year, says Casey Quirk & Associates. The rebound in assets, which shrank to $1.4 trillion at the end of 2008, is being driven by inflows from U.S. institutional investors, particularly pension funds. U.S. investors will add about $400 billion to hedge funds before 2013, when assets will reach $3 trillion. It says institutional investors are no longer looking at hedge funds as specialized investments and are instead incorporating them into their stock and bond allocations, helping to boost infows.

French To Work Longer

The French will have to work two years longer before retiring under proposed reforms to bring France's pensions budget out of a deficit. Under the plan, the minimum retirement age will be lifted gradually to 62 in 2018 from 60 at present. As well, people would have to work at least 41.5 years by 2020 to be entitled to a full pension at 62, against 40.5 years now. However, even with the change, France will still have one of the earliest legal retirement ages in the developed world. Germany plans to raise its retirement age to 67, while Britain and Italy are standardizing at 65. France’s pay-as-you-go pension system is forecast to register a $39 billion deficit in 2010.

Fournier Heads Caisse Real Estate

Daniel Fournier will become executive vice-president, real estate, and president, real estate group, at the Caisse de dépôt et placement du Québec as of July 19. Already part of the Caisse real estate team, he was previously executive vice-president and chief investment officer at Caisse subsidiary SITQ.


Tuesday, June 15, 2010

DB Sponsors Say Progress On Reform Insufficient

More than 90 per cent of Defined Benefit plan sponsors believe that the federal and provincial governments are not making sufficient progress on pension reform, says an RBC Dexia Investor Services’ survey. The second ‘RBC Dexia Pension Quick Poll’ found respondents were vocal about the lack of a consistent approach in aligning the interests of plan members and plan sponsors. However, through the financial turmoil of 2008 and 2009 and, more recently, the sovereign debt crisis, plan sponsors remain focused on the many different types of risk they have to deal with on a day-today basis. Liquidity risk topped the list with 96 per cent of respondents indicating that this risk was still of high importance or had become even more relevant and important. Shortfall risk ranked as a close second with 92 per cent identifying this as having the same importance or more importance. Respondents' perspectives on interest rate risk and counterparty risk was also significant with 91 per cent and 89 per cent, respectively, identifying these as being important – seemingly, a reflection of their increased use of derivatives to hedge risk.

Frontier Markets Offer Opportunity

Frontier markets offer a profit opportunity because the growth rate of their small and medium enterprises is expected be higher than that of large entities in their economies and global companies, says Gerhard Pries, president of the Sarona Group. He told the ‘IAMFI Investor Network’ meeting, co-hosted by the Social Investment Organization and Sarona Asset Management, that a rapidly growing middle class in these countries is putting upward pressure on the need for housing, food, transportation, and energy. As result, these economies are growing twice as fast ands developed economies and, since the mid to late 1960s, their GDP growth has, on average, outperformed that of the U.S. and Europe.

CLHIA Welcomes Improved Access

The Canadian Life and Health Insurance Association (CLHIA) is welcoming the decision arising from the meeting of Ministers of Finance to improve access to workplace-based retirement savings programs by expanding participation in multi-employer pension plans. Adjustments to tax and pension rules would make group pensions less complicated and costly to administer for small businesses and the self-employed, making pensions at the workplace more available to many working Canadians, it says. "We need to build on the strengths of Canada's retirement savings system by improving access to workplace-based savings vehicles," says Frank Swedlove, CLHIA president.

Canadians Unprepared For Retirement

Almost half of pre-retired Canadians above the age of 45 are not fully prepared for a comfortable retirement, says a Canadian Institute of Actuaries survey. It found only 45 per cent of pre-retirees are confident in their financial future, one in five say they will never fully retire; and just eight per cent are ‘very prepared’ for retirement. It also found that while approximately half have every intention of planning for life after work, a similar number are not seeking financial advice of any kind, whether it is from a bank, a specialist adviser, a relative, or even a book. "It is interesting – and alarming – that despite the best of intentions and a clear understanding of the risks of not being adequately prepared, too many pre-retired Canadians have yet to take action to protect themselves financially for the future," says Robert Howard, CIA president.

Microfinance Attractive Opportunity

Microfinance presents an attractive opportunity for investors for a variety of reasons, says Scott Budde, managing director, global science and community investing for TIAA CREF. Speaking at the ‘IAMFI Investor Network’ meeting, co-hosted by the Social Investment Organization and Sarona Asset Management, he said they provide a global focus, have a long-term investment horizon, and fill the dual role of providing financial returns and having a social impact. Funding for microfinance comes from local and international sources and is used by microfinance institutions to provide products and services such as loans, savings, insurance, and remittances to low-income clients in developing economies. Total investment in the microfinance sector has reached about $35 billion, but an additional $265 billion is needed to provide financial services to the world’s 1.5 billion working poor.

UK DB Being Axed

Almost every Defined Benefit plan in the UK has plans to reduce or axe current provisions in the future, says a PricewaterhouseCoopers survey. Just six per cent of 179 employers said they expect to maintain DB schemes in their current form. This comes despite 87 per cent of employers admitting their employees would not have saved enough for their retirement.

Canadians Vacation Deprived

Almost half of employed Canadians (47 per cent) identify themselves as ‘very’ or ‘somewhat’ vacation deprived, the highest reported level in four years, says the eighth annual ‘ Vacation Deprivation’ survey. It found  24 per cent are not taking all of their vacation time, giving back an average of 2.17 unused vacation days to their employer. This translates into nearly 36.5 million unused days in Canada overall and an overwhelming $6.02 billion in wages handed back to employers. They say there are a variety of reasons why they wouldn't use them all, including work is their life and they're too busy to get away and their significant other is unable to get away from their job. Work-related concerns even cause interruptions to vacations that are already planned. One-third of Canadians say they've checked their work messages while on vacation and one-quarter have even cancelled or postponed vacation plans in the past because of work.


Monday, June 14, 2010

Flaherty, Duncan Have Reform Plan

The federal government and Ontario are both proposing to expand the Canada Pension Plan and relax rules for financial institutions to let them offer pension plans to self-employed people, small business, and anyone not covered by a corporate plan. In a letter to his provincial counterparts, Finance Minister Jim Flaherty set out his vision for pension reform which shares a view offered by Ontario finance minister, Dwight Duncan. Flaherty wants a modest, phased-in, and fully funded enhancement to CPP benefits complemented by changes to federal tax rules and federal and provincial modifications for pension standards to allow banks and insurance companies the flexibility to offer low-cost pension plans to multiple employers, all types of employees, and the self-employed. Ontario wants to see regulatory changes that would encourage financial institutions to offer low-cost retirement options to the self-employed and small businesses. Duncan plans to proceed in the fall regardless of what the provinces decide.

ACPM Has Five-point Plan

The Association of Canadian Pension Management (ACPM) has released its five-point plan towards improving retirement income coverage in Canada. The plan calls on governments to remove barriers to group coverage; ensure Defined Benefit plans continue as viable options for coverage; enable more innovations; promote simplicity in administration; and increase incentives to save. Scott Perkin, ACPM president, “This is a comprehensive plan that requires all five points to be implemented to ensure that every Canadian, including the self-employed and those employed in small businesses, have the saving options that work best for them and their families.”

Insurance Industry Questions Changing

With boomers on the cusp of retirement, their impact on the insurance industry and financial planning is evident in the products that have been developed and the questions that need to be answered, says Kevin Dougherty, president, Sun Life Financial Canada. “Thinking back 15 or 20 years ago, the insurance industry was all about answering the question ‘What if I die?’ – have I provided security for my family. Today, the question for many baby boomers is ‘What if I live?’ – will I have enough money to live comfortably in retirement and am I confident I have financial security that will last my lifetime,” says Dougherty. Noting a number of circumstances that have created a perfect storm around financial security – economic shocks, healthcare concerns, pension reform questions and increasing life spans – a number of solutions have been put forth by the industry, including creation of a registered health savings plan (RHSP) and pension reform. “These are easy changes to make to regulations. And no doubt they would serve to improve the financial security of Canadians immediately without hindering our ability to improve government programs,” says Dougherty. “Living longer should not be a burden. Instead this should be an opportunity for us to step up to the challenges of making financial security a reality.”

Financially Healthy Retirement Within Reach

A financially healthy retirement is well within reach for most Canadians, says Russell Investments Canada Limited. However, its report, ‘Spending patterns in retirement,’ says factors such as income level, marital status, age, and retirement date must be taken into account and planned for. It found, on average, more than 50 per cent of retirement income comes from government transfers. However, these government transfers are generally not sufficient to cover all of the essentials of retirement. They provide 70 per cent coverage for the average retiree and 39 per cent for higher-income retirees. For retirees with annual incomes of $35,200, more than $27,100 of that cash flow was needed to pay for yearly essential expenses.

Best Buy Improves Benefits

Best Buy Canada has expanded its benefits coverage to include a top-up of 75 per cent for 17 weeks for mothers who give birth. The move is to assist in making the adjustments required as families welcome their new family members. The benefits are part of a range of flexible benefits offered to Future Shop, Best Buy, Geek Squad, and Connect Pro full-time store, distribution centre, and head office employees and their families. 

CPAS Opens LA Office

CPAS Systems Inc. has opened a regional office in Los Angeles, CA. It says the Marina del Rey office will enable it to better serve its growing client base in California and support its expansion on the west coast. A large percentage of its business today is being done in the U.S. and in California in particular.

Birrell Returns To Hedge Fund Hotel

Rodney Birrell, of The Wine Investment Fund, will return for another Hedge Fund Hotel 'After the Close' session. He will give a brief presentation about the fund and speak generally about investing in fine wines and how this alternative asset class differs from ‘mainstream’ hedge funds. It takes place June 15 in Toronto, ON. For more information, visit


Friday, June 11, 2010

Canadians Face Inadequate Income In Retirement

A growing number of Canadians will not have an ‘adequate’ income level in retirement, resulting in a lower standard of living for many seniors over the next four decades, unless pension reform is pursued, says a report from TD Economics. However, this future deterioration in the state of retirees' standard of living is due, in large part, to the way in which Canadians have accumulated their personal savings since the mid-1990s. Individuals have been saving less out of their pay cheques and have increasingly relied on asset returns – such as the value of their home – to build up their personal wealth. In order to acquire these assets, individuals have increasingly borrowed money to finance their purchases, lifting personal debt levels to a record high. Looking ahead, the low savings rates, combined with modest and volatile asset returns and higher debt service costs, will hamper wealth accumulation.

Domestic Equity Trading Contracts

Canadian institutions' domestic equity trading business is unlikely to meet volume expectations in 2010, says Greenwich Associates' ‘2010 Canadian Equity Investors Study.’ The report shows that the total amount of projected commissions paid by Canadian institutions to brokers on trades of domestic stocks contracted by 18 per cent to a final tally of approximately $690 million for the 12 months ending February 2010. Although the lack of growth in the institutional commission pool is indicative of slower than expected trading activity, it also reflects the continued erosion of average brokerage commission rates. This year, Canadian institutions report paying an average "all-in" blended commission rate of 2.46 cents-per-share, down from 2.66 cents in 2009.

Small DB Plans Endangered

Bill C-9’s requirement for annual valuations with a high threshold for exemption from annual filings, combined with the regulations calling for the averaging of solvency ratios and a five per cent solvency margin for contribution holidays, would seem to afford plan members additional security and limit wide fluctuations in the employer's solvency funding requirements, says a Fogler, Rubinoff ‘Pension Alert.’ However, there may be a concern as to the additional burden on Defined Benefit plans, particularly smaller plans where the cost of an actuarial valuation is significant. It can be expected that annual valuation reports would be required for most federally registered plans on the assumption that most will not have a solvency ratio of 1.25. Since most federally regulated plans tend to be large, they will be able to absorb the cost of annual valuations. If such a requirement should find its way into provincial legislation, however, it could impact smaller DB plans which are already endangered.

Court Closes Door On Mental Suffering Claims

The Ontario Court of Appeal has closed the door on employee tort claims against employers for negligent infliction of mental suffering in the workplace, says a Spectrum HR ‘Law Alert.’ Specifically, the court ruled in Piresferreira v. Ayotte that employers cannot be sued in tort for negligently inflicting mental distress on their employees. Rather, employees must make their claims for mental distress that occurred in the workplace on the basis of breach of the express or implied contract of employment that exists in every employment relationship.

Savings Could Hit 12 Per Cent

Based on Ontario’s announced changes to what all Ontarians will pay for generic drugs, estimates indicate that employers will see the Ontario portion of their prescription drug plan costs drop by approximately nine per cent to 12 per cent within two years, absent other market changes, says Hewitt’s ‘Health Care Check-Up eBulletin.’ There are a number of key steps employers should take immediately to ensure the savings aren’t eroded by other market factors. For example, the exact savings for each employer will depend on the generic utilization under the plan. For plans that already use design features such as mandatory generics and managed formularies, the savings from these changes will be greater. For employers who have considered the implementation of managed drug programs in the past, the potential savings from these features are now substantially increased. All employers should re-assess the use of drug management plan design features to ensure they are maximizing the savings now available through lower-cost generic drugs.

Small Business Against Doubling CPP

Canadian small businesses are overwhelmingly opposed to a mandatory doubling of Canada Pension Plan premiums and benefits, says a Canadian Federation of Independent Business survey. “Proposals by unions to double CPP would serve as a major job killer as economists worldwide recognize that payroll taxes are a drag on job growth and economic development. With EI payroll tax premiums set to rise for the next several years beginning in 2011, an increase in CPP premiums could hamstring Canada’s economic recovery just as it begins to gain momentum,” says Catherine Swift, the federation president. “Entrepreneurs already pay double the rates of other Canadians and they would be faced with massive increases if this option is considered,” she added.

Plan Market Value Increased At Year End

The market value of employer-sponsored pension funds amounted to $920.4 billion at the end of the fourth quarter, up $22.3 billion (2.5 per cent) from the previous quarter, says Statistics Canada. This was the third consecutive quarter of growth in pension fund assets, as they rebounded from significant losses in 2008 and the first quarter of 2009. The value of these assets in the fourth quarter was 10.9 per cent higher compared with the same quarter of 2008. However, it remained 5.2 per cent below the high of $970.8 billion reached in the second quarter of 2008. Stocks and equity funds accounted for 33.9 per cent of total pension fund assets at the end of the fourth quarter, while fund assets held in bonds accounted for 35.2 per cent. Although expenditures increased, rising 14.3 per cent to $14.7 billion, net income was up for a third consecutive quarter to $16 billion. Just over six million Canadian workers are members of employer pension plans.

HighView Research Available

Canadian Western Trust Company will now offers web access to HighView Financial Group's independent mutual fund research and guided fund portfolio solutions via CWT's online query tool, CWeb. Mark Barnicutt, president and CEO of HighView, says "By combining CWT's custodial platform with our mutual fund and fee-based portfolio, our investment solutions will have a unique advantage in the marketplace." CWT has been offering retirement, trustee, and custodial solutions to financial advisors, corporations, and individuals for more than 20 years, and currently administers more than $5.8 billion of assets. HighView is a provider of independent investment fund research and investment support tools for advisors in Canada.

Denys Joins Direct Distribution

Chris Denys is vice-president, sponsored markets and finance, at Sun Life Financial Direct Distribution. With more than 14 years at the company, he is responsible for the sponsored markets business including association, affinity, and creditor business. Greg Bell is vice-president, business and market development. He brings with him 20 years experience in group retirement services. Shawn Kauth is assistant vice-president, product development. He is responsible for product development and management of the product offering.


Thursday, June 10, 2010

Eurozone Unlikely To Fall Apart

While the Eurozone is unlikely to fall apart, discussion over its recovery from its current debt crisis is likely to last for a decade, says Craig Alexander, senior vice-president and chief economist at TD Bank Financial Group. In an economic outlook panel at the Morningstar Investment Conference, he said the motivation for creating the Eurozone was political, not economic. It was a measure to prevent future European wars. Now, with the debt crisis, the economic basis is more unstable and there is a possibility some countries may leave the group so they can have their own currency. He also dismissed proposals for a two-level Euro, saying no-one would invest in a bond issue from the troubled southern tier of Europe. As well, a country like Italy is unlikely to want to share a currency with, for example, Greece.

Engagement Designed For Institutions

Engagement as a responsible investment tool was designed to appeal to institutional investors, says Karina Litvack, head of governance and sustainable investment at F&C.   Speaking at the Jantzi Sustainalytics session ‘Responsible Investing and Pensions,’ she said it came into prominence about 10 years ago and relies on the ability of institutional investors to shape corporate behaviour. Investors track the impact of company behaviour and make suggestions on how they can improve and become better and more successful companies. As a last resort, if a company fails to comply, it can be excluded from a portfolio. And, she said, more of their clients are saying if engagement with a company doesn’t work within a certain timeframe, they will divest their portfolios of these holdings. However, she said it is difficult to determine if the actions taken do, in fact, drive up the stock price because there are a number of other factors that influence stock price.

Reversion To Mean Misunderstood

A failure to understand the relationship between skill and luck is also the reason that investors do not understand reversion to the mean, says Michael J. Mauboussin, chief investment strategist at Legg Mason Capital Management and an adjunct professor at the University of Columbia Business School. Speaking at the Morningstar Investment Conference session 'Think Twice: Why Our Minds Are Prone to Investment Mistakes,' he said success is usually the result of a combination of skill and luck and great success the result of skill and great luck. However, this means that over time good returns tend to migrate down to the average and bad returns migrate up to the average. The fact that even institutional investors do not understand the relationship between skill and luck and reversion to the mean is revealed by studies on performance by managers hired and fired by plan sponsors. Typically managers are hired when they deliver outperformance and fired when they underperform. However, within two years of being hired or fired, managers who were fired outperform those who were hired.

Access To Funds Undermines Retirement Saving

Government proposals to look into early access to pension savings undermine efforts to encourage people to save for retirement, says Mercer. Its research across 11 major national pension systems in its Melbourne Global Pensions Index found that early access hindered efforts to provide sustainable and adequate pension provision in Canada, Chile, China, Netherlands, and the United States.  Bruce Rigby, its global retirement strategist, says allowing members’ early access to their accumulated savings can have an appealing short term impact and satisfy a range of needs. However, in countries where this occurs, these payments are rarely paid back in full. “Financial responsibility to care for these people then falls back onto the state and taxpayers. Early access often means the fundamental goal of ensuring financial self-sufficiency in old age becomes much more difficult.”

Economic Activity Based On People

More than anything else economic activity is based on the activity of people and the more people there are, the more  active an economy, says Terry Carr, vice-president and managing director, fixed income, at MFC Global Investment Management. He told a Morningstar Investment Conference session on 'The Search for Yield' that this is one reason why emerging markets' share of global GDP has grown from 21 per cent in 1995 to 26 per cent in 2007. Most global population growth is taking place in less developed countries as population growth in developed countries is basically flat-lined. The prospects of further economic growth in emerging markets is also promising because right now they have young populations. As their populations age and enter the labour force, activity in these economies should increase even more.

Less Than Half Outperform

Only 40 per cent of active mutual funds in the Canadian Equity category were able to outperform the S&P/TSX Composite Index during the first quarter of 2010, says the Standard & Poor’s Index Versus Active Fund Scorecard (SPIVA) for Canada. Similar results were seen in the Canadian Small/Mid Cap Equity category of mutual funds when compared against the performance of the S&P/TSX Completion Index. In the first quarter of 2010, actively managed funds in the Canadian Equity category underperformed the S&P/TSX Composite Index when examining both equal- and asset-weighted returns. However, active funds fared better across some of the other fund categories. On both an equal- and asset-weighted basis, active funds outperformed their benchmarks in the categories of U.S. Equity and Canadian Focused Equity.

Interest In Infrastructure Growing

Interest in infrastructure from pension funds and other institutional investors is increasing, mainly due to the sector's potential to deliver long-term, predictable, often inflation-linked cash flows, and the ability to put large amounts of capital to work, says a bfinance survey. Its survey of large infrastructure investors found respondents expect either the same or higher returns from their infrastructure investments compared with three years ago, with 67 per cent now expecting returns of 10 to 15 per cent net of fees per annum. However, they are finding debt is more difficult to access than equity and that the broad definition of infrastructure – which can mean anything from investment in toll roads, regulated utilities, or social infrastructure to airports or greenfield renewable energy projects – can make it difficult for investors to understand the underlying risks they are actually exposed to.

Hum Joins Guardian

Joyce Hum is vice-president, consultant relations, at Guardian Capital LP. Most recently, she was vice-president, consultant relations, with State Street Global Advisors. She will be working to establish, maintain, and nurture relationships with consulting firms.


Wednesday, June 9, 2010

Performance May Give China Excuse

Weak performance in the eurozone is unlikely to drag down the U.S. or Chinese economies. However, Wilber L. Ross, chairman and CEO of WL Ross & Co. and chairman of Invesco Private Capital, told the Invesco Investment Forum that this may give China an excuse to maintain its currency peg. He said Europe is ‘so socialist’ that change will not come easily. Other problems are that taxes account for about 40 per cent of GDP and government spending accounts for about half of GDP which means increases in taxes or cutting government spending to control deficits becomes a challenge. As well, even with fiscal restraint, they will be forced to increase their deficit through 2013 and for years to come. However, he says they expect to make more distressed investments in the eurozone. However, this doesn’t include southern Europe where he says bankruptcy laws are labour friendly and not creditor friendly.

DC Members Need Default Strategies

Defined Contribution members risk dramatic fluctuations in retirement income unless they adopt default strategies that reduce the impact of market shocks, says an Organisation for Economic Co-operation and Development working paper. It says similar strategies should become the default for individuals who make no active investment choice. ‘Assessing Default Investment Strategies in Defined Contribution Pension Plans’ found strategies with low exposure to equities (less than 10 per cent) and those with high exposure to equities (more than 80 per cent) generally proved inefficient. However, lifecycle strategies that have constant exposure to risky assets during most of the accumulation period, switching to bonds in the last decade before retirement, produced adequate results, providing higher expected benefits for a given level of risk than other lifecycle strategies. The OECD paper also found lifecycle strategies perform better than fixed portfolio strategies when the contribution period is short, for example 20 years. Longer contribution periods reduce the benefit impact of lifecycle strategies.

Growth Opportunity Well-underpinned

The long-term growth opportunity in emerging markets is well-underpinned by demographics, says Douglas Gooding, head of client portfolio management for Invesco Global Strategies. Speaking at the Invesco Investment Forum, he said investors should view these markets differently now because they are no longer driven by ripple effects from the U.S. economy or commodities. In fact, the recent financial crisis was a good test for the resilience of emerging markets economies. The share of total consumption by emerging markets consumers has been rising steadily in recent years and personal consumption exceeded spending in the U.S. for the first time in 2008. As well, their banks are in outstanding shape and do not have to take on risk to ensure growth.

Hedge Funds Hurt By Crisis

Hedge funds lost an average of 2.7 per cent through May 27, says the ‘HFRX Global Hedge Fund’ index, as the sovereign debt crisis in Europe triggered declines in stocks, the euro, and commodities and the gap in yields between U.S. short-term and long-term debt narrowed. The drop marked the biggest decline since November 2008 when hedge funds lost three per cent in the wake of Lehman Brothers Holdings Inc.’s bankruptcy two months earlier.

Senior Secured Loans Sweet Spot

Senior secured loans may be the sweet spot for fixed income beta allocation, says Jan Friedli, head of global (ex-U.S.) investment grade fixed income for Invesco Fixed Income. He told the Invesco Investment Forum that there are a number of reasons for this. Global government short/long rates are at historic lows which means investors have to take on more duration risk to capture higher yield. As well, deleveraging could impart some limits on increases in rates. With credit spreads much tighter, but not at all time tights, and the backdrop of extended low short rates/deleveraging supporting tighter spreads, he says this makes senior secured loans – such as corporate debt and short-term floating rate instruments – attractive. Plus, if rates do rise this will add to their returns.

Canadians Have More Confidence

Canadian CFA charterholders have more confidence and trust in the effectiveness of their own financial system and capital markets than other countries feel about their own markets, says the CFA Institute’s ‘2010 Canadian FMI Index’ report. It gauges CFA charterholders’ perceptions of the state of ethics and integrity in six different countries around the world and how these perceptions change over time. Those in Canada have steadily become more assured of the soundness of their system after watching other markets suffer far worse damages as a result of the global financial crisis. As well, perceptions of the ethical behavior of financial professionals improved over last year. However, the scores reflect disparity among the categories with pension fund managers receiving the highest rating and hedge fund managers receiving the lowest. 

McCordick Managing Director

Evan McCordick is managing director of Cordiant. He will oversee investor relations and, as a member of the management committee, he will be involved in the screening of investments and the development and implementation of corporate strategy. Previously, he was a founding partner and managing director of IBIS Capital Management, a captive financial advisory group to a large multi-sector private conglomerate with investments in insurance, banking, energy, and real estate.

Sun Makes Changes

Kathy Seliga is vice-president, actuarial, responsible for the strategic direction of the actuarial aspects of the group benefits business at Sun Life Financial. She has more than 15 years at the company. Greg Davis is vice-president, finance, for group benefits which he joined in 2007.  He is responsible for the accounting and financial aspects of the group benefits business.


Tuesday, June 8, 2010

European Funds Diversify Into Riskier Assets

European pension funds are continuing to diversify into riskier assets, says bfinance. Its survey found interest in private markets is likely to increase in the short to mid-term and fixed income will also benefit as investors decrease their allocation to equities over the short to medium term. About 16 per cent of respondents say they will increase their allocation to infrastructure in the following six months and, over three years, 30 per cent of investors intend to increase their infrastructure allocation. Property and private equity are also popular over the short and medium term with 20 per cent and 10 per cent of investors aiming to boost allocations respectively over the next six months. In contrast, investors are planning a 17 per cent and 37 per cent decrease in allocating to equities over the next six months and three years respectively.

Teachers’ Group Acquiring SonicWALL

An investor group including the Ontario Teachers' Pension Plan (OTPP) is set to acquire IT solutions provider SonicWALL. The buyers are led by U.S. private equity firm Thoma Bravo. Teacher’s is participating with its private investment arm Teachers' Private Capital. This is the latest in a series of private equity investments made by Teachers’. In April, it acquired U.S. aluminum container manufacturer Exal Group, while in March it bought UK's national lottery operator Camelot.

Commissions Falling Short

Commissions paid by institutional investors to brokers on trades of U.S. equities are falling far short of projections to this point in 2010, says Greenwich Associates' ‘U.S. Equity Investors Study.’ The amount of brokerage commissions paid by U.S. institutions on trades of domestic equities decreased 13 per cent to an estimated $12.1 billion from the first quarter in 2009 to the same period in 2010. Contributing to the decline in average commission rates over the past 12 months has been the continued drive among U.S. institutions to shift trading volume to electronic systems. U.S. institutions executed 37 per cent of domestic equity trading volume through electronic single-stock trades in 2009/2010, up from 36 per cent the prior year. Among larger commission accounts, the proportion of trading executed electronically reached 44 per cent of volume.

Funds Need Protection Against Risk

Doubts over whether BP will pay out the next quarterly dividend have underlined the need for pension funds to protect against future financial risk, says FairPensions, a group lobbying for UK pension funds and managers to adopt responsible investment practices. Duncan Exley, director of campaigns at FairPensions, says its “refusal to confirm its ability to pay its next quarterly dividend, and the implications this will have for UK pension funds, highlight the potential for this crisis to damage UK savings and the need for investors to put in place measures to guard against such risks in the future." Its research on pension funds and fund managers shows recognition of the financial risks of  'extra-financial issues' was usually unmatched by practice on the part of pension funds and their fund managers. "From oil leaks to irresponsible lending, environmental, social, and corporate governance issues have a history of precipitating crises that damage our economy and our investments. We urge investors to put in place measures to ensure these issues are monitored and managed so the next crisis is less likely to affect us all," he says.

Nomura Launches Fixes Income Fund

Nomura has launched a fixed income fund offering institutional investors absolute returns through interest rate markets. IRIS is an interest rate positioning index which adjusts in changing market and economic conditions using macroeconomic and quantitative indicators. The index implements long or short positions across the interest rate curves of six markets using liquid fixed income instruments – money-markets futures, bond futures and interest rate swaps – through more than 40 trading positions.

Howard Moves To Ogilvy Renault

Evan Howard is a partner in the employment and labour group at Ogilvy Renault. He has almost 15 years of experience in all aspects of pensions and benefits law. He also regularly advises on the pension and benefits aspects of domestic and international corporate transactions, mergers, financings, insolvencies, and restructurings. He was recognized by ‘The Best Lawyers in Canada 2010: Employee Benefits Law.’

SRI Leaders Discuss Innovation

Leaders from the Canadian socially responsible investment industry will explore how innovation is changing the face of socially responsible investment (SRI) and how SRI is revolutionizing conventional investment at this year’s ‘Canadian Responsible Investment Conference.’ Organized by the Social Investment Organization, it features more than 30 speakers from across Canada and around the world talking about cleantech, oilsands issues, public attitudes, advisor/client relationships, divestment versus engagement, and innovations in environmental-social-governance (ESG) research and investment management. This year's theme is ‘Responsible investment: Building sustainable capital through innovation.’ It takes place June 14 to 16 in Toronto, ON. For more information, visit

Summit Looks At Benefits Research

The ‘Benefits Summit 2010’ will capitalize on three 2010 Conference Board of Canada research reports as the foundation for discussion. The reports look at benchmarking and cost control – getting the best possible value from benefit spending; health and wellness – ensuring your competitors don’t offer more to employees; and disability and sick leave management – producing the best possible results for your employees and your organization. It takes place October 27 in Toronto, ON. For more information, visit


Monday, June 7, 2010

Funds Can Be Transferred

Manitoba is now permitting a one-time transfer of funds from pension plans, says the Hewitt ‘Monitor.’ A prescribed transfer for this purpose is a once in a lifetime withdrawal by an individual age 55 or older of up to 50 per cent of the balance in a LIF, LRIF, and, if permitted, pension plan to a prescribed RRIF that is not locked-in.

Breakthrough Made In Tax Treatment

Unequal tax treatment of foreign pension funds in the EU took a step closer to being eradicated. ABP, a civil service pension fund, says it has made a “breakthrough” with the Norwegian government which returned a dividend tax paid by ABP. ABP has now claimed €60m in dividend tax payments from several countries, including Sweden, Denmark, Germany, Austria, France, Italy, Spain, and Portugal. As well, the European Commission (EC) is taking Germany to the European Court of Justice (ECJ) over its existing dividend tax legislation, which it says discriminates against overseas pension funds.

Currency Market Relationships Examined

The complex relationships driving the currency markets today and in the future as well as some of the tools that can be used to manage currency risk and to potentially generate excess returns will be examined at a plenary session at the 2010 ACPM National Conference. In ‘Your Investments Have Currency,’ Louis-Vincent Gave, GaveKal (Hong Kong), and Michel Malo, University of Toronto Asset Management, will provide information to help plan sponsors as they write their investment policies and formulate investment strategies. It takes place September 14 to 17 in Whistler, BC. For more information, visit


Friday, June 4, 2010

Due Diligence Focuses On Fraud

Too much diligence into hedge funds is now focused on detecting fraud, says Christopher Addy, president and chief executive officer at Castle Hall Alternatives. Speaking at the CIBC Mellon Presentation Series, ‘Hedge fund investing today,’ he said since the Madoff affair, most due diligence is aimed at preventing funds from investing in another one of these schemes. However, frauds happen in other areas of financial markets and will likely happen again, he said. The best measure to avoid it is by carrying out proper due diligence into, for example, the quality of the managers.

Absenteeism Tracked Poorly

Canadian organizations generally do not track employee absenteeism well, even though rates – already high by international standards – are on the rise, says a Conference Board of Canada’s survey of employer-sponsored benefits, ‘Beyond Benefits II: Disability Plans and Absence Management in Canadian Workplaces.’ “Absenteeism rates reached their highest point in several years in 2008/09. The implications of absenteeism for organizations are significant – both in terms of lost wages and productivity, and in the potential to substantially reduce costs through better management of their programs,” says Karla Thorpe, associate director, compensation and industrial relations. The first step to controlling absenteeism is to measure rates and direct costs. Organizations have traditionally focused on watching their long-term disability programs more closely than sick leave or short-term disability programs. Yet, the survey found that an average of nine per cent of full-time employees were on short-term disability in 2008. The direct cost of absenteeism averaged 2.6 per cent of payroll in these organizations in 2008. 

Teachers’ Opposes Magna Deal

The Ontario Teachers' Pension Plan will vote against Magna's proposed transaction to eliminate the company's multiple-voting shares. Teachers' believes Magna International's proposal to eliminate the company's dual-class share structure is fundamentally unfair to the company's subordinate voting shareholders. It also raises larger governance questions as to whether the board of directors has fulfilled its duty, as well as the purpose and benefits to shareholders of dual-class share structures. "We support the principle of one share, one vote; however, we will vote against the proposed transaction and we won't support dual share collapses at any company that look like this," says Wayne Kozun, senior vice-president, public equities.

Journal Examines Tomorrow’s Fund

‘Building Tomorrow’s Pension Fund’ is the focus of the spring 2010 issue of the Rotman International Journal of Pension Management. It examines both the need for better performing pension funds and the key features that define tomorrow’s pension fund with 10 articles from leading pension practitioners and academics. "Conversations are growing about the features of tomorrow’s pension fund and the need for better performing funds," says Keith Ambachtsheer, director of Rotman ICPM and an adjunct professor of finance at the Rotman School. “Turning retirement savings into pension payments should create value and not destroy it. Many large pension funds do not operate this way and ultimately, millions of workers and retirees have been affected.”

Peister Heads Green Shield Board 

Sherry Peister is chair of the board of Directors of Green Shield Canada. She became a member of the board in 1997 and has served as vice-chair since 2007. She is a consultant pharmacist involved in pharmacy practice enhancement and has an active practice in an independent community pharmacy.

Mintz Looks At Pension Reform

Professor Jack Mintz, director and Palmer Chair in Public Policy of The School of Public Policy at the University of Calgary, will address proposed options by expert pension reform panels across the country which include expanding the CPP, various forms of government-sponsored DC plans, and amending pension and tax laws to enable increased coverage under private arrangements at the Alberta Regional ACPM Council’s ‘Lunch with Jack Mintz.’ As well, Chris Brown, vice-president of ACPM, will present a brief overview of ACPM’s recent activities and advocacy role. It takes place June 9 in Calgary, AB. For more information, visit


Thursday, June 3, 2010

Government Ending Prisoner Pensions

The federal government has introduce legislation that will cut Old Age Security and Income Supplement payments to prisoners above the age of 65. The issue of prisoner pensions was raised when it was revealed last month that convicted serial killer Clifford Olson, 70, was receiving $1,100 a month in old age benefits. If passed, the changes would affect 400 inmates in federal prisons and 600 more in provincial system.

BMO GRS Enhances LifeGARD

BMO Group Retirement Services (BMO GRS) has enhanced its LifeGARD program with a suite of new employee benefits – Group Banking services – provided across Canada through the Bank of Montreal’s branch banking network. Now, plan sponsors can offer both group retirement savings programs and a line up of banking services and personal loans with the advantage of group buying power. As part of this program, plan members will enjoy important savings on their every day banking, personal loans, and personal savings as an added layer of benefits beyond the group retirement savings program. 

Fund Indices Post Losses

All the fund indices that track either equity or balanced fund categories posted losses in May, as the month marked the return of volatility levels not seen in financial markets since the depths of the credit crisis in early 2009, says Morningstar Canada’s preliminary performance data. With the eurozone remaining a major source of global instability, other equity markets also retrenched in the month, it says. “Joint efforts by European finance ministers, the European Central Bank, and International Monetary Fund served to shore up financial aid and help stave off the risks of sovereign default,” says Neal Brandon, fund analyst. “However, investors remained wary that the focus on subsequent austerity measures would largely subdue any prospects for regional growth.”

Volatility Hurts DB Plans

The significant volatility in the equity and bond markets since the beginning of May has had a detrimental impact on the accounting positions of Canadian Defined Benefit positions, says Hewitt Associates. The aggregate funded ratio of Canadian DB pension plans decreased from 99 per cent at the beginning of May to a low of 92 per cent at close of business on May 20 before recovering somewhat to 94 per cent by May 28. This increased volatility comes at a time when plan sponsors are focusing on the final stages of the transition to International Financial Reporting Standards, which will mean the funding position of the plan (and the inherent volatility) will sit directly on the sponsor’s balance sheet.

Sarona Signs UN-PRI

Sarona Asset Management has become a signatory to the United Nations Principles for Responsible Investment (UN-PRI) and joined the Investors Council of the Global Impact Investment Network (GIIN). Both the UN-PRI and the GIIN are organizations working to bring social and environmental standards to the investment industry. The UN-PRI, set in motion barely five years ago by the Secretary-General of the United Nations, now has more than 750 signatories, each of which is committed to following ever more rigorous standards in caring for the environment, benefiting people, and governing their business with integrity and transparency. The GIIN seeks to give structure to the ever growing impact investment industry. Sarona has been an impact investment firm since its inception almost 60 years ago.

Aggarwal Joins bfinance

Vikram Aggarwal is senior associate in the investment consulting research team at bfinance. He will be responsible for conducting and overseeing searches in real estate and infrastructure. He previously worked in the real estate and infrastructure private equity arm of HSBC.


Wednesday, June 2, 2010

Pension Reform Concerns IFIC

The Investment Funds Institute of Canada (IFIC) has highlighted pension reform and financial literacy as key concerns in its submission to the Financial Services Commission of Ontario regarding FSCO’s proposed ‘2010 Statement of Priorities.’ FSCO identified pension regulatory services as a key focus area and noted its support for the development of harmonized regulatory solutions. IFIC encourages FSCO to work with the Ontario government to continue to implement improvements that ease the regulatory burden for retirement savings vehicles and encourage their use. IFIC also looks forward to receiving information related to FSCO’s proposed pension reforms and welcomes the opportunity to participate in any related consultations. While FSCO did not make specific reference to financial literacy in its proposed statement, IFIC believes that raising the level of financial literacy of the population would be a big step towards meeting FSCO’s mandate, which is to provide regulatory services that protect the public interest and enhance public confidence in the regulated sectors.

More Health And Wellness Support Offered

Equitable Life of Canada is offering employers the ability to further support employee health and wellness. By providing access to a range of services, it hopes to address employers' needs to manage the cost and impact of workplace absenteeism. The services include a confidential and anonymous interactive, web-based mental healthcare system designed to assist family physicians and patients in the early diagnosis, treatment, and follow-up of common and potentially debilitating mental health issues; a cancer assistance program that helps reduce the physical and emotional impact that cancer places on employees and their families by ensuring medical best practices are utilized; and a full EAP program with work-life and wellness services and access to support from professional counsellors via the telephone, face-to-face sessions and online.

Hewitt Forms Pension Reform Team

Hewitt Associates has formed a Canadian pension reform team. This multi-disciplinary group of specialists has been actively involved in the pension reform process and has developed expertise that goes beyond legislative compliance to deal with upcoming changes to both federal and provincial pension legislation in a more holistic manner. The team is formed from its retirement, legal, research, communication, and administration consultants from across the country. It has been involved in reviewing and providing feedback to various pension reform task forces as their reports have been released.

Workers Lack Interest In Pensions

Fewer than a quarter of European workers are interested in their pension benefits, says the Aon Consulting European Employee Benefits Benchmark. Its survey of workers from 10 countries about pension, benefits, and general retirement issues found Britain, France, and the Netherlands are failing to foster a sufficient long-term retirement savings, with only 12 per cent of people taking an active interest in their pensions. This compares to 37 per cent in Germany, the highest in Europe. It found 16 per cent of people do not have a pension plan in place because they can't afford to make savings, 11 per cent because they never got around to it, and five per cent claim they have actively made the decision to rely on state benefits.

Swap Elimination Almost ‘Nonsensical’

A provision in a U.S. Senate bill that some fear would eliminate the use of swaps and other derivatives by Defined Benefit and Defined Contribution plans “seems just short of nonsensical,” says a Greenwich Associates report. ‘Derivatives Reform: Reducing Systemic Risk, but at What Cost?’ says the key problem with the legislative provision in the Senate’s financial regulation overhaul is that it would require derivatives brokers to act as fiduciaries in transactions with pension funds and other retirement plans. “By definition, the two sides of a swap transaction have conflicting interests,” says the report. While increased transparency and tough disclosure rules about potential conflicts of interests make sense as methods of protecting market participants, the fiduciary requirement as it currently exists in the bill seems just short of nonsensical, the report says.

‘Defined Ambition’ Concept Proposed

A ‘defined ambition’ concept should replace Defined Benefit pension plan arrangements, says Jan Tamerus, actuary director at PGGM, the provider of the healthcare scheme PFZW. He says an approach that aims at the accrual of inflation-proof pension rights, while still including risks, should be introduced as part of the necessary review of the pension contract. This should replace DB because the latter was introduced when a large body of mainly young employees contributed to the pensions of a smaller number of older colleagues. Pension funds should use forecasted longevity, structurally decreased returns, and interest, as well as moving markets, as steering instruments for contributions, indexation, and benefits. If the real cover ratio of pension funds has been less than 70 per cent during two years, pension funds should start discounting pension rights, he says. No indexation should be granted if the real cover ratio has been less than 90 per cent during five years or less than 80 per cent during three years. If these rules had been applied during the past years, it would not have been necessary for pension funds to make recovery plans, he says.

Northern Trust Enhances Monitor

Northern Trust has enhanced its ‘Hedge Fund Monitor’ solution with the addition of a compliance module designed to support the unique demands of UCITS funds-of-hedge funds. UCITS – Undertakings for Collective Investment in Transferable Securities – are a set of European Union directives that allow collective investment schemes to operate throughout the European Union on the basis of a single authorization from one member state. UCITS funds must operate within a strict regulatory framework that imposes standards on liquidity, concentration risk, transparency, and other attributes. This enhancement helps fund managers running UCITS funds-of-hedge funds to monitor their compliance.

Inflation Protection Examined

Senior executives examine how to protect their portfolios from future inflation erosion at the Investment Management Institute’s ‘Global Markets Forum.’ Topics will include analyzing risks embedded in global portfolios, global market opportunities through 2015, and infrastructure investing options. It takes place July 11 to July 13 in Quebec City, QC. For more information, visit

Microfinance Investing Discussed

Microfinance investing will be the focus of an ‘IAMFI Investor Network’ meeting, co-hosted by the Social Investment Organization and Sarona Fund. The meeting a forum in which prospective investors may attend presentations by fund managers that offer impact investment opportunities in micro-, small- and medium-enterprise funds. It takes place June 14 in Toronto, ON, prior to the opening of the ‘Canadian Responsible Investment Conference 2010.’ For more information, visit or contact Kristina Lopez, IAMFI program associate, at

Quebec Committee Launched

AIMA Canada will recognize the launch of its Quebec committee with a reception. The group of Quebec-based alternative investment industry professionals will focus on promoting growth, education, and sound practices in the province of Quebec. It takes place June 14 in Montreal, QC. For more information,


Tuesday, June 1, 2010

ELHT May Mislead Retirees

The insurance industry is concerned that while enhanced funding of ELHT would increase benefit security, it might mislead workers and retirees into thinking such benefits are insured, says ‘Eckler Group News.’ It says the deadline for comments on the federal proposal to amend the Income Tax Act in order to create ELHTs was April 30 and many comments focused on the ELHT tax efficiency, the greater security of fully-insured benefits, and the risks of ASO plans. The proposed legislation provides for tax deductibility of employer annual contributions to an ELHT up to the amount actually paid out by the ELHT as benefits and expenses in that year. Several respondents recommended providing such deductions to contributions based on the actuarial cost of future benefit obligations, in order to assist employers with the actual prefunding of benefits paid over longer periods. This would be particularly important for long-term disability benefits provided under administrative-services-only (ASO) plans through an ELHT.

Pension Risk Concern Rises

Pensions are looming larger on the risk radar screens of UK employers, says an Aon Consulting survey. Final salary pensions are now in second place on the list of corporate risks, ranking behind only the market environment as the biggest risk facing employers. More than four out of 10 employers consider pensions to be a “very high” or “high” risk, a significant rise since the 2008 poll when only a quarter said pensions were a key business risk.

Sloan Keynote Speaker At Conference

Dr. John Sloan, of the University of British Columbia, will examine the interaction between the elderly population and the medical system at the 31st annual Retirement Planning Association of Canada (RPAC) conference. Other speakers include securities lawyer Glorianne Stromberg, actuary Patrick Longhurst, and mutual fund veteran Tom Bradley who will contribute their insights on pension and investment issues. It takes place October 1 to 3 in Toronto, ON. For more information, visit


Monday, May 31, 2010

Shift Work/Cancer Link Needs More Study

More study is needed to assess the link between shift work and cancer, says Kristan Aronson, professor, community health and epidemiology, Queen’s University. Speaking at the CARWH 2010 Conference on ‘Work at Night and Cancer Risk, she said the studies to date have been limited for a number of reasons. For example, the definition of shift work has varied from study to study and the amount of shift work in these studies could not be confirmed. However, she said there is evidence to suggest shift work can cause other problems such as sleep disruption and declines in vitamin D production in the body.

Wilson Chairman At Barclays

Michael Wilson is chairman and Bruce Rothney is head of Barclays Capital, Canada. Wilson will be responsible for managing its client relationships in Canada. Most recently, he was ambassador of Canada to the United States from 2006 to 2009. Rothney is responsible for broadening the Canadian franchise and the management of various business lines in the region. Most recently, he was deputy chairman of RBC Capital Markets. 

July Commuted Value Interest Rate Assumptions

The interest assumptions required to calculate commuted values for an event which occurs in any month up to and including July 2010 are now available at An Excel spreadsheet on the website contains six worksheets:


Friday, May 28, 2010

Confidence Lacking In U.S. Structure

Market players don’t have a great deal of confidence in the U.S. equity market structure as a result of the wake of the “flash crash” on May 6, says a survey by TABB Group. It found that barely half of the respondents have a high degree of confidence in the current market structure. The survey also found that 73 per cent do not believe market structure strongly supports an orderly market and 44 per cent believe that market structure is not a level playing field, up from 34 per cent in a 2009 survey. As well, 62 per cent of buy-side participants are now negative toward high-frequency trading (although the sell side and execution venues remain positive in their views on HFT) and there is consensus that high frequency traders should register as broker dealers.

Pennies A Week Can Double CPP

Ottawa can double benefits under the Canada Pension Plan simply by deducting a few more pennies a week for the next seven or eight years from active workers’ paycheques, says former Canadian Auto Workers president Buzz Hargrove. Speaking to CAW retirees, he also said governments can protect pensions with other measures such as legislation forcing companies to make weekly pension contributions as well as the creation of an insurance scheme design to guarantee pension payouts. Improving pension guarantees and payments would benefit organized labour in non-monetary ways. It would get people to understand what unions all about; that they’re about building a society that has a sense of fairness and as much equality as it can get,” he said.

Account-Based Plans Increasing

Account-based retirement plans for new salaried employees are increasingly replacing Defined Benefit plans at large U.S. companies, says a Towers Watson study. Account-based plans include Defined Contribution plans and hybrid pension plans, typically cash balance plans. The study found 58 companies in the Fortune 100 ranking currently offer only a DC plan to new hires, compared with 55 companies at the end of last year and 51 companies at the end of 2008. Meanwhile, 17 companies continue to offer a traditional DB plan, which represents a decline from 20 at the end of last year and 24 at the end of 2008. The analysis also shows that 25 of the 42 companies with DB plans offer hybrids such as cash balance plans. Hybrid plans reduce cost and funding volatility for employers while providing more visible benefits for employees than traditional DB plans.
OMERS Buying Logibec

OMERS has acquired the publicly traded company Logibec Groupe Informatique Ltee. Through its private equity arm, OMERS has agreed to make an offer to purchase all of the outstanding common shares of the software company. Logibec makes information systems for health and social services sectors.

Alternative Investment Consultants Look At Issues

‘Changing Industry Dynamics: Profiling best of breed investing’ and ‘Defined Contribution Plans: The Impact and Consequences’ will be among the topics covered at the Investment Management Institute’s ‘Summer Annual Alternative Investment Consultants Summit.’ It takes place July 21 in Greenwich, CT. For more information, visit


Thursday, May 27, 2010

Disclosure Changes Significantly

Relatively few employers contributing to North American multi-employer pension plans are subject to the accounting requirements of the International Accounting Standards Board (IASB) – mostly Canadian and U.S. subsidiaries of European corporations. This will change significantly on January 1, 2011, when most Canadian enterprises will become subject to IASB accounting, says a Segal Company ‘Bulletin.’ The IASB exposure draft of proposed changes to IAS 19 leaves the basic requirements for pension expense related to participation in a multi-employer plan unchanged. However, the disclosure requirements will change significantly starting in 2013, if the proposals are adopted without change. The proposed disclosure standard calls for entities participating in Defined Benefit multi-employer plan to disclose, for example, a description of the funding arrangements, including the method used to determine the entity’s rate of contributions and any minimum funding requirements. Of particular interest is a requirement to disclose withdrawal liability, if any, even if there is no likelihood that the employer will withdraw in the foreseeable future. Withdrawal liability applies to Quebec employers who participate in Canadian multi-employer plans, unless those employers are in industries that are federally regulated.

Single Regulator Supported

The CFA Institute and the Investment Counsel Association of Canada (ICAC) have both come out in favour of the Canadian Securities Act which, if passed, would establish a national securities regulator in Canada. The CFA Institute reaffirmed the position of its Canadian members from a June 2009 survey that markets should have a single, unified securities regulator with enforceable jurisdiction. It believes that a national regulator would eliminate regulatory arbitrage and confusion, reduce costs for issuers and market participants, reduce the likelihood of inconsistent enforcement and oversight, and make regulations less burdensome and complex. The ICAC has for many years advocated the need for a national securities regulator and has actively participated in advancing the concept. The ICAC has long held the view that a Canadian securities regulator would strengthen the financial system; provide protection to investors from unfair, improper, or fraudulent practices; and reduce inefficiencies and duplication inherent in operating 13 regulatory structures.

CPPIB Looks Abroad

The Canada Pension Plan Investment Board (CPPIB) is looking abroad to find investments in government bonds, says a report from Bloomberg. It sees them as a substitute for provincials and government treasuries. The fund would likely pursue a diverse exposure to foreign debt such as sovereign bonds from large stable countries. It will maintain a strategic asset weighting of 35 per cent for fixed income.

Investor Confidence Down In May

Globally, investor confidence fell 11.2 points to 88.2 from April's revised reading of 99.4, says the State Street ‘Investor Confidence Index for May 2010.’ Declines in sentiment in North America were a key contributor, with institutional investor confidence falling five points from 103.3 to 98.3. Among European investors, confidence was also lower, falling 3.5 points from 95.7 to 92.2. In Asia, by contrast, confidence was robust, rising 6.8 points to reach 101.0. Uncertainty around the outcome of the British elections played a role early in this month’s declines, as did the market volatility exhibited by U.S. exchanges on May 6.

Kerzner Looks At Opportunities

Bob Kerzner, president and CEO of LIMRA, LOMA, and LL Global Inc.; will look at the current opportunities for growth, as well as the potential negative disruptors, and how to be prepared for whatever the future holds at the ‘LOMA Canada Annual Conference.’ It takes place June 10 in Toronto, ON. For more information, visit

Wellness Measurement Examined

‘Measuring and Benchmarking Outcomes in Healthy Workplace Wellness Programs’ will be discussed at the ‘Health Work & Wellness Conference.’ Dr. Peter Melnyk, of BioMedCom, and Allan Smofsky, an independent workplace health strategist, will discuss how awareness of employee health/well-being as a vital element of organizational sustainability and success has grown in recent years. The session will provide an overview of the goals/objectives and outcomes that are typically considered in Canadian workplace health initiatives. The conference takes place September 29 to October 2 in Vancouver, BC. For more information, visit

Employers Dealing With Obesity

Kevin West, vice-president at Innomar Strategies Inc., will provide a case study of how employers, a manufacturer, and an insurer are working in co-operation to help employees who are morbidly obese successfully address their disease at ‘Health, Wellness and Obesity.’ The session will review some of the programs employers can develop to reduce obesity in the workplace. The Connex Health event takes place June 10 in Burlington, ON. For more information, visit


Wednesday, May 26, 2010

Fraser To Offer Cost Benchmarks

Sponsors of registered pension plans now have the opportunity benchmark their plan operating costs against plans of comparable size. Fraser Group, a Toronto based research firm, has introduced the ‘Survey on Pension Fund Expenses’ to assist sponsors of registered pension plans in determining if their plan operating costs are reasonable. The report will compare plan expenses relative to asset size and plan type. Among the expense categories in the survey are consulting fees, investment management, plan administration, and legal/audit. The target date for release of the survey report is October 2010.

RPP Membership Increases

Membership in registered pension plans (RPPs) increased 1.7 per cent in 2008 to just over six million, the first time the number of active participants has surpassed that level, says Statistics Canada. However, all the growth came from the public sector where RPP membership increased 4.3 per cent compared with a 0.7 per cent decline in the private sector. Membership in private sector plans still represents more than one-half of total RPP membership, but its share has continued to decline. In 2008, private sector plans accounted for 51 per cent of total membership, down from 52 per cent in 2007. About 4.5 million people, or 75 per cent of those with a RPP, were in a Defined Benefit pension plan. The rate of participation in these plans has declined constantly from more than 85 per cent a decade earlier. Membership in the other most frequent type of plan, Defined Contribution, remained virtually unchanged at 939,200, about 16 per cent of the total. Membership in other types of pension plans, including hybrids and combinations, accounted for almost 10 per cent of total membership. This type of membership showed high gains, increasing by 29.9 per cent to 565,400 in 2008. This growth came mainly from sponsors in the private sector who added a DC component to their DB plans for new entrants.

Sponsors Should Warn Members Of Equity Risk

Sponsors would do well to remind participants that stocks have often – but not always – outperformed less risky portfolio holdings over time, says research from Vanguard. ‘Equity risk and time: A survey of U.S. investors’ found 31 per cent of U.S. investors believe the equity market “always” does better than safer investments if held long enough. These investors are more likely to invest in the stock market generally and more likely to hold equity allocations of 60 per cent or more. During the 2008/2009 market downturn, overconfident investors were more likely to engage in market-timing behaviour (selling out of stocks entirely) or contrarian behaviour (increasing equity exposure in falling markets). It says plan sponsors need to counsel the gung-ho equity investors to give them a more realistic view of equity risk.

Early Bird Extended

The early bird registration for the CPBI Ontario Regional Conference, ‘Unique Perspectives,’ has been extended to June 15. The event will feature a range of seminars and workshops of pension, benefit, and investment issues. Some of the topics are the cost of benefits fraud, new pension regulatory views, and target date funds. It takes place October 4 to 6 in Niagara-on-the-Lake, ON. For more information, visit

Impact Of Bankruptcy Examined

What exactly happens when a pension plan sponsor files for creditor protection or declares bankruptcy will be the focus on a session at the ‘2010 ACPM National Conference.’ Judy Cameron, of OSFI; Robert Ferchat, a professional corporate director; and Ian McSweeney, of Osler, Hoskin & Harcourt LLP; will look at issues such as the role of law-makers and regulators and what can be done to protect current retirees and strengthen the pension promises already made. The conference takes place September 14 to 17 in Whistler, BC. For more information, visit


Tuesday, May 25, 2010

Deemed Trust Claims Denied

The Ontario Superior Court of Justice has denied two trust claims by pension plan members at Indalex Holdings (BC) Ltd., says the ‘Hewitt Monitor.’ In response to the approval of a sale of assets of the company, which is under Companies' Creditors Arrangement Act (CCAA) protection, two groups brought trust claims over the Canadian sale proceeds. A group of former members of the executive pension plan sought a declaration that the wind-up liability for their plan should be subject to a deemed trust for the benefit of the plan beneficiaries. The second claim was brought by a group of unionized pension claimants whose salaried pension plan is being wound up. They sought recovery from the sale proceeds for an amount equal to the $1.8 million deficiency in their plan. However, the court ruled that at the date of the transfer of sale assets there were no amounts that were "due" or "accruing due" for the plans. Since Indalex was not required to pay any amount into the plans at that date, no deemed trust arose in respect of the remaining deficiency arising as at the date of wind-up.

Carmody Moves To Aviva

John Carmody is global strategy director for financial institutions at Aviva Investors. Based in London, he will work with sales teams globally to develop new and existing relationships with financial institutions clients and to facilitate cross-border business. Previously, he was BlackRock and UBS Global Asset Management.

Conference Looks At Compensation

Compensation leaders of best practice organizations will explain how to adjust compensation strategy as the economy returns to growth, ensure high performers continue to give their best, and refine rewards to ensure they attract and retain key talent at the Conference Board of Canada’s 'Compensation Outlook 2010.'’ Sessions will also look at deriving real value from compensation strategies and reviewing executive compensation under increased scrutiny and accountability. It takes place October 26 in Toronto, ON. For more information, visit


Friday, May 21, 2010

Chile Good Model For Quebec

Quebec should be looking to reform of its public retirement savings system based on the Chilean experience, rather than increasing the Quebec Pension Plan contributions paid by workers, says Éric Duhaime, a consultant in democratic development in a Montreal Economic Institute ‘Economic Note.’ "The best way to guarantee the future of young Quebecers' retirement savings while ensuring benefits for current retirees, as Chile has done, would be to give workers currently in the labour force the freedom to invest for their old age in their own retirement savings accounts rather than requiring them to rely on the Caisse de dépôt et placement du Québec," he says. The QPP’s financial position has become increasingly precarious because of higher life expectancies, a low birth rate, and slower-than-expected wage growth. As a result, future generations will have to pay much more than their elders for the right to receive comparable or possibly lower benefits. He says Chile was facing similar problems three decades ago. It replaced the public pension system with a system of individual capitalization and retirement savings accounts, with each worker having his own account under private sector management.

Pension Cuts Would Harm Economy

Cuts to public sector pensions would harm communities and the Canadian economy, says the Public Service Alliance of Canada. "Employees are the main contributors to their pension plan. They contribute more than 10 cents of each dollar earned," says John Gordon, PSAC’s national president, in response to recent attacks from the Canadian Federation of Independent Business (CFIB). The CFIB says the federal government is too generous in subsidizing public service pensions and it is time to start leveling the playing field with the private sector. "Public sector workers have fought hard to ensure that they will not retire in poverty," says Gordon. "We object to the idea of a race to the bottom."

Group Wants Pension Reform

Leaders of major Canadian pension organizations are urging Canada’s finance ministers to take action to improve pension coverage and costs. A group representing these plan leaders has sent a letter to Canada's ministers of finance saying that the public component of Canada's pension system is in good shape, but that the supplementary component is not serving Canadian workers as well as it could. The letter says, for example, depending on the definition used, between one-half and three-quarters of Canada’s private sector workers do not have access to collective workplace pension arrangements that are well-managed and operate at low cost. It says a supplementary plan could be delivered by existing organizations such as insurance companies or pension plans; or through a new structure under a national umbrella. Ministers are being urged to create an impartial federal-provincial task force to create a practical implementation plan within a six-month timeframe.

DB Needs Risk Sharing To Survive

If Defined Benefit pension plans are to survive, they will need more risk sharing between employers and plan members, says Elizabeth Brown, of Hicks Morley. Another possibility is that the DB promise will become a thing of the past replaced by a target benefit with no guarantees it will be there. Speaking at its ‘2010 Toronto Client Conference,’ she said while the economy is recovering from the financial crisis in 2008, DB plans are not because their problems date back prior to the crisis. A prolonged period of low interest rates, tax rules which prohibited surplus beyond a certain threshold, two decades of contribution holidays or improving employee benefits, and people living longer are among the reasons pension plans have not recovered and continue to be underfunded. And while governments across the country are wrestling with reforms to save DB pensions, she said the reality is that only eight per cent of workers in the private sector have a DB plan. Governments are acting as if they anticipate widespread use of DB plans when the reality is quite different, she said.

CPPIB Assets Grow

The Canada Pension Plan Investment Board’s funds under management grew to $127.6 billion in its most recent fiscal year. The value of the fund grew by $22.1 billion in the financial year ended March 31, 2010, over the $105.5 billion it reported for 2008-2009. Investment income for the 2009/10 financial year was $16 billion, partially reversing a year-earlier loss of $23.8 billion. The 14.9 per cent return is the third-highest rate in its 10-year history.

HSBC Launches Bond Fund

HSBC Global Asset Management (Canada) Limited has launched a global inflation linked bond pooled fund. This fund seeks to protect Canadian investors from any resurgence in inflation. Managed by Sinopia Asset Management, the quantitative specialist of HSBC Global Asset Management, it will invest in developed government inflation linked bond markets. Sinopia had more than $29.2 billion assets under management at the end of 2009.

DC Plans Need Further Refining

Defined contribution schemes across the world are more robust following the financial crisis. However, they need further refining to best meet members’ needs, says Towers Watson. It says the crisis made DC members assess their risk appetite and forced plan fiduciaries to review both investment strategies and default funds to redress the balance of risk and return. However, DC schemes still need further restructuring if they are to better serve millions of individuals worldwide who were exposed to its failings during the credit crunch.

Reports Released At Summit

The Conference Board of Canada will release three research reports at its ‘Benefits Summit 2010!’ These reports will act as the foundation for the event that promises a comprehensive view of benefits trends and best practices, including how to use wellness programs to reduce costs and attract talent. It takes place October 27 in Toronto, ON. For more information, visit


Thursday, May 20, 2010

Current Proposals May Be Disaster

Current proposals to change bankruptcy rules to protect pensions are a disaster as, if any were enacted, they would result in limited credit availability to restructuring companies, says Craig Hill, of Borden Ladner Gervais. Speaking at its ‘Pension and Benefits Law Update,’ he said lenders will change their requirements if they suspect that loans are being used for purposes such as making up pension obligations. Currently, there are three private member’s bills addressing this issue. The insolvency of businesses, he said, is not the area to address the protection of pensions in these proceedings. The other practical consideration is that while bankruptcies are under the federal government’s jurisdiction, pensions are, for the most part, a provincial responsibility.

Retired Canadians Enjoying Retirement

Retired Canadians over the age of 50 with assets of at least $100,000 are enjoying retirement, with more than half (56 per cent) saying their quality of life has improved, says the first annual ‘RBC Retirement Myths and Realities Poll.’ On the other hand, only 38 per cent of pre-retirees in this same demographic group expect life to improve after retiring, with half (50 per cent) expecting no change. When it comes to regrets, just over half of retirees (55 per cent) and 65 per cent of pre-retirees have them. Some regrets among retirees include not taking better care of themselves (13 per cent); not starting to save earlier for retirement (12 per cent); and not travelling enough (seven per cent). The main regret of pre-retirees was not starting to save earlier for retirement (18 per cent).

Benefits May Not Be Benefit

In the highest income bracket, fringe benefits may not be much of a benefit, says Eva Krasa, of Borden Ladner Gervais. In a session entitled ‘Employment Fringe Benefits: What’s Taxable and What’s Not’ at its ‘Pension and Benefits Law Update,’ she said in the case of a high income earner, the tax rate for a fringe benefit could be 50 per cent. While there is no definition of fringe benefits, they are generally any benefit provided by an employer above an employee’s cash remuneration and basic pension and group insurance benefits. Whether it is taxable or not, depends on whether the employee or employer benefits. So, while a membership to a fitness centre would be a taxable benefit, an onsite fitness centre open to all employees would not be a taxable benefit, she said.

New Regulations Could Punish Canada

New international financial regulations will unduly punish already stringently regulated Canadian institutions, says Donald Stewart, president and CEO of Sun Life Financial Inc. “It would indeed be ironic if Canada, a country which came through the financial crisis better than most, was to find itself at a disadvantage on account of new international rules originating from outside our country,” he told shareholders at the company’s annual general meeting. A variety of proposals could have a negative impact on the Canadian financial services industry, Stewart said. For example, Canadian life insurers, who already operate under a strong financial reporting system, would face challenges in adopting the new standards, which he says impact the calculation of liabilities on balance sheets and make the bottom line appear more volatile.

Litigation Linked To Communication

The quality of communications with employees may determine whether or not an employer is sued, say Christiaan Jordan and Sonia Mak, of Borden Ladner Gervais. Jordan told a session on ‘Pension Class Action Developments’ at its ‘Pension and Benefits Law Update,’ that in recent decisions where courts have ruled in favour of employee class action suits over reduction of benefits, the need was illustrated for accurate communications with respect to employee pension and benefit rights. In an earlier session entitled ‘Changes to Pension Plans: What Do You Need to Know about Managing Change,’ Mak also stressed the need for accuracy in communication of plan changes as lots of litigation in the pension context relates to the accuracy of communications material provided to employees.

Aon Makes Appointments

Aon Consulting has made a number of appointments across Canada. Anne Burpee is a vice-resident in the Canadian finance function. Tracey Manion is a consultant in the Calgary, AB, health and benefits practice. Leslie McMillan is a senior consultant in the Toronto, ON, employee benefits outsourcing practice. Jean-François Gariepy is national practice director in the Montreal, QC, retirement practice. Laura Mensch is national practice director in the Toronto, ON, benefits solutions practice. Scott Bunker is national practice director in the Toronto human capital practice. Brendan George is market director in the Western region.


Wednesday, May 19, 2010

Coverage Problem Has Target Group

Pension coverage in Canada is a targeted problem, says Scott Perkin, president of the ACPM. Speaking on ‘ACPM Advocacy: Taking the Pension Debate Forward’ at the ACPM’s ‘Sharing Innovations: Developments in Retirement Plan Design and Communications’ session, he said the problem is the lack of coverage for the self-employed and those working at small businesses. The targeted group is one in need of assistance as low income earners’ retirement needs will be met by CPP and OAS while high income earners can look after themselves. He said the ACPM believes several large plans operating in multiple jurisdictions would provide the flexibility and choice of savings that experts contend would meet the needs of these employers and individuals. However, he said until the coverage issue is resolved, government is unlikely to proceed with pension reform.

Pension Plans Too Expensive

Almost 80 per cent of small- and medium-sized Canadian business owners respondents to a Canadian Federation of Independent Business survey do not currently offer a retirement savings plan, such as RRSPs or a Registered Pension Plan, because they are too expensive. Part of their submission to the federal government's consultations on the retirement income system, their survey, ‘Securing the Future,’ found the second most common reason is that they are too complicated to administer. This suggests that at a time when proposals for mandatory increases to payroll taxes such as CPP/QPP premiums and benefits are being put forth, many owners simply cannot afford such pension initiatives.

Balance Traditional With ‘Shiny Objects’

Plan sponsors need to balance the traditional with “shiny objects” when it comes to communicating with plan members, says Neil Murphy, director, member services communications, Ontario Teachers’ Pension Plan Board. In a presentation entitledRe-thinking Plan Member Communications’ at the ACPM’s ‘Sharing Innovations: Developments in Retirement Plan Design and Communications’ session, he said traditional forms of communication still have a lot of merit and those charged with communicating with plan members need to focus on the core vehicles that work best for their plan. They shouldn’t move to “shiny objects” – social networking – until plan members show a need for it. Teachers’, for example, does not see much value in setting up Facebook accounts for 85-year-old retired teachers. The move to these can be made as they evolve naturally.

Franklin First Canadian Chair

Margaret Franklin is the first Canadian chair of the board of governors of CFA Institute, the global association for investment professionals that administers the CFA program worldwide. Franklin is the president and CEO of Kinsale Private Wealth. She has almost 20 years of financial industry experience in investment management with both institutional and private clients and has worked with global institutions including Barclays Global Investors, State Street Global Advisors, and Mercer.

Monitoring Effectiveness Needs Emphasis

Monitoring the effectiveness of the plan in delivering retirement savings should be emphasized if Defined Contribution plan members want to mitigate their concern that member savings will fall short of their retirement needs, says Ian Genno, of Towers Watson. In a session at the ACPM’s ‘Sharing Innovations: Developments in Retirement Plan Design and Communications’ session, he said inadequate savings for retirement can create a number of problems including delayed retirement and having a more modest lifestyle in retirement. As well, he said, sponsors are concerned that shortfalls in retirement savings could lead to litigation. Good communications programs can make members more engaged who appreciate their plans.

Buyout Industry Up In First Quarter

Investment and fundraising levels for Canada's buyout industry were up in the first quarter as the industry demonstrated signs of recovering from the global economic slowdown, says Canada’s Venture Capital and Private Equity Association. Canadian funds invested $415 million in Canada in the quarter while American and other foreign funds invested only $40 million, down significantly from the $381 million invested by foreign funds in the last quarter of 2009 and the $567 million invested in the first quarter of 2009. In addition to increased activity by Canadian funds at home, Canadian funds invested substantially more abroad in the quarter than in recent quarters. Canadians invested $719 million in companies abroad, which was 45 per cent of the $1.6 billion invested abroad in the entire 2009 year.

Livingston Joins STRATA

Shirley Livingston is a consultant with STRATA Benefits Consulting Inc. Previously, she was with the Winnipeg, MB, office of a major consulting firm. She has expertise in benefit plan design, cost-effective underwriting bases, and renewal analysis.


Tuesday, May 18, 2010

Make It Easier For Employers – Iannicelli

Government needs to make it easier for employers, including small- and medium-sized enterprises, to step up to bat and do more for their employees, says Joseph Iannicelli, president and CEO of The Standard Life Assurance Company of Canada. Speaking at the Canadian Club of Toronto, he said Canadians should be given greater access to workplace retirement plans. “If every workplace with 20 employees or more was required to provide a group plan, it would ensure that 80 per cent of private sector workers have access to a group plan, compared to only about 50 per cent currently.” This could be done by allowing any employer, including self-employed workers, to participate in a single Defined Contribution plan for multiple, unrelated employers. The financial services industry also must continue to be a pivotal player in interacting with and educating the consumer, he said. It can offer fewer products with better explanations of which financial objectives are met, the degree of risk associated with the product, and a realistic analysis of what taking that risk means to the consumer.

Balance Of Interests Debatable

While the McGuinty government is attempting to balance the interests of employers and employees, whether this objective is being met is debatable with the most recent pension reforms in Ontario, says David Vincent, of Ogilvy Renault LLP. He told its ‘5th Annual Employment and Labour Law Conference’ that the most recent changes, including new grow-in rules, have received third reading and could be proclaimed as early as this summer. Once proclaimed, virtually every pension plan in the province will have to be amended. He said the changes are friendly to multi-employer and jointly sponsored plans, but they are not so friendly to single employer sponsored Defined Benefit plans, making them an endangered species. The new grow-in rules, for example, will end the procedural wrangling with FSCO over whether a partial wind-up is necessary, however, all employees who lose their jobs will be entitled to pension benefits that include any early retirement enhancements. This will add to termination costs.

Start Financial Literacy At Young Age

The federal government’s efforts to promote financial literacy would be best served by getting Canadians to change the way they behave, says the Financial Planning Standards Council. Its submission to the Task Force on Financial Literacy says financial planning is a learned behaviour and a life skill. It recommends the task force focus on strategies that will enact behaviour change by recognizing the importance of starting financial literacy early in life. This can be done by instituting compulsory learning about money and personal finance beginning in grade school.

Misalignment Of Interests Revealed By Crisis

A majority of pension funds believe misalignment of interests with their private equity managers became more apparent during the financial crisis, says a survey by IE Consulting. It found two-thirds of the schemes surveyed thought the crisis had shown certain fund mangers were acting at odds with the limited partners' – investors in private equity – interests. In addition, three-quarters of the pension funds felt that their private equity managers had tried to blame the financial crisis for their own investment mistakes. Respondents to the survey predicted the fundraising environment would become tougher and tougher, when more private equity managers struggling to raise a new fund in the next two years.

CPPIB Starts Australian Real Estate Fund

The Canada Pension Plan Investment Board (CPPIB) and one of Australia’s largest property groups have launched an Australian real estate fund. The joint venture is 80 per cent owned by the CPPIB with the remainder funded by Goodman Group. The Goodman Australia Development Fund will focus on buying a range of high quality pre-committed development opportunities. Goodman and CPPIB teamed up last year to create a joint venture to invest in logistics assets in mainland China.

Clark Forms Dunhelm

Jim Clark has formed Dunhelm Consulting, a consulting services firm providing communications, reputational review, product development, and market research to institutional investment managers. He has more than 20 years of experience in the Canadian institutional market, most recently with Aurion Capital Management.

Mintz Looks At Options

Proposed options for pension reform from expert panels across the country including expanding the CPP, various forms of government-sponsored DC plans, and amending pension and tax laws to enable increased coverage under private arrangements will be examined at the Alberta ACPM Regional Council’s ‘Exclusive Lunch with Jack Mintz.’ Professor Jack Mintz, director and Palmer Chair in public policy of The School of Public Policy at the University of Calgary, is a leading thinker, researcher, and commentator on Canada's retirement income system. It takes place June 9 in Calgary, AB. For more information, visit


Monday, May 17, 2010

Osteoporosis Undiagnosed

A significant portion of Canadians with osteoporosis are undiagnosed and untreated, says Dr. Maria Shapiro, associate professor in the department of family and community medicine at the University of Toronto. Speaking at the ‘Connex Health Employer Forum,’ she said one result of this is as the workforce ages, osteoporotic fractures will become more prevalent in the workplace. Currently, there are more incidents of osteoporotic fractures in women than incidents of heart attack, stroke, and breast cancer combined. In patients who are still in the workforce, these fractures can result in sick leave, loss of efficiency and productivity, and increased health claim costs.

Bill Out-of-step

A private members' bill that would mandate employers with more than 20 employees to provide a retirement savings plan is out-of-step with the provincial and federal governments' position on pension reform, says CUPE. The bill, introduced by Ontario Liberal MPP Jeff Leal, would not require employers to make contributions and workers could opt-out. However, CUPE said the bill is in conflict with a serious, pan-Canadian policy dialogue that is still underway at both federal and provincial levels and, if passed, it would seriously undermine efforts for national pension reform. CUPE is calling for an expansion to the Canada Pension Plan (CPP), an increase to the Guaranteed Income Supplement (GIS), and tougher laws to protect pension plans from bankruptcy, high-risk investments, and employer underfunding.

Arthritis Takes A Toll

Thirty-two to 50 per cent of those with rheumatoid arthritis leave the workplace within 10 years and 50 to 90 per cent leave within 30 years of the onset of the disease, says Diane Lacaille, associate professor, division of rheumatology, at the University of British Columbia. She told theConnex Health Employer Forum’ that other impacts include sick leave and temporary work disability. She said European studies show that those suffering from arthritis lose 22 to 82 days a year because of the ailment. The yearly cost of work disability from arthritis and musculoskeletal disability in Canada is more than $14 billion. Employers can help, she said, by having a better understanding of the disease, encouraging good medical care, and providing a supportive environment.

Alternative Directive Flawed

If the European Union pushes through a flawed directive on alternative investment fund managers, the impact will go far beyond the hedge fund and private equity industries, says the Alternative Investment Management Association (AIMA). The warning comes ahead of votes the week on the directive in the European parliament’s economic and monetary affairs committee (ECON) and the economic and finance council meeting of European finance ministers. Andrew Baker, chief executive officer of AIMA, says the consequences would be much wider than the hedge fund and private equity industries. Real estate and infrastructure investment in Europe would also be impacted because funds in this sector would also be covered by the directive. Plus, it would ban European investors from accessing funds outside the European Union.

Engaged Workers Healthier

Engaged workers are healthier and more productive is the message delivered by Kenton Needham, of Needham HR, to the ‘Connex Health Employer Forum.’ He said, however, engagement in the workplace is lacking with only 21 per cent of employees in a recent survey saying they were engaged. Management can take a number of steps to help engage their employees. It needs to show it is sincerely interested in the well-being of its employees. As well, it must provide opportunities for workers to improve their skills and capabilities, have a reputation for being socially responsible, provide career advancement opportunities, and encourage innovative thinking. The best way to sell the message about the need to engage employees to senior management is to show employees will be more productive and health costs will decline.


Friday, May 14, 2010

Drug Coalition Launched

Towers Watson has launched the Canadian Rx Coalition, a new way for employers to manage employee drug plans through a co-operative alliance with other Canadian plan sponsors. Membership in the Canadian Rx Coalition will give organizations control over their pharmacy benefit plans. Members of the coalition will have access to better ways to proactively manage pharmacy costs and deliver optimal care, including collaborative purchasing and much improved transparency of the deal terms available to them through their pharmacy benefits manager. In addition, step-by-step approaches for drug utilization management, disease management, formulary development, and other efforts will have a sustainable, long-term impact on overall costs, quality, and individual health outcomes.

Employers Seeking Communication Methods

Many employers are exploring new communication methods to help plan members maximize their retirement savings, says the Association of Canadian Pension Management’s ‘Education Initiative Report,’ a summary of discussions with employers across the country regarding effective retirement plan member communication. Some of the effective communication strategies outlined in the report include messaging targeted to employees at different ages/career stages; the use of media and approaches that ensure information about the program is accessible, relevant, and personalized; and measuring success of communication initiatives so that tactics can be revised if necessary. The complete report is available for download at

Bond Diversification Prudent Strategy

Vanguard Group says bond diversification is a “prudent strategy amid interest rate uncertainty.” ‘Deficits, the Fed, and Rising Interest Rates: Implications and Considerations for Bond Investors’ says bond allocation that reflects the overall fixed income market is a great, simple way “to diversify its various risks, including how interest rates of various maturities may evolve in the future.” However, a key lesson of the global financial crisis is that implementing a too-narrow or surgical bond allocation (such as by shortening duration or investing solely in riskier bond instruments) involves important tradeoffs that may expose bond investors to unintended yield-curve or market risks while potentially depriving them of a higher future income stream.”

June Commuted Value Assumptions

The interest assumptions required to calculate commuted values for an event which occurs in any month up to and including June 2010 are now available at An Excel spreadsheet on the website contains six worksheets:


Thursday, May 13, 2010

Fix Outdated Rules, Leech Says

“Times have changed, so it’s time pension rules changed too,” says Jim Leech, president and CEO of the Ontario Teachers' Pension Plan. During his Economic Club presentation, Leech said there’s no better time than now to address the outdated limitations stifling Defined Benefit adoption among employers. Specifically, he pointed to the 30 per cent maximum ownership rule, a 1932 law, which puts local pension fund managers at a major disadvantage compared to foreign funds that are able to purchase 100 per cent of a Canadian company. While the Ontario government seems willing to take on change, Leech says the federal government needs to wake up to the reality behind such limitations, which do nothing more than “cost plan members and taxpayers money.” He is hopeful, however, that government, the private sector, and labour can come together as a task force and assess all the ideas currently on the table.

Changes To Impact Administrators

Recent changes contained in the Pension Benefits Amendment Act, 2010 will give plan administrators more guidance regarding their obligations to advisory committees, says Caroline Helbronner, partner, Blake, Cassels & Graydon LLP. Speaking at Blake’s ‘Pension and Benefits Law Seminar,’ she said the act will, among other things, require plan administrators to help members who are attempting to establish an advisory committee, by distributing notices and other information. Administrators will also be obliged to provide ongoing assistance to these advisory committees once they’re established. She also noted that changes to the act will soon give administrators the authority to use electronic means to send notices, statements, and other records to all members.

Retirement Research Centre Created

The Royal Bank of Canada is partnering with the University of Waterloo to create ‘the RBC Your Future By Design Retirement Research Centre at the University of Waterloo.’
The research centre combines the university’s insights and expertise on healthy aging with RBC’s expertise in providing Canadians with financial advice and solutions to help them succeed. The centre will focus on research related to areas that influence quality of life in retirement including health, leisure, wellness, lifestyle, financial, economic, science, arts, and technology. In addition, RBC is creating an undergraduate grant program called the ‘RBC Your Future By Design Retirement Research Undergraduate Fellowship at the University of Waterloo.’ This fellowship is designed to develop expertise in full-time undergraduates interested in retirement and aging as it impacts Canadians.

Employers Running Out Of Options

Employers are frustrated and running out of options to cut healthcare costs, says Rob Crofts, vice-president, life and health, Corporate Benefit Analysts. Speaking on ‘The ROI of Workplace Wellness’ at the Medtronic of Canada Ltd. and Tri Fit ‘Diabetes Prevention in the Workplace: Sharing Best Practices Breakfast Symposium,’ he said today’s lifestyles are tomorrow’s claims as the aging demographic will lead to higher benefit plan costs. For example, on average, a 42-year-old employee will submit $1,508 in annual health claims, while a 57-year-old will submit 50 per cent more, $2,255. However, with 70 per cent of ill health preventable, he said, employer objectives will change as they realize preventing illness is less expensive than treating it.

Sudra Joins Watermark

Mehul Sudra is a consultant at Watermark Human Capital’s Calgary, AB, office. His practice involves advising clients on the design and implementation of employee group benefit programs and human capital issues. His background includes working internationally in merger and acquisition finance, private wealth management, insurance law, re-insurance law, and litigation.

Chapter Updates Pension Plans

The ISCEBS Toronto Chapter will look at target pension plans in its ‘Pension Plan Update.’ Mark Davis and Susan Deller, from Eckler Ltd., will speak about target pension plans and how they impact plan sponsors and plan members. It takes place June 16 in Toronto, ON. For more information, visit


Wednesday, May 12, 2010

Hedge Funds Likely To Outperform

Hedge funds are likely to outperform, thanks to their ability to effectively navigate volatile markets. However, Andy Stewart, president and COO at Man Investments Inc., told an AIMA Canada panel discussion that he “wouldn’t be surprised to see the market down 20 per cent from here; I wouldn’t be surprised to see it up 20 per cent from here.” Performance from fund to fund can vary drastically, he said, and with the current level of market volatility, this is even more likely to occur. “There’s going to be a huge dispersion in hedge fund returns,” making it critical to carefully select fund managers who are able to dynamically adjust their investments based on market environment.

Healthy Retirees Cost More

Healthy retirees actually face higher total healthcare costs over their remaining lifetime than unhealthy retirees, says an ‘Issue Brief’ from the Center for Retirement Research at Boston College. It says that a typical healthy couple at age 65 can expect to spend $260,000 with a five per cent risk of exceeding $570,000, while a typical unhealthy couple can expect to spend $220,000 with a five per cent risk of exceeding $465,000. It found that people in good health can expect to live significantly lon­ger. At age 80, people in healthy households have a remaining life expectancy that is 29 per cent longer than people in unhealthy households. However, they still eventually become less healthy and often need nursing home care. Therefore, they are at risk of incurring healthcare costs over more years.

Public Plans Face Funding Challenges

Multi-employer and public employer Defined Benefit plans in Canada face significant funding challenges, but plan sponsors are taking steps to address these concerns and ensure the long-term viability of these plans, says a survey by the International Foundation of Employee Benefit Plans finds. To help improve the funded status of their DB plans, a large majority of survey respondents (70 per cent) report their plans took a number of actions over the last year to strengthen their financial standing. The most common approaches taken by plans include examining actuarial cost methods and assumptions (41 per cent); reviewing, and revising if necessary, investment policies (36 per cent); examining benefit formulae to determine if they can be achieved in the future (29 per cent); seeking increased contributions without a comparable increase in benefit accruals (25 per cent); and revising actuarial cost methods and assumptions (24 per cent). To further improve solvency ratios, 44 per cent of DB plan sponsors report that it is likely or very likely that additional contributions will be needed to fund pension plans in 2010.

Foreign Exchange Markets Migrate

Global foreign exchange markets continued their migration to electronic execution last year as e-trading volumes increased amid a decline in overall FX trading activity, says Greenwich Associates. Customer electronic foreign exchange trading volumes increased seven per cent from 2008 to 2009. While this growth pales in comparison to the 25 per cent expansion in 2007/2008, the fact that electronic trading systems were attracting business while the overall market was contracting suggests that market participants continue to actively shift trading volumes to the platforms from other channels.

‘(Not) Pension Reform’ Examined

Robert Brown, of the University of Waterloo, and Dr. Lisa Butler Beatty, of Appleby Personnel, will look at expanding pension coverage in Canada by drawing on the experience (including lessons learned) of other countries and the Canadian experience to date in the plenary ‘(Not) Pension Reform’ at the2010 ACPM National Conference.’ They will also discuss contributions, replacement income, the roles of the employer and financial institutions, and whether the system should be mandatory, voluntary, or somewhere in between. It takes place September 14 to 17 in Whistler, BC. For more information, visit

McDonald Speaks At Summit

Lawrence G. McDonald, author of ‘A Colossal Failure of Common Sense – the Inside Story of the Collapse of Lehman Brothers,’ is a featured speaker at the ‘Institutional Trading and Technology Summit 2010.’ It takes place May 17 and 18 in Toronto, ON.  For more information, visit


Tuesday, May 11, 2010

Innovation Needed To Serve ETFs

There is need for innovation and efficiency in servicing exchange traded funds, says a State Street Corporation ‘Vision Focus.’ ‘ETF Servicing: Moving Forward in a Market in Motion’ says ETFs currently account for more than $1 trillion in global assets under management and remain an efficient, low-cost, transparent and tax-friendly investment tool. However, ETF sponsors are facing new challenges as the funds continue to grow rapidly in both size and type. The report suggests the use of best practices such as Web-based service platforms and flexible and highly customized client service provided by staff who share their expertise in numerous areas of fund administration, including legal, tax, and treasury services.

Organizations Offer Summer Hours

Close to half (48 per cent) of organizations who participated in an Aon Consulting Canada ‘Rapid Ready.’ While 52 per cent of respondents do not offer flexible summer hours, results indicate that among those who do, the most common practice for compressing the work week involved working an extra half to one hour each day in order to leave earlier every Friday. The survey points to a wide range of practices employers follow to compress the work week as part of their summer hour policy. Of note, 70 per cent of respondents confirmed that they do not offer any form of flexible hours throughout the year. In Canada, because summers are short, flexible work arrangements are a non-financial benefit leveraged by employers to reinforce their work/life balance philosophy and help attract and retain employees.

CPPIB Moves Into Manhattan

The CPP Investment Board has purchased minority stakes in two office properties in the heart of New York City. The properties are on Avenue of the Americas and Lexington Avenue. The Avenue of the Americas original developer, Rockefeller Group International, Inc., will retain the remaining 55 per cent ownership interest and will continue to manage and lease the property. The CPPIB has bought 45 per cent of Lexington Avenue. SL Green will manage the building. The CPPIB, which makes investments on behalf of the Canada Pension Plan, had $7.1 billion worth of real estate assets as of the end of last year. These are its first properties in Manhattan.

Session Looks At Obesity

‘Health, Wellness and Obesity’ is the topic of the next Connex Health breakfast session. Kevin West, vice-president at Innomar Strategies Inc., will provide a case study of how employers, a manufacturer, and an insurer are working in co-operation to help employees who are morbidly obese successfully address their disease. It takes place June 10 in Burlington, ON. For more information, visit


Monday, May 10, 2010

Wait Times Greatest Weakness

The greatest weakness of Canadian healthcare remains long wait times, says the Frontier Centre for Public Policy and Health Consumer Powerhouse ‘3rd annual Euro-Canada Health Consumer Index (ECHCI).’ The index evaluates the consumer-friendliness of Canada’s healthcare system and compares Canada to 33 European countries by assessing the extent to which each national healthcare system meets the needs of healthcare users. The report shows that despite high levels of government spending, healthcare in Canada is markedly less responsive to consumers’ needs than most European countries. For the second straight year, the Netherlands finishes with the highest overall score on the ECHCI. As with most of the top-performing countries, the Netherlands promotes efficiency in healthcare delivery by allowing competition between insurers and by maintaining independence between insurers and healthcare providers. Patient rights and access to information is another weak point for Canada. Bureaucratic obstacles and long waits often make it difficult for Canadians to access a second opinion about their own medical status and patient rights are not codified in an explicit legislative guarantee.

CAPSA Seeks Comments

The Canadian Association of Pension Supervisory Authorities is seeking comment on its draft Guideline on Fund Holder Arrangements, says the ‘Hewitt Monitor.’ The draft guideline is designed to provide guidance to pension plans of all types and sizes in all jurisdictions with their fund holder arrangements; identify permitted types of fund holder agreements; specify the roles and responsibilities of key players in a pension plan with respect to fund holder arrangements; and promote compliance and consistency in establishing and maintaining pension plan fund holder arrangements. It addresses areas such as fund holder principles and responsibilities of administrators, fund holders, custodians, employers, sponsors, third-party service providers, regulators, and the Canada Revenue Agency.

CAP Members Don’t Know

“A CAP member’s greatest risk is the risk that he/she does not yet know!”, say Tony Ioanna, vice-president, DC practice, eastern region, and Ivor Krol, analyst, financial risk consulting, with Aon Consulting. In the article ‘Understanding And Managing Stakeholder Risk’ at, they say the fact that plan members only enrol once in their company retirement program means that they rarely retain essential information regarding the key aspects of their plan and often forget how to stay on-top of their retirement planning. This is why the education, information, and tools that CAP sponsors provide to their plan members are extremely important.

View From Europe Discussed

‘SRI: The view from Europe’ will be examined at the ‘Canadian Summit on socially responsible investment (SRI).’ Often hailed as a model for ESG research and asset management, the session will look at whether Europe’s reputation is warranted. Lisa Hayles, senior client relationship manager at EIRIS, and Cindy Rose, head of SRI research at Aberdeen Asset Management, will discuss the matter. It takes place June 14 to 16 in Toronto, ON. For more information, visit


Friday, May 7, 2010

Criticial Illness Insurance Interest Grows

A growing number of plan sponsors are looking to add critical illness insurance to their benefits plans, says Steve Foye, of Aon Consulting. Speaking at the ISCEBS Toronto Area Chapter seminar ‘Fundamentals of Pensions and Group Benefits,’ he said a recent Aon survey found almost 16 per cent of respondents planned to do so. It provides for lump sum payouts to employees who survive a critical illness for certain period of time, typically 30 days. Plans may cover three to 20 illnesses, but at a minimum include the big three – cancer, stroke, and heart attack.

Retirement Date Impacts Income

"A worker with a Defined Contribution pension plan or RRSPs, who retired on May 15, 2008, will have close to twice as much income for the rest of his life as someone who retired almost a year later," says Dave Coles, president of the Communications, Energy and Paperworkers Union of Canada. Speaking at a meeting with Ontario Finance Minister Dwight Duncan, he cited that statistic to show how the recession has affected pensioners. He outlined the cornerstone of the union’s proposed solution to the pension crisis – a national investment pension fund that would protect Defined Benefit pension plans that are in difficulty. Bankrupt companies would have the assets of their DB plans transferred to the fund, rather than be liquidated, which reduces retirees' benefits by up to 40 per cent. The fund could be administered by investment professionals, at minimal cost to governments.

Litigation Risk Increases

A federal government proposal to allow Defined Contribution plan members to draw down their accounts in a LIF-like fashion in retirement may increase the risk of litigation, says Ross Gascho, of Fasken Martineau. Speaking at its pension reform seminar, he said while the latest round of proposed pension reforms are slanted to Defined Benefit plans, it is suggesting allowing variable benefit payments for retirees with DC plans. However, if they run out of money and no longer feel loyalty to their employer, they may turn to the courts for a solution.

Two-tier System Impacts Plans

A move to a two-tier system of healthcare could have an impact on benefits plans. Cathy Smith, of Mercer, told the ISCEBS Toronto Area Chapter seminar ‘Fundamentals of Pensions and Group Benefits’ that if employees turn to private clients to avoid long wait times at public clinics, they may look to their employer's plan to cover the cost of that treatment. She expects governments in Canada to continue to offload services and drugs to the private sector. As well, the provinces are eyeing private clinics as one way to reduce their healthcare budgets. 

Amendment Notice ‘Big Change’

A proposal to require pension plans in Ontario to advise members of plan amendments prior to registration is a "big change." Peggy McCallum, of Fasken Martineau, told its pension reform seminar that included in the provincial government's current round of pension reform is a requirement that all current, deferred, and retired plan members be advised of almost all plan amendments before they are filed for registration. In the past, she said, most sponsors have not felt it necessary to give notice to deferred and retired members about amendments impacting active members and vice versa.

CPPIB Adds U.S. Shopping Centres

The Canada Pension Plan Investment Board has acquired an interest in four U.S. shopping centres through a joint venture with Kimco Realty Corporation. It believes its association with Kimco will assist in finding substantial quality opportunities. CPPIB is looking for assets which are dominant in their markets, where there are limits on the ability to add competitive new supply and the trade area is well developed with reasonable growth prospects. The newly-acquired shopping centres were well located and anchored by strong tenants including Wal-Mart and Costco.

Group Insurance Contract Renewed

The government of Newfoundland and Labrador has renewed its group insurance contract with Desjardins Financial Security. The new agreement includes measures that will optimize each partner’s operational efficiency. As well, Desjardins will substantially increase its presence in Newfoundland in terms of both staff and services. The plan has 35,000 employees and retirees as members.

Small Cap Returns Better

A new paper by Rob Bauer, Martijn Cremers, and Rik Frehen has just been posted on the ICPM website. It extends earlier research performed by Bauer, Frehen, Lum, and Otten in the 2007 paper ‘The Performance of U.S. Pension Funds: New Insights into the Agency Costs Debate.’ Key findings in the new paper show that domestic equity investments of U.S. pension funds tend to generate abnormal returns close to zero or slightly positive, contrasting the average under-performance of mutual funds. However, small cap mandates of Defined Benefit funds have outperformed their benchmarks by about three per cent per year. It says “While large scale brings cost advantages, liquidity limitations seem to allow only smaller funds, and especially small cap mandates, to outperform their benchmarks." Both papers are at

Emerging Markets Debt At Record Inflows

Emerging markets debt is hitting record inflows as institutional investors turn to developing nations to bolster fixed income returns, says Emerging Portfolio Fund Research Inc. So far this year, emerging markets bonds have attracted $12.8 billion, about 60 per cent more than the $8 billion recorded for all of last year. This year's inflows also surpassed the previous annual record set in 2005, when emerging markets bond strategies attracted a total of $9.7 billion in assets.

Garofalo Delivers Keynote

David Garofalo, senior vice-president, finance, and chief financial officer, Agnico-Eagle Mines Ltd., will deliver a keynote address at the ‘2010 FEI Canada Conference.’ Garofalo, who is also Canada’s CFO of the Year 2009, will discuss the history, fundamentals, and re-emergence of gold. He will also provide an overview of the market for gold equities. It takes place June 9 to 11 in Victoria, BC. For more information, visit

Stewart On Panel

Andy Stewart, president and chief operating officer for Man Investments Inc., will take part in AIMA Canada’s panel discussion ‘Recovering from the Equity Hangover: Prescriptions from institutional managers.’ Stewart is in charge of the company’s managed account initiatives. Other panelists are James Suglia, principal and U.S. advisory sector leader – investment management, KPMG; Darren Spencer, institutional client service and marketing group, Dorchester Capital; and Daniel MacDonald, portfolio manager of alternatives for the Ontario Teachers’ Pension Plan. It takes place May 11 in Toronto, ON. For more information, visit


Thursday, May 6, 2010

Current System Works Well

The Investment Industry Association of Canada (IIAC) says the existing retirement system works well for most Canadians. However, its submission to the Department of Finance identifies several policy measures to strengthen the calibre of the retirement system. It wants the development of a national strategy to increase financial literacy among Canadians. As well, it recommends reforming the RRSP and TFSA contribution limits to assist middle income Canadians in bolstering their retirement savings and to help alleviate the inequality between Canadians who save in RRSPs and those who have access to Defined Benefit pensions.

Stock Picker’s Market Benefits Managers

Canadian active managers continue to benefit from a stock picker’s market in 2010, although the Greece-debt situation and looming interest rate hikes are weighing in on the markets in the second quarter, says the Russell ‘Active Manager Report.’ It found 75 per cent of Canadian Large Cap active managers beat the S&P/TSX Composite Index in the first quarter of 2010, the highest level since the second quarter of 2004. The Financials sector was a key contributor in the first quarter. The S&P/TSX Composite Index returned 3.1 per cent, but 80 per cent of the return stemmed from the Financials sector. Active managers in Canada are overweight the Financial sector on average, which helped them beat the benchmark. The report also found that 81 per cent of value managers outperformed the S&P/TSX benchmark compared to 76 per cent of growth managers. 

BMO Expands Offering

As part of the ongoing enhancement to its ‘Governex’ program, BMO Group Retirement Services has expanded its open architecture platform to now offer a wide selection of BMO Mutual Funds. This initial offering provides a broad range of domestic and global investment options diversified by asset class, sector, region, and specialized mandates. This addition to its platform introduces 47 institutionally priced BMO Mutual Funds, all suitable as CAP investments. This new selection increases its overall open architecture offerings to 115 fund selections.

Stress Builds On Adult Children

As the Canadian population continues to age and live longer, many adult children are taking on the added responsibility of caring for elderly parents while managing their own family and professional obligations, a new trend that could have a significant impact on their mental health. The Desjardins Financial Security ‘National Survey on Canadian Health’ shows that they are highly stressed and their burden will increase over the next few years. Of those assisting their parents, 47 per cent said that it was a significant source of stress for them. When asked to describe the most stressful activities, the majority said managing the schedules of children and parents, taking parents to one or more health professional, and psychologically supporting their parents through illness or disability. A third went on to say they expected that the needs of their parents would increase over the coming years.

Government Proposing Use Of Average Solvency Ratios

The federal government wants to introduce a new standard for establishing minimum funding requirements on a solvency basis that will use average – rather than current – solvency ratios. An Osler ‘Pensions & Benefits Alert’ says the three solvency ratios used in the determination of the average would be based on the market value of plan assets. Past deficiencies would be consolidated annually for the purpose of establishing solvency special payments. The new standard is intended to mitigate the effects of short-term fluctuations in the value of plan assets and liabilities on solvency funding requirements due to, among other things, volatility in the equity market and changes in interest rate levels, by allowing sponsors to better manage their funding obligations. It is seen by the federal government as a better alternative to extending the amortization period for solvency deficiencies.

Pier 21 Offers Global Equity Funds

Pier 21 Asset Management Inc. has launched Canadian-domiciled pooled funds for institutional investors of all sizes. The pooled funds are complimentary global equity strategies. The Global Value Pool is sub-advised by ValueInvest Asset Management, out of Luxembourg, and the WorldWide Equity Pool is sub-advised by Carnegie Asset Management, out of Copenhagen. CIBC Mellon has been selected as custodian and record-keeper for the funds.

Outsourcing Trend Accelerates

Complex investment challenges and a rising compliance burden are accelerating the trend toward investment program outsourcing by pension plans and non-profit organizations, says Northern Trust. This is being driven by three key factors. Structural changes in the movements of global markets are dramatically influencing where and how returns are generated, resulting in a wider array of investment options and specialist asset. As well, institutional investors are having difficulty monitoring manager performance and tracking risk in complex, sophisticated programs, especially in alternative investments. Finally, market volatility, investment program complexity, and tight resources for oversight have raised the potential for a plan to stray from its policy and its mission to invest for the best interests of the beneficiaries. Its solution provides clients with access to global investment expertise, across asset classes, for a custom manager-of-managers portfolio.

Less Than Half Calculate Retirement Savings Needs

Less than half of U.S. workers (46 per cent) report they and/or their spouse have tried to calculate how much money they will need to have saved by the time they retire so that they can live comfortably in retirement, says the ‘2010 EBRI Retirement Confidence Survey.’ This is comparable with the percentages measured from 2003 to 2009, but is lower than the high of 53 per cent recorded in 2000 and comes at a time when workers face an increasing individual responsibility for planning for retirement. The likelihood of doing a retirement savings needs calculation increases with household income, education, and financial assets.  In addition, married workers (compared with unmarried workers), those age 35 and older (compared with those ages 25 to 34), retirement savers (compared with nonsavers), and participants in a Defined Contribution plan report trying to do a calculation more often. Instead of doing a systematic retirement needs calculation, many workers simply guess at how much they will need to accumulate.

Healthy Eating Examined

Cherilee Garofano, a holistic nutritionist, will share her views on healthy eating in the workplace at Connex Health’s ‘8th Annual Employer Forum. In her presentation, she will discuss practical solutions to good nutrition in the workplace. She will also talk about power foods and their effectiveness on targeting weight loss, stress, energy, and productivity. It takes place May 13 and 14 in Ingersoll, ON. For more information, visit

Session On Buyouts Added

A session entitled ‘Buyout – LP Perspectives on the Buyout Industry’ has been added to the program at theCVCA Annual Conference.’ A panel of Derek Murphy, PSP Investments; Joe Topley, Parish Capital Advisors Europe, LLP; Susanne Forsingdal, ATP Private Equity Partners; and Stephane Dupont, UBS Global Asset Management; will provide their outlooks on the buyout industry and what to expect over the coming years. Topics addressed will include how institutional investors are evolving their thinking on asset allocations to buyout funds, which strategies and geographies are most attractive, and whether fund terms are changing. It takes place May 26 to 28 in Ottawa, ON. For more information, visit

Health Researchers Deliver Keynotes

Two leading occupational health researchers will deliver keynote addresses at the biennial ‘Canadian Association for Research on Work and Health (CARWH)’ conference. Opening the conference is Katherine Lippel, Canada research chair in occupational health and safety law, University of Ottawa. She will address the invisibility of the health consequences of precarious employment – jobs that are insecure, unprotected and/or poorly paid. As well, Kristan Aronson, professor, community health and epidemiology, Queen’s University; will discuss the challenges in research on work at night and its potential link to a higher risk of breast cancer. Hosted by the Institute for Work & Health, it takes place May 28 and 29 in Toronto, ON. For more information, visit


Wednesday, May 5, 2010

Restrictions May Be Shelved

The federal government’s proposal to eliminate certain investment restrictions currently imposed on private pension plans is disappointing, says a Heenan Blaikie ‘Pension Pulse.’  It calls the quantitative limits now in place outmoded in a modern investment regime that places more weight on fiduciary duties and the prudent person standard.  “While many in the pension investment community had hoped that all of the quantitative limits would be eliminated, this was perhaps too much to hope for in this round of regulatory changes,” it says. There are five such investment limits on the investment of a pension fund’s assets. The government wants to eliminate limits on ownership of real estate and Canadian resource property assets. It would keep the 30 per cent of the shares of an entity that may be used to elect the directors and 10 per cent of the book value of a fund’s assets in any one entity.

Overexposure Concerns Caisse

The head of the Caisse de dépôt et placement is concerned with the overexposure of banks in offshore tax havens. A report in the Globe and Mail says Michael Sabia told a Quebec National Assembly committee hearing that if the Caisse is going to pursue investments in chartered banks, it will require answers regarding investment strategies involving offshore tax havens. He was responding to opposition questions on why the Caisse had voted against a proposal at the CIBC annual shareholders meeting that the bank produce a report describing the extent to which it was exposed to tax haven countries.

Real Estate Ready For Rebound

Real estate investment is ready for a rebound, says Colliers International’s ‘2010 Global Investor Sentiment Survey.’ It found real estate investors in Canada and abroad are finding access to financing is becoming easier and the majority of private and institutional Canadian investors plan to invest in their home countries. While Canadian investors don't believe the market has bottomed out yet, 65 per cent plan to make real estate purchases in the next year. Globally, 64 per cent of global investors have the same intentions. Activities will start to pick up in the third quarter of this year.

Corporate Wellness Returns $3.50

Corporate wellness programs are returning $3.50 for every dollar invested, says Dr. Dwight Chapin, clinic director at the High Point Wellness Centre. Speaking on ‘Developing a Corporate Wellness Program: From Theory to Practice’ at the Industrial Accident Prevention Association’s ‘Partners in Prevention 2010: Ontario Health & Safety Conference & Trade Show,’ he said this increases to $4.30 when reduced absenteeism numbers are included. Peer-viewed research on the impact of corporate wellness programs also shows that there is a 27 per cent reduction in sick leave absenteeism, a 26 per cent reduction in health costs, and a 32 per cent decline in workers’ compensation and disability claims. Where wellness once was a “nice” thing to have which was eliminated when budget cuts were needed, today it is a key strategy as businesses look to manage health costs, he said.

Modest Gains For Equities

After a relatively smooth, upward ride in March, equity funds had a very volatile month in April that, for many, ended with modest gains, says preliminary performance data from Morningstar Canada. Funds that invest in small and mid-sized companies performed better than average last month, but the clear winners were those that target the precious metals sector. Thirty-six of its 43 Canada fund indices had positive returns in April, though 22 of them gained less than one per cent.

Use Of Non-vanilla Products Declines

Around the world, the use of non-vanilla products declined in credit, equity, and interest rate derivatives last year, says Greenwich Associates. Only 31 per cent of interest rate derivatives users around the world employed strategic derivatives in 2009, down sharply from the 52 per cent of market participants using them the prior year. Within the group that did use strategic derivatives, the instruments were most commonly employed to manage debt capacity and in balance sheet restructuring/rebalancing. Notional trading volume in interest rate derivatives increased by almost 10 per cent globally last year to more than $1.8 trillion.

European Managers Under Pressure

The European asset management industry is likely to remain under pressure, due to financial market conditions, the need to restructure, and pending regulatory reforms, says Fitch Ratings. It says that it does not expect fund industry profits will return to pre-crisis levels in the short term because of slow growth in assets under management and reduced cost saving opportunities. The European asset management industry experienced a cyclical recovery in 2009 as assets under management grew by 15.6 per cent, following a sharp retreat in 2008 when they declined 23 per cent. It also says the industry will face further challenges in the shorter-term, particularly as economic uncertainty will likely weigh on asset performance and inflows in 2010.


Tuesday, May 4, 2010

Financial Advice Ignored

The Investment Funds Institute of Canada wants the Manitoba government to recognize the importance of financial advice as it considers strategies for strengthening the retirement income system. Its submission to Manitoba’s minister of finance, ‘Mechanisms for Expanding Pension Coverage and Retirement Income Adequacy in Canada,’ says reforms should look beyond pensions to a wider array of retirement savings solutions. It says much of the debate around the retirement income system so far has been overly focused on pension plans, ignoring non-registered financial assets accumulated by Canadian households such as tax-free savings accounts and other savings outside of RRSPs. As well, financial advice has been overlooked in the debate.

IASB Would Eliminate Smoothing

Companies would have to recognize gains and losses in their Defined Benefit plans immediately instead of amortizing, or smoothing, them over an extended period of years, says the International Accounting Standards Board exposure draft of amendments to IAS 19. The proposals call for the elimination of the option of a company to defer gains and losses in the value of DB assets, or in its estimate of DB obligations. Instead, it says companies should recognize these gains and loses immediately. The exposure draft, at, can be commented on until September 6.

Canadians More Optimistic

Positive economic indicators and stock market gains have helped Canadians feel more optimistic about their financial health of late, says the Russell Financial Health Index. It is at its highest level since the fourth quarter of 2008, up to 51.1 points from its low of 47.9 points in the third quarter of 2009. Investors who recently used the online calculator displayed less concern across almost all of the 11 potential areas of financial concern listed. Having sufficient income to cover essentials saw the greatest decrease in concern among Canadians. Investors are also less concerned about having enough income for their lifestyle, riding out Canada's economic performance, and having a reliable source of income.

GE Offers Commodities Product

GE Asset Management (GEAM) has launched its first commodities product for institutional investors. The GE Active Commodities strategy is an actively managed portfolio currently utilized as an investment allocation within the GE U.S. Pension Trust. It is an attractive investment option for those seeking to improve portfolio diversification, who want protection from unexpected inflation, and who are looking to participate in the current bullish long-term outlook for the asset class.

Denison Speaks At Conference

David F. Denison, president and chief executive officer, Canada Pension Plan Investment Board, and Henry Hu, risk director for the Securities and Exchange Commission in the U.S. are among the keynote speakers at the ‘2010 IGN Annual Conference and AGM. Theme of the event is ‘The Changing Global Balances.’ Hosted by the Ontario Teachers’ Pension Fund and the Canada Pension Plan Investment Board, ICGN is partnering with the World Economic Forum for this event. It takes place June 7 to 9 in Toronto, ON. For more information, visit


Monday, May 3, 2010

Fiscal Austerity Coming For Some

Europe and the U.S. are facing fiscal austerity in their futures, says Craig Alexander, senior vice-president and chief economist for TD Bank Financial Group. The question, he told those attending TD Asset Management’s ‘7th Annual Sharing of Knowledge Learning Series,’ is whether governments will do it voluntarily or be forced into it by financial markets. Governments are facing bigger deficits because of their stimulus spending during the financial crisis. While this had a positive psychological impact, he said there are risks associated with the timing and rebalancing of fiscal and monetary policy. However, he said the recovery is real, although fragile in industrialized countries.

Complexity Lessens When Self-interest Removed

While many have written on pension reform, none has taken a position that puts the interests of the average working Canadian front and centre, says Warren Laing, CEO of Open Access. In an article now on the Benefits and Pensions Monitor website, ‘A New Bias: An Unprecedented Opportunity To Initiate True Reform,’ he says the sponsors of many substantive pieces on pension reform would argue that creating a fiduciary‑based DC model is either unnecessary or too complex. “As much as ‘easy’ and ‘right’ are seldom brothers, complexity is lessened considerably when self-interest is removed. Furthermore, it becomes difficult to argue that a fiduciary, highly skilled at investment selection and acting solely in the best interest of its plan members, is not a necessity without unveiling a bias that has little to do with the financial well being of a plan member, but has much to do with protecting a third pillar model that has led to high fees, often times inferior proprietary product offerings, the creation of ill-equipped, laymen investors, and poor disclosure.” Visit to read the article.

Fund Demand Could Limit Rate Increases

Pension fund demand for long bonds could limit the extent of rising interest rates, says Kevin Le Blanc, vice-chair at TD Asset Management. Speaking at its ‘7th Annual Sharing of Knowledge Learning Series,’ he said economic forecasts and industry reports have long been predicting rate increases. And, as rates rise, pension funds will start moving in. However, their demand will put a cap on how high rates will go. He suggested that plans now on the sidelines “be ready for action” by setting up a governance structure, establishing trigger points, and committing to a manager.

Aon Establishes New Practice

Aon Consulting Canada has developed a new practice. Aon Benefits Solutions’ approach pre-tests products and services and pre-qualifies market access for the delivery of health, retirement, and lifestyle programs to employers and their employees. Its solutions are scalable to satisfy group benefit program needs for all insurance, retirement, and lifestyle needs. The practice is meant to be an extension of the client and will be the client's administration resource for claims, enrolment, and funding.

Summit Explores Innovation

‘The Canadian Summit on Socially Responsible Investment’ will explore how innovation is changing the face of socially responsible investment and how SRI is revolutionizing conventional investment. Sessions will look at cleantech, oilsands issues, public attitudes, advisor/client relationships, divestment versus engagement, and innovations in environmental social governance (ESG) research and investment management. It takes place June 14 to 16 in Toronto, ON. For more information, visit


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