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News Archives - August / September 2007

Friday, September 28, 2007

Soft Dollar Spending Levels Off

Uncertainty about the intentions of regulators has led institutions across North America to scale back their use of soft dollars, says the Greenwich Associates' 2007 Canadian Equity Investors Study. In both the United States and Canada, institutions might be coming to the end of their cautionary period. Following statements by the U.S. Securities and Exchange Commission that clarified the regulator's position, U.S. institutions are planning a sharp increase in soft dollar allocations in the coming year. At the same time, Canadian institutions are indicating that they are done cutting back on soft dollar spending for now. The amount of total equity brokerage commission payments allocated to soft dollar arrangements in Canada declined to seven per cent in 2007 from eight per cent in 2006 and 11 per cent in 2005. Canadian institutions predict that soft dollars will hold steady at seven per cent of commissions.

The Role Of Pharmacy Examined

Connex Health’s second session of the season will address the role of pharmacy. Managing patient care and why pharmacy is relevant to a network of benefits professionals will be examined October 23 in Burlington, ON. Representatives from the Ontario Pharmacy Association, Emergis, and a benefits consulting firm will discuss the issue. For more information, visit


Fundamentals Program Returns

The basics of plan member communications will be one of the areas examined at this year’s CPBI Ontario Region Fundamentals sessions. Divided into two streams, it is designed for those professionals who want an introduction to the basics of pensions and investments or employee benefits. For more information, call (905) 823-7347 or email


Thursday, September 27, 2007

Maple Bonds First Step In Foreign Expansion

Canadian fixed income investors increased their participation in international bond markets last year – a trend that has been building slowly since the elimination of the Foreign Property rule in June 2005, says Greenwich Associates’ 2007 Canadian Fixed Income Investors Study. Over the 12-month period covered by the study, investors expanded their activity in Maple Bonds (Canadian-dollar denominated issues from foreign companies) as well as in several European fixed income instruments. The research reveals a particularly large jump in the percentage of Canadian institutions that said they have either bought Maple Bonds (46 per cent of those surveyed in 2007 versus 33 per cent in 2006) or planned to in the next 12 months (33 per cent versus 25 per cent last year). The increase was especially pronounced for the most active investors those with more than $5 billion in annual fixed income trading volume where more than half said they used Maple Bonds in 2007, up from only 38 per cent in 2006.

Organizations Re-evaluate Management Of Pension Investments

The increasing complexity of pension investment management and the need to control the negative impact of investment volatility upon corporate financials are prompting Canadian organizations to re-evaluate the management of their pension investments, says an SEI survey. Of the 100 organizations polled across the country, more than half (55 per cent) said they were re-evaluating their investment management approach with 42 per cent reporting that the main factor for considering alternative approaches is a need to better control investment volatility. Almost all acknowledged that the traditional consultant model of pension investment management is not the only available option to their organization.

GM Deal Creates Healthcare Trust For Retirees

General Motors Corp. and the United Auto Workers in the U.S. have reached a tentative agreement on a new labour contract that includes a memorandum of understanding that GM will create an independent retiree healthcare trust for UAW workers. The union would be responsible for investing money in the trust, a voluntary employees beneficiary association.

Contribution Holidays May Be Codified

The Ontario Expert Pension Commission may be considering codifying contribution holidays, says Peter Clark, of Heenan Blaikie. Speaking at its annual Labour, Employment & Pension Conference, he said concerns over employers taking contribution holidays when pension plans are in deficits is prompting the consideration. However, he noted that employers already bear an unfair risk in that they are required to put funds into plans that are in deficit, but their only recourse to getting surplus from their plans may be by taking contribution holidays.

Sponsors Want To Offload Closed Plans

Organizations with closed Defined Benefit pension plans are interested in the idea of offloading the responsibility for these plans, says a Morneau Sobeco 60 Second Survey. Closed plans are pension plans which are still operating but which have been closed off to new hires. The survey found that 55 per cent of respondents have closed their DB plans or plan to do so in the near future. Amongst organizations that already have closed off their DB plans, 67 per cent indicated that they would be interested in offloading the management of their plan to a third party.

CPPIB Invests In U.S. Real Estate Equity

The CPP Investment Board (CPPIB) has committed $125 million to acquire a 39 per cent interest in a joint venture sponsored by Callahan Capital Partners, a U.S.-based real estate private equity firm. The joint venture owns five class A office properties totaling 2.8 million square feet and a development parcel in downtown Denver, CO.

Major Benefit Trends Identified

Incentives/penalties for healthy/unhealthy behaviours is one of the ways U.S. companies are looking at to control rising healthcare costs, says a study by Watson Wyatt and the National Business Group on Health (NBGH). It shows employers are recognizing that having a healthy workforce can help reduce healthcare costs and increase worker productivity. More companies are offering financial incentives to employees who have healthy lifestyle habits or who participate in wellness and fitness programs. A few companies take the opposite approach and penalize workers for unhealthy choices, such as smoking, by charging them higher premiums.

Managers Optimistic About Equities

Despite the volatility in the market of late, many investment managers are bullish on Canadian, U.S., and overseas equities, says the latest Russell Investment Manager Outlook. Bullishness towards Canadian equities has remained fairly steady at 42 per cent yet various sectors appear to be falling in and out of favour. For example, bullishness towards traditionally ‘recession proof’ Consumer Staples rose from 29 per cent to 59 per cent. Meanwhile, sentiment has slipped for Consumer Discretionary, Energy, and Financial Services stocks. U.S. equities and emerging equities registered solid up-ticks in bullishness, with both markets now at 52 per cent. EAFE equities continue to be the most consistently exciting asset class in the world with 67 per cent of Canadian investment managers expressing bullish sentiment.


Wednesday, September 26, 2007

Trading Volume Increases Sharply

Canadian equity trading volume increased sharply in 2006-2007, says a Greenwich Associates study. Canadian institutions paid an estimated $790 million in commissions on equity trades for 2006-2007, a significant increase from 2005-2006. Its 2007 Canadian Equity Investors Study reveals that amid this increasingly active market, Canada's institutional investors put on hold some strategic shifts undertaken in prior years. In the 2006 study, Canadian institutions reported that they were preparing for a big move into electronic trading, and they were hiring research analysts as part of what seemed to be a burgeoning effort to internalize large parts of the research function. The 2007 data shows a decided pause on almost all of these fronts.


UWO To Educate Employees

The University of Western Ontario (UWO) will use The Financial Education Institute of Canada to educate employees approaching retirement. As part of an ongoing program, the university will host onsite seminars as well as distribute personalized study books prepared by the institute. Its 6,300 employees will also get access to a comprehensive retirement curriculum through the Internet.


State Street Buys Sectoral Interest

State Street Global Alliance and Stichting Pensioenfonds ABP (ABP) have acquired a minority interest in Sectoral Asset Management, an institutional investment management firm focused on the healthcare sector. With $2.9 billion in assets under management, Montreal-based Sectoral specializes in managing global equity portfolios in the worldwide healthcare and pharmaceutical/biotechnology sectors.


Health Plan Costs Hover Above Inflation

Projected trend cost increases for point-of-service (POS) medical plans (including prescription drugs) for active U.S. employees and retirees under 65 have declined from a high of 14.9 per cent in 2003 to 11 per cent in 2007 and are projected to be 10.5 per cent for 2008, says the Segal Co. However, this leaves them hovering above the inflation rate. Prescription drug price hikes for active workers and retirees were 11.9 per cent in 2007 and are projected at 10.7 per cent for next year. Prescription drug projected cost trends have declined dramatically, by nearly nine percentage points, since their high of 19.5 per cent in 2003.


Tuesday, September 25, 2007

FST Decision ‘Step Backward'

The recent Ontario Financial Services Tribunal (FST) decision in Hydro One takes one step forward in interpreting when work force reductions constitute “reorganizations” and one step back in applying sub-group analysis to Ontario partial plan wind-ups, says a Mercer Communiqué. As a result of the decision, workforce reductions that take place over a period of time where there is a plan to reduce the workforce will be considered to be a planned reorganization that can trigger a partial plan wind-up. This approach is perhaps not surprising and is consistent with other decisions previously made by the FST. What is surprising is the creation of sub-groups within a single pension plan for the application of the significant number test. As a result of this new test, the gates may have opened for consideration of non-trivial sub-groups as the relevant base for a comparative analysis of what is “significant” for plan wind-up purposes. If the sub-group analysis is upheld, the superintendent would have the power to declare partial plan wind-ups even when a relatively small number of plan members are affected.


NexgenRx And Co-operators Sign Agreement

Co-operators Life Insurance Company and NexgenRx have entered into a five-year agreement where NexgenRx will provide Co-operators with the use of their pharmacy benefit management and health and dental claims adjudication services. Co-operators provides health and dental coverage and adjudication services to more than 70,000 plan members plus their dependents. NexgenRx provides solutions for the delivery of extended health and dental adjudication services from a single platform. 


Members Flee Equity Markets

Members of 401(k) plans in the U.S. fled from the equity markets, transferring money into fixed income investments 70 per cent of the days in the month. The Hewitt 401(k) Index shows that the drop in the Dow Jones Industrial Average plummet in August resulted in $765 million being shifted out of equity funds, a change in direction from the month before when investors moved their money from fixed income investments to equities on 62 per cent of the days in the month. The volatile month also saw the greatest number of above-normal transfer activity days in over four years when seven days during the month had moderate or high transfer volumes.


Bar-David Speaks On Psychological Harassment

A growing trend toward respecting diversity and protecting people’s dignity in the workplace is leading to new thinking around the issue of psychological harassment. To examine the issue, the Employee Assistance Program Association Of Toronto will hold a breakfast seminar on psychological harassment November 1 in Toronto, ON. Sharon Bar-David, a lawyer, trainer, speaker, consultant, and family therapist, will be the featured speaker. For more information, visit


Luncheon Cancelled

The AIMA Canada luncheon set for September 26 has been cancelled. Professor Thomas Schneeweis, of Chartered Alternative Investment Analyst Association, was to have spoken on ‘New Product Development: Replication vs. Indexation.’


Monday, September 24, 2007

Members Will Assume Risk

As corporations move from Defined Benefit to Defined Contribution pension plans, plan members will assume the investment risks arising from their own retirement plans and learn to manage and bear these risks, says Malcolm Hamilton, of Mercer LLC. Speaking at the Canadian Pension and Benefits Institute’s Atlantic region 2007 conference, he said part of the dilemma is that DB plans are a complicated element of employee compensation, probably too complicated for most employers to manage effectively. To limit their risk, corporations will move from being active, deep-pocketed players in the retirement plans of their employees to interested, sympathetic, and occasionally supportive bystanders.


Retirement Savings Discussed

Influencing the need for retirement savings will be one of the topics at the 2007 IFIC Annual Leadership Conference. Speakers such as Roy Firth, executive vice-president, individual wealth management, Manulife Financial; and Brenda Vince, president of RBC Asset Management; will examine the wealth of Canadians and how they influence investment product development. It takes place October 1 to 3 in Toronto, ON. For more information, visit


CPBI Ball Looks For Sponsors

The Ontario Regional Council of the Canadian Pension and Benefits Institute (CPBI) is looking for sponsors for the 2008 Benefit Ball to support the Crohn’s and Colitis Foundation of Canada. Since 2005, the funds raised by the annual CPBI Benefit Ball have helped fund research to find the cure and provide education about the disease to health professionals, patients, their families, and the general public. This year’s theme is Aloha Luau.’ Guests will be treated to the Hawaiian island experience enjoying the food, culture, and entertainment. For more information, call the CPBI office at (905) 823-7347 or email


Friday, September 21, 2007

Apathy Still Troubles DC Plans

Defined Contribution pension plan sponsors and providers are making inroads into solving the problem of member apathy, but the change is still not significant enough, says Mike Collins, vice-president, marketing, group savings and retirement solutions at Manulife Financial. Speaking at the Canadian Pension and Benefits Institute’s Atlantic region 2007 conference, he said the statistics show that less than half of plan members feel they have at least a good understanding of their plan. As well, one of the challenges facing sponsors now is not just increasing the number of participants, but improving the “quality of participation.”


Graduates Honoured

The International Foundation will hold a special educational program and recognition luncheon for new CEBS (Certified Employee Benefit Specialist) graduates. It takes place October 3 at 8:30 a.m. in Toronto, ON. The academic and professional accomplishments of the 93 new graduates from December 2006 and June 2007 will be recognized. As well, two educational sessions will be presented. ‘A Trip Around the World – Economy Class’ will provide an economic outlook in 2008 for Europe, Japan , the United States , and Canada , as well as the economic powerhouses of India and China . ‘Legal and Legislative Developments’ will cover recent legal legislative developments to areas of benefits, labour, and employment law. For more information, visit


Future Trends Of Asset Management Industry Examined

Generation X and asset management will be the focus of the Investment Counsel Association of Canada ’s 56th Annual Conference. Sessions will examine the growth of Generation Y and their impact on the investment industry and emerging trends and opportunities for managed money in Canada . It takes place October 25 at 8 a.m. in Toronto, ON. For more information, visit


Thursday, September 20, 2007

Income Replacement Most Important

Income replacement has usurped wealth management as the most important objective of Defined Contribution plans, says a research report by Russell Investment Group. It argues that the burden on the DC fiduciary might have seemed less onerous than that of the Defined Benefit fiduciary, but that misconception is going away with a new generation of 401(k) plans. Fiduciary responsibilities will now include decisions around auto-enrollment, qualified default investment alternatives (QDIAs), brokerage window options, and employee education.


CPPIB Wants Airport 

The Canada Pension Plan Investment Board plans to bid for a substantial stake in New Zealand's main international airport in Auckland. It will give shareholders the choice of three options, one of which will be an all-cash option of NZ$3.70 a share. The pension fund made an earlier offer of NZ$3.10, which was rebuffed by some shareholders in June.


State Street Aligns Global Performance 

State Street Corporation has announced the alignment of its global performance and analytics capabilities. The State Street Investment Analytics team will provide its customers with a fully integrated range of industry leading global performance, risk, analytics, and compliance services.


Wednesday, September 19, 2007

REITs To Decouple From Income Trusts

Tax transparency and efficiency are among the benefits of real estate securities, says Michael Smith, senior vice-president, real estate analyst, for National Bank Financial. Speaking at its ‘An Overview of Global REIT Trends: Perspectives from Four Regions of the World,’ he expects to see a decoupling of REITs from income trusts in Canada. As well, he expects the market to go backwards before it goes forward and one or two big REITs may disappear.


Investor Confidence Falls

State Street Global Markets’ Investor Confidence Index (ICI) for September fell 7.5 points to 92.1. As with last month, North American institutional investors were responsible for a large portion of the global move, as their confidence declined from 117.1 to 106. Global investor confidence fell 7.5 points in September, a marked reverse after a rise in August that seemed indicate institutional investors were happy to buy on the dips in equity markets.


Tuesday, September 18, 2007

Hedge Funds Drop

Hedge funds suffered a 1.53 per cent drop in August, says the Credit Suisse/Tremont Hedge Fund Index. The subprime mortgage contagion led to a widespread sell off that swept equities, commodities, and low-grade credit markets. The sell off was exacerbated by the highest jump in the overnight loan rate in more than six years and banks and brokerages reported declining values in credit investments.

Merrill Lynch Develops New Index Series

Merrill Lynch has developed a U.S. pension index series designed to track the performance of U.S. pension liabilities. The indices are compiled based on sample projected pension plan liabilities, provided by Mercer, for young, mature, retired, and average U.S. pension plans. By aligning the asset index with the plan liabilities, the new indices solve a long-standing performance measurement problem facing most U.S. pensions.


Monday, September 17, 2007

Low Income Workers Get Biggest Increases

Low income workers will see the greatest increase in their 401(k) accounts as a result of the automatic increases allowed by the U.S. Pension Protection Act of 2006, says an EBRI study. The PPA allows employers to automatically increase a worker's 401(k) contribution to coincide with a raise or a work anniversary – though the employee can decline the increase. The  study suggests that the introduction of automatic escalation will result in a significant increase of 401(k) accumulations – especially for low income workers.


Asset Management Examined

‘The Future of Asset Management’ will be one of the areas examined at AIMSE’s 16th Annual Fall Conference. Other topics include corporate Defined Benefit pension reform. It takes place October 10 and 11 in New York, NY. For more information, visit


200 CEOs To Attend

More than 10,000 people, including 200 CEOs, are expected to attend The GLOBE Foundation’s 10th Event. GLOBE 2008 will be held in Vancouver, BC, March 12 to 14, 2008. It centers around three main themes – corporate sustainability, energy and climate change, and building better cities. For more information, visit


Funded Ratio Moves Up

Equities provided solid returns while long bond yields declined slightly in August, says Towers Perrin’s Capital Market Update. The combination nudged the funded level for its benchmark plan up 0.2 percentage points, to 93.2 per cent. While this ratio has dropped two percentage points from its early summer peak, it remains 3.8 points over the 89.4 per cent funded level at the start of the year.


Friday, September 14, 2007

CalPERS Using Standard Life Investments

The California Public Employees Retirement System (CalPERS) has selected Standard Life Investments (Private Equity) Limited to manage a mandate valued at €400m euros for their Alternative Investment Management (AIM) Program. The mandate is focused exclusively on European private equity. "We are delighted to have been selected for this mandate by CalPERS, the largest public pension fund in the U.S. This is testimony to the expertise and professionalism of our private equity team and our strong track record in the European private equity market. This is our fourth major segregated mandate from a North American client. Over 50 per cent of our assets under management are now from North America,” says David Currie, chief executive of Standard Life.

Value Of Plans Increased

The value of employer-sponsored trusteed pension funds increased for the third consecutive quarter between January and March this year, says Statistics Canada. These assets were worth $936.1 billion in the first quarter, up 2.3 per cent from the fourth quarter of 2006. Assets have been rising since a 2.1 per cent decline in the second quarter of 2006. At the end of March this year, stocks and equity funds accounted for 41 per cent of fund assets; bonds and bond funds, 31.7 per cent; real estate, 6.1 per cent; short-term investments, 3.4 per cent; mortgages, 1.4 per cent; and other assets, 16 per cent. The share of pension fund assets in foreign holdings increased to 30.9 per cent from 24 per cent two years ago.


Alternative Marketplaces About To Go Mainstream

A dramatic shift from a dual-marketplace structure to a multiple-marketplace structure in Canada’s equity market has created a huge tidal wave in technology use that is going to transform the buy-side traders’ trading behaviour and their preferred way to find liquidity in the marketplaces, says a report by Competitive Metrics Inc. ‘2007 Buy-side Equity Trading in Canada: Exchange, Upstairs, ATSs, What’s Next?’, says change is already afoot. Electronic trading is no longer concentrated in the hands of a few major firms and only going to the TSX. Now one in four buy-side trading desks execute 20 per cent or more of their equity trades electronically. A significant number of the buy-side traders also conduct some of their Canadian equity trading in the alternative marketplaces. As a result, the role and responsibility of the buy-side traders and the buy-side/broker relationship are poised for changes.


Product Development Discussed

New product development will be the focus of AIMA Canada’s Fall 2007 luncheon.  Professor Thomas Schneeweis will speak on ‘New Product Development: Replication vs. Indexation.’ Dr. Schneeweis is a professor of finance at the Isenberg School of Management at the University of Massachusetts and currently serves as president of White Bear Partners and managing director of Schneeweis Capital Management. It takes place Wednesday, September 26, in Toronto, ON. For more information, visit


Thursday, September 13, 2007

Revised MRA On The Way

A revised Memorandum of Reciprocal Agreement (MRA) for regulation of Multi-jurisdiction pension plans (MJPPs) is being developed by CAPSA, says Nancy MacNeill Smith, superintendent of pensions for the government of Nova Scotia. Speaking at the ACPM 2007 National Conference, she said the current MRA has been in place since 1968 and was developed to reduce administrative and regulatory costs associated with MJPPs. It called for MJPPs to be subject to the rules of each jurisdiction in which they have plan members. The new MRA will have clear and explicit rules regarding applicable laws.


CalSTRS Hires Acuity

Acuity Investment Management Inc. has been awarded a $50 million Canadian equity mandate focused on environmentally sustainable investments by the California State Teachers’ Retirement System (CalSTRS). Ian O. Ihnatowycz, president, CEO, and CIO of Acuity, says “We are very excited about CalSTRS’s decision, as it reinforces the interest we are seeing from institutional investors to seek both returns and environmental benefits.”


Orsborn Speaks At Mature Workforce Summit

Dr. Carol Orsborn, author of ‘Boom – Marketing to the Ultimate Power Consumer – the Boomer Woman,’ will speak on motivating and understanding KAA-Boomers at the 3rd Annual Summit on the Mature Workforce. KAA-Boomers are Boomers who want to stay engaged with the workforce and experience a second adulthood. The summit takes place November 21 and 22 in Toronto, ON. For more information, visit


Hedge Fund Risks Assessed

The existing indirect method of regulating hedge funds is probably the best approach, says a Bank of Canada discussion paper that assesses the risks that hedge funds pose. The paper looks at the potential threat that hedge funds pose to financial stability. They find that hedge fund failures are not uncommon, but that these failures typically don’t have systemic implications. The biggest source of systemic risk is the failure of a large fund in an “important market” because that could affect market liquidity and possibly spill over into the real economy. A failure in a niche market, such as natural gas, is less of a concern because large financial institutions are less exposed to these markets.


Wednesday, September 12, 2007

Pension Solution Wanted

Canada’s independent business owners are looking for a retirement solution, says Lucie Charron, an economist with the Canadian Federation of Independent Business (CFIB). Speaking at the ACPM 2007 National Conference, she said her organization represents about 97 per cent of independent businesses with less than 500 employees in Canada. However, over the next 10 years, 66 per cent plan to exit their business. With only about 12 per cent having a registered pension plan, most are relying on the sale of their business to finance their retirement. CFIB is conducting ongoing research on the best way to provide pension plans for these employers and their employees. Among the solutions being considered, said Charron, are MEPPs and a system of voluntary CPP contributions.


Members Miss Out On Income

Members of UK Defined Contribution schemes are missing out on up to 70 per cent of additional retirement income because of a lack of efficiency in administration,says Hewitt Associates. Its fourth annual DC survey found many DC schemes are not as efficiently run as they could be. Simple mechanisms such as salary sacrifice, matched contributions, a contribution structure which automatically escalates with age, or active management could remedy the problem.

Scotiabank Acquires Stake In Dominican Fund Administrator

Scotiabank Groups is acquiring a controlling stake in BBVA Crecer AFP, the largest pension fund administrator in number of affiliates in the Dominican Republic and its related insurance company, BBVA Seguros. BBVA Crecer AFP has more than half a million affiliates and RD$6.5 billion in assets under management, representing a 32 per cent market share by affiliate. BBVA Seguros was created in 2006 to provide life and disability insurance to BBVA Crecer AFP’s affiliates.


Tuesday, September 11, 2007

More Disclosure On ABCP

The Investment Counsel Association of Canada, representing Canada's professional investment counselor and portfolio management firms, is demanding that regulators, financial institutions, and issuers of asset backed commercial paper (ABCP) significantly increase disclosure and take several other steps to restore and maintain investor confidence. The ICAC is also calling for Canadian banks to signal when they plan to formally adopt global liquidity procedures in their existing/and or new ABCP issues and to indicate whether they will honour their pledge to implement such procedures in the interim period should a credit issue be triggered by bank-sponsored conduits.


Workers Fail To Join Plans

One-third of eligible U.S. employees failed to join their workforce Defined Contribution savings plan in 2006, a number virtually unchanged since 2000, says a Vanguard analysis. It also shows that among those who did participate in their DC plans, employee savings rates have also remained essentially unchanged since 2000. Participants contributed an average of 7.3 per cent of salary in 2006, while the median employee contribution was six per cent.


Investing In India Examined

The opportunities and challenges of investing in India will be the focus of a panel discussion at the Rotman School of Management. Chander Dhawan, managing editor and founder,; Fred McMahon, director of the Centre for Trade and Globalization Studies, The Fraser Institute; and Surinder Sharma, founder of Power Saving Systems Inc.; will discuss the issue. It takes place October 4 at 4:30 p.m. in Toronto, ON. For more information, visit


Monday, September 10, 2007

Chinese Benefits Examined

The evolving landscape of employee benefits in China will be one of the areas covered at the 26th Annual ISCEBS Employee Benefits Symposium. Jeffrey Fan, health and benefits business leader, China, for Mercer Human Resource Consulting in Shanghai, will explain what is happening in China in terms of benefits. It takes place September 16 to 19 in Seattle, WA. For more information, visit


ACPM Event Kicks Off

Members of the ACPM will gather this week in Charlottetown, PEI, for the 2007 National Conference. Theme of the event, which opens Tuesday, is ‘Charting the Future.’ More than 350 are expected to attend. For more information, visit


Friday, September 7, 2007

External Peer Panel To Review CPP Actuarial Report

The Office of the Chief Actuary has named a panel of actuaries to review the actuarial report on the Canada Pension Plan (CPP). Produced every three years, the report is considered by the federal and provincial ministers of finance when reviewing and making recommendations on the CPP. The external peer review process was first introduced in January 1999. The panel is comprised of Mark Campbell, a member of the CIA Actuarial Standards Board and previous reviewer of the CPP actuarial report, who will serve as chairman of the panel; Patrick F. Flanagan, a director of the board of the CIA; and Thomas D. Levy, currently vice-chairperson, Practice (Standards) Council of the CIA.


ITG Net Launched

Investment Technology Group, Inc. has launched ITG Net, which combines the technology of its existing routing network with the Macgregor Financial Network global connectivity and client service and support model. ITG Net helps buy side and sell side clients manage their trading process by providing consolidated order routing, pre- and post-trade analytics, IOI messaging, and post-trade processing services.


Big Investors Use New Solutions

The greater the percentage of assets investors have invested, the more likely they are to adopt the new solution-oriented products and services emerging from investment product providers and financial advisory firms, says a study from Financial Research Corporation. ‘Evolution of the Solution: Investor Perceptions of Solution-Oriented Products & Services’ shows the larger the percentage of total investment assets held in employer-sponsored retirement plans, the more interested participants are in options such as life cycle funds. Likewise, those with larger percentages of assets held in personal accounts, including IRAs and taxable investment accounts, are more likely to use the services of an adviser.


Wellness Topic At Breakfast

‘How Workplace Wellness Can Affect Your Bottom Line: Making The Business Case’ will be the topic of the next Manitoba CPBI Breakfast Seminar. Carol Deckert, senior director, Seven Oaks General Hospital Wellness Institute, will show how a workplace wellness program can positively affect your bottom line. It takes place September 27 in Winnipeg, MB. For more information, contact Dale Davidson at


Essential Pension Course Returns

Income tax and pension fundamentals will be examined at Osgoode Professional Development’s 3rd Annual ‘The Essential Course in Pensions.’ Lyle Teichman, of Towers Perrin, will provide an overview of the relationship between Canada’s tax and pension schemes. It takes place October 22 and 23 in Toronto, ON. It also features an optional post-conference workshop on cross-border pension issues on October 24. For more information, visit


Thursday, September 6, 2007

Leech Replaces Lamoureux

Jim Leech, currently senior vice-president, Teachers' Private Capital, has been appointed as successor to Claude Lamoureux who is retiring as president and chief executive officer of the Ontario Teachers' Pension Plan (Teachers') at the end of 2007. Lamoureux is Teachers' inaugural CEO. He was appointed in 1990, when the government established a new independent corporation to replace the Ontario Teachers' Superannuation Fund. Leech joined Teachers' in 2001 with a mandate to expand Teachers' private investment activities globally.


Carbon Offsets Examined

Dr. Ron Dembo, founder and CEO, Zerofootprint, will explain ‘Everything You Wanted to Know About Carbon Offsets But Were Afraid to Ask’ at the next session of the Rotman School’s The Business of Green Speaker Series @ Rotman. Zerofootprint provides information, products, and services to consumers and businesses who wish to reduce their environmental impact. It starts at 8 a.m.  September 12 in Toronto, ON. For more information, visit


Session Looks At Litigation Issues

Disclosure of potential pension plan changes will be one of the areas covered at the Pension Law and Litigation session December 11 and 12 in Toronto, ON. The Federated Press event will also look at avoiding litigation over pension shortfalls and developing a pension risk management approach that will stand up to legal/regulatory scrutiny. For more information, visit


Wednesday, September 5, 2007

Kerry Appeal Launched

Koskie Minsky, which represented the plan members in the Kerry case has filed an application for leave to appeal the Ontario Court of Appeal decision to the Supreme Court of Canada. Last June, the Ontario court has overturned a Divisional Court decision in Nolan v. Superintendent of Financial Services (otherwise known as Kerry). The Court of Appeal essentially restored the earlier, more employer-friendly decision of the Financial Services Tribunal in respect of pension plan expenses. It means pension plan administration expenses are payable from the plan fund and, depending on how a plan is structured, it is permissible to use surplus from the Defined Benefit component of the plan to fund contributions in respect of the Defined Contribution component of the same plan.


NYSE First Foreign Exchange In China

The China Securities Regulatory Commission has approved an application by New York Stock Exchange LLC, a subsidiary of NYSE Euronext, to open a representative office in Beijing. The new office will become the NYSE’s center of operations for advancing its brand and service to its listed companies in China. The NYSE currently lists 40 companies from greater China, including 28 from mainland China and seven from Hong Kong.


Tuesday, September 4, 2007

American Investors Anxious

American investors have significant and widespread anxiety about the security of their investments, particularly as it relates to their retirement savings, says a survey by the Financial Industry Regulatory Authority. More investors report that they are anxious about losing money on their investments (78 per cent) and saving for retirement (73 per cent) than are anxious about losing their job (50 per cent), buying a house (42 per cent), or paying for college (35 per cent). Only serious health problems were ranked above investment concerns in the survey. Although retirement ranks as the most important saving and investment milestone for a majority of investors (72 per cent), less than half (47 per cent) are highly confident they are saving and investing enough for their retirement.


Monthly Update Of Pension Plan Commuted Value Interest Rate Assumptions

The interest assumptions required to calculate commuted values for an event which occurs in any month up to and including October 2007 are now available at An Excel spreadsheet on the website contains six worksheets


Friday, August 31, 2007

Ontario Creates New MEPP

Ontario will create a new class of Multi-Employer Pension Plans (MEPPs) which will be allowed to exclude consideration of any new solvency deficiencies in setting contributions based on actuarial valuations, says an Eckler Special Notice. Specified Ontario Multi-Employer Pension Plan (SOMEPP) must meet three key criteria. Besides satisfying the requirements for a SOMEPP under the Income Tax Act, they must permit the trustees to reduce benefits based on plan provisions and elect to be classified as a SOMEPP. A pension plan may make such an election at any time between September 1, 2007, and August 31, 2010. For MEPPs that don’t qualify as a SOMEPP, or don’t elect to be a SOMEPP, the solvency funding rules have been clarified to specifically require that solvency deficiencies be funded.


Quixtar Turns To Employer’s Edge

Quixtar Canada Corporation has partnered with Employer’s Edge, Inc. to create a multi-faceted wellness program that will be designed based upon the expressed needs and desires of Quixtar’s employee base. Through group interaction, personal wellness profiles, and one-on-one consultations, Employer’s Edge will be able to determine which wellness programs would be best suited for Quixtar’s employees.


Helik On CSI Blog

Benefits and Pensions Monitor columnist Jim Helik is the first resident blogger on the CSI Exchange website. In addition to writing The Back Page column for Benefits and Pensions Monitor, Helik is a lecturer at the Ryerson University School of Business, and co-author of ‘101 Investment Tips: How to Maximize Returns and Reduce Risk.’ To log on, visit and click on ‘Your Financial Network.’


Company Match Fails To Increase Participation

The company match in 401(k) plans which feature auto enrollment is no guarantee of employee plan participation, says a study for the National Bureau of Economic Research (NBER) in the U.S. ‘The Impact Of Employer Matching On Savings Plan Participation Under Automatic Enrollment’ shows that the success of automatic enrollment at increasing participation in employer-sponsored savings plans does not appear to rely much on having an employer match. It looked at new hires with six months of tenure at firms that went from a match to a non-contingent contribution. In these cases, participation rates decreased by at most six per cent after the match was eliminated and overall average employee contribution rates fell by 0.65 per cent of pay.


Fixed Income Depends On Hedge Funds

Hedge funds generated nearly 30 per cent of U.S. fixed income trading volume last year, double the 15 per cent they accounted for in the prior 12-month period, says Greenwich Associates’ 2007 North American Fixed Income Investors Study. It found trading volume in distressed debt and leveraged loans more than doubled, while trading volume in below investment-grade bonds increased some 40 per cent and trade volume in investment-grade credit bonds increased more than 20 per cent. The accelerated pace of trading was due at least partially to the ongoing advance of hedge funds in the U.S. fixed income market. 


Consultants Share Secrets

Money managers who want to learn what consultants are looking for in new business should plan to attend the Investment Management Institute’s 21st Annual Consultants Congress Meeting. Set for November 6 and 7 in New York, NY, it brings managers together with leading consultant firms. For more information, visit


Pre-retirees Under-estimate Lifespan

Pre-retirees believe they will need to make their retirement savings last until an average of age 83, yet estimates today give a healthy 65-year-old man a 24 per cent chance of living to at least 90 and healthy women a 35 per cent chance of living to 90, says a report from the Fidelity Research Institute. Over half (53 per cent) of pre-retirees indicated they are concerned about outliving their retirement savings. However, 61 per cent admit they have not made a formal calculation of how much they can afford to spend monthly to keep from doing so.


Thursday, August 30, 2007

Finance Managers Working Longer Hours

Financial professionals are putting in more hours on the job than just two years ago, but exactly how much time varies widely by country, says a global report Robert Half International. It found that in Canada, 47 per cent of finance managers say their hours have increased over the last two years. Among those, close to two-thirds (64 per cent) said they now work an additional five to 15 hours a week. Canadian respondents cited working an average of 42.5 hours per week, more than the 40.9 hours reported in the United States, but below the average 43.2 hours worked in Australia, 43.8 hours in Italy, and 47.1 hours in Japan. As well, 44 per cent of Canadian finance professionals said they take work calls or check e-mail in the evening at home. The results were 10 percentage points higher than the global average, double the results in Germany, and were second only to Netherlands (46 per cent).


Integra Announces Changes

Integra Capital Limited has announced a number of changes. Units of the Integra Equity Fund may now be purchased by members of capital accumulation plans. As well, in the 4th quarter of 2007, Gryphon Investment Counsel Inc. will become the sole portfolio manager of the Integra Short Term Investment Fund. Commencing in January 2008, the Integra Balanced Fund will invest in the securities of the Analytic Core U.S. Equity Fund, the Acadian Core International Equity Fund, the Integra Bond Fund, and the Integra PanAgora Dynamic Global Equity Fund.


Electronic Trading Examined

The latest trends impacting the buy-side trading desk and strategies for dealing with complexity in the marketplace will be among the areas examined at the FPL Americas Electronic Trading Conference. Set for November 1 and 2 in New York, NY, it brings together the business leaders that steer the industry with the technology practitioners that are designing solutions to satisfy client needs. For more information, visit


Trends Impacting Shopping Centre Industry On Agenda

David Suzuki, professor emeritus in zoology at the University of British Columbia, will join Stephen Lewis, former UN Special Envoy for HIV/AIDS in Africa, as a keynote speaker at the 2007 International Council of Shopping Centers, Inc. Canadian Convention, Deal Making and Trade Exposition. Suzuki, an award-winning biologist and broadcaster, will offer insights into sustainable development and living well while protecting the environment. The convention takes place September 25 and 26 in Toronto, ON. For more information, visit


Wednesday, August 29, 2007

Teachers’ Opposes Magna Deal

The Ontario Teachers' Pension Plan will oppose a $1.5 billion investment in Magna International Inc. by Oleg Deripaska, saying the Russian billionaire would gain too much control. Magna hopes to boost its access to the Russian auto market with the deal, to diversify beyond the stagnating U.S. automotive market. Teachers' opposition follows a report by Institutional Shareholder Services Inc., a proxy advisory service, recommending stockholders approve the deal.

Hedge Funds Summit Changes Name

The World Hedge Funds Summit is expanding its horizons to meet the demands of an evolving industry and has become the World Alternative Investment Summit. This year’s event, set for November 5 to 7 in Montreal, QC, will feature 70 to 80 speakers and attract 500-plus delegates from around the globe. As well, to reflect its new name, this year’s agenda will address other non-traditional investments including private equity, emerging markets, real estate, electronically traded funds, and flow-through shares. For more information, visit

Leech Speaks To Economic Club

Jim Leech, senior vice-president at Teachers’ Private Capital, will be the featured speaker at the next session of the Economic Club of Toronto. He will speak on ‘The New Private Equity.’ It takes place at 11:45 a.m., September 11, in Toronto, ON. For more information, visit


Tuesday, August 28, 2007

Fundamental Series Set

The 2007 – 2008 CPBI Fundamentals Series program is set. Designed for industry newcomers and for those who simply need a refresher, there is a pension and investment series of lectures and a benefits fundamental series. Topics include a pension law primer, alternative investments, demystifying wellness, and benefits plan governance. For more information, visit

Approach To Benchmark Target-date Funds Offered

Vanguard Investment Counseling and Research has suggested an approach for benchmarking target-date funds. Its benchmarking plan reflects the objective of these funds and could help investors obtain a clearer picture of the long-term returns a fund provider expects to deliver, a fund's track record relative to those expectations, and the relationship between fund returns and a ‘typical’ investor's ability to finance retirement. It proposes two benchmarks that it says will help investors answer critical questions about a target-date fund's performance: the return required by the typical investor to generate enough retirement dollars and the fund performance relative to the investment manager’s return expectations.


Monday, August 27, 2007

More Canadians Collect CPP At 60

A growing proportion of workers—more so women than men—are choosing to collect benefits from the Canada Pension Plan/Quebec Pension Plan (CPP/QPP) at the age of 60, says the Statistics Canada study ‘Public pensions and work,’ published in Perspectives on Labour and Income. In 1995, 32.5 per cent of men and women had chosen to take their CPP/QPP benefits at the age of 60. By 2003, this proportion had increased to 36.4 per cent. The increase was greater for women, among whom the proportion increased from 31.1 per cent to 37.8 per cent. The study found that income from an existing employer-sponsored registered pension plan (RPP) tended to generate a pent-up demand for employees to take CPP/QPP benefits early.

Worries Restricting Investment In Alternatives

Underfunding, lack of transparency, and high fees are restricting pension funds’ cash allocations to alternative investments, says a Northern Trust white paper. ‘Why Diversification is Such a Hard Thing to Do’ shows that although the underfunded status of pension funds was cited by more than 80 per cent of respondents as a factor driving their investment goals, pension funds remain cautious about alternative asset classes. They feel that they can achieve the returns they need to meet future liabilities most cost effectively by investing in the long-only mainstream asset classes. On average, institutional investors allocate approximately three per cent of their cash to alternative asset classes such as hedge funds, property, private equity, and commodities, despite many saying that they want to invest strategically in alternatives to achieve uncorrelated absolute returns.

Pension Crisis Fears Lessen

Two-thirds of respondents still think Canada has a pension funding crisis, but the percentage of chief financial officers who believe that the crisis will be long-lasting has dropped from 61 per cent in 2006 to 48 per cent in 2007, says the Conference Board of Canada/Watson Wyatt Worldwide 2007 survey on pension risk. Despite the improved long-term outlook, employers are making plan design changes and conversions, adjusting their investment policies, and considering anticipated accounting changes. Funding deficits remain a challenge for more than half the respondents, yet few plan sponsors in the private sector are contributing more than the minimum to their Defined Benefit plans.

Summit Boats Quality Programs

The Integrated Care Summit, sponsored by the Disease Management Association of America and the National Association of Manufacturers (NAM), will tackle a critical driver of rising healthcare costs – chronic disease – through integrated health and wellness programs. With an estimated 70 cents of every healthcare dollar going to treatment of chronic conditions, employers urgently need effective chronic disease management strategies. A major theme of the summit is to help employers learn the best approaches to high-value programs that will improve employee health, productivity, and morale. It takes place September 17 to 19. For more information, visit

Design And Outcome Link Examined

The Benefits Breakfast Club’s first session for this year is ‘Managing Benefits: Plan Design and Health Outcomes.’ It will focus on the link between plan design and health outcomes. Gord Polk, president of Drug Benefit Consulting, will present research on connecting health outcomes to drug reimbursement policies. It takes place September 14 at 8 a.m. in Burlington, ON. For more information, visit


Friday, August 24, 2007

Proper Funding Costs Less

Defined Benefit pension plan sponsors are actually better off properly funding their program and investing in fixed income securities than by reducing pension contributions to cut costs. A study by three economists, ‘Why Do Firms Offer Risky Defined Benefit Pension Plans?’ issued as part of the Finance and Economics Discussion Series by the U.S. Federal Reserve Board, found that employees will demand a boosted compensation level in exchange for an underfunded and riskily invested pension. So, plan sponsors looking for a quick cost-cutting maneuver by holding down pension cash contributions will actually end up in a lesser financial position by having to pay more in compensation costs.

Workforce Goes KAA-Boom!

The 3rd Annual Summit on the Mature Workforce: KAA-Boomer! KAA-Booming! is set for November 21 and 22 in Toronto, ON. The event will feature the Best Employers Award for 50-Plus Canadians which recognizes Canada’s most progressive organizations in the areas of hiring, training, career development, healthcare, employee and family benefits, retirement policy, pensions, and pre- and post-retirement support systems in regard to employees over 50. For more information, visit


Thursday, August 23, 2007

Size May Matter

Size may matter when it comes to managers of Canadian equities, says Gordon Gibbons, a vice-president at Leith Wheeler Investment Counsel. He told a session on ‘Managing Your Managers’ at the International Foundation of Employee Benefit Plans’ 40th Annual Canadian Employee Benefits Conference that as managers of this asset class get bigger, they have more money to invest, but fewer opportunities. As a result, they may start to look more and more like an index fund and add less value.

Ontario Creates New LIF

Ontario has made changes to the locking-in provisions in pension plans by introducing a new Life Income Fund (LIF), says an ACS/Buck Extra! The new LIF takes the place of current LIFs and Locked-in Retirement Income Funds (LRIFs). The new LIFs will feature a one-time opportunity to take 25 per cent of the value in cash or transfer it to a non-locked-in RRSP or RRIF. As well, in the new LIFs, there is no requirement to use remaining assets at age 80 to purchase a lifetime annuity. Payments can continue indefinitely, as long as there are funds remaining.


Wednesday, August 22, 2007

Lower Rates Generate Interest In Portable Alpha

Lower interest rates are generating the increased interest among Canadian pension funds in portable alpha strategies, says Stephen Johnson, managing partner at Integra Capital Markets. Speaking at the International Foundation of Employee Benefit Plans’ 40th Annual Canadian Employee Benefits Conference, he said pension funds are turning to these strategies in an effort to keep their bond holdings from being a drag on their portfolios. Portable alpha strategies involve short selling the beta from some market returns in a portfolio and porting that alpha over to desired market returns.

Standard Life Gets Real About Retirement

The Standard Life Assurance Company of Canada has launched a program designed to help Canadians plan for the financial realities of life and retirement. Called ‘The Plan for Life Program,’ it is a multi-media program that offers communications, investment tools, and personal and online services to its clients' members. It features down-to-earth language and situations that address the real challenges, concerns, and opportunities people face when it comes to financial planning.

CPP Invests In Europe

The Canada Pension Plan has committed $572 million to a fund that will invest in modern distribution facilities in Europe. The fund was launched by ProLogis, the world's largest warehouse owner, operator, and developer. It has 2,523 properties and has also launched investment funds in Mexico, South Korea, and the U.S.

Investor Confidence Rises

Global investor confidence rose by 13 points this month to a level of 99.3, says State Street Global Markets’ Investor Confidence Index. Leading the way were North American institutional investors whose risk appetite rose by a full 21 points to 116.5. In Europe, by contrast, investors consolidated the pullback they began last month and confidence fell four points to 86.4. Asian investors remained in a holding pattern and their confidence level exhibited only a small increase from 83.5 to 84.1.

O’Hara Awarded Lifetime Volunteer Award

Ewart ‘Odie’ O’Hara has been awarded the International Foundation of Employee Benefit Plans’ first Canadian Lifetime Volunteer Award. O’Hara has been influential in the Canadian employee benefits community for the past several decades. He has been a speaker, moderator, and committee member for the International Foundation since 1979. “Odie played an instrumental part in establishing the International Foundation’s Canadian roots. Throughout the years, his continued involvement in the foundation has established him as a leader in the benefits community,” says Bernard Christophe, chair of the International Foundation Canadian Board.


Tuesday, August 21, 2007

Made In America Disasters

The stock market is an innocent victim of the troubled sub-prime mortgage and private equity problems, says Donald Coxe, global portfolio strategist for BMO Financial Group. Speaking at the International Foundation of Employee Benefit Plans’ 40th Annual Canadian Employee Benefits Conference, he said, while there will be more pain, it is not enough to start changing investment policy. He said these are “made in America” disasters, but they are not serious enough to have a lasting impact on global markets.

Canadians Can Afford Long-term Care

About 55 per cent of Canadians are confident they will have enough savings to afford their own long-term care, says a poll by the Canadian Medical Association. The survey also found Canadians think long-term care should be the top priority if medicare were to be expanded and they were split evenly as to whether the government should cover a portion of catastrophic drug expenses that exceed a certain amount of income.

ETFs To Top $2 Trillion

Total assets under management globally in ETFs are expected to top $2 trillion by 2011, up from $669 billion as of June 30, says a report by Morgan Stanley. Some factors driving growth are larger allocations by U.S. and European investors because of regulatory changes; expansion of the types of ETFs available; and an increasing number of managers bringing products to market. As of December 31, the U.S. remained the most active market, with 1,559 institutions using ETFs. The U.K. followed with 87 institutions; Canada, 77; Spain, 76; and Switzerland, 62 institutions.

AGF Broadens Global Equity Line-up

AGF Funds Inc. has unveiled a Global Dividend Fund, offering investors the combined benefits of global diversification and the potential for reduced performance volatility. Investors are increasingly diversifying their portfolios with global funds, as demonstrated by the almost $1 billion in net sales that flowed into Canadian global dividend funds just in the first quarter of 2007. Stephen Way, a senior vice-president and portfolio manager, will manage the fund.


Monday, August 20, 2007

Barrett Fears For Healthcare System

A former premier of British Columbia is shocked that Canadian governments are allowing private healthcare in Canada. Speaking at the opening keynote session of the International Foundation of Employee Benefit Plans’ 40th Annual Canadian Employee Benefits Conference on the ‘Perils of Turning Back the Clock on the Canadian Healthcare System,’ David Barrett said the healthcare system in under threat. However, he pities the politician who tries to return to a system of private healthcare.

Market Corrections Normal  

While markets in the short-term have been more turbulent than usual, this volatility reflects the normal functioning of healthy, expanding capital markets, says the president and CEO of the Investment Industry Association of Canada. Commenting on the market decline of the past month, Ian Russell says “Since the beginning of 2003 the average value of Canadian stocks, as reflected in the S&P/TSX index, has more than doubled. Since the end of 2005 they have increased by 30 per cent. The Dow has made similar gains. Those numbers include the corrections of the past month. In short, we're in a period of remarkably strong growth. And no investor should feel unduly concerned about corrections in such a strong market.”


Friday, August 17, 2007

Salary Increases Projected At 3.9 Per Cent

The desire to attract and retain the most productive employees is driving employers to project a national average salary increase of 3.9 per cent for 2008, just under the 4.1 per cent average increase granted in 2007, says Mercer Human Resource Consulting’s 2008 Canadian Compensation Planning Survey. Projected average salary increases vary across industries led by the oil and gas and petrochemical industries, mainly located in Alberta , which project a 6.2 per cent average salary increase. The vast majority of organizations are planning increases of between 3.1 per cent and four per cent across all employee categories.

Financial Institutions Agree On ABCP Solution

A number of major players in Canada's financial markets have come up with a solution to the liquidity problem affecting the third-party structured finance asset-backed commercial paper (ABCP) market in Canada. ABN AMRO, Barclays Capital, the Caisse de dépôt et placement du Québec, Desjardins Group, Deutsche Bank, HSBC, PSP Investments, Merrill Lynch, National Bank, and UBS have agreed to a proposal where all outstanding third-party ABCP will be converted into term floating rate notes maturing no earlier than the scheduled termination date of the corresponding underlying assets. This means existing liquidity facilities will not be necessary and will be cancelled with all outstanding liquidity calls revoked.

Private Equity Buyouts Set Records

Investment by private equity buyout firms into Canadian companies continued at a record setting pace during the second quarter of 2007, says the industry’s quarterly statistical report. A total of 52 transactions, with a total value of approximately $55.6 billion, were announced during the quarter. This includes the record-breaking $47.2 billion Bell Canada buyout. This is up dramatically from the 44 transactions with a total value of $5.4 billion recorded during the first quarter.

Citigroup Makes First Full Pension Buyout

Citigroup has made the first step in the UK pension fund buyout arena with the purchase of a £200 million Defined Benefit pension fund previously owned by Thomson Regional Newspapers. Citigroup will now become the sponsor and take financial responsibility for the support of the pension fund. The pension fund has been closed to new members for more than 10 years, but has around 3,600 members. Several firms have announced their intention to enter the pensions buyout arena within the last 12 months, but it is thought that Citigroup is the first to sign a deal taking full responsibility for a pension fund.

One-third To Quit Entirely

Only one-third of workers plan to quit work entirely when they are ready to retire, says a poll by Robert Half Management Resources. It found 24 per cent of survey respondents see themselves changing careers when they retire from their current jobs. An equal number said they would continue to work as a consultant (14 per cent) as those who said they would work the same job only with fewer hours (14 per cent).


Thursday, August 16, 2007

Caisse Organizing Bailout

The Caisse de dépôt et placement du Québec is trying to organize a bailout of the asset-backed commercial paper (ABCP) business, says a report in the Globe & Mail. Wednesday, the Caisse met with representatives of Canadian and international lenders to support the market for ABCP, a type of short-term debt. The market for this paper has vanished, impacting stock prices and raising liquidity fears. The Caisse, by some estimates, buys as much as a third of all the commercial paper sold by issuers.

SRI Wrong For Pension Funds

Socially responsible investing may not be the best thing for public pension plans, says a report from the Center for Retirement Research at Boston College . A paper by Alicia H. Munnell, the Peter F. Drucker Professor of Management Sciences at the Boston College Carroll School of Management, ‘Should Public Plans Engage in Social Investing?’, says that pension programs are ill suited as tools to bring about social change in other countries. As well, she contends that divestment policies may well put plan sponsors at odds with the notion that a primary function is to generate the highest returns for their participants.


Wednesday, August 15, 2007

HRPAO Launches Online Exam Preparation Course

The Human Resources Professionals Association of Ontario (HRPAO) is now offering an online exam preparation course for the National Knowledge Exam (NKE). HRwrx offers four different sections designed to help NKE candidates pass the exam. The NKE was introduced in 2003 as part of the national certification process.

Cross-border Pooling Assets Double

Northern Trust’s assets under custody in cross-border pooling vehicles have more than doubled in the last year to $24 billion as both investment managers and other institutional investors realize the benefits of aggregating the assets of investors from multiple countries into tax efficient funds. These structures have allowed multi-nationals to pool their assets, gaining improved oversight of their pension funds as well as offering economies of scale. Cross-border tax-transparent pooling also has a particular appeal to investment managers who can realize 30 basis points or more of additional return through the elimination of ‘tax drag’ when compared with a traditional pooled vehicle.

O’Brien Speaks At Symposium

The 26th Annual ISCEBS Employee Benefits Symposium will bring together more than 500 employee benefits and compensation professionals from Canada and the United States. Set for September 16 to 19 in Seattle , WA, featured speakers include M.J. (Peggy) O’Brien, a partner at Lawson Lundell LLP, who will provide a comprehensive overview of recent legal decisions in employee benefits, labour, and employment law in Canada. For more information, visit

Venture Capital Investment Drops

A total of $426 million in venture capital was invested across the country during the second quarter of 2007, representing a decline of approximately 30 per cent from the $606 million invested in the prior quarter, and a 12 per cent drop from the same quarter in 2006, says the industry’s quarterly statistical report. However, based on the strong performance in the first quarter, total venture capital investment of just over $1 billion through the first half of 2007 was up 21 per cent over the $853 million invested during the same period last year.


Tuesday, August 14, 2007

OMERS Buying Golf Town

The Ontario Municipal Employees Retirement System (OMERS) may get into the golf business. It has reached an agreement to take over the Golf Town Income Fund which owns the largest golf equipment retailer in Canada. The deal is subject to a ‘go-shop’ provision. Golf Town can seek a better deal than the OMERS offer until September 19.

Funded Ratio Slips

Equities lost significant ground in July, while long bond yields remained relatively stable which resulted in the funded level of Towers Perrin’s benchmark U.S. pension plan dropping 2.2 percentage points to 93 per cent. This still represents a 3.6 per cent increase from the 89.4 per cent funded level at the start of the year, says its Capital Market Update.


Monday, August 13, 2007

Teachers' Looks To Chile

The Ontario Teachers' Pension Plan has agreed to acquire up to 100 per cent of Esval S.A., a public water and waste water company in Central Chile. Esval, together with its subsidiary, Aguas del Valle S.A., is Chile's third largest water operator, serving approximately 16 per cent of the country's regulated water market. The purchase would be Teachers' second investment in the Chilean water sector and in South American infrastructure. In May, Teachers' agreed to buy two private water and wastewater companies.

CPP Assets Grow

The value of assets held by the Canada Pension Plan grew to $120.5 billion as of the end of June. That’s up $3.9 billion from three months earlier. It says while it “benefited from strong Canadian equity markets this quarter, the strength of the Canadian dollar against most major currencies largely offset gains in foreign equities in the portfolio.” Equities make up almost two-thirds of the CPP fund ($78 billion), while almost a quarter of the CPP’s total assets are in bonds ($29.7 billion). Real estate, infrastructure, money market securities, and other investments make up the rest of the assets.

Markets Move To Safety First

Market participants don’t know whether to buy on the rumour and sell on the news, do the opposite, do both, or do nothing, depending on which way the wind is blowing, says State Street's Global Markets’ Research Notes. It says institutional investors have responded by reining in risk in their portfolios, moving to what it calls a ‘Safety First’ regime. This is the first move away from the aggressively risk-seeking regimes since September 2006. ‘Safety First’ regimes are characterized by a marked preference for developed market equities over emerging and this move has been quite dramatic. Just one month ago 10-day flows into Emerging Asia were in the 65th percentile. They have now slumped to the 5th percentile.


Friday, August 10, 2007

Sub-prime Woes Trouble Hedge Funds

Financial firms are facing a tough choice as they decide how to deal with their hedge funds’ sub-prime woes, says a National Bank Financial (NBF) research note. Some firms – such as Bear Stearns and BNP Paribas – have temporarily suspended some hedge funds’ operations including redemptions, saying that current market conditions make it impossible to value their assets. The NBF says that the hedge fund industry is facing a serious stress test, as it contends with trouble in certain illiquid assets.

Right To Expand Membership Endorsed

The Ontario Superior Court of Justice has endorsed HBC’s right to expand the membership to include the Zellers and Kmart employees, says a Blakes Bulletin on Pension & Employee Benefits – August 2007. In handing down its decision in Sutherland et al. v. HBC et al, the court said the fact that benefits were on a Defined Contribution basis, as opposed to a Defined Benefit basis, was irrelevant. It emphasized that the term “benefits” should be interpreted broadly and encompass any benefits provided under the plan.  The principal issue in this case was whether HBC, as plan sponsor, was entitled to amend the Dumai Pension Plan in 1994 and 1998 to expand the class of membership to include employees of Zellers and, later, employees of Kmart; to provide for these employees to receive pension benefits on a Defined Contribution basis; and to fund the employer contributions required from the accumulated surplus in the plan.

S&P Companies Get Contribution Break

S&P 500 companies didn’t have to contribute as much to their plans in 2006 as they did the year before because of their improved pension funded status, says analysis by Mercer Human Resource Consulting and Mercer Investment Consulting. This has also lessened the shareholder equity impact of the new accounting rule that moved pension plan deficits onto corporate balance sheets. The median funded status for S&P 500 plan sponsors rose to 89 per cent in 2006, up from 83 per cent in 2005, propelled by strong asset returns and a rise in discount rates for valuing pension liabilities. The median return on plan assets was 13.4 per cent for 2006, compared with an expected return of 8.2 per cent.

Soft Dollar Use Recovering

After sharply cutting back on their use of commission payments for third-party research products –so-called ‘soft dollar’ allocations – institutional investors are starting to return to business as usual. Research from Greenwich Associates suggests that institutions are again paying third-party brokers for research and other services based on a growing belief that the Securities and Exchange Commission (SEC) is not planning a dramatic overhaul of rules pertaining to third-party research products. In recent months the SEC has provided guidance about what it considers appropriate with regard to third-party payment. In particular, in two January ‘no-action’ letters to Goldman Sachs, it provided a stamp of approval to client commission sharing arrangements and soft dollar transactions.

401(k) Plans Will Be Sufficient

Most of the concerns that Americans’ retirement savings are insufficient to pay for their golden years are overstated, says a Dartmouth College news release. It found that 401(k) wealth will continue to grow and that a financial market meltdown is unlikely despite the sometimes gloomy forecasts to the contrary. According to the study, retirees in 2040 are expected to have five times as much 401(k) wealth as retirees in 2007 in constant dollars. However, the study assumed that Americans would have a long working life with 401(k) coverage.


Thursday, August 9, 2007

Oversight Into Investments Inadequate

One of the country's largest pension plans has been found not to be in compliance with its governing legislation. The Financial Services Commission of Ontario (FSCO) says a three year examination of the Ontario Municipal Employees Retirement System (OMERS) found a lack of due diligence for compliance with the Pension Benefits Act (PBA) of Ontario. Specifically, it noted that, in transactions involving the Oxford Group and Borealis Capital Corporation, FSCO could not conclude that OMERS "met the standard of care, implicit in ... the Act, to provide the appropriate persons with sufficient information to monitor the plan and fund for compliance with the requirements of the PBA.”

Hanna Assists Dickson

The Superintendent of Financial Institutions, Julie Dickson, has appointed Bob Hanna as assistant superintendent, regulation sector, within the Office of the Superintendent of Financial Institutions (OSFI). Hanna has been acting in the role since last October when he replaced Dickson who had been appointed acting superintendent. Dickson was appointed superintendent last month.

$1 Trillion Traded On CanDeal

CanDeal, a Canadian online marketplace for debt securities has passed the $1 trillion mark in traded volume since inception. Participation by Canada’s industry leading dealers and progressive institutional investors has been material to ensuring the success of CanDeal. The number of investment dealers making markets on CanDeal has doubled to 12 from the original six founding member firms. Additionally, nearly one third of CanDeal’s buy-side participants are domiciled outside of Canada. This international audience is affirmation that electronic trading has been globally accepted as the standard for accessing fixed income liquidity.

State Street Strengthens Private Equity Services

State Street Corporation has expanded its capabilities for private equity servicing. In addition to the private equity servicing capabilities it assumed as part of the acquisition of Investors Financial Services Corp., it has also acquired Palmeri Fund Administrators (PFA). For more than 16 years, PFA has provided full-service fund administration services exclusively to the private equity industry.

Annuities Improve DC Plan Options

U.S. employers will begin offering annuities as an investment option within 401(k) plans as a way to ensure greater retirement security on behalf of their employees, predicts Watson Wyatt Worldwide. It says retirees should consider annuitizing at least the portion of assets they need to support basic consumption needs and then the remaining assets can be invested more aggressively to cover other consumption and bequest motives.

However, to make annuities an affordable option, employers are looking for a broader range of products such as simple, institutionally priced immediate and deferred annuities at retirement to flexible, portable in-service annuities.

Plans’ Funded Status Drops

The funded status of a typical U.S. pension plan dropped 4.4 percentage points in July because of a stock market decline and a sharp decrease in Treasury bond yields, says BNY Mellon Asset Management’s Pension Liability indexes. The July level is still about three percentage points better than January. Assets of a moderate-risk pension portfolio decreased 1.5 per cent in July, while the value of typical pension liabilities rose 2.9 per cent. For the first seven months of 2007, however, typical plan assets are up 3.4 per cent, and typical pension liabilities are up 0.5 per cent.


Wednesday, August 8, 2007

Communication Critical To Success Of Consumer-Directed Health Plans

Most U.S. employers that offer a consumer-directed health plan say communicating with workers about these plans is their greatest challenge. Additionally, most employers are not pleased with the availability of information on provider cost and quality, says a study conducted jointly by Watson Wyatt Worldwide and the RAND Corporation. Nearly all of the respondents – 90 percent – cited employee communication as their greatest challenge in introducing the consumer-directed health plan (CDHP) and during the plan's first year. Getting employees to enroll in these plans can be difficult when they also have more traditional health plan options. The study found that employers were most likely to achieve high levels of CDHP enrolment when they devoted additional time and resources to communication, forced employees to make an active choice at open enrolment, and offered financial incentives in ways that enhanced the appeal of the CDHP.

New Hires Using Balanced Funds

New and recent hires are investing their 401(k) assets in balanced funds, including lifestyle and lifecycle funds, says the annual Employee Benefit Research Institute /Investment Company Institute analysis of 401(k) plan data. At the end of 2006, 24 per cent of the account balances of recently hired participants in their 20s was invested in balanced funds, compared with 19 per cent in 2005 and about seven per cent in 1998. In contrast, the study found recently hired 401(k) participants are less likely to hold a high concentration of their account balance in company stock.


Tuesday, August 7, 2007

Older Americans Return To Work

Americans aged 55 and older are returning to full-time, full-year work, says the Employee Benefit Research Institute. Its August 2007 EBRI Notes says the number of Americans aged 55 or older in the labor force increased from about 38 per cent in 1993 to 45 per cent in 2006. For those aged 65 to 69, the number rose from about 18 per cent in 1985 to 29 per cent in 2006. The trend is a result of these people trying to obtain employer benefits and to save more for retirement.

International Equity Outperforms Index

Active International Equity managers outperformed the MSCI EAFE Index during first half of 2007 by 10.7 per cent, says InterSec. Two-thirds of active international equity portfolios outperformed the return of the index for the first six months of the year. The median portfolio in its EAFE Plus universe averaged a 5.8 per cent exposure to the emerging markets and posted a 17.3 per cent return year-to-date ending June. The skill of active managers is not limited to this year. Looking at the trailing three-year time frame, 65 per cent of portfolios in the peer group outperformed the MSCI EAFE Index return of 22.2 per cent.


Friday, August 3, 2007

Baillie Heads Alberta Investment Board

Charles Baillie, the former CEO of TD Bank, will head the board of the Alberta government’s investment corporation, Alberta Investment Management Corp. In early 2008, Alberta’s investment management operations will be moved from within Alberta Finance to become a provincial corporation. The move follows best practices for top public sector investment funds such as the Canada Pension Plan, the B.C. Investment Management Corporation, and the Ontario Teachers’ Pension Plan. The board will oversee Alberta’s savings, public sector pensions, endowments, and other funds.

Losses Driven By Unwarranted Fears

The recent losses on the Toronto Stock Exchange were driven by unwarranted fears that the U.S. sub-prime meltdown would seriously impact global growth, says a CIBC World Markets report. “Investors followed a circuitous route to link U.S. mortgages to Canadian equities over the past month,” says Avery Shenfeld, senior economist at CIBC World Markets. “Losses on sub-prime mortgages put some hedge funds at risk, which raised concerns about Wall Street’s liquidity. This led to widening spreads on high yield bonds and loans, which left dealers stuck with loans on leveraged buyout deals in process. This added to the risks to lending liquidity and pressured investment grade spreads, which raised concerns over global growth. The last leg of this Rube-Goldberg path entailed a broad-based drop in Canadian equities.”

Pension Fund Buys CHIP REIT

The British Columbia Investment Management Corp. (BCIMC), the pension fund for B.C. public sector workers, will acquire the Canadian Hotel Income Properties Real Estate Investment Trust (CHIP REIT). Under banners that include Delta, Radisson, Marriott, and Hilton, CHIP REIT owns and manages 32 hotels. BCIMC manages more than $85 billion in assets.

Participants Unaware Of Cost Of Plans

More than eight in 10 401(k) participants acknowledge they do not know how much they pay in fees and expenses associated with their plan, says an AARP survey. It also found more than half do not feel knowledgeable about the impact fees can have on their retirement savings. An encouraging finding from the survey was that many respondents appear to sense that fees can have a significant effect on their returns. When asked to choose between two funds with identical characteristics except for the expense ratio, the majority of respondents selected the fund with the lower expense ratio.

Employees Look To EAPs For Wellness

More than half of employees survey believe their employee assistance program is best-suited to provide wellness services, says a poll by ComPsych, a global provider of employee assistance programs. This compares with 27 per cent who say they trust their health insurance plan to provide these services. This suggests that even though health insurance plans may be more closely associated with health and wellness, employees know that EAPs are known for their handling of sensitive and confidential information, and for building relationships with employees based on trust.

Employing Foreign Workers Examined

While Alberta, British Columbia, and Saskatchewan all suffer from labour shortages, hiring internationally is not a simple solution. ‘The 2nd Annual Legal and Human Resource Guide to Employing Foreign Workers’ will look at topics including finding and recruiting and how to make the decision whether to hire internationally. It takes place September 27 and 28 in Calgary, AB. For more information, visit


Thursday, August 2, 2007

Accounting Changes Put On Hold

Canada’s Accounting Standards Board has elected not to proceed with recently proposed changes to CICA Handbook Section 3461, Employee Future Benefits, says Eckler Ltd. The proposals released in March would have applied to many plan sponsors from the end of 2007 and could have affected the sponsor’s balance sheet dramatically. They called for recognition of the full funded status of a Defined Benefit plan in the sponsor’s balance sheet, immediate recognition of changes in funded status on the balance sheet, and alignment of the measurement date with the balance sheet date. In rationalizing its decision, the AcSB noted that now is not the right time to implement changes to pension and benefits accounting standards, only to change them again in a few years during the planned transition to International Financial Reporting Standards. While it is now unnecessary for plan sponsors to prepare for accounting changes this year, sponsors should still plan for the harmonization of Canadian and international accounting rules for pensions and benefits, which is anticipated in 2011.

Funding Crisis A Myth

The pension funding crisis is largely a myth, says a study by DBRS. The study reviewed 536 pension plans, predominantly North American Defined Benefit plans. It looked at plan performance, assumptions used, demographics, and regulatory and legislative changes when evaluating the 2002 to 2006 results of each pension plan. “The main finding of this year’s pension review is that public perception of serious funding problems in DB pension plans, in both Canada and the United States, is a myth,” the rating agency reports. For 2006, it found that more than 25 per cent of the plans reviewed could be classified as being over-funded, while more than 70 per cent could be described as well-funded.”

Great-West Life To Provide Record-keeping

Great-West Lifeco Inc.’s U.S. subsidiary, Great-West Life & Annuity Insurance Company, has reached an agreement with Franklin Templeton Investments whereby Templeton will transition its 401(k) record-keeping business to Great-West Life & Annuity. Great-West Life & Annuity's affiliate FASCore, LLC has been supporting Franklin Templeton's record-keeping business since 2006. Under the new agreement, Great-West Life & Annuity will assume additional servicing and custodial responsibilities for approximately 340 plans, representing about 64,000 participants.


Wednesday, August 1, 2007

AcSB Monitoring Canada's Progress

The Accounting Standards Board (AcSB) will monitor Canada's progress in implementing the IFRS convergence strategy and the readiness of the investor and business communities to move to international accounting standards. The AcSB is on track for adoption of IFRSs as Canadian GAAP for publicly accountable enterprises in 2011. The AcSB announced in May 2007 that, subject to results of the progress review, the changeover to IFRSs should be mandatory for fiscal years beginning on or after January 1, 2011.

Equity Managers Challenged

Canadian equity investment managers faced a more challenging investing environment in the second quarter of 2007, with only 53 per cent of large cap equity managers beating the S&P/TSX Composite Index's return, says Russell Investments Canada's 2nd Quarter 2007 Active Management report. That was down from 65 per cent in the first quarter, which was the highest proportion in almost three years. On average, less than 50 per cent of large cap Canadian equity managers in Canada beat the benchmark in 2005 and 2006.

Account Balances Up

The average account balance increased at an annual rate of 8.7 per cent among U.S. employees who consistently held 401(k) accounts from 1999 through 2006, says a study by EBRI and the Investment Company Institute. Average account balances for the group rose 79 per cent over the same period to $121,202 as of December 31, and the median account balance increased 168 per cent to $66,650. Among other trends, the group's employer stock holdings dropped to 11 per cent in 2006 from 13 per cent in 1999.

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