The Canadian Source Of Employee Pension Fund Investment And Benefits Plan Management


News Archives - April / May 2008

Friday, May 30, 2008

Supplementary Pension Plan Needed To Fill Gap

Shortcomings in workplace pensions and individual retirement saving plans mean millions of Canadians face large declines in living standards when they retire. The answer, says a C.D. Howe Institute Commentary is a major new supplementary pension plan for Canadians. In the study, ‘The Canada Supplementary Pension Plan (CSPP): Towards an Adequate, Affordable Pension for All Canadians,’ Keith Ambachtsheer outlines the factors that jeopardize the ability of Canadians to put away adequate retirement savings and proposes a practical solution to the problem – the CSPP. The CSPP would have automatic enrolment, investment, and annuitization features. Ideally, it would be nation-wide, but can also work on a sub-national or provincial level.

Private Equity Industry Has Grown

Canada’s private equity industry has grown and helped fuel Canada’s economic prosperity, says a report on Canada’s private equity industry by Canada’s Venture Capital and Private Equity Association (CVCA). The report shows that over the last five years, buyout investors have added $25 to $30 billion in value (GDP) to the Canadian economy and created 114,000 jobs. As well, Canadian buyout firms have been far more active buying American companies. From 2002 to 2006, Canadian buyout firms executed buyout deals in the U.S. valued at approximately three times the value of U.S. buyouts of Canadian firms.

Documentation Framework For Risk Mitigation

Documentation is the primary framework for risk mitigation in a securities lending arrangement, says Maureen Campbell, of Sungard. Speaking at IMN’s Third Canadian Summit on Securities Lending and Global Custody, she said this documentation should include the securities lending contract, collateral requirement/investment guidelines, and the service level agreement between the agent lender and the beneficial owner. As well, beneficial owners should be monitoring their agent lender at least yearly. Areas to monitor include whether or not the loan is profitable and if required levels of liquidity are being maintained.

Foreign Exchange Markets Transforming 

Dramatic growth in trading volumes and a seemingly bottomless well of liquidity are transforming global foreign exchange markets, says Greenwich Associates ‘2008 Global Foreign Exchange Research Study.’ It shows worldwide forex trading volume surged 36 per cent from 2006 to 2007 continuing a steady run of double-digit annual growth. Banks and investment managers are increasing their presence in FX as they diversify portfolios with international assets and the market continues to attract new users ranging from hyper-active hedge fund traders to a growing cohort of retail investors. Much of this new business is being facilitated by electronic trading technology which provides institutional, corporate, and retail players alike with instant access to deep pools of liquidity at very low cost.

AXA Rosenberg Launches Global Long/Short Strategy

AXA Rosenberg Investment Management has launched a global long/short investment strategy that aims to deliver equity-like returns at substantially lower levels of risk and with low correlation to equity markets. The Global Advantage Long/Short strategy invests in large and mid cap equities across the U.S., Europe, and Japan. The target regional weightings are 50 per cent U.S., 40 per cent Europe, and 10 per cent Japan. It draws on a bottom-up stock selection process which ranks more than 21,000 stocks based on their future earnings prospects relative to their peers.

Northern Trust Enhances Automation And STP

Northern Trust has launched PassportLink, a system integration tool that offers a plug-and-play technology solution, enabling asset servicing clients to seamlessly communicate trade messages and reporting data between their internal front office systems and Northern Trust’s custody systems, thus increasing operational efficiencies. PassportLink was developed as part of Passport, its online, institutional client data delivery platform and has been designed to be used in conjunction with its Web Trade Services solution which offers automatic trade matching.


Robert Veloso is manager, consulting services, at TWENTY-FIRST CENTURY INVESTMENTS INC. He will be responsible for maintaining relationships with the consultant community including database stewardship, managing the RFP process, providing performance and portfolio data, ad hoc analyses, and generally supporting all consultant activities. Previously, he was an associate, equity research, at BMO Capital Markets.

BMO Appoints Two

Simon Fish is executive vice-president and general counsel for BMO Financial Group. Prior to joining the firm, he served as executive vice-president and general counsel at Vale Inco Limited and as vice-president, general counsel and secretary, of Shell Canada Limited. Terry Bulger is executive vice-president of risk analytics and portfolio management. Most recently, he was executive vice-president and chief risk officer for ABN AMRO's North American operations.

Governance Course Held In Toronto

SHARE’s four-day ‘Pension Investment & Governance’ courses takes place September 29 to October 2 in Toronto, ON. Both basic and intermediate levels are being offered. The courses are interactive and hands-on, providing the practical knowledge and skills needed to serve plan members' best interests. For more information, visit


Thursday, May 29, 2008

Payment Of Expenses Clarified

The Ontario Court of Appeal judgment in Burke v. Hudson’s Bay Company (Burke) has clarified when it is acceptable to pay pension plan expenses from the pension fund, says a ‘Blakes Bulletin on Pension & Employee Benefits.’ The court emphasized again the distinction between plan and trust fund expenses. Referring to the Kerry decision, it said when the pension plan assets are held by way of trust, there are expenses that arise in the management of the trust fund. The test for when expenses – either plan administration or fund management expenses or both – can be paid from the pension fund is whether or not the plan documentation requires the company to do so. Absent this undertaking, the company is under no legal obligation to pay such expenses as there are no principles of law that automatically require an employer to pay plan expenses.

Aging Workforce Creates Talent Gaps

Managing talent is the most critical human resources challenge worldwide and will remain at or near the top of executive agendas in every region and industry for the foreseeable future, says a study by The Boston Consulting Group and the World Federation of Personnel Management Associations (WFPMA)/Canadian Council of Human Resources Associations (CCHRA). ‘Creating People Advantage: How to Address HR Challenges Worldwide Through 2015’ also found that managers also rated improving leadership development and managing work/life balance as urgent priorities. With nearly 24 per cent of the Canadian population projected to be older than 65 by 2031, the study notes that more than 78 per cent of Canadian companies expect that by 2015 – or earlier – they will be offering flexible employment options to attract or retain semi-retired or retired employees.

DC Retirees Need Investment Returns

A good portion of the money participants will need for their retirement will come from the investment returns generated by their 401(k) accounts after they stop work, says a Russell Investments research report. It suggests that in a Defined Contribution context, the plan benefits a participant receives in retirement will consist of 10 per cent of each retirement income dollar from contributions made to the DC plan while working; 30 per cent investment returns generated before retirement; and 60 per cent of investment returns generated after retirement. As part of its research, Russell altered several input assumptions – such as the retirement age, the age when saving begins, and age of death – and found that only lowering the expected post-retirement return would significantly change the 10/30/60 rule.

Ethical Funds Turn To Emerging Markets

The Ethical Funds Company will expand its corporate engagement activities to the emerging market companies in its portfolio, says its annual review of its Shareholder Action Program. As a first step, it has signed on to the Emerging Markets Disclosure Project, a coalition of investors currently representing $850 billion in assets under management. The project is a joint effort to improve the reporting on sustainability issues in emerging market companies. Experience in the North American market has shown that once companies begin to publicly report on their environmental, social, and governance (ESG) performance, they begin to actively work to improve that performance, especially in relation to their peers.

Young Hedge Funds Attract Interest

Nearly half of institutional investors, 46 per cent, are willing to invest in young and/or small hedge funds, says a survey by database manager Preqin Hedge. If the new hedge fund has come from a well-established firm, the percentage of those who would invest rose to 55 per cent. Endowment officials are the most inclined to invest with emerging hedge fund managers. By contrast, only 14 per cent of corporate pension plan officials would invest in an emerging hedge fund.

CPPIB Opens London Office

The Canada Pension Plan Investment Board (CPPIB) has opened an office in London to get greater access to investment opportunities in the United Kingdom and Europe. It’s the second foreign office for the $122.7 billion fund which opened a Hong Kong bureau in February. The CPPIB has $12.1 billion invested in public companies in Britain and Europe, along with $8.4 billion in private equity, infrastructure, and real estate holdings.

Gangwal Joins Teachers’

Rakesh Gangwal has joined Teachers’ Private Capital, the private equity arm of the Ontario Teachers’ Pension Plan. He will be responsible primarily for sourcing and evaluating technology and business services transactions. He was previously chairman, president, and CEO of Worldspan Technologies Inc.; president and CEO of US Airways Group; and also worked in various senior-level positions at Air France and United Airlines.

Trainor Presents Drivers

Industry visionary Norm Trainor will present the four key drivers of change in financial services and how they can impact your business and career at a PAICR networking session. The best-selling author and CEO of The Covenant Group, he has extensively studied the principles of success in financial services sales and marketing. It takes place June 12 in Toronto, ON. For more information, visit


Wednesday, May 28, 2008

CPPIB Taking Sophisticated Approach

The Canada Pension Plan Investment Board (CPPIB) will take a more sophisticated approach towards investing in the public and private debt markets, it says in its annual report. The CPPIB private debt strategy will include the creation of a new investment group that will oversee private debt investments such as distressed mortgage securities, senior bank loans, and corporate bonds. In public markets group, it will add to its debt market capabilities by investing in corporate bonds. This group started investing in global corporate bonds at the beginning of this year.

Teachers’ Invests More In RailPower

The Ontario Teachers' Pension Plan has invested $20 million to help hybrid locomotive maker RailPower Technologies Corp. build a factory in Quebec. The factory will handle assembly work currently being subcontracted out in the United States. The plant is expected to be open by mid-January 2009, with the first locomotives leaving the facility by next spring. Teachers' investment is a convertible debenture, the same method it used to invest $35 million in the company earlier this year.

Life Expectancy Costs Pension Plans

Adjustments to increased life expectancy in the UK cost pensions £40 billion over the last three years, says research from KPMG. It shows the average life expectancy for pensioners increased to 86 in 2007 from 83 in 2004. Many companies expect retirees will live to 87 on average.

Employees Get More Flexibility

U.S. employers are giving their employees more flexibility, says The Families and Work Institute’s ‘2008 National Study of Employers.’ It reports that 79 per cent of employers now allow some employees to change their arrival and departure time compared to 68 per cent in 1998. As well, 60 per cent of employers provide wellness programs up from 56 per cent a decade ago. More employers are also recognizing the demands being placed on employees by aging parent. Almost 40 per cent provide access to information about services for elderly family members, up from 23 per cent in 1998.

Lim Joins Standard Life Investments

Lawrence Lim is vice-president, client services, for Standard Life Investments Inc. He is responsible for maintaining and building strong client relationships with its institutional clients in the Central Canada region. He has more than 10 years of investment and consulting experience in the institutional pension fund and endowment markets.

Lamoureux Looks At Retirement Woes

Claude Lamoureux, special advisor to the Canadian Institute of Actuaries, will discuss fixing Canada’s ailing retirement savings system at an Economic Club of Toronto luncheon. It takes place June 3 in Toronto, ON. For more information, visit


Tuesday, May 27, 2008

BCE Gets Expedited Hearing

The Supreme Court of Canada has granted BCE Inc. an expedited hearing in its appeal of a lower court ruling. However, it still needs to rule on whether or not it will hear the appeal. If leave to appeal is granted, the hearing would take place June 17 with a decision handed down prior to the June 30 deadline for the transaction. A ruling could come soon after. Last week, the Quebec Court of Appeal ruled BCE hadn't properly considered the interests of bondholders when making the decision to sell to a group of investors lead by the Ontario Teachers Pension Plan. The bondholders had argued the deal would put BCE heavily into debt which was causing the value of their bonds to drop.

HSBC Changing Name

HSBC Investments (Canada) Limited will become HSBC Global Asset Management (Canada) Limited as of June 2. The name change in Canada is part of the re-naming of the HSBC Group's investment management businesses around the world. HSBC Global Asset Management is the core global asset management business of the HSBC Group. In Canada, the business provides investment management services to institutional, retail, and high net worth private clients and acts as manager of the HSBC Pooled Funds.

Fewer U.S. Stocks In Global Index

U.S. stocks now make up 42 per cent of the Russell Global Index, down from a high of 59 per cent in 1999, says Russell Investments. International stocks comprise 58 per cent of the global index, up from 41 per cent in 1999 and emerging markets equity represents 12.4 per cent, up from 3.2 per cent. By the end of 2006, total GDP of the developing economies overtook the U.S., making up 28.9 per cent of total global GDP compared to 27.5 per cent for the United States. These trends have continued in magnitude and direction in 2007 and into 2008. However, U.S. stocks have continued to increase in value. The market cap of the Russell 3000 was $16.8 trillion in June 2007 compared to $12.6 trillion in 1999.

Smart Now Vice-president, Legal

Gawain Smart is vice-president, legal, for Oxford Properties Group, the real estate investment arm of OMERS. Previously, he was a partner in the real estate group of Davies Ward Phillips & Vineberg LLP in New York, NY, focusing largely on structuring real estate private equity funds, real estate-based debt financing, and real estate acquisitions and restructurings across all asset classes.


Monday, May 26, 2008

New Hires Still Get DB

The pace of retirement plan changes among FORTUNE 100 companies is stabilizing and a majority still offer pension plans to their new employees, say an analysis by Watson Wyatt Worldwide. The analysis found that more than half offer a Defined Benefit pension plan to newly hired salaried workers. Following an 11 per cent decline between 2004 and 2005, the number of FORTUNE 100 companies sponsoring pension plans decreased by five per cent in 2006 and four per cent in 2007. The rate of change slowed after passage of the U.S. Pension Protection Act of 2006, which established a more supportive environment for both traditional and hybrid DB plans. But with proposed hybrid plan regulations not final until 2009, it could take several years to see the full effect of these encouraging developments for DB plans.

Mercer Factors In ESG

Mercer has further evolved its manager research process to evaluate the extent to which fund managers pro-actively integrate environmental, social, and governance factors (ESG) into their mainstream investment process. The move comes as institutional asset owners are becoming increasingly interested in whether managers behave as active owners of capital and whether they reflect the materiality of ESG in their investment decision-making. Its existing ESG research process has been expanded to rate all managers on their ESG capabilities at strategy level. Going forward, ESG questions will be asked of every manager in the Mercer database and included on every research meeting agenda. The manager research team will indicate where managers incorporate ESG and recommend where further ESG research is justified.

OMERS Not Exposed To ABCP

OMERS has no direct exposure to third-party asset-backed commercial paper (ABCP) and has no intention of getting any, says Michael Nobrega, its president & CEO of OMERS at its ‘2008 Spring Annual Regional Meeting.’ Attendees also learned that it is heading toward an investment portfolio which is split equally between private and public markets. Last year, it collected $1.9 billion in contributions from its members and employers and paid out $1.8 billion. However, it expects that pension payments will exceed contributions this year which means investment returns will be required to make up the shortfall. Currently, about 70 cents of every pension payment dollar is financed by investment returns.

Northern Trust Expands Reporting Tools

Northern Trust has expanded its array of reporting tools to support institutional investors in meeting new and complex requirements for corporate governance, financial disclosure, and regulatory filings in markets worldwide. New reports launched in 2008 will help clients comply with higher standards for transparency in class action processing, taxation, investment risks, and accounting practices. Governance, regulatory, and financial reporting requirements include class actions as clients around the world have a heightened interest in securities litigation driving increased demand for comprehensive, consolidated, and integrated data on class action processing.

Analysts Debunk Oil Price Theory 

Analysts at Barclays Capital are seeking to debunk the currently popular theory that the rise in oil prices is due to institutional investor holdings of commodity index linked assets. Their report places the total of commodity investments at the end of the first quarter 2008 at $225 billion and institutional investors accounted for about half of that with funds invested in commodity futures or exchange-traded funds. The actual inflow of net new investor money was very modest and commodity indexes have received a thoroughly undeserved focus in the search for scapegoats for higher oil prices, says the report. Commodity indexes were the preferred investments with $122 billion, followed by commodity ETFs with $46 billion, medium-term commodity notes with $40 billion, and commodity-linked mutual funds with $17 billion.

Whitman Rejoins Brandes

James Whitman has rejoined Brandes Investment Partners as regional director, Toronto and Atlantic Canada. Most recently, he was COO at Altamira Investment Services. He is returning to Brandes after leaving in 2006 to gain some experience on the corporate management side of the business.

New DC Funds Examined

Life cycle and target-date funds will be examined in the group benefits and retirement stream at this year’s ‘LOMA Canada Annual Conference.’ Sean Collins, investment solutions executive, group retirement services, at Sun Life Financial will lead the session. As well, Shelley Frohlich, supervisor, investigative services department, at Manulife will discuss group benefits claims fraud. It takes place June 12 in Toronto, ON. For more information, visit

Conference Looks At Managing Workplace

Heenan Blaikie’s ‘2008 Managing The Workplace Conference’ will take place September 25 in Toronto, ON. The theme for this year’s one-day conference is ‘Technology and the Evolution of Labour and Employment Law.’ The conference will cover topics such as technology and the globalization of the HR function and responding to mental stress claims. For more information, eMail


Friday, May 23, 2008

BCE Seeks Expedited Hearing

BCE has filed a motion seeking an expedited process from the Supreme Court of Canada to hear both an application for leave to appeal and the appeal itself of the Québec Court of Appeal decision denying the company's sale to a group lead by the Ontario Teachers Pension Plan. The Quebec Court of Appeal has ruled that BCE unfairly overlooked the interest of bondholders in a bid to get the best possible price for shareholders. It is trying to get the matter settled prior to the June 30 deadline to complete the transaction.

Notice Insufficient To Change Compensation Terms

It has generally been accepted that an employer is permitted to change unilaterally a term or condition of employment, including compensation and benefits, by providing reasonable notice of the change to affected employees. However, a decision by the Court of Appeal of Ontario now says where an employee does not consent to changes to his/her terms of employment, an employer can make unilateral changes only if it precedes them with reasonable notice of termination and offers re-employment to the employee on the new terms, says Michelle S. Henry, of Borden Ladner Gervais LLP. Writing in its ‘Newsletter,’ she says the ‘Wronko’ decision makes it clear that providing reasonable notice to an employee of a fundamental change to his/her terms of employment, may no longer be sufficient. If an employee objects to the change, the employer may be faced with a wrongful or constructive dismissal claim. The risks of a successful claim are greater where an employment contract does not have an embedded amending power with respect to the specific term of employment. This is not usually the case with pension and benefits plans, as most plans have a right to amend expressly set out.

CPP Posts Loss

The Canada Pension Plan Fund had a 0.29 per cent loss on its investments during the year ended March 31. The fund totalled $122.7 billion at the close of the fiscal year, up by $6.1 billion from a year earlier thanks to $6.5 billion in worker and employer CPP contributions not needed to pay current benefits. Its four-year annualized investment rate of return was nine per cent, well above the return required to sustain the CPP at its current contribution rate. The fund's investments earned 12.9 per cent in fiscal 2007, 15.5 per cent in 2006, and 8.5 per cent in 2005.

T. Rowe Price Helps Retirees

T. Rowe Price is helping investors who are retiring into today’s bear market. The firm recently completed an analysis of the problem and provides tips for retirees in the spring issue of its quarterly newsletter. The ‘T. Rowe Price Report’ tells retirees to consider a cut back in portfolio withdrawals. “...Bear markets can be devastating for new retirees who do not take action to compensate,” it says. “While their instinct may be to flee the risk of equity markets, a more effective strategy... is to temporarily reduce annual withdrawals from their nest eggs.” Investors who follow this course could bring withdrawals back up once the stock market recovers.

$401(k) Money Moves To Equities

Members of 401(k) plans had mixed investment sentiment, says the ‘Hewitt 401(k) Index.’ Participants shifted monies from equities to fixed income investments during 55 per cent of the days in April. However, a net of $98 million in assets were moved from fixed income funds to equity funds during the month. GIC/stable value funds received the largest net transfers in April of nearly $230 million. Lifestyle funds also saw strong net inflows of $197 million during the month.

Equity Indices Recover In April

April was a strong month of recovery for the financial markets, with major U.S. and international public equity indices up more than five per cent and improved liquidity conditions in higher-yielding segments of the fixed-income market, says Watson Wyatt’s ‘Investment Brief.’ As a result, the funded status of a ‘typical’ corporate Defined Benefit plan has partially recovered from the declines suffered in previous months. While the funded status of a corporate DB plan with a traditional investment strategy had deteriorated by 11.5 per cent from January to March 2008, the year-to-date decline now stands at 6.2 per cent.

Employers Want To Address Obesity In The Workplace

The workplace is an appropriate setting for responding to weight management issues, says research by the Strategies to Overcome and Prevent (STOP) Obesity Alliance and the National Opinion Research Center (NORC). The survey findings demonstrate that across the board, all employees – including people who are average weight, overweight, and people who are obese – exhibited a strong desire for weight management help from their employers. They also indicated a willingness to pay more for various workplace weight-loss options including exercise programs, nutritional counseling, and other means. Employers also acknowledged their role in providing obesity prevention and management options for their employees.


Thursday, May 22, 2008

Ruling Threatens BCE Deal

A Quebec court ruling has put the future of the Ontario Teachers' Pension Plan takeover of BCE Inc. The Quebec Court of Appeal has ruled that BCE unfairly overlooked the interest of bondholders in a bid to get the best possible price for shareholders. The bondholders had lost their case in a lower court decision earlier this year. BCE can either try satisfy the concerns of the bondholders or appeal the decision to the Supreme Court of Canada and hope for a decision prior to the June 30 deadline to complete the transaction.

‘E’ Now Means Employee

The ‘E’ in SERP now applies to ‘Employees,’ not just senior executives, says Buck Consultants' survey of ‘Supplemental Employee Retirement Plans in Canada.’ With the average wage steadily climbing, more and more employees are finding their pensions restricted by the Income Tax Act limits under the registered pension plan. In 1968, the maximum pension a full career employee could receive under a registered pension plan was $40,000, about seven times the average wage at that time. In those days, only the highest paid executives had to worry about the income tax limits on their pensions. Today the maximum pension limit is only about 1.8 times the average wage. As a result, employers are finding it increasingly necessary to offer supplemental pension arrangements not only for their senior executives, but for their middle-management employees as well.

Commission Identifies Time Delays

A merger of pension plans may take an average of 928 days and an asset transfer 1,165 days for regulators in Ontario to process, Kathryn Bush, of Blakes National Pension & Employee Benefits Group, told its ‘Recent Developments in Pension & Employee Benefits Law’ seminar. An advisor to the Ontario Expert Commission on Pensions, she said this was one of the findings of the commission. As a result, she said plan sponsors are not even proceeding with plan mergers or asset transfers because, notwithstanding the time factor, they can invest the time and money to get to the decision stage only to have the regulator reject it.

Equity Allocations High For Target-date Retirees

Defined Contribution participants nearing retirement may be shocked at the asset allocation to equities in their target-date funds, says a Watson Wyatt research paper. It says some target-date funds may retain more risk by allocating more to equities than might be optimal. For example, some funds for employees expecting to retire in 2010 still have almost 70 per cent of assets in equities. Its analysis of target-date funds has shown considerable variability in asset allocations. For instance, in 2006, allocations to equities for employees 10 years from retirement varied from 80 per cent to 40 per cent among target-date funds. Equity allocations for employees on their retirement day ranged from 65 per cent to 20 per cent.

Investors New To Commodities

More than a third of investors in commodities have been active in these markets for less than three years and more than one in 10 say they started investing in OTC commodity derivatives within the past 12 months, says research from Greenwich Associates. Its ‘2008 Global Commodities Research Study’ says the entry of new financial or speculative investors into global commodities markets is fueling the dramatic run-up in prices. The growing ranks of commodity market investors consist of three types of organizations. Pension funds are using commodities as a portfolio diversification tool. European banks use commodity derivatives to structure retail products that they then sell to their retail customers. Hedge funds are using commodities as a source of alpha.

High Oil Prices Justified

With emerging country growth continuing, it is unlikely the trend in oil prices will reverse its course in the short term, says the ‘Natcan Weekly Market.’ Oil recently set new record highs and respected analysts have been calling for a price super-spike that might lead the barrel to as much as $200 within a year. It says the strongest determinant of growth in demand for oil is world economic growth and the growth in demand from the emerging world has been strong. In fact, the International Monetary Fund (IMF) has confirmed that China and emerging countries account for more than 90 per cent of world growth in demand for oil. For oil prices to drop, demand growth will have to slow or there needs to be a combination of new supplies coming on stream as well as adjustments in consumption.

Surplus Need Not Be Transferred

Surplus in a company pension plan does not need to be transferred to the acquiring company’s plan if the pension documentation gives clear entitlement to the selling company’s plan, says Randy Bauslaugh, of Blakes National Pension & Employee Benefits Group. Commenting on the Ontario Court of Appeal decision in ‘Burke v. Hudson’s Bay Company,’ he said it must be clear in the plan documentation that the company is entitled to the surplus and this may not be the case if surplus entitlement is not clear.

Index Has Exposure To Equity Volatility

Merrill Lynch Global Research has introduced an index with exposure to equity volatility. Its U.S. Forward Equity Variance Rolling (FEVR) Index measures the performance of a long S&P 500 volatility strategy designed to be both tradable and efficient. Because of the tendency of volatility to strengthen when equity markets weaken, volatility can serve as an alternative to standard equity portfolio hedges, such as put options. The index tracks volatility using a strategy designed to minimize the carry cost associated with owning volatility while attempting to capture many of the important benefits that a long volatility strategy provides.

Ceridian Offers Integrated Outsourcing Solution

Ceridian has launched of HR/Payroll Latitude, its next generation HR, payroll, and benefits solution. Key features include an on-demand integrated cross-border HR, benefits, and payroll platform serving both Canadian and U.S. employees by eliminating the need for separate HR and payroll systems. It integrates its full suite of HR solutions, including Workforce Management, Manager and Employee Self-Service, Tax Filing, Talent Management, and Recruiting.

Virtual Teams Examined

Claire Sookman will explain how Virtual Teams can enhance an organization’s effectiveness at the next Employee Assistance Program Association of Toronto (EAPAT) session. Virtual Teams are made up of individuals with specific skills to perform specific work tasks, but members are from diverse locations, sometimes even working in different cities and countries. The team communicates largely via internet, teleconferences, and webinars. However, geographic, ethnic and cultural differences can impact the effectiveness of how these teams operate. Sookman specializes in virtual team building. Her clients include Bell Canada, AT&T, and Campbell Soup. It takes place June 5 in Toronto, ON. For more information, visit


Wednesday, May 21, 2008

Banks Want BCE Price Cut

The future of the $35-billion purchase of BCE Inc. may now depend on concessions the buyers can make to their banks on interest rates and other loan terms, says a report in the Globe and Mail. It says the Ontario Teachers' Pension Plan and its partners in the planned acquisition are likely to retreat on loan terms and possibly on interest rates for the loans financing the deal. The banks, on the other hand, want to see the price reduced so they do not need to lend as much.

Confusion Over Investment Options Top Concern

Canadian employers who sponsor Defined Contribution or capital accumulation pension plans are worried that their employees don’t understand their choices under their plans in spite of concerted communications efforts, says a survey of Canadian plans by Buck Consultants. The study, ‘Moving Forward – An Overview of Capital Accumulation Plans in Canada,’ found that 74 per cent of sponsors think members are confused about investment options. The survey found that 57 per cent of sponsors offer more than 10 investment choices, a significant increase from the 2003 survey, where only 40 per cent offered more than 10 options. Other top concerns include governance and compliance issues, benefit adequacy, employee satisfaction, and cost containment.

Law Commission Looks At Division Of Pension 

The Law Commission of Ontario has issued a consultation paper on the division of pensions upon marriage breakdown. The paper summarizes current problems with the law relating to pensions and marriage breakdown and the two main approaches that have been suggested as a basis for reform. It is seeking public input on how the law in this area should be reformed. Written submissions will be accepted until July 31.

Inflation Ranks As Top Retirement Concern

From the high price of milk and eggs to the unprecedented cost of gas, inflation is affecting every American. A study from the Society of Actuaries, ‘Risks and Process of Retirement Survey Report,’ says inflation is the top retirement concern among the 78 million baby boomers inching ever closer to retirement and current retirees who are experiencing soaring costs in a volatile economy. The report says pre-retirees and retirees are worrying about keeping the value of their assets up with inflation as well as having enough money to pay for long-term care, paying for adequate healthcare, and the challenges of maintaining a reasonable standard of living after the loss of a spouse – all of which are also impacted by inflation.

DB Funding Status Improved In 2007

Defined Benefit pension plans S&P 500 companies returned to their overfunded status in 2007 with $63 billion in excess assets, says data from Standard & Poor’s Index Services. However, other post-employment benefits (PEB), primarily medical and pharmaceutical drug plans, remained severely underfunded with $269 billion in shortfalls. Pension funding improved to 104.4 per cent in 2007 from 97.3 per cent in 2006. Fully funded plans increased to 127 in 2007 from 85 in 2006 and 47 in 2005. The aggregate OPEB underfunding declined from $293.7 billion in 2006 to $269.1 billion in 2007. Only six companies are overfunded for OPEB.

ASPPA, COPA To Join Forces

The American Society of Pension Professionals & Actuaries (ASPPA) and the College of Pension Actuaries (COPA) have agreed to collaborate in moving toward the goal of combining their efforts in the pension actuarial profession. The objective will be to integrate COPA as a semi-autonomous body within ASPPA. The body would be known as the ASPPA College of Pension Actuaries (ACOPA). The boards of directors of both organizations will proceed with developing a formal agreement to implement this strategy. The plan will be offered for a vote by the COPA membership later this year. With membership approval, ACOPA would function as an operating unit within ASPPA to represent the needs of the combined group of pension actuaries.

Headwinds Created For Commodity Markets

The global economy continues to slow and create headwinds for commodity markets, says ‘RBC DS The Harbour Group: Harbour Notes.’ Base metals are feeling this effect and there are good reasons for caution on the TSX metals and mining industry as a
result. However, the actions by global central banks to combat the credit crisis have put into place the conditions for an economic rebound in 2009.

Firms Share Access To ‘Dark’ Pools

Goldman Sachs, Morgan Stanley, and UBS have announced a series of bi-lateral agreements that will allow each firm to offer their clients access to each other’s pool of non-displayed liquidity. These arrangements allow algorithmic trading orders of each firm to interact with the U.S. equity liquidity found in three of the largest broker-dealer operated ‘dark’ liquidity pools in the U.S. – Goldman Sachs’ SIGMA X, Morgan Stanley’s MS POOL, and UBS’ PIN ATS. They hope that providing their respective clients access to each other’s liquidity, they will achieve even better crossing results.

Private Equity Buyouts Still Solid 

“The level of investment activity in our private equity markets during the first quarter clearly demonstrates that the Canadian buyout sector remains strong,” says Rick Nathan, president of Canada’s Venture Capital and Private Equity Association (CVCA). First quarter of 2008 investment statistics for the private equity buyout sector in Canada show 29 transactions were completed during the quarter, with nine disclosed investments totalling $2.4 billion. Buyout activity during the first quarter of 2008 was consistent with the performance achieved during the prior quarter when 14 transactions with disclosed values amounted to $2.3 billion and a total of 42 investments were completed.

Desjardins Appoints McGowan

Gil McGowan is regional vice-president, sales, savings for Groups and Businesses, at Desjardins Financial Security. He will be responsible for developing and implementing strategies aimed at promoting group retirement services and ensuring this sector’s growth in brokerage and consulting markets in Ontario and the Western provinces.

SRI Challenges Examined

Susan Enefer, manager, corporate governance, at BC Investment Management Corporation and John D’Agata, director, pensions and benefits, McGill University, will share their experience and insight on incorporating socially responsible investing (SRI) into their investment policies at the ‘Association of Canadian Pension Management’s 2008 National Conference.’ In a session entitled ‘ the challenges after SRI implementation and the lessons that are being learned. Theme of this year’s conference is ‘Climbing the Rocky Road.’ It takes place in Lake Louise, AB, from September 16 to 19. For moHow Green is Your Fiduciary Duty,’ they will look atre information, visit

GIPS Conference Set For Boston

The CFA Education Centre’s ‘GIPS Standards Annual Conference’ takes place September 25 and 26 in Boston, MA. It will examine the proposed changes to the GIPS standards and what those changes mean. Sessions will look at the latest on valuation requirements, the use of carve-outs, and current best practices in investment performance reporting. For more information, visit


Tuesday, May 20, 2008

Banks Reportedly Want New BCE Financing Terms

The Ontario Teachers Pension Plan Board expects lenders to keep their original commitments to finance the $35.1 billion takeover of BCE Inc. The New York Times reported last week that the banks had submitted new financing terms calling for higher interest rates, tighter loan restrictions, and stronger protections for the banks. While Teachers’ declined comment on the report, it said it expect everyone will honor their commitments. A consortium led by Teachers’ last year offered $35.1 billion for the parent of telecommunications holding company Bell Canada, with financing from lenders including Citigroup Inc., Deutsche Bank AG, and Royal Bank of Scotland Group PLC.

Judge Delays ABCP Decision

An Ontario Superior Court justice has delayed his decision on the $32-billion restructuring of Canada's frozen asset-backed commercial (ABCP) paper market. Colin Campbell says that he can't give approval for the plan because he's not satisfied that the legal immunity provisions that would protect some parties from lawsuits are fair or legal. The plan would give parties in the ABCP market broad protection against lawsuits, including immunity from potential claims of fraud. However, challengers of the plan argue that giving immunity to fraud claims is not permitted under the Companies' Creditors Arrangement Act under which the restructuring is taking place.

Desjardins ABCP Write-down Grows

Desjardins Group has booked an additional $220-million write-down on asset-backed commercial paper. The $220-million write-down represents 11.1 per cent of Desjardins’ $1.66 billion in ABCP holdings. Desjardins had already taken ABCP-related write-downs of $116 million in the fourth quarter of 2007 and $157 million in the third quarter of 2007, bringing its ABCP-related charges to $493 million

VenGrowth Appoints CIBC Mellon

VenGrowth has appointed CIBC Mellon as custodian for five of its labour-sponsored investment funds. The funds include its three investment funds. VenGrowth's funds are invested in private equity with more than $1.3 billion in close to 200 companies.

Rogerscasey Buying Perimeter

Rogerscasey will acquire Perimeter Capital Management Inc., a Toronto, ON-based investment manager research and portfolio construction services firm. It offers its proprietary technology to financial institutions and institutional investors throughout Canada.


Friday, May 16, 2008

Employees Offered Large Carrots To Retire Early

Retirement incentives in Defined Benefit pension plans offer employees significant inducements to retire early; a concern as Canada’s labour force ages and the first baby boomers move toward retirement, says a C.D. Howe Institute ‘Commentary.’ ‘Greener Pastures: Understanding the Impact of Retirement Incentives in Defined Benefit Pension Plans’ demonstrates the large and compelling inducements to retire that can be found in four pension plans: Ontario Teachers’ Pension Plan, the Federal Public Service Pension Plan, the Ford Canada – Canadian Auto Workers pension plan, and the pension plan covering Steelworkers at Stelco Canada. What these plans have in common are clear incentives to enter retirement as soon as a person is eligible for unreduced retirement benefits. Special retirement provisions provide workers with clear incentives to enter retirement at set ages, and as early as 55. 

LDI Can Hedge Pension Plans

Investors should be paying close attention to the unfolding story of the extent to which higher inflation translates to higher pension fund payments for corporates, says Gordon Latter, pensions and endowments strategist at Merrill Lynch. They should monitor the investment strategy that plan sponsors are using. The gap in performance between those corporate pension plan sponsors using and not using Liability Driven Investment (LDI) could increase markedly as stagflation takes hold. “Plan sponsors using LDI have the advantage of a hedge against higher inflation and sharp changes in interest rates,” he says. “Those pension plans that remain unhedged leave themselves at the whim of the market.”

Hedge Fund Returns Rebounded

Hedge fund returns rebounded a bit in April, says the Credit Suisse/Tremont Hedge Fund Index. The index rose 0.57 per cent last month, driven primarily by gains in the long/short equity sector. Stronger than expected earnings posted in the financial and retail sectors helped boost investor confidence, driving an increase in stock prices amid declining volatility. Despite concerns over rising inflation, hedge funds quickly adjusted to changing market conditions and capitalized on key opportunities arising from the first quarter.

Currency Shifts Create New Opportunities

In light of the massive write-downs experienced by global financial institutions as a result of the ongoing crisis in credit markets, some of the largest European and global banks are tightening credit policies. But, as big banks pull back their balance sheets, some of Europe's smaller and regional banks are aggressively courting companies with offers of credit – a trend that could be working to forestall any general tightening of credit conditions, says Greenwich Associates' ‘2008 European Corporate Banking Study.’ It strongly suggests that companies that obtain credit from the largest global and pan-European banks are feeling the sting of changes to these banks' lending policies. As recently as 2005, 30 per cent of companies using top-10 European or global banks described their banks as the market's most reliable credit providers or the market's most willing to lend. That share dropped to 27 per cent in 2006 and to just 23 per cent in 2007. Many of the small banks that Greenwich Associates works with see current market developments as a nearly unprecedented opportunity.

Downturn Delaying Retirement

U.S. baby boomers are delaying retirement and taking premature withdrawals from their retirement savings as a result of the economic downturn, says a survey by AARP and the AARP Bulletin. It found more than one out of four (27 per cent) workers age 45 to 64 say they postponed plans to retire due to the recent economic downturn. Almost 25 per cent reported they are prematurely taking money out of their 401(k)s and other investments. In addition, younger boomers (ages 45-54) indicated they are doing things like postponing paying bills (27 per cent) and cutting back on medications (17 per cent) to deal with the economic crisis.

Social Index Value Increases

The Jantzi Social Index (JSI) increased in value by 5.9 per cent during the month of April. For the same period, the S&P/TSX Composite Index and the S&P/TSX 60 Index decreased by 4.6 per cent and 5.42 per cent respectively. From its inception on January 1, 2000 through April 30, 2008, the JSI achieved an annualized return of 8.32 per cent, while the S&P/TSX Composite and the S&P/TSX 60 had annualized returns of 8.19 per cent and 8.16 per cent respectively, over the same period.

Moore Managing HR

Estelle Moore is human resource manager at TruServ Canada Inc. She has more than 20 years experience in human resources, primarily in the financial services sector. The majority of her career has been with the Royal Bank of Canada and, most recently, she was with the Assiniboine Credit Union.

Money Manager Survey Unveiled

The 6th annual ‘Morningstar Investment Conference’ takes place June 11 in Toronto, ON. This year’s theme is ‘Taming the Market Cycles.’ During the conference, advisors will learn strategies they can use to minimize the effects of market swings on investors and their portfolios. Attendees will also hear the results of Morningstar's ‘2008 Money Manager Survey’ and a panel of distinguished investment strategists and market watchers will comment on the results and discuss their own beliefs on where the best opportunities lie. For more information, visit


Thursday, May 15, 2008

ACPM Intervenes In Kerry

The Association of Canadian Pension Management (ACPM) will seek to intervene in the case of Elaine Nolan et al. v. Kerry Canada Inc. The ACPM says the two major questions before the Supreme Court of Canada (SCC) in the Kerry case are whether or not the ongoing costs of administering a pension plan are properly payable from the pension fund and if contribution holidays are properly permitted in a pension plan that combines both Defined Benefit and Defined Contribution provisions. In June 2007, the Ontario Court of Appeal concluded that plan expenses could be paid from the pension fund in the absence of an explicit prohibition in the plan documents preventing such payment and also condoned contribution holidays taken in respect of a DB/DC arrangement. "The Court of Appeal decision was logical and well-reasoned,” says ACPM president Scott Perkin. “The ACPM will argue that the SCC ought to affirm the reasoning and result reached by the Ontario Court of Appeal.” The SCC has agreed to hear an appeal of the case and the ACPM noted that the issues raised in the appeal are of significant importance to occupational pension plans across Canada.

Bank Takes $855-million Hit

The Royal Bank of Canada will take an $855-million hit as a result of fallout from the U.S. subprime mortgage situation. It says that $715 million of its write-downs relate to its capital markets operations and the remaining $140-million to corporate support. “We are not happy about taking any write-downs and certainly do not take them lightly,” says Gordon Nixon, chief executive officer. “That said, these write-downs are manageable and our risk profile continues to remain within our risk appetite.”

Politics Matter In Today’s Market

In today’s market, politics matter, says Dr. Ian Bremmer, president, Eurasia Group, and expert on global politics and risk management. Speaking at CPBI Forum 2008 on ‘Global Markets, Global Politics & Global Risk,’ he said if you don’t get politics, you can’t deal with Russia and China. Global economic growth is taking place in developing countries and emerging states. In these countries, politics are behind key economic decisions.

China To Be World’s Largest Economy

Although China’s growth rate will inevitably decline, it will continue to be the highest in the developed world, says Burton G. Malkiel, Chemical Bank Chairman's Professor of Economics at Princeton University. In his presentation at the CFA Institute ‘61st Annual Conference,’ Malkiel cautioned that China will face obstacles along the way to becoming the world’s largest economy including environmental concerns and a banking system struggling with bad loans. He believes that China will continue to grow economically, however, because of continuing opportunities for the development and urbanization of the middle and western regions of the country, its educated population, the government’s ongoing investments in infrastructure, and a sense developing among the Chinese people that economic progress is part of their heritage.

Manulife Offers ‘Alert’ Letter

Manulife Financial has introduced a Plan Default Letter Service (PDLS), the first of its kind in Canada. It is designed to make it easy for sponsors of group retirement savings plans to alert their members to make an active choice with their investments. With this service, Manulife will send letters directly to plan members who have not made their investment selections. This personalized letter informs members of the advantages of selecting investment options that best suit their retirement planning.

Inflation Overtakes Growth As Fear

Stagflation fears are gripping investors, but inflation concerns are fast overtaking worries about economic growth, says Merrill Lynch’s ‘Survey of Fund Managers for May.’ A quarter of respondents expect global core inflation to rise in the coming 12 months, compared with just seven percent in April. This is prompting predictions of higher bond yields, with 80 per cent of investors expecting long-term rates to be higher a year from now.


Wednesday, May 14, 2008

Workplace Stress Costs Employers

Workplace stress is a serious and costly issue impacting employee health in Canada, says a survey for sanofi-aventis Canada Inc. Almost 40 per cent of respondents acknowledged that workplace stress has made them physically ill at times, up from 25 per cent in 2002. Respondents also expressed growing concerns about being at risk for developing chronic diseases such as cancer, heart disease, and diabetes. A vast majority of respondents, 83 per cent, would be more likely to stay in their job if they really believed their employer was interested in maintaining their good health and 75 per cent think more highly of their employer because of the health benefit plan provided.

Globalization Can Act On Regional Basis

Globalization can act on a regional basis to reduce the number of countries that have not integrated, says Thomas P.M. Barnett, senior managing director of Enterra Solutions LLC and author of the forthcoming book ‘Great Powers: America and the World After Bush’ (January 2009). In a presentation at the CFA Institute 61st Annual Conference, he discussed the dominant trends that will shape the world during the next 25 years. He divided the world into two groups: those regions that have fully integrated and those regions that have not. The former group, which has largely recognized the benefits of economic integration and globalization, includes North America, Europe, Russia, Australia, and parts of South America. The latter group – Africa, the Middle East, and southeastern Asia – has resisted the benefits of economic integration and globalization. He said China could help Vietnam emerge from the gap, whereas Brazil may eventually have a similar impact on countries like Venezuela. Barnett suggests the United States could serve as a model in this process because its states unified out of mutual self-interest to promote commerce and common security. Barnett believes that this integration, with its own regional variations, will be the dominant dynamic of the next 25 years.

Retirees Offer Retirement Advice

Saving early, make saving a priority, and paying off debts before you stop working are at the top of the list of advice from Canadian retirees in TD Waterhouse’s first ‘Canadians and Retirement’ survey. Of retired Canadians, 43 per cent feel confident that they planned well and saved enough, but only 15 per cent say they are completely living out their retirement dreams. For many poll respondents, retirement wasn’t exactly what they had imagined. They found adjusting to retired life challenging. The most difficult adjustment was no longer being defined by their work (25 per cent), followed by not being able to do all the things they used to because of financial constraints (22 per cent).

DC About To Have Moment In Sun

The DC pension plan is about to have its moment in the sun, at least in the private sector, says Malcolm Hamilton, a principal at Mercer. Speaking at CPBI Forum 2008 on ‘Rethinking the Future of Pension Plans, he said they have an opportunity to succeed or fail, on their own merits. Behavioural finance may hold the key s it can help improve employee decisions about savings and investment. To succeed, DC plans will need intelligent defaults; the diversion of future raises, not today’s compensation, to retirement savings; and a relatively small number of low cost, fully diversified, easily differentiated, investment options.

Morneau Allies With Sibson

Morneau Sobeco has struck a strategic alliance with Sibson Consulting, the human resource consulting division of The Segal Company, to strengthen its presence in the United States. Through this alliance, Morneau Sobeco will be able to offer benefits and human resource consulting solutions to its U.S. clients and provide enhanced outsourcing solutions to Sibson's client base. The two companies will collaborate on their respective client mandates and will pursue new joint business opportunities.

Small Proportion Well-prepared For Retirement

Only be a small proportion of people – mainly in Northern America and Europe – will be well prepared for later life, says HSBC Insurance’s ‘The Future of Retirement Investing In Later Life’ report. In between the two extremes of preparedness is a significant group of pre-retirees, aged 40-60, that is optimistic and practical in their attitudes toward retirement, but may not be able to meet their expectations of later life. But this group is still in a position to gain greater control over their retirement needs. In terms of the different sources of retirement income, the research shows that Europeans and Asians will broadly rely on savings, while North Americans will use stocks and shares. Meanwhile, people in Latin America will largely fund their retirement through annuities (Brazil) and assets (Mexico).

Bank ABCP Acceptance Adds Liquidity

The Bank of Canada's recent proposals to accept certain asset-backed commercial paper as collateral will help add sorely needed liquidity to the ABCP market, which is a positive development, says a report from Fitch Ratings. But, the proposals do contain some ambiguities that are important to understand. It notes that the Bank of Canada began soliciting feedback in early March on its proposed eligibility criteria for accepting ABCP as collateral for borrowings under its Standing Liquidity Facility. With additional results expected by June, the bank's attempts to promote minimum acceptable standards of disclosure and transparency should benefit all market participants.

Funds Rising To Correlation Levels

Participants in a Research Foundation of CFA Institute study have attributed recent decay in performance at many quantitatively managed equity funds to rising correlation levels, style rotation, and the fact that there are now more active quantitative managers using the same data and similar models. While alpha generation was identified by participants as the most important selling point for a quantitative fund, nearly three quarters of the study’s participants believe that it will become increasingly difficult for quantitative equity managers to find profit opportunities. The reason is that most models rely on similar predictive factors extracted from commercial data sets and academic models and, therefore, reach similar conclusions on investment opportunities.

Managing Care Focus Of Session

‘Managing Care, Risk and Health Outcomes’ will be the focus of the last Benefits Breakfast Club session of the season. Some of the emerging trends and influences in Canada and the U.S. that will challenge employee benefits will be explored. Topics will include the impact of catastrophic drugs and how the issue might be addressed in Ontario, the value based benefits/health management movement sweeping the U.S., and the regulatory changes that will soon affect group plans. It takes place May 29 in Burlington, ON. For more information, visit


Tuesday, May 13, 2008

Shepell-fgi Joins With Morneau Sobeco

Shepell-fgi and the Morneau Sobeco Income Fund have entered into an agreement to join together to offer an enhanced range of health and productivity solutions to Canadian employers. Together, they will offer clients a more complete range of solutions to meet emerging human resources needs in the coming years by leveraging and maintaining the established expertise of both firms. The acquisition doubles the size of the company in both revenues and employee base. They will maintain their existing leadership teams and brand identities, and will continue to serve their clients independently.

Partial Wind-up Rules Changed

All of the rules for partial pension plan wind-ups changed in 2007 with the Financial Service Tribunal’s decision on Hydro One, says Elizabeth Brown, of Hicks Morley. Speaking at its ‘Toronto Client Conference,’ she said as a result of this decision, almost any termination of employment following a reorganization of business may trigger a partial wind-up. While the final outcome remains uncertain because Hydro One Inc. is seeking leave to appeal the decision to the Ontario Court of Appeal, the case raises serious concerns for plan sponsors and members alike. If it stands, it will make it difficult, if not impossible, for employers to determine when a partial plan wind-up will be triggered. As well, there will no doubt be situations where even a very few terminations following a reorganization will result in wind-up treatment for the affected members while many other members, terminated in the normal course of business, will not be provided with the same treatment.

Manager Search Activity Rises

Canada saw a considerable increase in activity in 2007, at 120 searches (up from 101 in 2006), led by global equity searches, says a Mercer report on global investment manager search trends. It says recent market turmoil further has accelerated search activity in non-traditional asset classes. While the number of Canadian equity searches increased, these were overshadowed by the combined growth of non-domestic equity mandates. Equity funds with a socially responsible or ESG (environmental, social, and corporate governance) focus generated some interest.

Principles Address Structured Product Distribution

Five investment industry trade associations have released a draft of principles that aim to address the distribution of structured products. The Joint Associations Committee – which comprises the European Securitisation Forum, the International Capital Market Association, the London Investment Banking Association, the International Swaps and Derivatives Association, and the Securities Industry and Financial Markets Association – designed the global, non-binding, principles to address a wide range of issues affecting distribution of structured products to individual investors and to complement the principles focusing on the provider-distributor relationship.

Beatty Offers Tips On Governance And Performance

Investors should consider ‘SPISE’ when determining whether a company is being governed with a focus on long-term performance, says David R. Beatty, managing director of the Canadian Coalition for Good Governance. In a presentation at the CFA Institute 61st Annual Conference, he said the acronym stands for style (S), performance (P), investment (I), spine (S), and evaluation (E). Determining if, for example, the CEO is an imperial manager who is attempting to control the entire enterprise – Style – or evidence that the board has a backbone – Spine – can show if a company has governance processes designed to pursue long-term performance.

Caisse Cuts BAA Holdings

The Caisse de dépôt et placement du Québec sold 20 per cent of its stake in airport operator BAA PLC last July. The transaction was subject to confidentiality agreements until recently. Its interest in BAA now stands at 23.15 per cent compared to 28.94 per cent at the time of the acquisition. BAA operates a number of airports, primarily in the UK.

Backers Say Change Impossible

Backers of the asset-backed commercial paper market plan claim changes to the proposal are impossible. A court hearing on the $32-billion restructuring started Monday. Challengers want the court to cut out or weaken an immunity clause that would protect players in the market from lawsuits. The banks involved in the proposal will pull their support if they are not given immunity.

IRS Releases Minimum Contribution Proposal

The IRS has released proposed regulations providing guidance on how to determine minimum required contributions under the new U.S. Pension Protection Act funding rules, says Osler, Hoskin & Harcourt LLP. Specifically, the regulations provide detail on how to calculate the contributions including rules for accelerated quarterly contributions, the liquidity contribution requirements, and the application of excise taxes for failure to meet the funding requirements. The regulations are proposed to be effective January 1, 2009, but plans may rely on them for their plan year beginning this year. 

Taglioni Heads Individual Wealth

Effective June 1, 2008, Rocco Taglioni will be taking on a new role as vice-president, individual wealth, in Sun Life Financial’s individual insurance and investments division. In this role, he will be leading its retail wealth business in Canada. Before joining the company, he was at Sceptre Investment Counsel for 10 years as a managing director.

Still Handles Western Canada

Michael (Mike) Still is vice-president, business development, Ontario and Western Canada, at AGF Asset Management Group. He will focus on building its assets under management from pension plans, charities, foundations, and endowments in Ontario and the western provinces.


Monday, May 12, 2008

Budget Changes LIF Withdrawals

Canadians can now take advantage of Budget 2008 improvements to the administration of Life Income Funds (LIFs) arising from federally-regulated pension plans. Budget 2008 significantly enhances the flexibility to withdraw funds from LIFs through three provisions. Individuals 55 or older with total holdings in federally regulated locked-in funds of up to $22,450 will be able to wind up their accounts or convert to a tax-deferred savings vehicle with no maximum withdrawal limit. Or they will be entitled to a one-time conversion of up to 50 per cent of LIF holdings into a tax-deferred savings vehicle with no maximum withdrawal limit. All individuals facing financial hardship (low income, high disability, or medical-related costs) will be entitled to withdraw up to $22,450 a year.

Exemptions To Bill C-10 Recommended

Finance officials are recommending two amendments to Bill C-10, an act to amend the Income Tax Act. One amendment would exempt from the resident contributor and resident beneficiary status most registered pension plans, the CPPIB, similar provincial funds, and certain Canadian trust and corporate intermediaries, says the 'Hewitt Monitor.' The second amendment modifies the definition of exempt foreign trusts to include non-resident commercial investment trusts in which the only Canadian resident investors are Canadian mutual funds whose investors are, exclusively, RRSPs, RRIFs, and plan entities eligible for the first suggested amendment. As well, a ‘comfort letter’ would serve to exempt pension funds and pension fund pooling vehicles from the proposed resident contributor and resident beneficiary rules.

Hillsdale Launches Institutional Services

Hillsdale Investment Management Inc. has officially launched its in-house institutional investment services team. This culminates a multi-year process that marks the end of its relationship with Twenty First Century Investments Inc., an independent investment management marketing organization that has been under contract to Hillsdale since June 2003. The institutional team will be led by Harry Marmer who will work directly with both sponsors and consultants assisting them in their needs and requirements. Key professionals include John Motherwell and Johnny Quigley covering institutional investors in Canada; Allan Hutton providing services to the consultant community in North America; and Chen Yongjian leading the marketing services efforts.

Retirement Questions Need Answers

Entering retirement is not about buying the right product, it’s about understanding the dynamics of retirement and designing a solution that works, says Trevor Parry, of GBL Actuaries and Financial Consultants. Speaking at the Toronto Area Chapter of the International Society of Certified Employee Benefit Specialists Pensions seminar, he said those about to retire need to answer questions including how long they will be retired, how much money they will need, and whether they have enough money.   

Members Do Poor Job With 401(k)s

Despite extensive efforts to educate workers about saving for retirement, many are not doing a good job of managing their company-sponsored 401(k) accounts, says a study by Financial Engines, a firm that provides investment advice and managed accounts for Defined Contribution plans. The analysis found that 69 per cent have inappropriate risk or diversification of holdings and 36 per cent have worrisome concentrations of company stock. In addition, one-third of savers aren't putting enough aside to qualify for the full company matching contribution.

Industrial Alliance Move Into Private Wealth Continues

Industrial Alliance Insurance and Financial Services Inc. has acquired Aegon Dealer Services Canada, Money Concepts (Canada), and National Financial Insurance Agency in a deal with National Financial Corp. This is its 13th takeover as it continues to expand in the wealth management business. Aegon Dealer Services will be merged with its Investia operation. Money Concepts will continue under its brand name within Investia. National Financial Insurance Agency will continue to provide insurance services to Money Concepts advisers. 

Private Equity Best Performing Asset

Private equity has been one of U.S. institutions' best performing assets of the last 10 years, says research from Private Equity Intelligence. In a review of 108 public pension funds in the U.S., Canada, and Europe, it found that private equity outperformed their entire portfolios at rates of from four per cent to nine per cent per annum over time horizons of one through 10 years. Assets in private equity funds worldwide doubled between 2003 and mid-2007 to about $2 trillion.

EAFE Universe Plus Negative

The median international equity portfolio in the InterSec EAFE Plus universe returned -8.9 per cent during the first quarter of 2008, matching the MSCI EAFE return, says the InterSec Research ‘Q1 2008 EAFE Universe Update EAFE Plus Performance.’ In the past year, the median manager has returned -1.4 per cent, out-pacing the MSCI EAFE return of -2.7 per cent. This marks the first time in almost five years that either the MSCI EAFE or the median EAFE manager have had a negative one-year return.

Onslow Joins Addenda

Bill Onslow is portfolio manager, U.S. equities at Addenda Capital. He has 27 years investment experience acquired at Mutual Life of Canada, Altamira Management, and Natcan Investment Management.


Friday, May 9, 2008

Others Consider Retiree Trusts

The creation of benefit trusts for autoworker retirees and reports that other employers are considering similar moves may signal a fundamental change in the employer-provided healthcare system, says an Alliance for Health Reform report. It suggested that other large employers are thinking about setting up voluntary employee beneficiary associations, a step taken by General Motors, Ford, and Chrysler to provide health and benefits for retirees in exchange for company contributions. "Only time will tell whether this movement away from employer-sponsored coverage to new models of care will be unique to the auto workers, or is a sign that the nature of worker coverage is fundamentally changing," it says.

Cancer Incidents Rising Fastest

Incidents of cancer are among the fastest rising benefit claims facing employers with disability management programs, says Rob Matthews, of Medavie Blue Cross. Speaking at theToronto Area Chapter of the International Society of Certified Employee Benefit Specialists Group Benefits seminar, he said this is a national trend impacting all industries. He noted that, in general, the number of claims is going up. He suggested that the aging workforce and better medical care may be reasons for the increase. Mental/nervous disorders claims are still the most prevalent, accounting for about 20 per cent of all disability claims.

U.S. Clarifies Fiduciary Liability Protections

The U.S. Department of Labor has released amendments to the Qualified Default Investment Alternative regulations which generally clarified the fiduciary liability protections for investment in certain types of funds when a participant fails to provide investment instructions, says Osler, Hoskin & Harcourt LLP. The corrections make three changes to the regulations. They include expanding the list of persons who may manage a QDIA to include a committee of the plan sponsor if certain requirements are met; clarification that ‘round-trip’ restrictions (restrictions on investing in a QDIA after previously transferring out of it) are not prohibited; and clarification of the types of stable value funds that are ‘grandfathered.’

Equity Markets Rebound

Equity markets rebounded strongly in April, ending a five-month period of negative returns, says Towers Perrin ‘Capital Market Update – April 2008.’ The favourable asset experience was somewhat offset by results on the liability side as long corporate bond yields dropped slightly for the month. At the bottom line, the funded ratio for its benchmark plan increased by 1.2 percentage points to 89.9 per cent. However, the funded ratio of U.S. plans remains down 2.8 per cent on a year-to-date basis.

Wellness Challenge Pays Off

IKON Canada’s ‘Wellness Challenge’ to officially start the New Year is showing results. The goal was to get employees to do some type of healthy activity (smoking cessation, incorporating nutritious foods, or exercising at least 30 minutes per day at least three days per week). After the first quarter of the year, it found 74 per cent had increased physical activity; 69 per cent made healthy changes to eating habits; and 48 per cent lost weight. The total weight loss provided by those who completed the survey was 2,859 pounds.

Standard Life Marks Anniversary

This year marks Standard Life’s 175th anniversary in Canada. To commemorate this event, Standard Life is creating a $1.75 million endowment fund to enhance its current community investment program. Standard Life was the first life insurance company to transact business in Canada and, from its origins in life insurance in 1833, the company has broadened the scope of its operations to offer a full range of asset managing services for retirement, investment, and protection.

Hamilton Speaking At ACPM

‘DB Plans: Terminal or Critical?’ will be one session at the ACPM ‘2008 National Conference.’ Theme of the conference is ‘Climbing the Rocky Road.’ The DB session will feature Malcolm Hamilton, partner, Mercer (Canada) Ltd.; Christopher A. Brown, Alberta co-chair, Joint Expert Panel on Pension Standards; and Kathryn Bush, of the Ontario Expert Commission on Pensions. They will discuss the key suggestions made to the committees studying pensions in Alberta, British Columbia, and Ontario. The conference takes place September 16 to 19 in Lake Louise, AB. For more information, visit


Thursday, May 8, 2008

DC Potential Needs Examination

The Association of Canadian Pension Management (ACPM) says there is a need for a comprehensive and balanced analysis of retirement saving plans in Canada. Its ‘Delivering the Potential of DC Retirement Savings Plans’ report says it is becoming apparent that member-directed retirement savings plans will play a larger role in the Canadian retirement income system in the future. However, there is concern in the industry about the ability of these plans to meet the retirement savings needs of Canadians. The ACPM hopes its report will become the starting point for a discussion among retirement system stakeholders that will end with fair and practical recommendations for improvements to retirement savings plans in Canada.

Guidelines Set For Pension Regulators

The OECD countries and the International Organization of Pension Supervisors have agreed on new guidelines to help pensions regulators and supervisors improve the way pension entities – such as pension fund managers or trustees – are managed in order to boost their financial security and performance. The guidelines, part of a broader Organization for Economic Co-operation and Development effort to strengthen public confidence in the pension system, set out minimum requirements that pension entities should meet when applying for a licence to begin operating. Issues covered by the guidelines include minimum requirements related to the pension entities’ starting capital, funding policy, and risk management mechanisms, as well as their governance structure and investment policy. They also outline the circumstances in which a licence to operate may be withdrawn. The licensing regime, if fully implemented, would ensure that pension entities upgrade their financial, human, and operational resources to the level necessary to meet the challenges of an increasingly complex financial system.

TFSAs May Complement RRPs

Employers considering adding Tax Free Savings Accounts (TFSA) to replace their retirement plans might want to reconsider, says Ross Gilbert, a pension principal at Morneau Sobeco. Speaking at its TFSA seminar, he said, at best, TFSAs may be complementary to registered retirement plans (RRPs). They do not have the vesting and locking-in provisions, nor can they ensure the money is being accumulated for retirement, as is the case with RPPs. As well, if they are used instead of a retirement plan, the governance requirements do not go away. Employers would still have to satisfy Capital Accumulation Plan guidelines and provide employees with education and financial planning tools.

Investment Return Timing Critical

The timing of investment returns is critically important in the decumulation phase, says Bruce Curwood, of Russell Investments. Speaking at the ACPM Ontario Regional Council’s ‘Capital Accumulation Plans – Can They Meet Your Objectives?’ event onConverting CAP Balances into Retirement Income,’ he said the greatest risk is early in retirement when poor returns can seriously jeopardize future living standards. Downside risk is less bearable because the burden of funding retirement living expenses is on the retirement nest egg and the time horizon is uncertain. For Defined Contribution plan members, it becomes important to provide flexible distribution options to fit each individual situation.

Employees Work To Keep Health Coverage

Older workers without other healthcare insurance options are more likely to defer retirement to stay covered under their employer's plan, says an analysis by Watson Wyatt Worldwide. The analysis found that employees who rely on their employers for healthcare coverage and do not expect to receive employer-provided health benefits in retirement are 16.5 percentage points less likely to retire in any given year than workers with access to healthcare coverage through another source. These sources can include a spouse's health insurance plan or employer-sponsored retiree health insurance.

FlexTrade Connects To Chi-X Canada

FelxTrade Systems, a provider in broker-neutral multi-asset algorithmic trading systems, says its FlexTRADER EMS is now providing full connectivity to Chi-X Canada, a fully-anonymous and low-cost alternative trading system (ATS) offering a continuous auction market in securities listed on the Toronto Stock Exchange. FlexTRADER is a fully customizable, quantitatively enriched equity trading, and execution management system with a global client base including institutional users on the buy-side and sell-side, hedge funds, and investment managers. It can execute pre-defined trading strategies and tactics for lists, as well as single stocks, and offers those engaged in agency trading, index arbitrage, and other proprietary and standard strategies the ability to trade large blocks of equities anonymously while minimizing market impact.

Trustees Get Legislative Update

Governmental policy-makers, employee benefit executives, and industry leaders will present to approximately 225 trustees, administrators, and professional advisers serving multi-employer and public sector benefit plans at this year’s ‘Ottawa Legislative Update.’ Set for May 15 and 16 in Ottawa, ON, this International Foundation of Employee Benefit Plans event will look at current proposed legislation from federal regulators. Key sessions will feature Brian Day, president of the Canadian Medical Association, who will present on national healthcare; and Michael Lynk, associate professor, faculty of law, University of Western Ontario, who will speak on returning to work after retirement. For more information, visit


Wednesday, May 7, 2008

Employer Can’t Amend Employment Contracts

The Ontario Court of Appeal has found that an employer cannot unilaterally amend the terms of an employee’s contract of employment, says a ‘Blakes Bulletin on Pension & Employee Benefits.’ In Wronko v. Western Inventory Service Ltd., the court found that if an employee refuses to accept an employer’s offer to amend the terms of his or her employment contract and the employer allows the employee to continue working, the terms of the original employment contract remain in force. This decision is significant to any employer who wishes to amend the terms of employment including, for example, amendments to employee benefit and compensation arrangements. Old practices of giving reasonable notice of amendments are no longer sufficient to amend employment contracts.

Active Managers Have Rough Start

New data from the Russell ‘Active Manager Report’ reveals that less than 20 per cent of large cap Canadian equity investment managers beat the benchmark in the first quarter of 2008. That was down from 41 per cent in the fourth quarter of 2007 and was the lowest level since 1999. The median large cap manager’s return of -3.9 per cent lagged the S&P/TSX Composite return of -2.8 per cent. However, after experiencing the worst back-to-back performance since 1999, value managers showed improvement and held up better than growth managers in the first quarter of 2008. In the quarter, 27 per cent of value managers beat the S&P/TSX Composite, which was up from 16 per cent in the fourth quarter. In contrast, 24 per cent of growth managers beat the benchmark in the first quarter down from 53 per cent in the fourth. 

Soft Dollars In Limbo

Soft dollar packages are in limbo while the industry waits for Canada’s rules, says Patrick McEntyre, vice-president, ITG. Speaking on ‘Going Hard: The Business Impact from Changing Soft Dollar Practices’ at the ‘4th Annual FPL Canadian Electronic Trading Conference,’ he said there are few to no new users and established users are shutting down or freezing their programs. The lack of activity is due to concern that there will be onerous disclosure requirements in Canada’s regulations. However, he said there is a significant backlog of demand.

Hedge Fund Investors Pessimistic

Hedge fund investors are pessimistic about the year ahead, says a survey by Deutsche Bank. The bank reported that 80 per cent of investors it surveyed are bearish for 2008. However, they are more optimistic for next year, with 40 per cent expecting the global economy to pick up in 2009. They predict that macro, distressed, and equity volatility will be the top performing strategies for 2008. The majority of investors surveyed also plan to increase their allocations to emerging markets, with the Middle East as the predicted top performer amongst all regions.

Compliance Reporting Adds SRI 

JPMorgan Investor Services is extending its Compliance Reporting Services product to assist clients in monitoring their Socially Responsible Investment (SRI) restrictions. Its institutional and asset manager clients will now be alerted when their portfolios are nearing or have breached limits that they have set themselves according to environmental, social, and governance (ESG) criteria. The new criteria cover some 50 categories including adult entertainment, gambling, tobacco, weapons, country ties, board diversity, corporate governance, climate change, and faith values.

CC&L Signs On With Omgeo

Connor, Clark & Lunn Financial Group (CC&L) has signed on to Omgeo Central Trade Manager. It will use Omgeo CTM to process domestic and cross-border trades via a single interface across multiple time zones. Omgeo has been serving the Canadian marketplace since its inception in 2001.

Pike Now Global Head

Susan Pike is global head, market products and services, at RBC Dexia Investor Services.  She has more than two decades of progressive experience in the investor services industry. Over the past decade, she has advanced through a series of positions of increased responsibility with RBC Dexia and its predecessor organization, most recently as global head, securities lending.

Sun Life CFO In Top 40 Under 40

Rick McKenney, executive vice-president and chief financial officer at Sun Life Financial Inc., is a recipient of ‘Canada's Top 40 Under 40’ for 2007. A national award program, it annually honours 40 Canadians in the private, public, and not-for-profit sectors under the age of 40, the program. Honorees are chosen on five criteria including vision and leadership; innovation and achievement; impact; community involvement and contribution; and strategy for growth. McKenney joined Sun Life Financial in 2006, becoming the youngest-ever appointee to its global executive team.


Tuesday, May 6, 2008

DundeeWealth Buys Share Of Aurion

DundeeWealth Inc. is buying 60 per cent of Aurion Capital Management Inc. The majority stake will be acquired in exchange for cash and common shares of DundeeWealth. Aurion employees will retain 40 per cent of the company. The investment in Aurion represents a long-term strategic investment that broadens the wealth management platform at DundeeWealth while, at the same time, supporting its expansion into the institutional market. Aurion is a Toronto-based institutional money manager of equities, real estate, and fixed income. It has more than $4.5 billion in assets under management.

Global Offers True Diversification

Canadian pension plan sponsors need to look beyond the S&P/TSX indices if they want to achieve true diversification, says Ari Levy, vice-president and director at TD Asset Management, at its ‘Annual Sharing of Knowledge Learning Series.’ With resource stocks making up 48 per cent of the S&P/TSXComposite Index, he noted that Canadian plans are already looking outside the country. In 2002, non-domestic equities were just 47 per cent of equity holdings. They represented 58 per cent of equity holdings in 2007. Levy also said while foreign exchange can have an impact, over a 15-year time horizon it becomes less significant. Sponsors with short-term liabilities may, however, want to hedge their currency risk.

Operational Risk To Be Expected

If you live in an earthquake zone, you have to expect earthquakes and the same is true of operational risk, says Tony Peccia, of Citigroup. Speaking at the ‘4th Annual FPL Canadian Electronic Trading Conference’ on reducing operational risk via electronic dealing, he said in many cases it is a small factor that ends up creating significant operational risk. In the case of Citigroup, for example, subprime mortgages made up a small part of its business, but ended up causing a significant loss. Because you can’t really prepare for these types of risks, you have to be ready to recover as soon as possible.

Bermuda Welcomes ‘Team Canada’

A group of leading Canadian hedge fund managers and service providers are getting back to work following a whirlwind trip to Bermuda last week. The objective was to highlight the Canadian investment story and promote awareness of the growing number of hedge funds that Canada now offers. Brendan Caldwell, of Urbana Corp, set a tone of informed debate with a stimulating and off-the-cuff discourse on the art of investing in bourses from Bermuda to Bombay. He outlined how to not only leverage the value of a stock exchange, but specifically how to benefit from all the economic successes in the domestic economy represented by the exchange, be it resources, re-insurance, technology or other local assets. Other presentations came from Canadian fund managers such as Salida Capital and new start-ups including Rosalind Capital, Pan Asset Management, Optimal Models, and DDX. The event was sponsored by BMO Capital Markets, Borden Ladner Gervais LLP, the Bermuda Stock Exchange, the Bermuda International Business Association, and KPMG.

Employers Embrace Flexible Work Arrangements

Employers are embracing flexible work arrangements as a way to meet the needs of a diverse workforce, but most have not structured their programs to maximize the benefits, says Hewitt Associates. Eighty-eight per cent of U.S. employers provide some sort of flexible work arrangement to their employers, up from 77 per cent in 1998. Of the companies which offer flexible work arrangements, almost all (98 per cent) said the benefits of workforce programs match or outweigh the costs associated with implementing them. However, few employers have formal policies and consistent procedures in place to manage their workforce programs. Just more than one quarter indicated they have company-wide, formal written policies and only one-third have a formal employee application process.

Monthly Update Of Pension Plan Commuted Value Interest Rate Assumptions For June

The interest assumptions required to calculate commuted values for an event which occurs in any month up to and including June 2008 are now available at An Excel spreadsheet on the website contains six worksheets

  1. ·        Commuted Values – 2005 Basis
  2. ·        Commuted Values – 1993 Basis
  3. ·        Marital Breakdown – CSOP 4300 - March 2003
  4. ·        Marital Breakdown – CSOP 4300 - March 2003 ALTERNATE
  5. ·        Annuity Proxy for Solvency Calculations for Non-Indexed Pensions
  6. ·        Minimum Interest on Employee Required Contributions (including the 12 month average rates)

Samaroo Named Western Canada Retirement Practice Leader

Laura Samaroo is the western Canada office leader for Watson Wyatt Worldwide’s retirement practice. Based in the Vancouver, BC, office, she will provide expertise to clients and prospects on a full spectrum of pension services including CICA and FASB financial reporting, financing, design, mergers and acquisitions, governance, and administration.


Monday, May 5, 2008

Credit Crisis Affects U.S. For Another Year

Most CEOs, CIOs, portfolio managers, and analysts expect that the U.S. will be affected by the global credit crisis for at least another year, says a poll of attendees to the ‘61st CFA Institute Annual Conference.’ A third of those polled expect the U.S. recovery will take longer than 18 months. This was in contrast to China, India, Russia, and Brazil, where expectations were for a six- to 12-month recovery. Most attendees surveyed expect that Canada and Hong Kong will take eight to 12 months to recover. The poll also forecasts a difficult environment ahead for the equities market. Most survey respondents predicted that, over the next 10 years, the risk premium for equities over T-bills will be between two and six per cent.

Justice Wants ABCP Hearing Delay

The Ontario Superior Court Justice ruling on the fairness of the restructuring plan for Canada’s third-party asset-backed commercial paper (ABCP) needs more time to review the case. He would like to hold the hearing May 12 and 13. However, to do so, the banks would have to extend the standstill agreement that prevents a meltdown in the market. That agreement is to expire May 9.

January 1 Deadline To Provide Contract List

January 1, 2009, has been set as the date on which every insurer transacting group insurance or administrator of an employee benefit plan must provide the Regie de l'assurance maladie du Quebec (RAMQ) with the full list of their current group insurance contracts or employee benefit plans, says the Hewitt ‘Monitor.’ As well, they must also inform RAMQ of any amendments causing eligible persons covered by a contract or plan to be transferred to the public plan. Fines will be imposed for failure to provide or inform the Regie as required.

Equity Funds Enjoy Strong Returns

Equity-based investment funds enjoyed strong returns in April, says Morningstar Canada. All but one of the fund indices that track the performance of equity fund categories showed positive returns for the month, with 10 of the indices gaining four per cent or more. This positive performance comes on the heels of a very volatile first quarter that saw practically all of those same indices finish in the red. The best performer in April was the emerging markets equity fund index with a six per cent gain. The second best return in April belonged to the Canadian equity fund index, which gained 5.4 per cent. This was the best monthly return for that fund category since December 2005.

ING Acquiring Citistreet

ING Group has agreed to acquire CitiStreet, the record-keeping business jointly owned by Citigroup Inc. and State Street Corp. CitiStreet provides record-keeping and administrative services, advice programs, and other benefit plan services primarily in the U.S. The combined businesses will give ING $351 billion in assets under management and administration, serving 14 million Defined Contribution plan participants.

Sponsors Would Have To Fully Fund Deficits  

Plan sponsors in Newfoundland and Labrador may be required to fully fund any deficits on wind up. A Pension Benefits Act amendment would require any plan sponsor to fully fund the benefits provided under a plan it intends to wind up. The current practice requires a plan sponsor to contribute up to the date of wind up. After that, new deficits identified are not the responsibility of the sponsor. The amendment will be applied to plan terminations which take place after April 1, 2008.

Kapeluck Earns National Award

David Kapeluck is the first recipient of the CPBI National Volunteer of the Year Award. It will be presented May 13 at the CPBI FORUM 2008. Kapeluck is manager, member services, at the Co-operative Superannuation Society Pension Plan. He served on the CPBI Saskatchewan regional council from 1989 until 2007, including terms as secretary, program chair, and chair of the regional council on two occasions. He has also acted as the Saskatchewan representative on the CPBI board of directors for two years (1992-94).  

Members Need To Double Contributions

Members of Defined Contribution schemes need to more than double their contributions to ensure an adequate retirement, says the Irish Association of Pension Funds (IAPF). Research presented at its first DC conference revealed the average contribution to a DC scheme totalled 11 per cent, with five per cent from employees and six per cent from employers. It warned contributions should be "more than double this" on average, in order to secure an adequate income in retirement. 

Lang Speaks At IMN Event

Amanda Lang, host of BNN's SqueezePlay, will be a featured speaker at IMN's ‘Third Canadian Beneficial Owners' Summit on Securities Lending & Global Custody.’ SqueezePlay is a national program covering business and politics. She is also a columnist for Report on Business. It takes place May 29 and 30 in Toronto, ON. For more information, visit

Impact Of Child Health Claims Examined

The Group Insurance Pharmaceutical Committee’s ‘Our Children Today - The Workforce of Tomorrow’ seminar will be held June 5 in Toronto, ON. It will examine the impact of health claims for children where there are disturbing trends already affecting employer costs. Keynote speaker is Kelly Murumets, president and CEO, ParticipACTION. Other speakers include Dr. Bob Dent, director, Weight Management Clinic, The Ottawa Hospital; Karen Kesteris, director of marketing, Green Shield Canada; and Janet Crowe, director of health and wellness, TELUS. For more information, visit

Foundations Hold Primer In Canada

The International Foundation of Employee Benefit Plans’ ‘Concepts and Practices of Canadian Benefits for Canadian and U.S. Corporations’ will offer a primer for those new to Canadian benefits. Taking place July14 to 16 in Toronto, ON, it will explore the unique differences and regulations between U.S. and Canadian plans. For more information, visit


Friday, May 2, 2008

DC Faces Uncertain Future

Defined Contribution pension plans may have already seen their best years, says Morneau Sobeco’s ‘Vision.’ Expectations by both employers and members have been inflated by the economic environment of the past 20 years, but that was the most benign period for DC plans in the 85 or so years for which good statistics on capital markets are available. However, DC participants will probably not be able to retire with as much pension in the next 10 years as they would have enjoyed over the past 10 years. The 10 years after that may be worse again. At some point, the extent of the variability in DC pensions will become an issue and employers will feel the pressure to shore up their DC plans in some fashion. The longer corrective measures are delayed, the more expensive they will be to implement.

Canadian Workers Punch In Even When Sick

The Desjardins Financial Security ‘National Health Survey’ has found 42 per cent of Canadian workers went to work sick or exhausted at least once in 2007. Of these, 29 per cent admitted to working while ill three to five times, 11 per cent from six to 10 times, and 12 per cent admitted to more than 10 times in the last year. The reasons most often mentioned by the respondents for their presenteeism were looming deadlines, preventing workload pile-up, not wanting colleagues to be overloaded, concern about missing work being frowned upon, and simply not being able to miss the income.  

Much To Consider Before Changing Retiree Benefits

Traditional retiree benefit plans are becoming unmanageable, thanks to rising accounting costs/liabilities, more downloading of medical costs from governments, and newer medical technologies and innovations. For employers looking to eliminate or make minor changes to their retiree benefits programs, various options and risk factors have to be considered, said Ellen Whelan, Mercer Human Resource Consulting, at a CPBI seminar. Employers must assess the legal, financial, and human capital risks to changes and build communication around notification periods prior to changes. Rather than taking on a ‘payer role’ of plan costs, employers can consider a ‘facilitator role’ which provides access to medical solutions for retirees.

Women Twice As Likely To Suffer Mental Illness

Mental illness, mostly mood disorders such as depression, strikes twice as many women in Canada, says David Goldbloom, senior medical advisor, education and public affairs, at the Centre for Addiction and Mental Health; and professor of psychiatry at the University of Toronto. Speaking on ‘Mental Health in the Workplace: A Measurable Cost’ at the Connex Health ‘6th Annual Employer Forum, he said it is important that employers recognize the symptoms of depression because the cost of mental illness is substantial. In fact, a Treasury Board report said it is the number one cause of disability in the public sector. The leading kind of mental illness is depression which, he said, can be treated. Signs of depression include a lack of productivity, more mistakes in their work, and irritably. Theme of the event was ‘Workplace Health and Productivity Management: Measuring for Success.’

PH&N Acquisition Completed

The Royal Bank of Canada has completed its acquisition of Phillips, Hager & North Investment Management Ltd. (PH&N). The acquisition creates the largest retail mutual fund company in Canada with more than $105 billion in mutual fund assets under management as at March 31, 2008 and one of the largest private client investment counseling businesses in Canada. RBC also becomes one of the top five managers in the Canadian institutional market for Defined Benefit and Defined Contribution pension plans. Both the RBC Asset Management and PH&N brands will continue within the combined organization.

de Bever Heading AIMCo

Leo de Bever has been selected as the first chief executive officer of the Alberta Investment Management Corporation (AIMCo). He is currently chief investment officer of Victorian Funds Management Corporation, one of Australia’s top public sector pension funds with $35 billion in assets. His career includes service as executive vice-president of Manulife Financial and senior vice-president of the Ontario Teachers’ Pension Plan.

CFA Institute Meets In Vancouver

The CFA Institute's ‘61st Annual Conference’ will be held from May 11 to 14 in Vancouver, BC. The conference provides a look at the trends and investment issues critical to success in today’s global marketplace. Speakers will cover a range of topics including asset and risk allocation strategies, practical implications of behavioural finance, and investment strategies to exploit the growth of China, hedge fund alphas and betas, consequences of ‘black swans,’ and the future of the dollar and other currencies. For more information, visit


Thursday, May 1, 2008

Employees Unhappy With Pay

Employees are most unhappy with their wages, says a study by The Beacon Group. Compensation and benefits was the lowest scored item on the survey with a failing grade of 49 per cent. Learning, growth, and development fared only slightly better with a score at 51 per cent. More than 31,000 employees from Canada, the U.S., and Mexico participated in the study between 2002 and 2007.

Quebec Permits Phased Retirement For DC

Quebec has tabled legislation to amend the phased retirement provisions of its Supplemental Pension Plans Act (SPPA) to reflect recent changes to the federal Income Tax Act (ITA), says a Watson Wyatt ‘InfoFlash.’ The amendments also break new ground by including measures allowing hybrid and Defined Contribution pension plans to offer phased retirement. Phased retirement is available, upon concluding an agreement with the employer, to members of hybrid or DC plans who are between the ages of 60 and 65. Such employees will receive a benefit, other than a pension, that is calculated and paid as prescribed by the plan. The benefit cannot exceed 60 per cent of the ceiling on the life income that the member could receive under a replacement pension purchased at the end of the fiscal year of the plan immediately preceding the commencement of the phased retirement period.

Pension Funds Follow Endowment Example

U.S. pension funds are following the endowment example in a shake-up of their own portfolios, says research from Greenwich Associates. Pension plan sponsors, however, are not simply adopting endowment asset allocation models. Instead, they are integrating the investment strategies that have worked so well for endowments and foundations into a still-evolving approach to fund management that also includes innovative strategies for closely matching plan assets to pension liabilities, says the ‘2008 Greenwich Associates U.S. Asset Allocation Report.’

Critics Claims Plan Used As Tax Shelter

More than 6 million Americans are enrolled in health insurance plans that allow them to also open health savings accounts, nearly double estimates from just two years ago, say insurance industry projections. However, critics of health savings accounts said taxpayers with health savings accounts had an adjusted gross income averaging about $139,000 in 2005, versus $57,000 for all other filers. This means the wealthy are using the accounts as a tax shelter rather than as a means to help them afford health insurance. Health savings accounts are a relatively new product. Workers who purchase health insurance plans with a high deductible can deposit up to $2,900 into the account tax-free, or up to $5,800 for families. Consumers can use the money in their account to pay their medical expenses or they can save it for future needs, including retirement.

Middleton Moves To KingSett

David Middleton is chief financial officer for KingSett Capital. He was formerly CFO at Genuity Capital Markets and at Mulvihill Capital Management where he held overall responsibility for financial and capital planning, corporate governance, information technology, human resources, regulatory compliance, and providing tax strategies.

Advanced Investment Tools Examined

Advanced Investment for Pension Committee Members’ will provide an introduction to advanced investment tools and options including real estate, private equity, managed futures, hedge funds, infrastructure, commodities, and collateralized debt obligations. Sessions will also look at portable alpha and socially responsible investing. It takes place June 4 and 5 in Toronto, ON. For more information, visit

Wong Discusses Drug Trends

‘The Prescription Drug Landscape’ will be the focus of a Manitoba Region CPBI session May 15 in Winnipeg, MB. Connie Wong, a national account manager at Emergis, will discuss drug trends, demographic trends, and health-related trends and how these factors impact drug benefit plans. For more information, eMail

ISCEBS Holds Seminar

Karin Hiscock, of Morneau Sobeco, will look at health and dental and Tom James, of Pal Benefits Inc., will examine life insurance in the benefits portion of the Toronto Area Chapter of the International Society of Certified Employee Benefit Specialists seminar May 8 and 9 in Toronto, ON. In the pension session, featured speakers include David Kidd, a retirement and investment plan consultant, who will discuss structuring, selecting, and monitoring investments; and Trevor Parry, of GBL Actuaries and Financial Consultants, who will discuss DC plans – accumulation to payout. For more information, visit

Wednesday, April 30, 2008

'Too Little, Too Late’ Says Van Riesen

While we have the focus and the ability to take measures to revive Defined Benefit pension plans in Canada, we need the will, says Gretchen Van Riesen, former vice-president, global pensions and benefits, at CIBC. Speaking at the Conference Board of Canada’s 2008 Pensions Summit as part of a panel discussing pension reform, she said only now when there is a crisis facing DB plans are we getting down to looking at the changes that need to be made. Unfortunately, it may be a case of “too little, too late.” She said many corporations have come to the conclusion that they are not in the business of providing pension plans and that they can provide Defined Contribution plans with no financial risk.

Alberta Eliminates Health Premium

Alberta has eliminated the premiums under Alberta’s publicly-funded healthcare program, the Alberta Health Care Insurance Plan (AHCIP), says a Mercer Communiqué. The elimination of health premiums brings Alberta in line with the majority of provinces, which do not levy provincial healthcare premiums. Employers may wish to review current cost arrangements in light of the proposed changes. If employers are currently paying some or all of the AHCIP premiums, savings will accrue to the employer as a result of the change. Employers will need to decide whether or not to pass on any savings to employees through enhancements or increased employer cost-sharing in other benefit plans. In some cases, collective bargaining agreements may provide direction.

RBC Denies Writedown Report

The Royal Bank of Canada is refuting an analyst who said it could be facing a $5 billion writedown. A note issued by a Citigroup analyst downgraded the bank's stock based on a belief it could be facing $5 billion in writedowns due to risky exposures. However, RBC officials said it contained factual errors and its exposures to risky areas remain within its tolerance levels. It says the report overestimates the risks and writedowns the bank could be facing. As well, the diversification of its businesses means it doesn't have the outsized exposure to certain risky areas that some of its competitors do.

 Judge Wants To Know Who Will Sue

The judge overseeing the $32 billion restructuring of Canada's asset-backed commercial paper (ABCP) market wants to know who plans to sue before he agrees to a proposal that would block lawsuits. The proposed restructuring plan gives broad legal immunity to those involved in the market. Many corporate ABCP holders want the right to sue in an effort to get their money back. Ontario Superior Judge Colin Campbell has ordered lawyers representing these companies to provide details on planned suits. Proponents of the restructuring plan argue that without the clauses that release ABCP sellers, creators, and bankers from potential legal claims, the deal will fall apart.

Non-disclosure Has Potential For Liability

Non-disclosure of revenue-sharing arrangements involving self-dealing for Defined Contribution pension plans has a real potential for liability under Canadian law, says Markus Kremer, of Borden Ladner Gervais LLP. Speaking at the firm’s ‘Pension Group Seminar,’ he also said it won’t be just the sponsor who is sued, it could be the providers. Under the Pension Benefits Act, administrators and agents must exercise the same care, diligence, and skill that a person of ordinary prudence would exercise in dealing with another person’s property. Agents could include lawyers, consultants, custodians, and other providers. He noted that in the U.S., there have been more than a dozen cases in recent years based on breaches in fiduciary duty relating to fees and expenses. He expects similar types of actions could be coming to Canada.

Definitions For Critical Illnesses Set

A series of benchmark definitions for critical illness (CI) may help change the attitudes of advisors toward selling CI insurance, said reinsurer Munich Re Canada at the World CI Conference in Toronto. The vast majority of advisors do not have critical illness insurance on their product radar at the moment and the fact that illness is defined differently within the policies is often blamed. The goal was to hash out a set of definitions for everything from the thickness of a malignant melanoma to a definition of blindness. The process began in March 2007 and in February of this year a document was distributed for companies to consider. Currently only about 20 per cent of advisors are selling the CI insurance in Canada and only six per cent of the market has been tapped.

Americans To Be Worse Off In Retirement

Middle-class Americans will be far worse off in retirement than they expect, says a study from BGI. It found a significant number of American employees face cuts in their expected retirement income once adjustments for healthcare and the value of home equity are made. The study assumes that Medicare will become means-tested. For the top half of households based on wealth, that would result in a $7,000-a-year cost for buying private health insurance, based on current prices. In addition, only 40 per cent to 50 per cent of home equity will be available for non-housing consumption in retirement.

 Sponsors Focus On Investment Decision-making

U.S. plan sponsors are putting a heightened focus by on investment decision-making and monitoring, says a survey by Grant Thornton International Ltd. It says plan sponsors have determined an Investment Policy Statement (IPS) is critical to decision-making by retirement plan investment committees. Eighty-two per cent of sponsors surveyed have an IPS in place with 45 per cent reporting that their IPS was created by a third-party consultant or adviser. Forty per cent said they consistently review their IPS to ensure investment strategy and guidelines accurately represent the decision-making process. The survey found a clear majority of retirement plan participants report that plan sponsors are doing a good job of clearly documenting how decisions to choose or remove plan investment options have been made.

 Price Helps Drive Pharmacy Spend

Two of the primary drivers that impact total pharmacy spend are prescription price and prescription utilization, says PMSI’s ‘2008 Annual Drug Trends Report for Workers' Compensation.’ Current estimates indicate pharmacy spend represents 12 per cent of total medical costs in workers' compensation. As a result, there is more focus than ever before on controlling these rising costs. Other key cost drivers include drug usage trends, brand versus generic utilization, price and utilization per drug class, and PBM influences. PMSI is a U.S. provider of pharmacy and specialty products and services centric to workers' compensation.

Klinck Moves To Hicks Morley

Terra Klinck is a partner in the pension and benefits practice group at Hicks Morley Hamilton Stewart Storie LLP.  She was formerly a partner in the pension and benefits department of a national full service firm. Her practice focuses on all legal issues relating to pension and employee benefit plans including fiduciary duties, pension plan redesign proposals, plan mergers and wind-ups, ongoing pension plan administration, governance and compliance issues, and issues relating to corporate transactions. 

 Communications Strategies Examined

Integrating online and print communications will be the focus of a Federated Press event September 8 and 9 in Toronto, ON. Topics covered will include developing a communications strategy, distinguishing between content that belongs in print or online and measuring the effectiveness of a communications strategy. For more information, visit


Tuesday, April 29, 2008

Concerns Diminish On Pension Risk 

Changing views of Canadian chief financial officers (CFOs) about the nature of the pension funding crisis are expected to give human resources executives more latitude to use plan design for employee attraction and retention in the future, says the Watson Wyatt/Conference Board of Canada ‘2008 Survey on Pension Risk.’ Twenty-six per cent of CFOs responding to the fifth annual survey indicated that they felt the crisis was long-lasting, down from highs of 61 per cent in 2006 and 48 per cent in 2007. Meanwhile, 31 per cent of CFOs view the crisis as cyclical. “The extent to which respondents believe that CFOs must be heavily involved in making plan design decisions seems to be on the decline, allowing greater involvement of vice-presidents HR in the future,” said Ian Markham, director, pension innovation, Watson Wyatt Worldwide. “The role that HR plays in making plan design decisions is expected to increase in five years.”

 Retirement Funding Costs Rising

Canada will face cost increases, but will fare better than the U.S. when it comes to ensuring retirement incomes, says Sylvester J. Schieber, chairman of the U.S. Social Security Advisory Board. Speaking at the ‘2008 Pensions Summit,’ he said the cost of financing retirement incomes has increased over the last 40-plus years in the U.S. In 1960, it was nine per cent of payroll and reached 25 per cent by 2005. However, with the growing number of baby boomers getting set to retire, this could increase to 30 per cent by 2030. By prefunding retirement through the Canada Pension Plan, financing Canadian workers’ retirement income security will cost between 16 and 25 per cent of payroll by 2030.

Teachers’ Gets More Time

The Ontario Teachers’ Pension Plan has been given a two-week extension to file documents related to the proposed privatization of BCE by the Canadian Radio-television and Telecommunications Commission. Deadline to file the documents is now May 12. The CRTC approved the deal last month subject to certain conditions.

OSFI Won’t Allow Early IFRS Adoption

The Office of the Superintendent of Financial Institutions (OSFI) says that firms won’t be allowed to adopt the International Financial Reporting Standards (IFRS) early. As well, it will demand more disclosure on the issue. The Canadian Accounting Standards Board has confirmed the mandatory transition date to IFRS for publicly accountable enterprises for fiscal years beginning on or after January 1, 2011. OSFI says that all federally regulated financial institutions (FRFIs) are considered publicly accountable enterprises and must adopt IFRS. However, it says it could not allow any FRFIs to adopt IFRS before January 1, 2011, because of significant impacts to various areas of its organization.

Organizations Offer Retirement Planning Education

A survey by the International Foundation of Employee Benefit Plans shows 70 per cent of organizations offer some type of retirement or financial planning initiative, education, or program for employees or participants. ‘Retirement and Financial Planning Programs’ shows the most popular offering is retirement planning, which is provided by 77 per cent of the respondents. In addition, 60 per cent offer investment education, 39 per cent financial planning, and 28 per cent investment advice. The most common type of initiative offered is a group meeting with a plan provider, such as a 401(k) vendor, indicated by 67 per cent of respondents.

 DC Consulting Business Changes

The Defined Contribution pension plan consulting business is changing to adjust to new plan trends by, among other things, offering custom target date funds, says a survey by PIMCO. Its ‘2008 Defined Contribution Consulting Support and Trends Survey’ found 79 per cent of consultants believe target date strategies will be the most prevalent default investment in DC plans within the next several years. Most consultants (90 per cent) believe plan sponsors should consider creating their own custom strategies once plan assets exceed $1 billion. Volatility of returns and fees were considered the most important factors for plan sponsors considering creating their own or selecting a packaged target date product.

Mavroudis Named CEO

George Mavroudis is chief executive officer of Guardian Capital LP. His institutional background is extensive with several years as a senior executive at JPMorgan Asset Management (and predecessor companies) working in their Toronto, New York, London, and Moscow offices. J.J. Woolverton is chairman. He will assist Mavroudis in the orderly transition of the current management responsibilities and, going forward, provide assistance and guidance to the CEO in executing strategic initiatives.

 Scobie Becomes General Manager

Scott Scobie is general manager of CWT. He joined the CWB Group in August 2005 as managing director, sales and marketing, CWT.

 Session Examines Default Options

‘Building a Better Default Solution’ will be one of the sessions at the 2008 CPBI Forum, May 12 to 14 in Toronto, ON. Karen Welch, vice-president, global compensation and benefits, Four Seasons Hotels & Resorts; and Zaheed Jiwani, senior investment consultant, Hewitt Associates; will examine best practices for selecting a default fund, as well as how to engage plan members in retirement planning, with practical solutions from a successful plan sponsor. For more information, visit


Monday, April 28, 2008

Couples Retired Independently

Rather than retiring together, men and women in dual-earner couples appeared to have approached retirement in a more independent fashion during the 1990s, says a Statistics Canada study. The study found that among dual-earner couples in which at least one spouse retired in 2001, 29 per cent of the spouses retired within two years of each other. This was a slight decline from about 32 per cent during the late 1980s and 1990s. There was also a decreasing tendency among couples to retire within two to four years of each other. In 1986, in cases where the husband retired first, 19 per cent of wives retired within two to four years. For husbands retiring in 2001, only 15 per cent of wives retired within two to four years. This suggests that dual-earner couples in Canada took a more independent approach towards retirement during this 15-year period.

 BC Introduces Phased Retirement Options

British Columbia has introduced amendments to its pensions act which would allow pension plans registered in the province to provide phased retirement benefits, says the ‘Hewitt Monitor.’ Individuals aged 60 or over, or 55 and over and eligible for an unreduced pension, will be able to work and contribute to their pension plan while simultaneously collecting a portion of their pension benefits. Currently, older workers must choose between collecting a pension or contributing to their pension plan.

Executives Evaluating IFRS Impact

About half of all senior finance executives have started to evaluate the impact of IFRS on their business, says a research report called ‘IFRS Readiness in Canada.’ Co-conducted by the Canadian Financial Executives Research Foundation (CFERF), the research arm of Financial Executives International (FEI) Canada, and Ernst & Young Canada, it also shows that 72.9 per cent don’t have a dedicated team in place to facilitate the changes. “The majority are nowhere near prepared for conversion at this point in time, haven’t calculated the conversion costs, and don’t know if their systems can handle the job,” says the report. In spite of this, the executives said they did not want the 2011 conversion deadline to be extended.

Noteholders Approve ABCP Plan

Noteholders of third-party structured asset backed commercial paper have voted overwhelmingly in favour of the restructuring plan proposed by the Pan-Canadian Investors Committee for Third-Party Structured ABCP. The plan would restructure $32 billion in frozen non-bank asset backed commercial paper (ABCP). Under the plan, the original shorter-term notes will be replaced with newly structured notes with maturation dates in the nine-year range. The next step is a hearing in which an Ontario Supreme Court must sanction the plan.

Overcoming Harmful Online Conduct At Work

Web 2.0 social networking sites – such as Facebook, MySpace, Wikipedia, and blogs –are not only weakening productivity levels among businesses, but are damaging company reputations and exposing confidential information. As younger individuals in tune with technology enter the workforce, employers need to start taking proper action, said Michael Horvat, at an Ogilvy Renault Labour Law Group seminar. Employers can legally control harmful on-duty and off-duty conduct and have legal rights to discipline employees that impact business interests in negative ways. Companies can take action through electronic surveillance, software blockers, or by applying specific Internet policies to all employees.

TFSAs May Offer Alternative

Capital accumulation plan sponsors may wish to examine their current plan design and educational materials to determine if Tax-Free Savings Accounts (TFSAs) offer an alternative to non-registered components of any CAP, says an ‘Avalon Newsletter.’ TFSAs may also have a place in executive savings arrangements. It says plan members will be faced with new issues to consider and decisions to make. The February 2008 federal budget proposed TFSAs which are intended to provide Canadians with tax favoured savings opportunities not necessarily related to retirement. They are expected to be available in early 2009. 

Ripsman At PH&N

Colin Ripsman has joined the institutional portfolio manager team at Phillips, Hager & North Investment Management Ltd. as a vice-president. He will have responsibilities in the areas of Defined Contribution thought leadership and product development and will also have relationship management responsibilities. 

Enforcement Of Securities Law Discussed

How to get to a more effective, efficient, fair, and balanced approach to the enforcement of securities laws in Canadian capital markets will be one area examined at the ‘Advancing an Enforcement Agenda’ symposium led by the Capital Markets Institute at Rotman. It brings together leaders and influencers in business, government, and academia to discuss fresh ideas which will keep an enforcement agenda in the forefront and possibly stimulate stronger political action. It takes place May 2 in Toronto, ON. For more information, visit

 Conference Looks At Group Benefits

Group benefits and retirement services will be one of the areas covered at the LOMA Canada Annual Conference. It takes place June 12 in Toronto, ON. For more information, visit


Friday, April 25, 2008

Conference Looks At IFRS

A two-day conference is underway in Toronto, ON, focusing on the world-wide migration to a common financial reporting language known as International Financial Reporting Standards (IFRS). The IFRS – North America Conference is a joint presentation by The International Accounting Standards Committee (IASC) Foundation, and The Canadian Institute of Chartered Accountants (CICA). The new international standards will apply to Canadian publicly accountable enterprises. In general, these can include publicly-listed companies, certain government corporations, and enterprises with fiduciary responsibilities such as banks, insurance companies, credit unions, and securities firms. The official changeover date is beginning on or after January 1, 2011 for interim and annual financial statements relating to fiscal years. 

 Sponsors Improving DC Performance

U.S. pension plan sponsors have embarked on a campaign to improve the performance of their Defined Contribution plans, says a study by Greenwich Associates. The effort received a considerable boost last year from the implementation of several important provisions of the Pension Protection Act of 2006. Practices and structures being used include automatic enrollment. More than a third of U.S. DC plan sponsors are using automatic enrollment in their 401(k) plans, up from about a quarter of plans in 2006. DC plans have grown to account for 46 per cent of pension assets among U.S companies with more than $250 million in plan assets and 74 per cent of assets among companies with smaller pension funds.

Negative Quarter For The Pension Funds

Diversified pooled fund managers posted a median return of -1.4 per cent, before management fees, in the first quarter of 2008, says Morneau Sobeco’s ‘Performance Universe of Pension Managers’ Pooled Funds.’ The credit crunch and the slowdown of the U.S. economy have had a negative impact on equity markets around the world. Furthermore, the drop in bonds’ interest rates has resulted in a larger increase in solvency liability than expected. The negative return and the increase in solvency liability have worsened the financial situation of pension plans in the quarter.

UK Trustees Believe DB Will Last

Eight in 10 UK pension plan trustees believe their Defined Benefit programs will still be around in 10 years despite predictions of plan freezes within the next decade by half of employers. An Aon Consulting survey found more than half (52 per cent) thought their plan would last longer than 20 years. The trustee responses were in stark contrast with the expectations of employers. Of employers, 50 per cent of employers expect their DB pension to be wound up within 10 years.

Alert Issued On ‘Cat Bonds’

The Financial Industry Regulatory Authority has issued an ‘Investor Alert’ warning investors about the risks of speculating on natural disasters with event-linked securities such as catastrophe bonds or ‘cat bonds.’ These bonds offer high yields, but can quickly lose most or all of their value if a triggering event such as a hurricane, earthquake, or pandemic occurs in specified geographical regions. They are typically marketed to institutional investors.

Biovail Settles Suit

Biovail Corporation has entered into an agreement to settle the class action shareholder litigation in the claim brought by the Canadian Commercial Workers Industry Pension Plan. Under the terms of the settlement agreement, the parties have agreed that the sole source of compensation for the plaintiffs will be the settlement amount previously agreed to in the proposed settlement of the parallel U.S. securities class action. Settlement in the U.S. case was $138 million. The CCWIPP claimed it lost nearly $500,000 on its investment in Biovail between February 2003 and March 2004 because of misleading statements about the company’s financial position. The settlement is subject to final approval by the Ontario Superior Court.

Real Estate Dragged Down By UK

Unlisted European real estate funds saw a negative return on their investments of -3.9 per cent in 2007, driven by the poor performance of the UK property market as well as currency conversion pressures attached to the dollar and euro, says INREV, the European association for investors in non-listed real estate funds. Its ‘Institutional Vehicles’ index showed the European funds generated a return of 12.5 per cent when the UK sub-index is excluded. However, the downturn in the UK market had a major impact as 71 of the 257 funds are UK-centric.

Hedge Fund Investment Flat

Net investment in hedge funds is almost flat this year as poor returns and the high profile implosion of funds is scaring off investors, says data from Hedge Fund Research. Its numbers show capital managed by hedge funds in the first quarter of 2008 increased less than one per cent, the smallest gain globally since the beginning of 2004. Of the $16.5 billion invested this quarter, almost half was put into distressed strategy funds.

Pelosi Speaks At Wellness Conference

The 12th Annual Health Work & Wellness Conference 2008 will take place October 15 to 18 in Calgary, AB. This year’s theme is ‘Moving Forward ... Giving Back’ as it examines how leading companies move forward and give back. Speakers include Peggie Pelosi, author of ‘Corporate Karma: How Business Can Move Forward by Giving Back.’ She will focus her keynote address on how corporate philanthropy can unleash the potential of organizations by energizing employees, improving loyalty and retention, enhancing personal satisfaction, and establishing trust. For more information, visit

Symposium On Workplace Health

Author Brady Wilson will uncover the five core drivers of employee engagement and demonstrate how employers can use them to create a healthier, high performing work environment at Pathways to Business Health’s spring symposium. As well, Dr. Alice Cheng, a leading endocrinologist, will talk about the growing epidemic of diabetes and the hidden impact it is having on the workplace. It takes place May 21 in Mississauga, ON. For more information, call (519) 836-0184 or eMail


Thursday, April 24, 2008

BC Launches Venture Capital Fund

British Columbia has launched a $90 million venture capital fund to support growing companies in the province's technology and life sciences sector. The BC Renaissance Capital Fund will be managed by venture capital fund managers from Arch Venture Partners, VantagePoint Venture Partners, Kearny Venture Partners, Walden Capital, Ventures West, and Celtic House Venture Partners. The fund will focus on early-stage investments in clean technology, information technology, new media, and life sciences.

Access To Cancer Specialists Provided

ACE Life has added CAREpath's Navigation System to its group critical illness plan – Spectrum. The plan will now offer access to a network of cancer specialists to its clients. Its provides individuals who have been recently diagnosed with cancer with one-on-one telephone counselling, guidance, and support through the stages of treatment.

Spending On Drugs Up In 2007

Spending on drugs in Canada was up 7.1 per cent in 2007. Speaking at ESI Canada’s annual ‘Outcomes’ conference, John Herbert, director of business development, said drug spend last year increased to $665, doubling what was spent 2000. The rising cost is due to a greater number of claims per claimant, in part due to the aging population, and increasing cost per script due to inflation and therapeutic mix of drugs.

Pension Accounting Document Now In Doubt

If it is unable to fix the issue of cash-balance type-plans, the International Accounting Standards Board may limit the project scope of its document on pensions accounting. The scope may only look at a shortened list of deferral mechanisms and disclosures. It might also adopt a less ‘conceptually pure’ benefit promise definition, potentially leaving career-average plans untouched. The IASB unveiled a paper last month proposing changes to pensions accounting requirements such as a new definition of contribution-based pension plans.

Fixed Income Defensive Stance Remains

The combination of a difficult phase for North American economies and ongoing stress in credit markets has driven fixed income investors deeper into safe haven investments, says Barrantagh Investment Management Inc.’s ‘Capital Markets Review First Quarter 2008.’ As a result, the demand for government bonds is virtually insatiable, especially for issues of short-term maturity, causing yields to continually move down. Bond markets have also reacted strongly to the rapid adjustment by the U.S. Federal Reserve with deep cuts in quick succession to the Fed funds rate. The behaviour of investors and the actions of the Fed have prompted both a pronounced steeping of the yield curve and a downward shift in yields across all maturities.

Employers Offering Health Insurance Declining

The number of U.S. workers nationwide with employer-provided health insurance from their own job fell each year from 51.1 per cent in 2000 to 48.8 per cent in 2006, says a study by the Economic Policy Institute (EPI). About 6.4 million fewer workers had employer-provided health insurance in 2006 than in 2000. The study found the loss of employer-provided health insurance since 2000 was not only driven by the loss of high-quality jobs, such as those in the manufacturing sector, but was caused by the significant decline in employers providing coverage within existing jobs across the board.

 Employers Focus On Keeping Workers Healthy

Employers continue to focus on trying to keep their workers healthy and productive as a way to hold down their workplace healthcare costs, says an Aon Consulting survey. Its ‘2008 Benefits and Talent Survey’ found that 64 per cent of U.S. employers follow a benefits strategy focusing on employee health and productivity. Wellness programs are the most common, increasing three-fold from 2007 to 2008. The top five workplace wellness programs for 2008 are promotion of exercise/physical activity, disease management, health risk appraisals, biometric screening, and telephone healthcare coaching.

 Northern Looks For Pooling Business

A U.S. Department of Labor opinion April 11 to permit pooling of U.S. pension assets with funds in different countries is prompting Northern Trust to go after multinational companies with U.S. pension plans in a bid to grow its pension pooling business. Northern Trust now works with seven companies that pool assets of pension schemes in various countries for investment purposes, to achieve economies of scale and thus reduce fees and costs. Four of these have U.S. pension schemes, which are not yet included in their pools.

Successful First Phase For Schroders

Schroders has gone live with the SimCorp Dimension investment management system. The system is to act as its portfolio book of record for its UK and US operations based in London. In the first of three phases, the main IT architecture has been implemented and the first group of portfolios has been migrated to the system.

Man Offers Capital Guaranteed Product

Man Investments is now offering Man Vision Index Notes, a capital-guaranteed hedge fund product that seeks to benefit from the key developments of the future including the growth of emerging markets, the impact of new demographics, climate change, and future sources of energy. It combines the approaches of two hedge fund managers, AHL and RMF. AHL employs systematic, statistically-based investment processes to identify inefficiencies in more than 120 markets around the world. RMF applies strategic research and innovation to select specialist hedge fund managers in new fields to create multi-manager portfolios.

 Companies Oppose Single-payer Healthcare System

Most U.S. companies do not support a single-payer healthcare system or state legislation mandating coverage. Instead, they prefer to rely on private sector solutions, says research by Watson Wyatt Worldwide and the National Business Group on Health. More than three-quarters (84 per cent) of employers do not support a single-payer system such as universal healthcare coverage as they are not willing to cede influence over programs that affect their workers' health.

Session Examines Derivative Disaster Prevention

Building a currency collar and preventing derivative disasters will be among the topics covered at a TMAC ‘Financial Risk Management’ session. It takes place June 18 and 19 in Toronto, ON. For more information, visit


Wednesday, April 23, 2008

Clarity Needed On Foreign Investment Screening

More clarity is needed in Canadian policies related to foreign direct investment screening, says a report comparing both stated policies and actual practices in six countries for the Conference Board of Canada. The report looks at the foreign investment review policies and practices of Canada, France, Germany, Italy, the United Kingdom, and the United States. Based on the findings, the UK is by far the most open to foreign direct investment followed by the United States and Canada. The UK’s so-called ‘light touch’ approach to regulation has few foreign investment limitations and a competitive model based on attracting the regional or global headquarters of multinational enterprises. At the other end of the spectrum is the ‘economic patriotism’ embraced by France, a mercantilist investment model in which national champions are encouraged to merge and acquire abroad, but are shielded from foreign takeover at home.

 Public Sector Plans Do Something About Drug Costs

While public sector plans are doing something about the rising cost of drugs in Canada, private payers must get together to do something about it, says Michael G. Biskey, president of ESI Canada. Speaking at its annual ‘Outcomes’ conference, he said the public sector has captured cost savings. However, this is coming at the expense of the private sector and the gap between private sector costs and public sectors costs is growing. As well, the public sector recognizes it can’t protect the private sector, nor is it willing to. However, he said this does signal major opportunities for savings for players who take action.

CEOs Discuss Importance Of HR

Keeping workers engaged and focused on company values have been keys to their business’ success, say three ‘Top 50’ employer CEOs at the Canadian Institute’s ‘Winning HR Practices of Canada’ conference. Geoff Smith, Ellis Don Corporation; Hank Stackhouse, of Delta Hotels; and Ronnie Miller, of Hoffmann-La Roche Ltd.; agree that with greater worker shortages on the horizon, now is the time for HR personnel to foster higher levels of engagement among employees.

OSFI Clarifies ABCP Role

The Office of the Superintendent of Financial Institutions (OSFI) has further clarified its role in the ongoing Asset-Backed Commercial Paper (ABCP) issue. Superintendent Julie Dickson says OSFI fully supports efforts to get to the bottom of what happened. However, it does not oversee the firms that created the non-bank ABCP, so these firms are not subject to OSFI capital guidelines. OSFI guidelines also do not apply to the offshore banks that negotiated the bulk of the liquidity lines to non-bank ABCP conduits. They are subject to the capital rules of their home countries.

CalPERS Amends Governance

CalPERSinvestment committee has amended the pension fund’s corporate governance policy to include a 14-point checklist that gauges companies’ commitment to the environment. It will develop a survey with the Investor Network on Climate Risk to measure public equity managers’ ability to evaluate climate risk.

Smoking Cessation Has Payback

Employer sponsored smoking cessation programs can result in a “large payback” at a small investment. Speaking at ‘Health and Safety 2008,’ the International Accident Prevention Association’s (IAPA) annual trade show and conference, Andrea Docherty, a senior co-ordinator with the Canadian Cancer Society’s Smokers’ Helpline, said employers can save more than $3,300 per employer each year in costs related to smoking. This comes from reduced absenteeism and increased productivity with former smokers.

OETC Creates New Brand

OTEC has a new brand and an increasingly wide array of innovative HR solutions, tools and resources. With the completion of the re-branding, it has also launched a new website The new site is designed to assist companies and organizations with the tools they need to attract and retain high performing employees and become employers of choice.

Infrastructure Examined At Conference

The Toronto CFA Society will hold its 2008 Infrastructure Conference May 13 in Toronto, ON. ‘Capitalizing on Growth’ will discuss how firms are capitalizing on the growing need for infrastructure spending. Speakers include Paul Lechem, executive director, equity research, CIBC World Markets. For more information, visit

Derivatives To Be Demystified

‘Derivatives Demystified’ will take place June 17 in Toronto, ON. It will help financial professionals understand key financial risk management concepts and use forwards, futures, and swaps. For more information on this TMAC ‘Money in Motion’ seminar, visit


Tuesday, April 22, 2008

Canada Ahead Of U.S.

Canada is ahead of the U.S. in its treatment and care for mental illness and addiction, says Christopher Kennedy Crawford. The first child of Peter and Pat Kennedy Lawford, the actor/author told the opening session of ‘Health & Safety Canada 2008’ that he battled a drug and alcohol addiction for much of his young life. He said Canadian corporations recognize they can’t afford the cost of failing to deal with mental illness and addiction in the workplace.  

Institutional Funds Down In Quarter

Nearly three out of every four pooled funds in the Morningstar Canada’s institutional pooled fund database lost money during the quarter, with the best returns generally coming from fixed income funds. Its summary of performance for the first quarter of 2008 showed the best-performing pooled fund category for the quarter, as measured by the median return of its constituent funds, was Canadian inflation-protected fixed income with a gain of 4.4 per cent. The second-highest median return was the 3.1 per cent gain posted by the Canadian short-term fixed income category. The worst performer was the science and technology equity category with a 16.3 per cent median loss.

Members Move To Fixed Income

Members of 401(k) plans moved their assets from equities to fixed income investments during 80 per cent of the trading days in March, says the ‘Hewitt 401(k) Index.’ During the first quarter of 2008, participants transferred $2.8 billion from equities to fixed income investments on a net basis, which is the largest quarterly equity outflow during the history of the index. 

Panel Recommends CPP Changes

An external peer panel review of the Canada Pension Plan (CPP) resulted in 12 recommendations dealing with various aspects of the report including data, methodology, communication of results, and other actuarial issues. The recommendations ask the chief actuary to maintain the tradition of continual improvements to actuarial methods and to work towards addressing the needs of both the broad audience and more technical readers of actuarial reports. The external panel's findings confirm that the work performed by the Office of the Chief Actuary (OCA) of Canada on the report meets all professional standards of practice and statutory requirements and states that the assumptions and methods used are reasonable. As a result, the chief actuary's conclusions on the CPP's financial sustainability are well supported.

U.S. Institutions Report Negative Results

Most U.S. institutional investment plan sponsors reported negative results for the quarter ending March 31, 2008, says the ‘Northern Trust Universe.’ "Virtually all plan types were negatively impacted to some degree by the turbulent market and economic conditions experienced in the first quarter of 2008,” says Craig Tome, product manager, Northern Trust Investment Risk & Analytical Services. “For plan sponsors, this was the worst-performing quarter since the third quarter of 2002.” Within the Universe, corporate and public funds plans posted median returns of -5.7 per cent and -5.1 per cent, respectively, for the quarter while foundations and endowment plans performed slightly better with a median return of -4.7 per cent.

DC Assets Close In On 50 Per Cent

Defined Contribution plans account for 46 per cent of pension assets among U.S companies with more than $250 million in plan assets and 74 per cent of assets among companies with less than $250 million in pension assets, says research by Greenwich Associates. As well, the percentage of large plans that offer target date retirement funds as an investment option in their 401(k) plans increased to 80 per cent in 2007 from 60 per cent a year earlier. 

Shenandoah Life Selects Global IQX

Global IQX Inc. anOttawa, ON, software provider in business automation and business process management for the North American employee benefits industry, says that Shenandoah Life Insurance Company has licensed its software platform to provide capabilities for online quoting, rating, proposal generation, underwriting, renewal management, and detailed reporting. Shenandoah Life is a mutual insurance company licensed in 31 states and the District of Columbia. It markets individual life, health, and annuity products and group vision, dental, life, and disability products. It will use Global IQX to support its straight-through processing platform for its group insurance business.

Burton Speaks At AIMA

Journalist and author Katherine Burton will conduct an interactive luncheon discussion on her book ‘Hedge Hunters, Hedge Fund Maters on the Rewards, the Risk and the Reckoning.’ The book provides an insightful look at the hedge fund world as seen through the eyes of 18 powerful hedge fund managers. The AIMA Canada and Toronto CFA Society sponsored event takes place May 1 in Toronto, ON. For more information, visit

 Session Looks At Remuneration

‘Remuneration – A Strategic Tool’ is the subject of session June 10 to 12 in Toronto, ON. It will look at setting remuneration strategies to attract qualified candidates in sufficient numbers and to retain competent employees. For more information, call 800-861-6618.


Monday, April 21, 2008

Canadian Pensions Stumble Continues

Canadian pension plans lost ground for the third consecutive quarter, as deepening financial woes depressed equity markets worldwide, says RBC Dexia Investor Services. Canadian pension funds slipped 1.9 per cent in the quarter ended March 31, pushing losses to -2.7 per cent for the latest 12-month period. Global equity was the hardest hit asset class, although a weaker loonie softened the blow for unhedged Canadian-based investors. The Canadian stock market also retreated, down 2.8 per cent this quarter, but this was somewhat cushioned by strong commodity prices. As gold and crude oil reached record highs, materials gained 7.3 per cent and energy was up 1.2 per cent – the only two sectors with positive quarterly returns.

 Final Chapter Of Bottoming Process Entered

The equity market is now entering the final chapter of the bottoming process, says a Marquest ‘Market Comment.’ Despite all the front page news that is negative, it says the stock market is rallying because all this negative news has already been priced into the market. The defensive posturing by investors in the past few months further supports this view. Investor psychology is at record lows and investors have acted upon their concerns by buying record amounts of money market funds and high quality government bonds.  As a result, the equity market can now more rationally price risk and refocus its attention back on the fundamentals of the economy and corporate earnings. 

Court Defines ‘Accidental’

The British Columbia Court of Appeal has upheld a lower court decision holding that an employee was entitled to the benefits under a group insurance contract even when they engaged in risky behavior if the unexpected consequences of that behavior are "accidental" within the meaning of the policy. A ‘Hewitt Monitor’ says in Gibbens v. Co-Operators Life Insurance Company, an employee suffered total paralysis of the lower extremities after contracting the Herpes virus (HSV-2) during unprotected sex. A group contract of insurance between his union and the defendant insurer said the employee was to receive accidental disease and dismemberment benefits, including a $200,000 payment, if he lost use of his legs from bodily injuries occasioned through "external, violent, and accidental means."

Investment Growth To Be Divided

Manitoba has updated its pension commission website as a result of a decision from the Manitoba Court of Appeal on a marriage breakdown pension division of assets, says the ‘Buck Outlook – April  2008.’ The court in Foster v. Foster upheld a lower court decision that said investment growth earned during a marriage on contributions made under a Defined Contribution pension plan prior to the marriage is to be divided upon breakdown of the marriage. It requires plan administrators to calculate a non-member spouse's pension entitlement to include interest on all pre-marriage contributions made by the member spouse.

 Caisse Writes Down ABCP

The Caisse de dépôt et placement du Québec has given a fair value of $10.7 billion for its investment in third-party asset-backed commercial paper (ABCP). Last year, it said it had $12.6 billion of third-party ABCP. However, its annual report has stated an unrealized decrease of 15 per cent or $1.9 billion.

Companies With DB Plans To Be Avoided

The British Private Equity and Venture Capital Association (BVCA) is recommending its members not buy companies with Defined Benefit pension plans. This follows a government decision to increase the enforcement powers of The Pensions Regulator (TPR), allowing it to issue contribution notices and financial support directions.The BVCA is concerned about the "unintended impact" the proposals would have on a wide range of corporate activity, including private equity.

Sponsors May Use Multi-advisors

Large 401(k) plan sponsors are looking for advisors with expertise in a particular service and will bring on more than one if they need to, says a Spectrem Group report. Nearly nine in 10 of the large plan sponsors said they have used an outside advisor in making plan decisions. As plan size increases, sponsors find it necessary to use the services of more than one individual/firm to advise on the retirement plan. Two-third of plans relying on a single advisor use one affiliated with their plan provider. For those using non-affiliated advisors, nearly half use a fee-paid employee benefit consultant. The others use TPAs, fee-paid investment consultants, and brokers/financial planners.

Hedge Fund Assets Grow

Global hedge fund assets grew by 27 per cent in 2007 to $2.65 trillion, says Hedge Fund Intelligence. It found that the 391 hedge funds manage $1 billion or more and they account for $2.083 trillion, roughly 80 per cent of the global total. The U.S. has 255, or 65 per cent, of the billion dollar funds.

Horne President Of Bissett

Michele Horne is president of Bissett Investment Management. She joined the company in 1997. Garey Aitken is chief investment officer. He is a 15-year industry veteran and joined the firm in 1998. Horne will oversee the balanced portfolio management and fixed income teams and Aitken will oversee the equity team.

Foreign Exchange Risks Examined

Understanding implicit and explicit foreign exchange risks will be one topic covered at TMAC’s ‘Money in Motion’ seminar on foreign exchange. It will also look at developing superior hedging programs. It takes place June 4 and 5 in Toronto, ON. For more information, visit

 Child Claims Affect Costs

Health claims for our children are often overlooked and yet there are disturbing trends already affecting employer costs. ‘Our Children Today – The Workforce of Tomorrow’ will help employers better understand the health issues affecting children and the implications for their health plans. The Group Insurance Pharmaceutical Committee event takes place June 5 in Toronto, ON. For more information, visit


Friday, April 18, 2008

New Retirement In Store

Is the face of retirement changing? That was the issue at a CPBI Ontario region session ‘The New Retirement.’ Dr. Sherry Cooper, executive vice-president and global economic strategist for BMO Financial Group, discussed her book, ‘The New Retirement – How it will change our Future.’ However, she said while boomer retirees will live longer, more attention needs to be placed on ensuring they have a healthy retirement. Far too much money is being spent in North America on keeping people alive at any cost and not on prompting wellness, she said. While Hamilton said he agreed with most of Cooper’s book, he did challenge her claims that boomers are changing the face of retirement. He said that in most cases their retirement will be the same as their parents.

‘Sensible’ Reform Necessary

Canada is not immune to the retirement and pension issues facing all facets of society, says State Street Corp.’s ‘Pension Vision Report.’ It suggests that although pension savings have doubled in the 10 years leading up to 2006, to $24 trillion, the world’s total retirement liabilities are estimated to be six times that, at approximately $163 trillion. Employer-related retirement plans have been one of the great financial success stories. However, it notes that “sensible” reform is necessary in order to increase the number of plans and maintain benefits for companies and their employees. “Governments, social partners, and the financial services industry still need to do a lot to boost private provision,” says the report.

Caisse Major Creator Of Wealth

The Caisse de dépôt et placement du Québec is one of the largest investors in Québec, with total assets of $37.8 billion, which makes it a major creator of wealth for its depositors and for Quebecers in general, says its 2007 annual report. It says the returns obtained by the Caisse remain its primary contribution to Québec's economic development. Over the last five years, the Caisse has generated net investment income of $63.1 billion, including $7.9 billion in 2007. During the same period, depositors' net assets doubled, growing from $77.7 billion to $155.4 billion. The weighted average return on depositors' funds was 5.6 per cent in 2007, which places the Caisse in the first decile within the comparative universe of Canada's major pension funds.

Worst Performance For Hedge Funds

Hedge funds had their worst performance in almost four years in the first quarter, says the Morningstar 1000 Hedge Fund Index. It shows the performance of most investments made by the 8,700 hedge funds it tracks, slipped 1.51 per cent in the first quarter as stocks and bonds suffered as a result of the credit crisis. The funds faring the worst were those focusing on stocks, especially in emerging markets and small companies in the U.S.

Contact Increases Response Rates

Contacting participants at least three times at intervals of approximately 25 days can increase response rates by an average of 60 per cent, says MassMutual's Center for Behavioral Research. Its white paper, ‘Best Practices in Employee Campaigns: Helping Them Get There,’ also shows that providing a pre-filled tear-off postcard to participants resulted in a response rate of almost 10 per cent versus 1.5 per cent for a traditional direct mailing. 

Exposure To Private Equity Increases

Australia’s superannuation funds have increased their exposure to private equity to six per cent from 4.5 per cent, says a survey by the University of New South Wales. It found that while the pension schemes are moving more to private equity, returns expectations have been scaled back from 16.5 per cent in 2005 to 11.6 per cent. The research also found that the proportion of superannuation funds using fund of hedge fund strategies for investing in private equity soared 75 per cent from 25 per cent over the last three years.

Funded Status Near 100 Per Cent

The funded status of U.S. pension programs was just below 100 per cent at the end of the first quarter, says the Milliman ‘100 Monthly Pension Funding Index.’ It called 2007 a year of reassessment and implementation of new investment policies as pension plan sponsors responded to the new pension funding reform law, new accounting standards, improved funded status, and emerging demographic trends. The research found that pension expense decreased in 2007 to $19.3 billion from $27.3 billion the year before.

 Currency Readings Extreme

Investors have signalled that they believe exchange rates have already departed from fundamentals, says Merrill Lynch’s ‘Survey of Fund Managers for April.’ April’s results show some of the most extreme currency readings in the survey’s history with 50 per cent of asset allocators regarding the U.S. dollar as ‘undervalued,’ up from 30 per cent three months ago. In contrast, 71 per cent see the euro as over-valued, up from 55 per cent in January. As well, 52 per cent of investors still believe that UK sterling is overvalued despite its recent collapse.

Cruikshanks Returns To Hewitt

August Cruikshanks is director of research for Hewitt Associates’ Canadian investment consulting practice. He worked with Hewitt from 1998 to 2003. He left in 2003 to become managing director, public market investments, at OPSEU pension trust. In his new role, he will focus on general research as well as investment manager research.

Selling Practices Examined

Some of Canada’s leading experts in the fields of practice management, transition, and succession will take part in Mindpath’s ‘Buying & Selling of Financial Advisory Practices Levels I & II.’  Speakers include Peter Wouters, director, estate planning, at Empire Life, who will present case studies of practice sales; and Rob McClelland, senior financial advisor and vice-president, Assante Wealth Management, who will speak on book building through acquisition. It takes place April 16 in Kleinburg, ON. For more information, visit

Conference Theme Face Of Change

‘The Face of Change’ is this year’s theme for the Canada's Venture Capital & Private Equity Association’s Annual Conference. The conference will include presentations and panel discussions with equal emphasis on both venture capital and private equity issues. Close to 500 industry professionals and influencers from across the country and the U.S. are expected to attend. It takes place May 28 to 30 in Montreal, QC. For more information, visit


Thursday, April 17, 2008

Market Dislocations Improved Funded Status

An increase in investment grade corporate bond yields as a result of the recent credit market dislocation has caused U.S .corporate pension liabilities to decline, and thus increased U.S. corporate funded status, say a Merrill Lynch research report. With the significant growth in Liability Driven Investment strategies (LDI) over the past few years, those plan sponsors who have implemented LDI received an additional benefit, as decreasing yields on these investments have increased the value of assets, which further increased funded status. 

Hedge Funds Expect Inflows             

Hedge funds are confident that they will see heavier capital inflows despite gloomy forecasts for the U.S. economy, says Rothstein & Kass. The CPA firm’s latest survey found that more than 90 per cent of hedge fund professionals polled believe they will enjoy a significant bump up in capital flows. About three-quarters predicted there will be more hedge fund launches this year. Only one-fourth expect more hedge fund closures.

CC&L Outlines Multi-Boutique Approach

By adopting a multi-boutique asset management business model, Connor, Clark & Lunn Financial (CC&L) says it’s well-equipped to handle any challenges ahead. At a CC&L media luncheon, the independently owned firm explained how foreign competition, changing demographics, and consolidation are affecting the asset management industry, and why adapting to these changes is necessary. The group clarified its distinctive multi-boutique structure which ensures investment management, operational management, and distribution are kept as three distinct functions, allowing each to operate effectively and without interference.

Social Index Performance Slips

The Jantzi Social Index decreased in value by 0.59 per cent during the month of March. For the same period, the S&P/TSX Composite Index and the S&P/TSX 60 Index decreased by 1.43 per cent and 1.22 per cent respectively. From its inception on January 1, 2000, through March 31, 2008, the JSI achieved an annualized return of 7.91 per cent, while the S&P/TSX Composite and the S&P/TSX 60 had annualized returns of 7.94 per cent and 7.8 per cent respectively, over the same period.

 Integrated Closes Fund

Integrated Asset Management has closed its real estate fund GPM 11, raising a total of $148 million in commitments. The largest fund to be raised in the history of the GPM series, this marks the first time Integrated conducted the fund-raising with no assistance from a third-party marketer. For five of the investors (all university pension, foundation, and endowment funds), this was their first allocation to real estate.

 Hedge Fund Managers Collect Windfall

The top 50 hedge fund managers earned a combined $29 billion in 2007, says Institutional Investor's ‘Alpha.’ Five managers earned more than $1 billion. It says one contributor to the amounts of money hedge fund managers are making is the unraveling of the traditional ‘two and 20’ method of compensation. Some of the bigger hedge funds are now charging as much as five per cent of the invested principal and 40 per cent of the profits.

 Canada Needs Single Regulator

A national securities regulator is a must-do initiative to improve the state of Canada’s securities regulatory system, says the chairman of the Ontario Securities Commission. Speaking to the Economic Club of Toronto, David Wilson said Canada needs to beef up securities regulation enforcement and a single regulator would be one way to do that. He cited a recent report from the International Monetary Fund which suggested that the Canadian financial system would be much better off with a common regulator.

Groups Back Uniform 401(k) Fee Disclosure Act

The American Society of Pension Professionals & Actuaries and the Council of Independent 401(k) Recordkeepers both support 401(k) fee disclosure legislation which will be considered by the House Education and Labor Committee. In particular, they support the uniform application of its service provider disclosure rules to all services providers, regardless of their business structures. Modified from its original language, the substitute language would require all 401(k) plan service providers to issue a fee disclosure statement to the plan administrator in advance of entering into a contract for services. 

CPBI Sets Annual Meeting Date

The CPBI’s annual general meeting for 2008 will take place May 14 in Toronto, ON. It takes place during CPBI Forum which runs May 12 to 14. Among the matters to be considered are its 2007 audited financial statement and annual report. These can be seen at

 Foreign Currency Exchange Risk Examined

‘Advanced Treasury Concepts’ will take place May 29 in Toronto, ON. This TMAC ‘Money in Motion’ seminar will examine topics such as hedging foreign currency exchange risk and managing Canadian and international interest rate risk. For more information, visit


Wednesday, April 16, 2008

Limits On Funding Worsens Plan Deficits

The decline of Defined Benefit pension plans in Canada is being exacerbated by federal laws and regulations that foster employer underfunding, says a study by the C.D. Howe Institute. ‘Lifting the Lid on Pension Funding: Why Income-Tax-Act Limits on Contributions Should Rise’ says one example is the prohibition by the federal Income Tax Act of sponsor contributions to single-employer, DB plans when their assets exceed recorded liabilities by 10 per cent. Recent volatility in asset prices and interest rates, and resulting volatility in DB plan balance sheets, highlights the desirability of raising – or even removing – this restriction. Limiting employer contributions stops plan sponsors saving in fat years to cushion lean ones. It either forces sponsors to inflate the size of reported liabilities so the cap does not constrain funding, or stops companies from pursuing consistent contribution strategies as interest rates and asset markets fluctuate.

 ABCP Protection Period Extended

The bankruptcy protection period for the currently frozen $32 billion in asset-backed commercial paper (ABCP) has been extended until after noteholders vote on a proposed restructuring plan. An Ontario Superior Court extended the protection until May 30. A committee chaired by lawyer Purdy Crawford has been working since last August on a restructuring plan for the frozen notes. A proposal has been tabled and noteholders are scheduled to vote on the plan April 25.

OPTrust Set To Eliminate Deficit

The OPSEU Pension Trust (OPTrust) expects its upcoming actuarial valuation to mark the elimination of its current funding deficit. It achieved a 5.6 per cent investment return in 2007, outperforming its weighted benchmark return of 4.2 per cent. This is the eighth consecutive year in which OPTrust has topped its benchmark. Its diversified investment portfolio generated investment income of $659 million in 2007. This contributed to an increase in the OPSEU Pension Plan’s net assets to $13.6 billion at year-end, up from $13.1 billion in 2006.

 Brodkin Honoured By Ontario CPBI

Wendy Brodkin has been awarded with the CPBI Ontario region’s first Volunteer Recognition Award. The president of T. Rowe Price Canada earned the honour for her years of service to the CPBI Ontario region board including a term as chairman. As well, she was cited for her working in establishing its very successful investment forecast breakfast each January. Brodkin is a member of the editorial advisory board of Benefits and Pensions Monitor.

Older Workers Want Shorter Work Week

Companies looking to retain older workers are going to have to offer perks such as shorter work weeks and flexible hours, says a workplace survey from RBC. Canadians who are 55 years of age and older would prefer to work Tuesday through Thursday and work mainly in the morning from nine to noon. "With unemployment levels at an all time low, good employees are harder to find. Older workers are becoming an integral part of the Canadian workforce and employers need to look at ways of retaining and attracting them," says Christianne Paris, vice-president, recruitment and learning. "Employers may have to alter the work environment or their recruitment profiles to suit older workers who are looking for more flexibility in their lives as they either transition into retirement or look to come back into the workforce."

Comparisons To Japan Faulty

Observers who point to the experience of Japan during the 1990s as a blueprint for the future of the U.S. as a result of its present financial crisis are comparing apples and oranges, says the Natcan ‘Weekly Marker.’ The broad dispersion of losses from the current credit crisis is one important difference between the U.S. and the Japanese experiences. It says the circumstances in each country are similar in one single regard: large drops in asset values. Japan’s economy and society were, and still are, characterized by extensive government intervention and inflexible rules while the U.S. is all about private market solutions and very flexible markets.

Harmonization Difficult Task

The Committee of European Insurance and Occupational Pension Supervisors would face a difficult task if it decided to harmonize solvency requirements for pension funds. Its report on how countries in the European Economic Area (EEA) measure the levels at which companies must fund their Defined Benefit pension schemes. However, the report shows that funding regimes for state pension systems are far apart due to national solutions based on different historical and cultural bases that have been crafted over many years, and the social contract between workers and employers. Against this background, it says persuading countries to adopt a basis for solvency and member protection that differs from what is currently in place looks quite a challenge.

Best Practices Proposed For Hedge Funds

Sets of best practices for U.S. hedge funds attempt to increase their accountability. Two private sector committees established by the President’s Working Group on Financial Markets have released their best practices for these managers. They call on hedge funds to adopt comprehensive best practices in all aspects of their business, including the areas of disclosure, valuation, risk management, business operations, compliance, and conflicts of interest.

Smaller Plans Fall Behind

Sponsors of small U.S. corporate pension plans are falling behind their larger counterparts when it comes to preparing for new mark-to-market accounting rules and changes in global investment market, says research from Greenwich Associates. Its  ‘2007 U.S. Investment Management Research Study’ shows large corporate plan sponsors – along with many public pensions – are taking radical steps to change the way they manage pension liabilities and structure fund assets as a result of the new mark-to-market accounting rules. These rules require plan sponsors to recognize pension funding status on the corporate income statement.

Patients Forced To Pay

Health insurance companies in the U.S. are adopting a new pricing system for very expensive drugs, asking patients to pay for prescriptions for medications that may save their lives or slow the progress of serious diseases, says a New York Times article. The new pricing system sees insurers abandoning the traditional arrangement that has patients pay a fixed amount for a prescription, regardless the drug's actual cost. Instead, they are charging patients a percentage of the cost of high-priced drugs, usually 20 to 33 per cent, which can amount to thousands of dollars a month.

Walker Handles Institutional Sales

Chris Walker is vice-president of institutional sales at Invesco Trimark. He will be responsible for growing its Defined Contribution pension plan business in Canada.

Seller At Bennett Jones

Susan Seller is a partner in the Toronto office of Bennett Jones LLP. Her practice will focus on all aspects of pension and employee benefits law.

 Seminar Examines Options

‘Financial Risk Management will take place May 14 and 15 in Ottawa, ON. The TMAC  ‘Money in Motion’ seminar will look at topics such as understanding options and the factors effecting option pricing and using a total return swap in pension fund management. For more information, visit 


Tuesday, April 15, 2008

Quebec Accommodates Phased Retirement

Quebec has introduced a bill which allows employees to phase themselves into retirement. Bill 68 would amend its ‘Supplemental Pension Plans Act (SPPA)’ to allow employees to receive a retirement pension from a Defined Benefits pension plan while continuing to work and accrue new pension benefits under the same plan. However, it limits the maximum annual pension that these employees can receive to 60 per cent of their pension if they were fully retired. It brings the SPPA in line with the federal Income Tax Act.

 Energy And Resources Will Keep Canada Out Of Recession

Canada’s energy and resources will keep it from following the U.S. into a recession, says CIBC World Markets. The report finds that Canada’s strength in global commodity and energy prices has translated into soaring growth in Canadian personal and corporate income. Those gains show up in a very healthy increase in domestic spending and enriched tax revenues for governments. It says if Canada were an island unto itself, the talk would be about a boom, not a recession risk, given the strength of final domestic demand, and particularly, consumer spending, which was up more than seven per cent annualized in the fourth quarter of 2007.

Global 130/30 Strategy Launched

BNY Mellon Asset Management has launched a global 130/30 strategy. Its ‘Global Extended Alpha Fund’ will focus on global quantitative strategies. The fund is aiming for a three per cent return above the MSCI World Index by using equity derivatives to target global equity markets. The portfolio will hold 350 to 400 stocks and be diversified across a variety of countries, sectors and currencies.

Canadian Investors Hold The Course

Despite fears of a U.S. recession, more than half (57 per cent) of Canadian investors do not plan to make any changes to their portfolio, says an Edward Jones poll. Another 12 per cent plan to invest more. The same poll in the U.S. found that nearly two-thirds of Americans remain committed to their current investment portfolio despite fears of a recession. As well, one in 10 respondents south of the border plan to invest more money in the stock market.

Symposium Looks At Securities Law Enforcement

‘Advancing an Agenda on Enforcement of Securities Laws: What is the solution?’ will be the topic of Capital Markets Institute/Rotman School of Management symposium. Led by the Capital Markets Institute, it will present new thinking on four areas critical to the enforcement of securities law – achieving greater effectiveness in investigation, prosecution, and adjudication; balancing effective investigation and protection of rights; the need for a unified approach to enforcement; and the merits of rules versus principles-based regulation. It takes place May 2 in Toronto, ON. For more information, visit

TMAC Demystifies Derivatives

‘Derivatives Demystified’ will take place May 13 in Ottawa, ON. This TMAC ‘Money in Motion’ seminar will examine areas such as managing interest rate risk and understanding interest rate swaps. For more information, visit


Monday, April 14, 2008

Partial Wind-up Order Upheld

A Divisional Court has upheld a Financial Services Tribunal decision which considered it appropriate to segregate 73 Management Compensation Plan (MCP) members of the Hydro One Pension Plan for purposes of a partial wind-up, says the ‘Hewitt Monitor.’ The 73 lost their jobs when Hydro One pursued a reorganization of its business between 2000 and 2002. On application, the Superintendent of Financial Services had refused to make an order for a partial wind-up of the plan. However, the Divisional Court in Hydro One Inc. v. Marino and Jones confirmed the Tribunal's decision.

Emerging Markets Hit hard

The world's emerging and developed equity markets were hit hard during the first quarter of 2008, losing 10.56 per cent and 8.95 per cent, respectively, during the first three months of the year, says Standard & Poor's. For the first quarter, among the 26 developed markets, only Luxembourg managed a positive return (+2.1 per cent). The hardest hit developed equity markets over the period was Iceland (-32.4 per cent). Canada was down 7.1 per cent in the quarter. As for emerging world equity markets, 15 of the 26 countries lost ground during the quarter. The best performing markets during the first quarter were Morocco (+23.8 per cent), Pakistan (+10.25 per cent), and Chile (+8.5 per cent). The worst performers were Turkey (-36.6 per cent), India (-28.55 per cent), and China (-24.65 per cent).

Prime Services Supports Managers

RBC Capital Markets has completed the formation of the RBC Global Prime Services Group which will support hedge fund managers, mutual fund managers, and institutional asset managers through one platform. This comes out a recognition that the lines between hedge fund and traditional institutional managers are becoming more obscure and their needs become more similar. For example, hedge funds are going public and are no longer using only long/short strategies while traditional fund managers are launching 130/30 funds and using leverage and shorting.

ERISA Allows Cross-Border Pooling

Northern Trust has received an advisory opinion from the U.S. Department of Labor that clears the way for U.S. pension plan participation in its cross-border pension pooling vehicles. These vehicles are set up by multi-national corporations in order to gain efficiencies and improved corporate governance over global pension funds. The advisory opinion clarifies that the use of pooled offshore vehicles to hold the assets of the U.S. pension plans and non-U.S. pension plans of multi-national corporations by Northern Trust does not violate Employee Retirement Income Security Act (ERISA) requirements for the holding of currencies or securities offshore.

Applying Electronic Commerce Examined

Essentials of electronic commerce will be covered at a TMAC Money in Motion’ seminar. Areas examined will include identifying how electronic commerce can be applied and reducing the costs and effort of setting up and maintaining electronic commerce. It takes place May 13 in Toronto, ON. For more information, visit

Conference Looks At Managing Investor Expectations

Managing investor expectations and selecting market-resilient investments will be among the areas covered at the ‘Morningstar Investment Conference: Taming the Market Cycles.’ Advisors will learn strategies on how to minimize the effects of market swings on investors and their portfolios. It takes place June 11 in Toronto, ON. For more information, visit


Friday, April 11, 2008

New Zealand Kills Airport Deal

New Zealand has killed the Canada Pension Plan Investment Board's bid for a 39.2 per cent stake in the country’s largest airport. The offer for Auckland International Airport Ltd. was rejected by two government ministers with veto power at the final stage of approval. They contended it would not benefit the country.

Manulife Uses Behavioural Finance Expert

Manulife Financial has hired behavioural finance expert Dr. Shlomo Benartzi to provide insights on retirement savings trends to its Canadian group savings clients. A professor at the University of California, Los Angeles, Benartzi is a pioneer in studying participant behaviour in retirement savings plans. Manulife hopes he can help combat the inertia which plagues the industry. Significant numbers of plan participants leave their savings in default funds and an equally substantial number make no effort to take advantage of features such as company matches. These same behaviours have been observed in the U.S. and plan sponsors there are already applying the results of Benartzi’s studies to assist their plan members.

Man Creates Environmental Project Fund

Man Group has announced a private equity style unit that will invest in environmentally related projects. Man Environmental Capital Opportunities will sponsor funds that would invest in projects benefiting the environment. It incorporates the $630-million China Methane Recovery Fund that Man closed in December.

 Panel Gets 116 Submissions

The Alberta/British Columbia Joint Expert Panel on Pension Standards has posted the 116 submissions it received on its website. These submissions are now being reviewed and it may choose to consult further with some submitters. The panel plans consultation meetings until the end of June. The deadline for the final report is September 30. Submissions can be found at

Obesity Costs Employers

Private employers in the United States are spending up to $45 billion a year on medical expenditures and work loss due to obesity, says a report by The Conference Board. ‘Weights and Measures: What Employers Should Know about Obesity’ says obesity rates in the U.S. have doubled over the last 30 years and obesity is linked to a 36 per cent increase in spending on healthcare services, more than smoking or drinking. While more than 40 per cent of U.S. companies have already implemented obesity-reduction programs, the report says employers need to find a balanced approach between being too intrusive in managing obese employees and the risks of not managing them.

Seward Nominated For Award

Karen Seward, Shepell·fgi senior vice-president of business development and Marketing, has been nominated for a Vision Award in Service Provider Excellence. The Vision Awards publicly recognize contributions and accomplishments made by professionals in the field of human resources in the national capital region, eastern Ontario, and western Quebec. Her nomination commends her understanding of employee health as a business issue.

Advisors Bullish On Financials

A shift in forecast for second quarter 2008 sees an increasingly bullish outlook on financials, says Horizons BetaPro’s ‘Q2 2008 Advisor Sentiment Survey.’ More than 40 per cent of the 400 advisors polled, a reversal from the first quarter when 47 per cent of advisors had a more bearish outlook. The bullish shift in financials is coupled with a notably weakened bullish sentiment toward the Global Gold Index and Gold Bullion, marking the first quarter in the last six where advisors responded with less than a 70 per cent bullish outlook for bullion and gold stocks.

Middle Office Services Goes Live

Northern Trust has gone live with its first hedge fund middle office services client. The provision of hedge fund middle office services includes automated trade matching, derivatives processing, reconciliations, and connectivity to multiple prime brokers. It will support a fund launched by New York-based Julius Baer Investment Management LLC (JBIM).

AIMA And MFA Partner

The Alternative Investment Management Association (AIMA) and Managed Funds Association (MFA) are entering into an alliance that will allow the two organizations to collaborate on key industry initiatives. Initially, MFA and AIMA will develop an information exchange, participate on each others' boards, discuss the development of shared initiatives, and collaborate on educational seminars.

Morningstar Launches Alternatives Platform

Morningstar has launched an institutional research platform focused on alternative investments. Morningstar Direct Alternative Investment Edition – a global, multi-currency institutional research platform – provides in-depth performance analysis of 8,700 hedge funds, funds of hedge funds, and commodity trading advisor products. It will enable clients such as fund-of-fund managers, fund managers, family offices, and institutional investors to conduct alternative investment research by combining timely data with advanced analytics and reporting tools.

ACPM Looks At Meeting CAP Objectives

‘Capital Accumulation Plans – Can They Meet Your Objectives?’ will be the topic of an ACPM Ontario Regional Council session. Sessions will look at engaging CAP members and CAP design. Speakers include Bruce Curwood, of Russell Investments, and Bill Robson, of the CD Howe Institute. It takes place May 7 in Toronto, ON. For more information, visit

Is Canada Ready For IFRS?

Despite the fact the move to IFRS is mandatory for Canadian publicly accountable companies on or after January 1, 2011, businesses still seem to be complacent in getting ready. And, the switchover will have an impact on both business and financial statements. To look at the issue, FEI Canada’s national breakfast series will hold a discussion April 25 in Toronto, ON. Presenters are Rafik Greiss, Canadian IFRS leader, Ernst & Young LLP;  Fraser J. Gall, a tax partner at Ernst & Young LLP ; and Peter Martin, director, Accounting Standards Board, CICA. For more information, visit

Conference Probes Future Of Insurance Industry

Futurist Jim Carroll headlines the program at LOMA Canada's Annual Conference, June 12 in Toronto, ON. Carroll will answer three key industry questions – is the Canadian life and health insurance industry keeping pace with other financial services sectors; how are likely future Canadian healthcare system changes going to affect the way it does business; and how it can remain competitive in today's global environment. Attendees may also chose from a variety of break-out sessions and workshops on subjects including group benefits and retirement services. For more information, visit

IFIC’s IDA Submission Revealed

IFIC’s submission to the IDA’s ‘The Client Relationship Model (CRM)’ model will be revealed April 22 in Toronto. The model proposed by the IDA outlines new requirements for relationship disclosure and new and additional regulations on account performance reporting and suitability. Speakers include John Adams, CEO of PFSL and chair of the Client Issues Task Force, who will provide an overview of the IDA proposal, including its overlap with the proposed NI 31-103. For more information, visit


Thursday, April 10, 2008

BCE Deal Gets Last Approval

The acquisition of BCE by the Ontario Teachers’ Pension Plan has received the last approval needed. Industry Canada is satisfied that the company qualifies as Canadian under CRTC regulations. With this approval, the regulatory approval process is complete. Pending the resolution of an appeal by BCE bondholders slated to start later this month, the transaction could now be complete by the end of the June.

Obligation To Co-workers Brings Sick To Work

The number one reason people go to work when they are sick is their sense of obligation to co-workers, says a poll by LifeCare, Inc., a provider of comprehensive specialty care services. This is the first time this response has topped the list. The number one response in two previous surveys was they felt it was ‘too risky to take time off.’ Other reasons cited were ‘too busy to stay home’ and ‘I save my sick days for childcare/eldercare emergencies.’ The percentage of respondents who do not go to work when they're sick has always remained at the six or seven per cent mark.

Company Faces Flood Of Lawsuits

With Bear Stearns’ buyout underway, the company faces a flood of lawsuits not just from shareholders, but from Bear Stearns employees over losses in their 401(k) retirement savings plans, says Michael Epstein, an employee benefits and executive compensation attorney at Montgomery, McCracken, Walker & Rhoads LLP in Philadelphia, PA. He says a recent U.S. Supreme Court ruling in LaRue v. DeWolff, Boberg & Associates Inc. upheld the right of employees to sue over losses in their 401K retirement savings accounts under certain circumstances such as employer mismanagement and fee disclosure. That ruling represents a major shift that could have significant implications for Bear Stearns and other financial services companies crumbling under the credit crunch and subprime mortgage fallout.

Canaccord Buying Out ABCP Clients

Almost all Canaccord clients with frozen asset-backed commercial paper (ABCP) will get all their money back. Canaccord Capital Inc. will offer to buy out the holdings of 1,430 clients holding less than $1 million of the paper at par, about $138 million of notes. The proposal covers 97 per cent of its clients with ABCP. The proposal should smooth the way for the restructuring of $32 billion of ABCP that has been locked up since the market for the short-term paper failed in August. Major holders of ABCP, including the Caisse de dépôt et placement du Québec, put forward a restructuring proposal last month, but small investors have been fighting for more money.

Quebec Tables Derivatives Legislation

New derivatives legislation which “will provide the industry with a clear legislative framework that meets its needs for legal security, flexibility, and efficiency” has been tabled in the Quebec legislature. The province hopes it will afford users of derivatives the protection they need, helping make Quebec one of the best places in the world to trade derivatives. The proposed legislation is designed to be closely harmonized with U.S. legislation. Quebec would become the first jurisdiction in Canada to legislate in the derivatives sector.

Integrated Closes Retirement Lodge Financing

Integrated Asset Management Corp. and its private corporate debt group, Integrated Private Debt Corp., has closed $19.5 million in financing for 4 All Seasons Retirement Lodge Ltd. The financing is a senior secured note with a 10-year term. Proceeds of the loan will be used to repay interim construction financing at the privately-owned, 101-bed complex care facility located in Ladysmith, BC.

Beauchemin Heads McLean Budden

Roger Beauchemin is president and chief executive officer of McLean Budden. He succeeds Douglas Mahaffy who becomes chairman. Beauchemin joined the firm in 1999 as a portfolio manager. He has served as president since 2007. Mahaffy served as president and chief executive officer since 1989.  

McMeans Regional Vice-president

John McMeans is regional vice-president, eastern and central region, for the life and health insurance division of RBC Insurance. He has worked for the firm for the past 14 years, including the past five as the regional vice-president for the central region. He will be responsible for developing strategy and guiding the sales and service leadership team in areas including group insurance.

Northern Trust Makes New Hires

John Folk is senior vice-president, client service and operations, and Valerie Hull is vice-president, finance, for Northern Trust Canada. Folk joins the firm after 14 years with State Street Canada where he was senior vice-president, institutional investor services, and co-head of investor services operations for Canadian pension, investment management, and corporate clients. Hull has in excess of 10 years experience working in the financial services industry, most recently with Goodman & Company, Investment Counsel Ltd.

Consulting Firm Challenges Examined

Trends in CIO outsourcing and the challenges facing consulting firms today will be among the topics at AIMSE’s 31st Annual Conference, ‘Institutional and Educational Opportunities for Success.’ Keynote speakers include Dr. Robert Aliber, a professor of international economics and finance at the University of Chicago; and Dr. John Eliot, a professor of business and psychology at Rice University. It takes place April 27 to 29 in Boca Raton, FL. For more information, visit

Summit Brings Together Pension Leaders

Now in its fifth year, the Conference Board of Canada’s ‘2008 Pensions Summit: Securing the Future’ brings together Canadian pension thought leaders and key players to discuss the issues that impact the long-term viability and value of their pension plans. The 2008 conference will feature pension leaders from Canada and the U.S. including Jim Johnston, director, insurance and pension, global risk solutions, BNP Paribas Securities Corp., who will discuss today’s investment strategy issues; and Gretchen Van Reisen, former vice-president, global pensions and benefits, CIBC, who will participate in a panel discussion of pension regulation and reform. It takes place April 28 and April 29 in Toronto, ON. For more information, visit

U.S. Banking Environment Examined

Understanding the U.S. banking and treasury environment will be one of the topics covered at TMAC’s ‘Advanced Treasury Concept’ seminar. Other areas examined will include hedging foreign currency exchange risk and managing Canadian and international interest rate risk. It takes place April 16 in Ottawa, ON. For more information, visit


Wednesday, April 9, 2008

ABCP Committee Gets Credit Default Swaps Agreement

The Pan-Canadian Committee for Third-Party Structured ABCP has reached an agreement with CIBC concerning the termination of one of CIBC's credit default swaps (related to SAT Series E) and the inclusion of CIBC's two other credit default swaps (related to SAT Series E and SIT III Series E) as part of the committee's restructuring plan. Reaching a mutually satisfactory agreement on the three swaps was a condition of CIBC's participation in the margin funding facility, which is integral to the committee's restructuring plan. The agreement resulted from negotiations among CIBC and investors who own a substantial majority of the outstanding SAT Series E notes.

Benefit Reduction Allowed

The Quebec Court of Appeal has quashed decisions rendered by the Superior Court, the Administrative Tribunal of Quebec, and the Review Board of the Régie des rentes du Québec that said it was not possible to offer benefits contingent on the sufficiency of negotiated contributions under a multi-employer pension plan. In Sean Kelly et al. v. Régie des rentes du Québec et al, provisions of the plan provided that if an employer withdrew from the plan with insufficient funding for the promised benefits, the benefits payable in respect of that employer's employees would be reduced to conform to the available funding. The previous decisions found that the Supplemental Pension Plans Act did not allow benefits to be reduced, even in a multi-employer pension plan where the obligation of the employer was limited to a fixed amount set out in a collective or trust agreement. The effect of the lower level decisions could have resulted in other plan members and participating employers subsidizing benefits payable to employees of withdrawing employers where there was a shortfall in the plan as a result of an employer withdrawing. The Court of Appeal has overturned those decisions.

IMF Sets Credit Losses At $945 Billion

The International Monetary Fund says losses related to the global financial crisis are at least $945 billion, surpassing the costs associated with the Asian financial crisis and the U.S. savings and loans crisis in previous decades. Its ‘Global Financial Stability Report’ says about half of the potential losses will be shouldered by global banks with other institutional investors – including insurance companies and pension funds – accounting for the rest. Financial stability has deteriorated significantly, it says, and the side effects of the credit problems will be harsh. While U.S. banks have written down much of their expected losses already, European banks are only just catching up so the toll on the global economy is only beginning to be felt. “Notwithstanding unprecedented intervention by major central banks, financial markets remain under considerable strain, now compounded by a more worrisome macroeconomic environment, weakly capitalized institutions, and broad-based de-leveraging,” says the report.

Sprott Planning IPO

Sprott Asset Management Inc. may public. It is planning an initial public offering which could value the company at up to $1.5 billion. The offering would reduce company founder Eric Sprott’s holdings from 78 per cent of the company to 67 per cent. He launched Sprott Asset in 2000 after founding an investment bank now known as Cormark Securities Inc. and then starting a hedge fund.

Best Employers in Canada Study Underway

Hewitt Associates’ Best Employers in Canada study is underway for the 10th year. All organizations that have operated in Canada for at least three years and have 50 or more employees are eligible. Interested organizations have until May 31 to register at

Cash Flees To Quality

U.S. companies are reducing risk levels in their cash investment portfolios and cutting return targets on short-term investments, says research from Greenwich Associates. Its survey of nearly 300 large companies in Asia, Europe, and the United States on the credit crisis reveals that companies in the United States have reduced return targets on their cash investments for 2008 to 3.7 per cent from 4.9 per cent. The reduction in target returns reflects a general flight to quality in the short-term investment portfolios of U.S. companies. In 2007, U.S. companies held 70.5 per cent of their cash assets in AAA-rated vehicles. That allocation has increased to 78 per cent. Meanwhile, allocations to AA-rated investments dropped to 16 per cent in February 2008 from 17.1 per cent in 2007.

Market Turbulence Offers Challenges And Opportunity

The Alternative investment Management Association (AIMA) says many hedge fund managers are doing what they set out to do – to deliver absolute returns for their investors during extreme market volatility and falling asset prices. It says the very practices recognized in the past as being part of the innovative nature of asset management – such as ‘shorting’ – are now being singled out for unwarranted criticism in a number of quarters. It is calling for hedge funds to be recognized for what they are: investment funds that offer investors access to a wide range of asset and investment strategies, which can offer downside protection in difficult market conditions.

Pension Fund Asset Increased

The value of the funds' assets increased 25 per cent from $621 billion in 2004 to $779 billion in 2006, says Statistics Canada’s ‘2006 Census of Trusteed Pension Funds.’ The biennial survey of all employer-sponsored pension funds shows revenues accumulated during 2006 amounted to $114 billion, far exceeding expenditures at $44 billion, for a net cash flow of $70 billion.

Europeans Opt For Default

While the average European Defined Contribution pension plan offers about 15 investment options, 70 per cent of members opt for the default option, says a European DC pension survey by Mercer. Within default options, balanced funds remain the most common, offered by 35 per cent of the plan sponsors surveyed. Lifecycle funds were next, offered by 23 per cent of DC plan sponsors.

Standard May Be Insufficient

IAS19, the International Accounting Standards Board’s measure for gauging employee benefits might not be sufficient to evaluate pension liabilities, says Pension Capital Strategies’ second annual survey of equity analysts’ views on pensions. It says analysts are placing increasing importance on the solvency position of pension schemes. The survey shows 97 per cent of analysts believe IAS19 is either a fair estimate or an under-estimate of the ‘true’ size of pension liabilities. As well, more than three-quarters are now asking companies for information on pension scheme solvency positions. It also shows that while most analysts would view a move from equities to bonds as neutral, more would view it positively, despite its impact on profit and loss statements.

Wilson Speaks To Economic Club

David Wilson, chair of the Ontario Securities Commission, will speak to the Economic Club of Toronto April 16 in Toronto, ON. He will address securities enforcement in Canada and how to strengthen the system. For more information, visit

Money Markets Focus Of Seminar

Selecting from among investment and borrowing alternatives will be among the topics examined at TMAC’s ‘Money Market’ seminar. Other areas examined will include managing interest rate risk more effectively, optimizing strategies depending on the shape of yield curve, and improving cash management activities. It takes place May 7 and 8 in Toronto, ON. For more information, visit


Tuesday, April 8, 2008

Bulls And Bears Battle Over Market Outlook

Even though the rising cost of gas has drivers fuming, increasing oil prices have made portfolio managers more bullish on the Canadian equity market, says the ‘Russell Investment Manager Outlook.’ It says 43 per cent of Canadian investment managers surveyed are bullish towards domestic equities, a 15 per cent increase in optimism since the fourth quarter of 2007. The attractiveness of commodity stocks played a key role, as 55.8 per cent of managers are bullish towards the energy sector, a jump of 13 per cent over last quarter. However, 43 per cent of managers surveyed were also bearish on the outlook for Canadian equities, showing remarkable polarity among investment managers.“The even number of bulls and bears on Canadian equities may reflect a general disparity of opinions. Is the worst of the sub-prime crisis over? Is recession coming to Canada? How will central banks balance demands for more stimulus while containing inflation? These are the questions currently dividing market watchers,” says Timothy Hicks, Russell’s chief investment officer.

Health Of Plans Declines

The financial health of Canadian pension plans showed a marked decline at the end of the first quarter of 2008, to levels not seen since the middle of 2005, says the Mercer pension health index. “Equity returns were negative in Canadian dollar terms in almost all regions for the second quarter in a row,” says Peter Muldowney, business leader for its investment consulting business in Canada. “This meant that the asset side of the Canadian pension plan balance sheets continued to take a pounding in the first quarter of this year.” The pension health index which measures the solvency funded status of plans, reached its lowest point on March 31, 2008, falling to 77 per cent, from 82 per cent at the end of 2007.” Canadian bonds were the best performing asset class in the first quarter of 2008, with the DEX universe bond index returning three per cent. The representative indices for all the other main asset classes had negative returns last quarter with Canadian equities down 2.8 per cent last quarter as shown by the S&P/TSX composite index.

OSFI To Make Approvals More Timely

OFSI will continue to make pensions’ approvals more timely; develop a supervisory framework for pension plans and practices guides to support the framework; and upgrade its internal information technology system. These are part of its strategic course for its development over the next three years. It also says the changing external environment for pensions, which includes increasing complexity of the work and a litigious environment, demands greater skill on the part of OSFI staff. It has started to address both the staff and systems issues, but work in these areas is not complete. The long time lines for approvals have been shortened, but further work needs to be done to ensure that delays do not result in reputational risk to OSFI.

Canada Post Assets Increase

The Canada Post Corporation’s Registered Pension Plan ended 2007 with total net assets of $14.7 billion compared with $14.4 billion an increase of $236 million. The seven-year-old plan, one of the largest in the country, earned a return of 2.1 per cent over the year, exceeding the benchmark return of 0.9 per cent. The fund has an annualized rate of return of 7.3 per cent since inception against the benchmark return of 4.8 per cent. "Financial markets continue to exhibit unusual volatility, as we work our way through the credit issues facing us. We are pleased that despite this uncertainty the plan continues to perform above its benchmark," says Douglas Greaves, vice-president, pension fund, and chief investment officer. The DB plan has almost 77,000 active members, retired members, deferred pensioners, and beneficiaries.

J. Zechner Selects CIBC Mellon

CIBC Mellon Global Securities Services has been appointed by J. Zechner Associates Inc. to provide asset servicing support for its family of pooled funds. This will include global custody, fund accounting, unitholder recordkeeping, foreign exchange, and securities lending services. Established in 1993, J. Zechner Associates Inc. manages more than $2 billion in assets for pension funds, institutions and mutual fund companies, family trusts, endowments, and high net worth individuals.

Employers Get Involved In Employee Health

The number of U.S. employers who plan to get more involved in managing the health of their employees has jumped, says a Hewitt Associates’ survey. The survey found that keeping employees healthy was one of the top business and workforce issues this year. Of plans surveyed, 88 per cent plan to make investments in longer-term solutions aimed at improving the health and productivity of their workforce over the next three to five years, up from 63 per cent last year. They plan to offer incentives to motivate sustained healthcare behavior change and healthcare data and measurements to drive their organization's healthcare strategy.

Integrated Finances Reliance

Integrated Asset Management Corp. and its private corporate debt group, Integrated Private Debt Corp. have announced financing of $30 million in an offering of 10-year interest only senior secured notes to Reliance LP. The financing is part of Reliance’s U.S. private placement which was influential in the structuring of Reliance’s public placement financing in Canada. The notes were sold on a private placement basis through Royal Bank Capital Markets and Citigroup. Privately-owned, Reliance rents, installs, and services home comfort products for residential and commercial customers, namely water heaters, HVAC equipment and security systems, and monitoring services.

Session Examines New Retirement

Dr. Sherry Cooper and Malcolm Hamilton will speak about the issues of aging and retirement at a CPBI Ontario Region breakfast seminar. Cooper, executive vice-president and global economic strategist for BMO Financial Group, will speak to the ideas in her book, ‘The New Retirement – How it will change our Future,’ about the boomer generation reaching retirement and how they will redefine it with “great energy and creativity.” Hamilton, a principal and worldwide partner of Mercer, will discuss how Canadians should address the financial challenges of retirement and the growing gap between the fact and fiction of aging. Attendees will receive a copy of Cooper’s book. It takes place April 17 in Toronto, ON. For more information, visit

Conference Looks At Investment Issues

The 2008 CFA Institute Annual Conference, May 11 to 14 in Vancouver, BC, will look at the trends and investment issues critical to success in today’s global marketplace. Now in its 61st year, it will feature renowned speakers who will share their thoughts and provide insight on the challenges and opportunities that lie ahead. Participants also will have the chance to meet and exchange ideas with investment professionals from around the world. For more information, visit


Monday, April 7, 2008

IFIC Could Create Umbrella Plan

IFIC members should work together to create one umbrella plan for registered disability savings plans (RDSP), says Jamie Golombek, vice-president of taxation and estate planning at AIM Trimark. Speaking at an Investment Funds Institute of Canada (IFIC) seminar on RDSPs, he said under the proposed legislation, RDSP holders can only purchase a plan from one firm “This is a real stumbling block for our industry,” says Golombek. “It means you cannot have a RDSP at AGF and at AIC and at AIM and at Mackenzie and at CIBC. You’ve got to choose one company.” However, by working together, IFIC could act as the issuer giving investors access to more than one fund. The RDSP was proposed by the federal government in its 2007 budget. It is intended to help parents and others to save for the long-term financial security of a child with a disability.

GE Pursues Essential Themes

GE will continue to pursue the six essential themes it believes are driving the world's economies and its growth, says Jeffrey Immelt, its CEO. In his letter to investors in its annual report entitled Invest and Deliver, he says these themes are technology, emerging markets, environmental solutions, demographics, digital connections, creating value. Its thesis is that each of these themes is essential in the development of the world. For example, in environmental solutions, he said the company launched its ecomagination in  2004 because it wanted to use its brand and technology to become a catalyst for broader change. Since then, it has created more than 60 ecomagination products that produce cleaner energy and water or improve efficiency.

Companies Paying More For Credit

A majority of companies in Asia, Europe, and the United States are paying higher prices for bank credit lines and long-term debt issues and are being forced to accept tighter terms and covenant restrictions on loans as a result of the crisis in global credit markets, says a study by Greenwich Associates. Its research suggests that companies around the world are adjusting strategies in response to the credit crunch and preparing for a likely economic downturn, but they are certainly not panicked. Rather, they seem to be taking a series of necessary and logical steps towards preserving access to the capital they need to run their businesses.

Pension Funding Ratio Down In U.S.

Pension funding ratios in the U.S. fell 11 per cent in the first quarter of 2008, says UBS Global Asset Management’s U.S. Pension Fund Fitness Tracker. This follows a second half of 2007 when pension funding ratios dropped 12 per cent. The past three quarters have seen pension funding ratios fall by almost 24 per cent. The typical U.S. pension fund started the year with a funding ratio of approximately 101 per cent and ended the quarter substantially weaker at approximately 90 per cent as a result of volatile equity markets and lower interest rates.

Behavioural Finance Examined At Workshop

The growing area of behavioural finance will be among the subjects examined at the Research Foundation of CFA Institute Annual Workshop entitled Research for the Practitioner VII. The workshop focuses on the expanding body of investment research and is designed to enhance investment practitioners’ knowledge and help them apply such research. It takes place May 11 in Vancouver, BC. For more information, visit


Friday, April 4, 2008

Caisse Asked To Play Lead Role

The Caisse de dépôt et placement du Québec is being asked to play a lead role in a bailout plan for retail investors holding asset-backed commercial paper (ABCP). The Caisse is the largest single holder of ABCP at about $13 billion. One proposal would be to have a big investor such as the Caisse buy at about 50 cents on the dollar the $400 million of ABCP that's held by individual investors. Then banks and other market players – including Canaccord, the brokerage whose clients hold much of the paper at issue –could create a fund to top up investors to as close to 100 cents on the dollar as possible. The issue for the Caisse with the proposal is it wants to avoid the perception that Quebec pensioners are subsidizing investors elsewhere in the country.

Pension Funds Join Class Action

Three U.S. pension funds have joined a class action against State Street Global Advisors over the performance of its low-risk bond funds last year. They allege that the bond funds lagged its benchmark by as much as 30 per cent in 2007. The pension fund at Unisystems started the suit and was joined by funds at Andover Companies and Nashua Corporation. State Street has earmarked $625 million for ‘legal exposure and related costs in connection with its fixed income strategies.’

SEC Letter Helps Resolve Crisis

A Securities and Exchange Commission (SEC) letter to CFOs of certain U.S. public companies highlighting options available under accounting regulation SFAS 157, which refers to mark to market accounting for assets and liabilities, is another important step in building the foundation for a resolution of the financial crisis, says a Marquest Market Comment. In essence, the SEC has reminded CFOs that they have the option under SFAS 157 to price assets according to their own models when market prices are distorted by forced liquidation or distressed sales. This action on the part of the SEC is an extremely important step which will assist in slowing the prolification of the liquidity crisis, says the Market Comment, and this action should result in a significant rally in the financial stocks which are the ones most impacted by the distressed selling from the liquidity crisis.

Institutional Involvement In Class Actions Rises

Institutional investor involvement in U.S. securities class action cases continued to increase in 2007, says a report from Cornerstone Research. However, almost 60 per cent of cases involving institutions as lead plaintiffs settled. The number of securities class action cases settled last year rose 21 per cent from 92 in 2006 to 111 in 2007. The total value of these settlements dropped 60 per cent from the all-time high of $17.2 billion reported in 2006 to $7 billion in 2007. More than 70 per cent of the drop was due to the largest settlement in history, the $7.2 billion Enron case settlement. Accounting issues continued to be included in the allegations of the majority (more than 55 per cent) of all settled cases. However, for the second year in a row, the percentage of cases involving allegations of financial statement restatements declined (30 per cent).

RBC Best Overall Fund

RBC Asset Management Inc. has been named ‘Best Overall Fund Group’ in Canada by Lipper Inc. for the second consecutive year. It was presented with the award for having the best risk-adjusted performance over a three-year time period ending December 31, 2007. The award is part of a global program of events held in 21 countries to highlight funds and fund families that excel in delivering consistently strong risk-adjusted performance relative to their peers. Fund families with at least five equity, five bond, and three mixed-asset funds were eligible for the award.

Employee Engagement Discussed

‘Influencing Employee Engagement to Drive Performance and Organizational Sustainability’ will be the topic of a Manitoba CPBI Council breakfast seminar April 17 in Winnipeg, MB. Diane Panting, vice-president, Aon Consulting Inc., will examine what drives employee engagement, how to determine if employees are fully engaged, how to apply a total rewards perspective to ensuring employee engagement, and how this impacts organizational sustainability. For more information, eMail


Thursday, April 3, 2008

Dollar Drop Softens Blow

Investment funds that target foreign stock markets suffered heavy losses during the first quarter of 2008, says preliminary performance data from Morningstar Canada. Amid turmoil in the global financial services sector, many of the world's markets had double-digit losses for the three-month period, but for Canadian fund investors the blow was softened by the Canadian dollar's steep drop against most major currencies during that time. Market losses were the most severe in Europe and Asia. For example, the UK's FTSE 100 Index was down 11.7 per cent for the quarter, while France's CAC 40 and Germany's DAX indexes dropped 16.2 per cent and 19 per cent, respectively, when measured in local currencies. But the loonie's woes played a large part in mitigating these losses for Canadian fund unitholders.

Don’t Retire From Investing

If investors are worried about what the current market conditions are doing to their retirement nest egg – have no fear – there’s ample time to make up those losses. Russell Investments shows as much as 60 per cent of retirement portfolio growth can come from investment returns earned after retirement. This different way of thinking about retirement is part of the strategy behind the launch of the Russell Retirement Essentials Portfolio (RREP). The portfolio’s 35 per cent allocation to equities and 65 per cent allocation to bonds is intended to generate consistent monthly distributions to cover essential retirement expenses such as housing, groceries, healthcare, and insurance.

DC Assets Top $10 Trillion

Defined Contribution assets in the U.S. surpassed the $10 trillion mark in 2007, an increase of 8.7 per cent over 2006, says the Society of Professional Asset-Managers and Record Keepers (SPARK). Data from its 2008 Marketplace Update shows employer-based DC plan assets grew nine per cent, reached nearly $5 trillion at year-end 2007. Private sector plans, at nearly $4.3 trillion, make up 86 per cent of all employer-based DC assets, while total assets in public sector employer plans increased almost 10 per cent over 2006, reaching $670 billion. The majority of the private sector assets ($2.9 trillion) are in 401(k) plans, which grew by 12 per cent compared to a year ago.

JPMorgan Tracks Private Equity Investments

JPMorgan has launched DealVault, a technology that tracks private equity investments valuations, performance, risk, and exposure analysis globally. It was developed to provide CFOs and deal and investor relations professionals with an advanced platform to centralize volumes of deal tracking information. It integrates with accounting and back office systems, providing private equity investment professionals with one platform to administer every aspect of a private equity investment’s life cycle.

Walwyn Returns To Baker & McKenzie

Donna Walwyn has returned to the Toronto, ON, office of Baker & McKenzie as head of the pensions and employee benefits practice. Prior to joining the firm, she practiced in the area of pensions and employee benefits law with a boutique firm in Toronto. In addition to her legal experience, she has worked with Ontario's provincial pension regulator in a variety of statutory compliance roles.

Pension Plan Commuted Value Interest Rate Assumptions For May

The interest assumptions required to calculate commuted values for an event which occurs in any month up to and including May 2008 are now available at An Excel spreadsheet on the website contains six worksheets: Commuted Values – 2005 Basis; Commuted Values – 1993 Basis; Marital Breakdown – CSOP 4300, March 2003; Marital Breakdown – CSOP 4300, March 2003 ALTERNATE; Annuity Proxy for Solvency Calculations for Non-Indexed Pensions; and Minimum Interest on Employee Required Contributions (including the 12-month average rates).

Event Focuses On ICPMs

Canada’s only event focusing specifically on investment counsel and portfolio managers (ICPMs) is set for June 5 and 6 in Toronto, ON. The 10th Annual Compliance Readiness Strategies for Investment Counsel and Portfolio Managers Conference will examine topics including best practices on emerging compliance issues. Pre-conference workshops will be offered June 3 and 4. For more information, visit


Wednesday, April 2, 2008

Teachers’ Faces Shortfall

The Ontario Teachers' Pension Plan posted a 4.5 per cent return, but it faces a $12.7 billion shortfall between the plan's assets and liabilities. The deficit resulted because it paid out double the amount of benefits to members versus the contributions it received, as the number of its active members relative to pensioners drops. Pension funding shortfalls are common around the world in Defined Benefit plans, where the size of members' pensions is independent of the performance of a fund's investment. However, Teachers’ says this will not affect it bid to purchase BCE. Jim Leech, president and chief executive officer, says they believe their risk models adequately measure the risk of that investment. As well, it is part of their private equity portfolio which is only nine per cent of its assets.

Institutions Anticipate Recession

Seventy per cent of large institutional investors participating in a global study by Greenwich Associates think turmoil in international credit markets will push the United States into recession in 2008 and almost 60 per cent think the still-unfolding crisis will result in a global economic downturn. Looking ahead to the remainder of this year, these investors see a new cause for pessimism. As banks pull back on lending in the wake of massive write-downs and losses, more than 70 per cent of the investors believe that companies throughout the world will find their ability to borrow constrained this year. If companies begin to have trouble obtaining credit, a crisis that until now has been mainly a concern of financial institutions will begin to have a real and dramatic effect on the global economy.

Key Trends Converge For RI

Three key trends that developed over several years converged in the past 12 to 24 months and this is behind the sudden ebullience of responsible investment (RI), says Pierre Czyzowicz, vice-president and director of responsible investment at Natcan Investment Management. Writing in The Vigil March 2008, he says the three trends of increased public awareness, the pertinence of the newly available information, and actual proof of the positive link between ESG and financial performances have prompted the world of responsible investment to greatly evolve since the turn of the new millennium. Today, there are more than 275 adherents with assets exceeding US$13 trillion.

OMERS Reports Top Quartile Returns

The total rate of return in 2007 for OMERS was 8.7 per cent, a top quartile performance that exceeded its benchmark return of 5.6 per cent. Net assets grew from last year’s close of $47.6 billion to $51.5 billion. This increase was due to strong performance in real estate, infrastructure, and private equity investments, but was tempered by lower returns in the more volatile public market investments. This is the fourth consecutive year that returns have exceeded the benchmark by over 200 basis points.

CPPIB Invests In Wind Power

The Canada Pension Plan Investment Board (CPPIB) has committed to invest $200 million in Noble Environmental Power, a Connecticut-based wind energy development and energy operating company. Noble Environmental Power has wind parks under development in several states including New York, Vermont, New Hampshire, Minnesota, Maine, and Texas. Founded in 2004, it is planning to bring 282 megawatts of wind power generation online in New York state in the beginning of 2008 and has several thousand additional megawatts under development and estimated to come online between 2008 and 2012.

Employees See Value, But Lack Commitment

Employees overwhelmingly see value in wellness programs, but don't stay committed to them, says a survey from the Guardian Life Insurance Company of America. It found that two-thirds of all employees and 85 per cent of those who are currently enrolled in or have participated in a wellness program in the past three years said the programs are very effective in promoting good health. However, nearly half of employees who have participated in wellness programs in the past three years admitted that their commitment trails off after just a few years.

Co-operators Launches Health, Dental Claims Solution

Co-operators Life Insurance Company has launched a new platform for drug, dental, and extended health claims adjudication. It includes the capability to provide online dental claims submission and a fully integrated pay direct drug card and pharmacy benefit management capabilities. Co-operators Life has been accepting claims from new group benefits clients through this system since the beginning of January. Existing clients and their dependents will be converted to the new system by the end of June 2008.

Bear Stearns A Turning Point

The collapse of Bear Stearns is a turning point for the financial crisis and equity markets, says Gerry Brockelsby, of Marquest Investment Counsel. The action of U.S. monetary authorities over the past few weeks has laid the foundation for a resolution of the financial crisis. As well, equity markets typically have a strong period of performance following a financial crisis as the liquidity from the stimulative monetary policy goes into the markets, he says. Following the past five financial crises, going back to Penn Central in 1970, the S&P 500 has gained, on average, 40 per cent within a year. 

Integrated Closes Debt Fund

Integrated Asset Management Corp. and its private corporate debt group, Integrated Private Debt Corp. have closed the Integrated Private Debt Fund LP II with total commitments of $425 million. Proceeds will be used to make senior, investment grade, term loans of up to 10 years to private and public mid-market companies for purposes such as re-financing core debt, plant expansion or modernization, acquisition financing, project financing, and management buyouts. John Robertson, president of IPD, says “the timing of this closing is ideal. With credit markets in turmoil and traditional sources of investment capital severely restricted, we are seeing a sharply increased volume of attractive investment opportunities.” IPD provides funding from, and manages more than, $1 billion in assets and committed capital in two private debt funds on behalf of a number of pension funds and other institutional investors.


Tuesday, April 1, 2008

Head Of UBS Resigns

The head of UBS AG has resigned as the world’s biggest investment bank has doubled its writedowns from the subprime crisis. It wrote down an additional $19 billion on U.S. real estate and related assets, causing a net loss of $12.03 billion in the first quarter. Its chairman, Marcel Ospel, decided to leave the job after the bank was forced to go to shareholders for a second time in as many months for emergency capital.

U.S. Institutions Redirect Assets

U.S. institutions are continuing to redirect assets from domestic equities. A trend which started in reaction to the stock market turmoil of 2001 and 2002 continued in 2007 as they liquidated $183 billion of domestic equities in the 12 months ended September, says Casey Quirk & Associates, a consulting firm. Alternative assets such as hedge funds and private equity received much of the reallocation. As well, about one-third has gone to fixed income assets. Biggest growth area for fixed income was long-duration strategies where $38 billion or 55 per cent of the category's assets was invested.

3M Closes DB Plan

3M will close its Defined Benefit pension plan to new employees in the U.S. starting next year. New employees will be offered a 401(k) savings plan where the company will contribute three per cent of pay and provide a dollar-for-dollar match on employee contributions of up to six per cent of pay. It will also change its retiree health benefits program. Pre-Medicare-eligible retirees will offered cost-sharing for medical premiums and the opportunity to participate in a consumer-directed plan with a tax-effective savings account. These changes were prompted by its aging workforce and the increasing ratio of retirees to active employees.

UK Reviews DB Accounting Standards

A UK Accounting Standards Board (ASB) fundamental review of the basis of accounting for Defined Benefit pension liabilities, both on company accounts and within the pension plan, is the first stage in a process that will result in recommendations to both the international and U.S. accounting standards boards as pension accounting standards harmonize across the world, says the Buck Outlook – March  2008. The UK review suggests that liabilities should be valued using ‘risk-free’ rates of return (government bonds), rather than the more optimistic corporate bond rates that are currently permissible. The result would be an increase in the reportable value of total scheme liabilities with a proportionately greater increase in the size of reportable scheme deficits. One possible offsetting change is a suggestion that no allowance should be made for future salary increases.

ACPM Meets In Lake Louise

The 2008 ACPM National Conference is set for September 16 to 19 in Lake Louise, AB. The theme of the 2008 Conference is ‘Climbing the Rocky Road.’ Conference sessions will highlight leading international pension experts, current pension system reviews, and future trends and solutions for the retirement income system in Canada.

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