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


News Archives - February / March 2007

March 30, 2007

RCMP Pension Cover-up Investigated

A commons committee and a government-appointed investigator will examine allegations of a cover-up in the RCMP pension scandal. The House public accounts committee wants to hear from former Liberal ministers and will also try to determine if RCMP witnesses may have perjured themselves in testimony before the committee in February. As well, Public Safety Minister Stockwell Day says the government will appoint an independent investigator into the matter. Current and former officers have claimed that senior RCMP officials tried to stop investigations into the management of the plans and an Auditor General's report found misallocation of more than $3 million in pension funds, including an estimated $1.3 million charged to the pension and insurance plans to pay for commissions or products that provided little or no value. 

Pension Crisis Persistent, Ongoing

Corporate executives see a persistent, ongoing pension crisis, says a report from the Conference Board of Canada and Watson Wyatt Worldwide. Their third annual survey on pension risk found that 80 per cent of chief financial officer respondents believe there is a widespread pension crisis, up from 59 per cent two years earlier. They also expect it to last a long time, with 61 per cent of CFOs saying that the crisis will last for the next few years, up from 43 per cent in 2005, and just 20 per cent in 2004. The top concerns of survey respondents are managing cost volatility and solvency funding.

Long-term Stability Of CPP Threatened

New legislation before Parliament to enhance certain benefits under the Canada Pension Plan sends a worrying message for the proponents of long-term stability in the CPP, says a C.D. Howe Institute e-brief. Bill C-36 would ease access to disability benefits for older participants and it would reflect the cost of future benefit enhancements in the contribution rate right away. In the study, ‘Will C-36 Undermine CPP ‘9.9’? Benefit Enhancement and the Sustainability of the Canada Pension Plan,’ William B. P. Robson, institute president and CEO, says the changes would increase the contribution rate required to maintain stability in the CPP to an estimated 9.79 per cent. While this is still below the legislated rate of 9.9 per cent, the change eats up part of the margin between the previous steady-state rate and the legislated rate that good economic times have created.

DB Plan Worth Saving

Defined Benefit pension plans are worth saving because they are inherently more efficient in managing longevity risk, force members to save for retirement, and are professionally managed, says Ronald P. O’Hanley, vice-chairman of Mellon Financial Corporation and president and CEO of Mellon Asset Management. Speaking at a Mellon Asset Management Breakfast Presentation, O’Hanley said DB plans need to be retooled for the 21st Century so the costs and benefits are made meaningful and transparent to employees.

Manager Registration Impacts Hedge Funds

National Instrument 31-103, which calls for the registration of investment managers in Canada, will impact hedge fund managers, says Michael Burns, AIMA Canada’s legal counsel. He said the measure is an effort to harmonize and streamline registration of investment managers across the country. Of concern to hedge funds, he said, is that many are limited partnerships, not trusts. This means that each partner involved in a family of funds would be required to register. AIMA Canada does plan to comment on the proposal by the June 20 deadline.

Correct Data Improves Efficiency

If reference data is correct, improved efficiency is possible for virtually all operational components of the investment process, says Jeremy Skaling, reference manager for Eagle Investment Systems. Speaking at its Toronto Solution Showcase, he said, however, there are a number of data management challenges. These include the need to consolidate multiple data sources and the redundant processes and inconsistent data between systems. In many cases, he said, the last source wins.

Russell Changes Canadian Equity Managers  

Russell Investments Canada Limited has appointed Foyston, Gordon & Payne and Aurion Capital as new managers in the Sovereign Canadian Equity Pool. Foyston's target weight within the pool will be 28 per cent while Aurion's will be 22 per cent. Foyston will also be added as a new manager in the Russell Canadian Equity Fund with a target weight of 24 per cent of the fund.


March 29, 2007

Canadian Investment Managers Bullish On Equity Markets

Bullishness for broad market Canadian stocks continued its steady march upward as Canadian investment manager bullishness crept up across all equity asset classes this quarter, says the Russell Investment Manager Outlook, a quarterly poll of investment managers. Across the board, the Canadian equity market saw pronounced increases in positive manager sentiment, as bullishness for the broad market increased 13 percentage points to 48 per cent and bullishness for Canadian small caps increased 22 percentage points to 45 per cent.

REIT Conditions Too Stringent

The draft legislation to tax income trusts does provide for an exemption for trusts that qualify as REIT property. However, the conditions that must be satisfied are so stringent that most REITs will be required to restructure in order to be confident of qualifying for the tax exemption, says Davies Ward Phillips & Vineberg LLP. It says the March 27 Department of Finance draft legislation affirming its proposals to tax most income funds are disturbing in that Canadian REITs now face a significantly more stringent regime than any other major English-speaking jurisdictions.


March 28, 2007

Bell Ending Retirement Benefits

Bell Canada will eliminate supplemental benefits for future retirees. Beginning January 1, 2012, most benefits will be eliminated for new retirees over 55. However, pensioners will still be eligible to receive medical benefits until they reach 65. All post-retirement benefits will be eliminated for employees who retire after 2017, although Bell will offer a program to allow retirees to pay for their own benefits. Its benefits include coverage for prescription drugs, dental care, and eyeglasses, as well as life insurance. The move is being taken because the company's benefits at retirement program is more expensive than those offered by its competition.

U.S. Investment Management On Brink Of Change

The U.S. asset management industry is on the brink of revolutionary change as pension plan sponsors look beyond their historic focus on asset growth and investment returns to more holistic strategies for funding pension liabilities, says research from Greenwich Associates. This shift is being driven by two powerful trends: underfunding and accounting reform. Underfunding poses a well-documented danger to Defined Benefit pension plans that will grow as the U.S. workforce ages. Simultaneously, the transition to mark-to-market accounting rules in the United States is reducing the ability and willingness of corporate plan sponsors to tolerate market volatility within their pension funds. The departure from traditional pension management practices is most evident in the increasing popularity of products and techniques such as liability driven investment strategies, absolute return strategies, portable alpha, and net-long approaches such as 120/20 and 130/30 strategies.

Lifecycle Funds Beat Balanced

Lifecycle funds do a reasonable job of creating retirement wealth and a better job of mitigating the downside risk than balanced funds, says an analysis by Watson Wyatt Worldwide. Though a series of simulations, Watson Wyatt found that the balanced fund is slightly more likely to outperform the lifecycle fund in terms of returns, but the aggressive approach leaves plan participants more vulnerable to losses as they approach retirement. The lifecycle fund is better at safeguarding wealth in a downward market, while still doing a reasonable job of building wealth.

UK Funds Reallocate Assets

Thirty per cent of UK pension funds reallocated more than five per cent of their investment portfolio in 2006, with the property sector the most popular way for funds to diversify their assets, says research by Aon Consulting. The research showed that these funds were seeking greater portfolio diversity and risk-controlled investment strategies. Half of UK schemes studied by Aon diversified their growth assets using property, 17 per cent used hedge funds, and 11 per cent used global tactical asset allocation.

Diversifying Collateral Pools Examined

Plan sponsors participating in securities lending programs have often preferred to accept government debt securities as collateral for their loans, reasoning that these instruments exhibit less volatility and provide better credit quality. In recent years, however, arguments have been made that diversifying collateral pools can reduce market risk by improving the correlation between loaned securities and collateral. James E.R. Slater, senior vice-president, capital markets, CIBC Mellon; and Gabriel Villegas, business analyst, CIBC Mellon; will examine collateral optimization in securities lending at a meeting of the Ontario Chapter of GARP. It takes place April 10 at 5:30 p.m. in Toronto. To register, visit


March 27, 2007

Double-digit Increases In Healthcare Costs

Plan sponsors can expect double-digit cost increases in 2007 for prescription drugs, medical plans, and hospital coverage in Canada, says the 2007 ACS/Buck Canadian Healthcare Trend Survey, the firm's seventh annual study. Although the 2007 cost increase for prescription drugs (14.26 per cent) dropped slightly from 14.31 per cent last year, prescription drug costs still represent the largest portion of employer healthcare costs.

CPPIB Calls For Transparency

The CPP Investment Board (CPPIB) wants more transparency from the companies it invests in when it comes to environmental, social, and governance factors. In particular, it wants companies to reveal how they plan to deal with their carbon impact and their plans for mitigating it. Don Raymond, head of the CPP Investment Board's Public Market Investments division, called for more transparency in a speech to the Conference Board of Canada in Calgary. The transparency is necessary for the CPPIB to make more accurate judgments on the likely future performance of companies.

Montreal Exchange Shares For Sale

Trading in shares of the Montreal Exchange began today. However, finding shares may be difficult. The exchange calculates that more than half of its 30.9 million outstanding shares are held by big investors and exchange management and workers. When trading opened this morning, there was only a listing. No new shares are being offered and there was no offering price.

Teachers More Conservative

Ontario Teachers' Pension Plan is shifting from stock market plays to infrastructure and other areas as part of an increasingly conservative approach to investing. The plan reported investment income of $12.3 billion and a 13.2 per cent rate of return for 2006. Its long-term forecasts show it has only 88 per cent of the money needed for payouts anticipated over the next 70 years to retired teachers in Ontario. “With a rising proportion of retired to active teachers, and contributions being outpaced by benefit payments, it is simply not prudent to increase the fund's exposure to the volatility of equity markets,” says Claude Lamoureux, chief executive officer. 

Sun Life Integrates Brands

Sun Life Financial Inc. is integrating its brand strategy in Canada to more effectively leverage the Sun Life brand. As part of the integrated strategy, the company will retire the Clarica name. The integrated brand strategy will better enable it to leverage the strength of the Sun Life Financial name across its three key businesses in Canada. The strategy will also allow the company to realize greater economies of scale in marketing expenditures and reduce brand duplication and complexity in the Canadian marketplace.


March 26, 2007

Ontario To Create MEPPs

Ontario may allow for the establishment of categories of multi-employer pension plans (MEPPS), including categories parallel to multi-employer plans found in the Income Tax Act (Canada), says ACS/Buck. The Ontario Budget 2007 proposes amendments to the Pension Benefits Act to create a category that mirrors the specified multi-employer plan (SMEP) category. The distinctive characteristic of a SMEP is that it is treated as a Defined Contribution plan under the act, even when it is a Defined Benefit plan.

Teachers’ Buys New Zealand Yellow Pages

The Ontario Teachers' Pension Plan’s investment arm of has bought Telecom New Zealand's yellow pages directories business. A private equity consortium of CCMP Capital and Teachers' Private Capital bought the yellow and white pages directories, both print and online. The transaction is subject to approval by New Zealand's Overseas Investment Office.


March 23, 2007

Canadian Plans To Shift Assets

A significant percentage of Canadian Defined Benefit pension plan sponsors expect to make significant shifts to the equity allocations within their portfolios over the next two years, says a survey by MFC Global Investment Management. On an asset-weighted basis, 53 per cent of DB plans are expected to change their Canadian equity allocations, with a variety of new approaches to be implemented. The most significant planned increases were with international equities. Fully one-third of plans intend to hike their international (ex-U.S.) equity allocation over the next two years. On the fixed income side, more than one in four said they expect to decrease their Canadian fixed income holdings in favor of fixed income investments in the U.S. and international markets.

SRI Assets Top $500 Billion

Growing institutional interest in socially responsible investment has propelled SRI assets in Canada to more than $500 billion, says a study by the Social Investment Organization. The Canadian Socially Responsible Investment Review puts total SRI assets in Canada in 2006 at $503.6 billion. This is an increase from $65.5 billion in 2004. The dramatic increase in SRI assets is largely the result of the recent adoption of SRI policies and practices by several large public pension funds. 

Rebate Considered For Trusteed Plans

The Department of Finance of Canada has released a proposal for a new Goods and Services tax/Harmonized sales tax (GST/HST) rebate that would considerably simplify the current GST/HST tax system for pension plan trusts, says a Mercer Communiqué. Under the proposal, the current GST/HST input tax credits relating to pension plan expenses will be replaced with a simple GST/HST rebate system. The new rebate system would apply to all employer-sponsored pension trusts, irrespective of whether they are currently GST/HST registrants. Any comments on the proposal must be submitted by April 30, 2007.


March 22, 2007

Money Managers Shift To Cash

Professional money managers are avoiding risk, shortening their investment horizons, and shifting to cash as a result of worries about a slowdown in the U.S. economy, says a Merrill Lynch global survey of fund managers. The survey shows that managers' investment horizons have shrunk to an average of seven months, the shortest in more than four years. Its composite index of risk appetite and liquidity fell to 37, one of the lowest readings in five years. The cash component of portfolios grew to an average 4.4 per cent, from 3.8 per cent last month.

Comfort With Hedge Funds Grows

Governing bodies are more comfortable investing in hedge funds today than they were 12 months ago, says State Street Corporation’s third institutional investor hedge fund study. Results show that the percentage of asset owners investing in alternatives increased significantly over last year. This year, only four per cent of asset owners indicated they have no hedge fund investments, down from 16 per cent last year. However, half of institutional investors said the negative financial effects of recent highly publicized hedge fund manager debacles on institutional portfolios have prompted their boards to call for a more robust risk management program. Nearly half cited a need for additional reporting and analysis on the part of hedge fund managers and more rigorous due diligence practices. 

Provincial Corporation To Manage Alberta’s Investments

The government of Alberta plans to establish a provincial corporation to manage Alberta’s investments. The Alberta Investment Management Corporation will have improved organizational governance, increased flexibility, and opportunities for greater investment returns for Alberta’s savings, public sector pensions, endowments, and other funds. A recent study concluded that a stand-alone organization would be the most appropriate structure to achieve investment excellence. The proposal follows best practices for public sector investment funds such as the Canada Pension Plan, the B.C. Investment Management Corporation, and the Ontario Teachers’ Pension Plan.


Tuesday, March 21, 2007

Ontario Pension Commission Releases Discussion Paper

The Ontario Expert Commission on Pensions has released a discussion paper addressing three sets of issues. The three sets are those issues which the commission must and will make recommendations on; the social and economic environment in which pension plans operate and establishing a context for analysis to make concrete recommendations; and a group of issues that do not fall within the commission's mandate, but are known to be of great concern to people who think about pension policy and work with pension plans. The commission intends to launch a program of research, to consult directly with major stakeholder and professional organizations, and to hold public hearings across the province in the fall of 2007.

Investment Confidence Surges

The State Street Investor Confidence Index jumped 10 points in February, the biggest jump since January 2003. State Street says in the since the sharp slide in Chinese stocks and recent concerns in the U.S. sub-prime market over apparent vulnerabilities in financial markets, institutional investors have used the past month as a buying opportunity; increasing, rather than decreasing, their holdings of risky assets. The implication from this is that institutional investor flows did not trigger the recent bout of volatility and moreover they have used the sell off in risky assets as a buying opportunity.

Course For Pension Committee Members

Federated Press is offering an advanced course on investment for pension committee members May 29 and 30 in Toronto, ON. The course will look at topics such as portable alpha and socially responsible investing. For more information, visit


Tuesday, March 20, 2007

Semi-retired Workers Can Contribute To Pension

The federal government will allow employers to pay a partial pension to an employee while that same worker is also contributing to the pension plan. The provision is included in the 2007-2008 Federal Budget. The budget also proposes increasing the age limit to 71 from 69 for individuals to convert RRSPs to registered retirement income funds or to buy annuities. "Many older Canadians want to continue working and saving," the budget document states. "As Canada's population ages, it will be important to allow them to do so."

Newsletters Communicate Benefit Information

Seventy-one per cent of organizations provide a newsletter to communicate information on employee benefits, says Newsletters for Employees and Plan Participants, a survey published by the International Foundation of Employee Benefit Plans. The survey found that the most popular method for distributing newsletters was mailing them to the homes of employees and retirees. The top five issues included in newsletters are information on employee benefit issues; organization news; health tips or wellness information; messages from specific executives such as the CEO or president; and retirement planning information.

ABN Amro And Barclays Look At Combining

ABN Amro Holding NV and Barclays PLC have confirmed they are in talks about combining the two banks. The discussions are the result of "careful consideration to create a highly complementary partnership," says ABN Amro. Barclays says the “potential combination of the two organizations” will create value for shareholders of both.

Behaviour Factor In Target Fund Strategies

Plan sponsors should consider their participants' savings and investing behaviour when selecting appropriate target retirement date funds for their retirement plans, says a JPMorgan Asset Management Group white paper. The paper says industry assumptions for target date funds are oversimplified as they overestimate participant salary and deferral rate growth and assume participants leave balances invested for the duration of their careers. Its research shows, on average, participant deferral rates start at six per cent and only increase slowly, reaching eight per cent by age 40 and not reaching 10 per cent until age 55. As well, 20 per cent of participants borrow, on average, 15 per cent of their account balance.

Davis Speaks At SIO Conference

Dr. Stephen Davis, president of Davis Global Advisors, Inc., and author of The New Capitalists, will be one of the keynote speakers at the Social Investment Organization’s (SIO) biannual Canadian Responsible Investment Conference. It takes place in Montreal, QC, May 27 to 19. For more information, visit


Monday, March 19, 2007

Retirement Savings Need Tune-up

The way Canadians invest and save for retirement is due for a tune-up, says Debbie Ammeter, vice-president of advanced financial planning for Investors Group. She says three proposals are worthy of consideration – Registered Retirement Savings Plans and Registered Retirement Income Funds should be excluded from the calculation of Guaranteed Income Supplement (GIS) clawbacks; a tax pre-paid savings plan should be implemented; and the age at which Canadians must convert their RRSP to a RRIF should be raised. She says, for example, the clawback of the GIS is a disincentive for lower income Canadians trying to save for retirement.

Psychologically Healthy Workplace Theme Of Conference

The Rotman School is sponsoring a conference that will explore the concept of a psychologically healthy workplace. A psychologically healthy workplace integrates employee goals of health and well-being with organizational goals of performance and productivity. It takes place May 3 and 4 in Toronto. For more information, visit


March 16, 2007

Retirement Savings Value Rebounds

The value of retirement savings of 4.6 million Canadian workers with trusteed pension plans rebounded between July and September last year, following its first decline in seven quarters, says Statistics Canada. Market value of assets amounted to $854.9 billion in the third quarter of 2006, up 4.4 per cent from the second quarter. This followed a 2.1 per cent decline in the previous quarter, which reflected the performance of Canadian stocks in the Toronto Stock Exchange. More than 40 per cent of the value of funds assets were held in stocks and equity funds in the third quarter. Bonds and bond funds accounted for 33 per cent. As well, pension fund assets in foreign holdings have increased with foreign holdings, particularly stocks, now accounting for 29 per cent of pension funds assets.

Broad Health Strategies Control Costs Better

The number of U.S. employers offering consumer-directed health plans continues to grow, says an annual survey by Watson Wyatt Worldwide and the National Business Group on Health. The portion of companies offering a consumer-directed health plan (CDHP) increased from 33 per cent to 38 per cent in the last year.

Tools Help With Diabetes In The Workplace

The website has undergone a facelift with an eye toward ease of use.  The site, specifically designed to address the prevention and management of diabetes in the workplace, provides a multitude of free pilot-tested, evidence-based, copyright-free tools and materials to assist in developing a worksite diabetes education, prevention, or management programs. Studies show that poorly-controlled diabetes and its complications contribute to absenteeism and affect productivity on the job. 

Creating Better Presentations Discussed

The PAICR Canada Workshop ‘Creating Better Investment Management Presentations in Less Time’ takes place Tuesday, April 10 at 7:30 a.m. in Toronto, ON. Dave Paradi, co-author of ‘Guide to PowerPoint,’ will explain techniques to link Excel data, charts and tables to PowerPoint slides so that they automatically update whenever the Excel data is changed and how to use an eight-step process to clean up the ‘chartjunk’ that is present in too many graphs. For more information, visit

Employees Need Help Navigating Healthcare System

Employers have a role to play in helping their employees navigate the healthcare system, says Michael Decter, founding chair of the Health Council of Canada. Speaking at a Mini Medical Rounds session, he said employers need to realize that chronic diseases are becoming more of a workplace issue and need more management. So they need to help their employees access the resources they need to manage their diseases. For example, he said estimates are that there will be three million Canadians with diabetes by 2010, which means about 10 per cent of their employees may need help to manage this disease alone.

Pension Artists Wanted

Pensions professions are invited to comment on the state of the Pensions Industry in Pendragon’s annual Art of Pensions competition. Entrants are encouraged to be as creative as they like – the only condition being that their submission fits on a standard blank postcard. Last year’s entries ranged from biting satire, to frivolous scribbles, to just plain off-the-wall. All entries will be exhibited on Pendragon’s stand at the annual National Association of Pensions Funds Conference & Exhibition in London, UK. Entry packs can be obtained by emailing


March 15, 2007

GM Lowers Volatility

General Motors Corp., Detroit, has moved 20 per cent of its pension assets to fixed income from equities in an effort to lower the volatility of asset returns and plan funded status. The asset allocation for the $119 billion fund is now 52 per cent global bonds, 29 per cent global equity, 11 per cent alternatives, and eight per cent real estate.

Sponsors Favourably Disposed To SRI

The majority of plan sponsors are favourably disposed toward the ideal of socially responsible investing (SRI) for pension plans, says a Morneau Sobeco 60 Second Survey. Of the respondents to the survey, 59 per cent felt that it was possible to practice SRI without compromising a pension fund’s goal of maximizing returns. Almost half of the respondents believe good corporate governance is the most important social screen.

Pension Fundamentals Offered

CPBI, Manitoba Region, will present a five-part pension fundamentals lecture series starting April 4. Session topics are an introduction to pensions, actuarial fundamentals, investments, legislative aspects, and communications and legal issues. They will start each Wednesday at 8 a.m. in Winnipeg, MB. For more information, eMail

Towers Perrin Acquires Employee Research Firm

Towers Perrin has acquired ISR, a global employee research and consulting firm. The transaction combines ISR's employee research capabilities with Towers Perrin's existing consulting and research capabilities to provide clients with services in optimizing the value of their workforce and workforce investments. ISR’s services include full-scale employee opinion surveys, senior leadership surveys, M&A surveys, and expatriate surveys.

Primary Objective Keeping Employees

Keeping key employees is the primary objective of benefits package, says a MetLife study of workplace benefits. This marks the first time in the five years of the study that employee retention was identified as the primary goal. Previously, controlling costs was cited as the primary objective.

LDI Examined

Liability Driven Investment (LDI) will be the focus of a Federated Press seminar May 28 and 29 in Toronto. ‘Developing a Liability-driven Investment Strategy’ will feature sessions on topics including identifying liabilities, the importance of investment manager selection in LDI, and identifying which liabilities to hedge. For more information, visit

Employees Urged To Ask For Pension Plan

The Ireland Pensions Board is urging Irish workers to use National Pensions Action Week as a reason to talk to their employers about kicking off a workplace plan. This week is Pensions Action week in Ireland and with recent research showing that just over half of Irish workers lacking access to a retirement plan in the workplace, the Irish government is stepping up pressure on employers to change that.


March 14, 2007

State Street Launches Active Fixed Income Strategy

State Street Global Advisors has launched an Active Canadian Fixed Income strategy, a risk-controlled approach for core fixed income investors seeking to deliver consistent risk-adjusted returns. The strategy is designed to add steady returns over the Scotia Capital Universe Bond Index by taking active positions across multiple and diverse strategies. To achieve its return objectives, the strategy will take diversified positions via multiple alpha levers including credit, interest rate, and global bond strategies.

Chinese Less Satisfied With Benefit Packages

Chinese workers are far less satisfied with their pay and benefit packages than workers in the rest of Asia-Pacific and in the United States, says a survey by Watson Wyatt Worldwide. The 2006 WorkGreaterChina found only 28 per cent of Mainland Chinese workers rate their compensation and benefits favorably, compared with 38 per cent in Asia-Pacific as a whole and 47 per cent in the United States. And while Chinese workers cite communication as a main driver of job satisfaction, many don't know how performance is measured or receive a consistent message from their company on the link between high performance and an individual's pay.


March 13, 2007

Employee Absences Cost Employers

A Hewitt Associates' survey shows that for an organization with 1,000 employees disability absence costs could exceed $3 million per year. However, organizations do not have data regarding frequency, duration, or cause of disability absence readily available, says the Disability Absence Index Survey 2007. Where data is available from third parties, organizations may not be accessing it, collecting it, and/or analyzing it to develop strategic plans to address disability absence. Without this data, it is difficult for HR to make the business case for disability management or wellness programs.

Healthcare In Canada Debated

Public versus private healthcare in Canada will the topic of the Great Debate at this year’s CPBI National Conference. Dr. Michael M. Rachlis, an associate professor at the University of Toronto; and Dr. Norma Kozhaya, an economist at the Montreal Economic Institute; will square off. Kozhaya will argue that private financing and delivery of health services already covered by Medicare will increase overall resources available in the healthcare sector and eventually increase its capacity to treat more patients in a timely manner. Rachlis believes that the public sector can be reformed and more privatization would increase costs and decrease access. The CPBI 2007 National Conference will be held June 13 to 15 in Winnipeg, MB. For more information, visit


March 12, 2007

Institutions Anticipated Correction

Cross-border investors sold the Chinese market in the nine sessions leading up to the nine per cent correction February 27, says State Street Global Markets research notes for March 9. This was part of a broader reallocation away from emerging markets that had already started and has accelerated since. It says this suggests institutional investors had to some extent anticipated the price action that has unfolded in these markets and had started to reorient their portfolios.

Benefits Fail To Live Up To Potential

U.S. employers and employees do not believe current employer benefit programs are living up to their potential, says a Towers Perrin survey. Only 25 per cent of the executives agreed their benefit package was very effective in controlling costs, while fewer than half said their programs are very effective at helping them attract and keep key employees. At the same time, most of the workers said their benefit programs were not very effective at meeting their needs for affordable healthcare and building their retirement nest eggs.


March 9, 2007

ODB Remains First Payer

The Ontario Drug Benefit (ODB) will remain the first payer for all ODB recipients, says Eckler Partners. In response to an inquiry to the Ontario Minister of Health and Long-Term Care, it was told the ministry is not proceeding with changes to the program where Ontario would become second payer for working seniors covered by employer-sponsored group insurance plans.

Retirement Savings Need Infrastructure

The time is ripe for an innovation that could help fund Canada’s infrastructure needs from Canadians’ growing pool of retirement savings, says a study by the C.D. Howe Institute. In the e-brief, ‘Found Money: Matching Canadians Savings with Their Infrastructure Needs,’ it is argued that Canada should finance more of its infrastructure through instruments similar to already existing securities backed by residential mortgages, leased assets, and real estate. Such securities would allow individuals to participate in the burgeoning field of infrastructure investment now dominated by large pension funds.   

The Online 401(k), ( a provider of full-service Web-based 401(k) plans for small and single-person businesses in the U.S., has created a ‘401(k) Plan Sponsor's Bill of Rights’ as part of its formal, public crusade to combat the excessive, opaque fee structure it claims is found in most 401(k) retirement plan offerings. The Bill of Rights highlight what sponsors should expect from their retirement plan providers in terms of fees and disclosure. The bill includes rights to fair disclosure of fees, to choose to match, and to a clear and simple set-up that has no surprises.

Compliance Forum Coming

The 6th Annual Compliance Forum will be held Monday, May 14, in Scarborough, ON. Developed by the Association of Canadian Compliance Professionals, the forum is of interest to retail distributor compliance officers. For more information, visit


March 8, 2007

Six Trends Influence Investment

Six broad trends will impact investment markets over the next 20 years, says Paul Taylor, senior vice-president and chief investment officer of BMO Harris Investment Management Inc. And, he says, there is a lot of money to be made from them. Speaking at a BMO Harris Private Banking Economic and Market Outlook session, he said the themes are demographics, supply/demand imbalances, stores of value, globalization, CleanTech, and active management. CleanTech is the optimized use of natural resources while reducing the impact on the ecology. While it is in its early days, there are compelling investment opportunities in this sector, says Taylor.

Border With Hedge Funds Blurs

The border between long-only fund managers and hedge fund managers is blurring, says Alexander Ineichen, managing director, UBS Global Asset Management. Speaking at an AIMA Canada luncheon on the topic ‘Asymmetric Returns – The Future of Active Asset Management,’ he said traditional managers are using more hedge fund practices including derivatives, short-selling, and leverage. They are realizing, he said, that hedge funds are not going to go away.

Maple Bond Issuance Grows

In the first two months of 2007, total bond issuance in the Canadian marketplace was $14.8 billion and Maple Bond issuance was $11.05 billion, or 75 per cent of new issuance, says data from Canso Investment Counsel Ltd. When the Foreign Property Rule was first eliminated in 2005, Maple Bond issuance was primarily comprised of government issues. However, in the first two months of 2007, 63 per cent of the Maple Bonds were issued by corporations. 

Third Pension Forum Takes Place

The BC Federation of Labour and the Shareholder Association for Research and Education (SHARE) will hold their third Pension Forum May 24 in Vancouver , BC. The conference brings together union leaders, pension trustees, pension advisory committee members, and pension activists with investment managers, public policy makers, and leading international thinkers to discuss and debate crucial pension plan governance, funding, and investment issues. For more information, visit

Standard Life Adds Addenda

Standard Life Canada has added Addenda Capital inc. to its Quality & Choice Investment Program, the investment platform for its Group Savings and Retirement business. One of Addenda's Canadian bond strategies is now being offered as an investment option in the Quality & Choice program.

Record Results For BlockBook

Perimeter Financial Corp.’s BlockBook block-trading platform had record results for orders, trades and execution quality for the first two months of 2007. Orders totalled more than 107 million shares worth $2.3 billion across 394 securities. Trades totalled 8.4 million shares worth $202 million across 64 securities. BlockBook is a regulated, electronic marketplace designed for block traders of Canadian equities. 

Cordiant Launches Third Emerging Loan Fund

Cordiant, a manager of emerging market private equity and debt funds, has launched the Cordiant Emerging Loan Fund III. The fund, with a target size of $500 million, will be comprised of a diversified pool of emerging market private sector loans. Cordiant has received $940 million in subscriptions since inception and has more than 100 investments in 30 emerging countries.  

AIMSE Seeks Outstanding Individual

AIMSE is looking for nominations for the Richard A. Lothrop Outstanding Achievement Award. The award, in honor of Richard A. Lothrop, an AIMSE past president, and a pioneer and innovator in the investment management marketing and sales industry, recognizes an individual who through his or her efforts and activities in the investment management industry and in his or her community has contributed significantly to the betterment of the investment management industry and to mankind. The Eighth Annual Award will be presented at the AIMSE 30th Annual Marketing & Sales Conference April 29 to May 1 in Arizona. Deadline to submit a nomination is March 16. For more information, visit

HRPAO Offers Seminars

The HRPAO will offer a series of seminars this spring. Running between March and June in Toronto, they range from half-day to one and two day courses that enhance abilities to manage and resolve issues and complexities around HR functions. For more information, visit

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 April 2007 are now available at An Excel spreadsheet on the website contains worksheets for:

Minimum Interest on Employee Required Contributions (including the 12 month average rates).


Wednesday March 7, 2007

Securitization Of Risk Growing

The securitization of risk is growing and it is now three times the cash bond market, says Andrew Colin, director of fixed income research for the StatPro Group plc. Speaking at a breakfast session, he said with new risks, such as mortality and weather derivatives and catastrophe bonds, systems are needed which can specifically target the risk exposure. He also cautioned the days are numbered for “corporate vanilla bonds.”

Investment In 130/30 Tops $50 Billion

About $50 billion is now invested in 130/30 strategies, led mostly by pension funds, says a Merrill Lynch report. The bulk of 130/30 strategies have been offered by quantitative managers at large firms. However, more fundamental managers and hedge funds “are increasingly offering or considering the portfolios.” The report expects a “wave” of such asset managers to begin offering 130/30 strategies this year, as the “gap between traditional managers and hedge funds continues to narrow.”

Older Workers Fail To Enroll

The challenge that employers face in getting workers to participate in 401(k) plans isn't limited to young and lower-paid employees. At many large companies, even some older and high-earning workers fail to enroll in the prevalent retirement savings program, says an analysis by Watson Wyatt Worldwide. In its analysis, it found that a not-so-surprising 52 per cent of workers earning between $10,000 and $25,000 annually choose not to participate in 401(k) plans. However, nearly one out of 10 workers earning more than $100,000 annually also does not participate. 

HRPAO Offers One Day Conferences

The HRPAO will offer a series of one day conferences between April and June in Toronto. The series include its 3rd Annual Compensation Conference which will examine aligning rewards with the changing employment deal. For more information, visit


Tuesday, March 6, 2007

TSX To Compete For Derivatives Business

The TSX has struck a deal with International Securities Exchange Holdings Inc. to create a Canadian market for futures and options. The market, dubbed DEX, will be ready in time for the 2009 expiry of a non-compete agreement with the Montreal Exchange. The plan is to offer investors the ability to buy both stocks and options from the same company, rather than having to divide up orders between several markets.

Comment Wanted On Marriage Breakdown Legislation

The B.C. Ministry of Attorney General has just launched the consultation process on pension division reform proposals, as well as on Phase 1 of the review of the Family Relations Act. The British Columbia Law Institute’s 2006 report ‘10 Year Review of Part 6 of the B.C. Family Relations Act’ is part of the process. The report can be found at and the attorney general’s consultation materials are at Deadline for comments on the Phase 1 consultation is May 1, 2007.


Tuesday, March 5, 2007

Unilever Closing UK Plan

Unilever plans to shut its Defined Benefit pension plan to new employees and force current UK plan participants to pay higher contributions if they want to stay in the plan. New employees will join a hybrid scheme in which their pension will partly rely on their average salary during their service with the company, which will be capped at earnings of £35,000 a year. Current employees who are members of the existing DB plan will have to pay higher contributions each year, up from five per cent to seven per cent from the start of 2008, to stay in the plan. They do have the option of joining the new plan where, like new members, they will be charged five per cent of their salaries each year for the career average element, on earnings up to £35,000 a year. For earnings above that level, they will have a money purchase pension plan.

Funding Levels Dip

The funding levels for state pensions in the U.S. slipped slightly in fiscal 2005 to 81.8 per cent despite solid investment returns, says Standard & Poors ‘Improved U.S. State Pension Funding Levels Could Be On The Horizon.’ The report does, however, expect them to stabilize and improve over the medium term if investment returns and liability growth meet expectations. It attributed the dip in funding from 83.5 per cent in June 2004 to 81.8 per cent for fiscal 2005 to the five year smoothing of asset values used by most public funds to investment losses in 2001 and 2002.


Friday, March 2, 2007

OSFI Updates Pension Members’ Guide

The Office of the Superintendent of Financial Institutions (OSFI) has released its updated Pension Members’ Guide detailing the latest information relating to federally regulated private pension plans. The guide explains in general terms some of the minimum applicable standards for private pension plans regulated by OSFI. Notable changes and additions to the guide include information on member investment choices in Defined Contribution plans, the impact of plan deficits on member benefits, and updated non-resident unlocking and Life Income Fund (LIF) rules. A copy of the guide is available at:

6.6 Per Cent Return Expected

Canadian plan sponsors expect their investment portfolios to generate an annual weighted average return of 6.6 per cent over the next five years, says Greenwich Associates' 2006 Canadian Investment Management Research Study. When asked to report mean five-year rate-of-return expectations for various asset classes, Canadian plan sponsors cite the following: 10.1 per cent for private equity (down from 11.1 per cent in 2005); 8.3 per cent for international (EAFE) equities (down from 8.5 per cent); 8.2 per cent for domestic equities (up from 8.1 per cent in 2005); eight per cent for real estate (from 7.8 per cent in 2005); 7.8 per cent for U.S. equities (down from eight per cent in 2005); seven per cent for hedge funds (down from 7.4 per cent in 2005), and 4.9 per cent for domestic fixed income (down from 5.2 per cent in 2005). "It is interesting to note that expected returns on hedge fund investments are equal to those for U.S. equities and lower than all other asset classes except domestic bonds," says Rodger Smith, a Greenwich consultant.

401(k) Matching Contributions More Generous

The number of 401(k) plans with a match rate of 100 per cent has steadily risen over the past five years, from 26 per cent of plans in 2002 to 36 per cent in 2006, says a Mercer analysis of the benefit programs at U.S. employers. In terms of the relative value of employee benefits overall – including healthcare coverage, retirement, and time loss – Mercer says nonprofit organizations (including civic and professional associations, religious organizations, and major foundations) offer the highest level of total benefits at $35,300 or 131 per cent of the market median, followed by government employers at $34,100 or 127 per cent of the market median.

Obesity In The Workplace

Dr. Robert Snihura, vice-president and chief medical officer at RBC Life Insurance Company will discuss obesity as an insurance risk and in the workplace at a Connex Health session. It takes place March 29 at 8 a.m. in Burlington. For more information, visit


Thursday, March 1, 2007

Canadian Pension Assets Top $1 Trillion

Assets under management by Canadian pension funds topped the $1 trillion mark for the first time in 2006 thanks in large part to the recent strong performance of domestic and global equity markets, says Greenwich Associates' 2006 Canadian Investment Management Research Study. It shows that strong investment returns have helped Canadian pension plan sponsors maintain funding ratios at a relatively robust 97 per cent for the past two years. Funding ratios among Canadian corporate pension plans averaged 99 per cent in 2006 and public and provincial plans averaged 100 per cent funded. "It is only among the Canadian subsidiaries of U.S. companies that average funding rates drop to 92 per cent," says Lea Hansen, a Greenwich consultant based in Toronto. 

Barriers Limit Pension Systems

Three barriers keep pension systems from being the best possible, says Keith Ambachtsheer, director of the Rotman International Centre for Pension Management at the University of Toronto and president of KPA Advisory Services. Speaking at a Toronto CFA Society luncheon, the author of the new book Pension Revolution: A Solution to the Pensions Crisis said there is a conceptual problem around the pension formula which focuses in on a Defined Benefit or Defined Contribution solution when a DC plan that “morphs’ into a DB plan may be the ideal solution. As well, he said the industry is waiting for someone else to do it first as no-one wants to be the first to try something new. Finally, there are those who believe the present system is working for them. The ultimate goal, he said, is broad workforce coverage where every worker is a member of an occupational pension plan.

CPPIB Closes Real Estate Transaction

The CPP Investment Board (CPPIB) has closed a $500 million real estate transaction that includes a $300 million investment in a joint venture which will invest in office properties in the United States and a $200 million investment in a TIAA-CREF Asset Management direct real estate investment strategy. All assets will be managed by the Global Real Estate group of TIAA-CREF Asset Management. Graeme Eadie, senior vice-president of real estate investments at CPPIB, says the investment significantly “increases our exposure in the U.S. real estate market which supports our focus of diversifying the overall CPP Investment Board portfolio by product type and geography.”

OSFI Sets Priorities

The Office of the Superintendent of Financial Institutions will develop and maintain working relationships with foreign regulators, says its report setting out its plans and priorities for the next three years. OSFI says that Canadian financial institutions are operating in an increasingly complex, international environment. These increasingly complex financial products mean that more effort is required, on the part of institutions and OSFI, to assess risk.

ACCA Presents Sustainability Reporting Awards

The Association of Chartered Certified Accountants’ sustainability reporting forum will show how stakeholders can capitalize on interest in the environment and sustainability. The forum will feature a keynote address from Andy Savitz, author of The Triple Bottom Line: How the Best Run Companies are Achieving Economic, Social and Environmental Success - and How You Can Too as well as the Ceres-ACCA North American Awards for Sustainability Reporting 2006. The all day session takes place April 12 starting at 7:30 a.m. in Toronto. For more information, contact


Tuesday, February 27, 2007

CPP Gets Full Use Of Derivatives

The CPP Investment Board is now allowed to invest in derivatives beyond “plain-vanilla” applications. The federal finance department is relaxing is restrictions because it says the agency has proven it can operate without this constraint. Derivatives are investment contracts in which the price is derived from the value of underlying assets. They include futures contracts, options, and swaps. 

STD Misunderstood

Employers don’t have a firm grasp on what they’re paying for short-term disability and employees don’t understand the value of the benefit, says a survey by the International Society of Certified Employee Benefits Specialists. The survey shows that employers rank disability near the bottom of the benefits that provide value to employees. Employees agree that disability is important, but not as important as other benefits. Thirty per cent of employees ages 35 to 65 will become disabled for at least 90 days at least once during their working years.


February 26, 2007

OMERS Returns 16.4 Per Cent

OMERS’ total rate of return was 16.4 per cent in 2006, a top-quartile performance that exceeded its benchmark return of 13.7 per cent. This is the fourth year in a row in which OMERS has achieved a double-digit return, earning net investment income for 2006 of $6.5 billion, compared with $5.5 billion in 2005. OMERS is continuing its long-term strategy to increase its holdings in private equities, real estate, and infrastructure from the current 24.2 per cent to 37.5 per cent of net investment assets. OMERS anticipates that over the long-term, an asset mix with greater exposure to private market investments is better positioned to generate strong, predictable returns and consistent cash flow with reduced risk to meet its funding requirements.

Future Of Healthcare Examined

Dr. Robert Carlyle, a vice-president at Aon Consulting Inc., will outline the most likely outcomes for healthcare change in Canada at the next Manitoba CPBI Council Breakfast Seminar. He will examine the relationship between the healthcare payers and discuss the key implications for benefit providers and insurers. It takes place March 15 in Winnipeg, MB, starting at 7:30 a.m. For more information, contact


February 23, 2007

T. Rowe Price Building Institutional Presence In Canada

T. Rowe Price, a global investment management organization, will open an office in Toronto to lead its efforts to serve institutional investors throughout Canada. "The Canadian market has undergone significant changes in recent years, and we find that there is good alignment between what clients are looking for and what T. Rowe Price is able to deliver, hence our desire to expand our efforts in the market at this time," says Todd Ruppert, head of T. Rowe Price's global institutional efforts and president of T. Rowe Price Global Investment Services. Wendy Brodkin has been appointed director of Canadian business development and client service. Prior to joining T. Rowe Price, Brodkin was practice leader, investment consulting central Canada, with Watson Wyatt Worldwide. Founded in 1937, T. Rowe Price Group had $389.5 billion in assets under management as of December 31, 2006. 

Employers Focus On Improving Employee Health

U.S. employers do not expect a decline in the rate of health benefit cost increases any time soon. As a result, they continue to invest in on-site medical clinics, call-in medical help lines, and employee health appraisals in efforts to control those costs, says a survey by Watson Wyatt Worldwide and the National Business Group on Health. The survey reveals that annual median increases for healthcare costs will remain at eight per cent in 2007 through 2008. Many employers are implementing creative solutions in an effort to improve employee health and stem costs long-term. These include nurse lines, health risk appraisals, and programs that focus on reducing obesity among employees.

CPBI 2007 National Conference ‘Winds of Change’

The CPBI 2007 National Conference will be held June 13 to 15 in Winnipeg, MB. This year’s theme, ‘Winds of Change,’ will present a global vision of key issues shaping the industry today. By participating in this event, attendees receive information on current trends, earn continuing education credits, and network with colleagues from across Canada. The ‘Early Bird’ registration, which saves $150 off the registration fee, runs until February 26. The registration fee covers the entire event including meals and evening entertainment with entertainers such as Grammy Award winner Chantal Kreviazuk. For information, visit


February 22, 2007

Canadians Count On Employer Pension

Nearly half (46 per cent) of Canadians are banking on employer-sponsored pension plans as part of their retirement mix, says a Decima Research survey. But of the 40 per cent who contribute to a company pension plan, more than half (51 per cent) are unsure whether their plan is a Defined Benefit or Defined Contribution plan. As well, less than half of that same group knows what their pension plan will pay during retirement. "Canadians need to be proactive in learning about employer pension plans," says David Ablett, Investors Group's senior tax and retirement planning specialist. "Every pension is different and it's important to understand how yours works, and just how much income it will generate during retirement."

Younger Retirees Less Likely To Work

About one out of every five workers begins to collect employer-sponsored pension benefits before they reach the age of 60, says a Statistics Canada study. However, while the study did show that the majority of the youngest pensioners continue to do some work for pay, the attachment to the labour market is relatively weak and loosens with age. Since these relatively young pensioners are not yet eligible for public pensions, and can expect a relatively long life span, it could be argued that they should be more likely than older retirees to return to work. Yet, the study suggests that it is unlikely that these early pensioners will represent a growing source of labour supply in the years to come.

Caisse Earns 14.6 Per Cent

The Caisse de dépôt et placement du Québec earned a 14.6 per cent weighted averaged return on depositors’ funds in 2006, which represents $17.8 billion of net investment income. This places the Caisse in the first quartile of large Canadian pension funds for the third straight year. Over the three year period of 2004 to 2006, its return was 13.8 per cent, a performance achieved by only five per cent of large Canadian pension funds, according to a survey by RBC Dexia Investor Services.

ACPM Charts Future

The 2007 ACPM National Conference will take place September 10 to 13 in Charlottetown , PEI. The conference theme is ‘Charting the Future’ and its sessions will feature leading international pension experts. For more information, visit

AGF Sets Out Vision

AGF plans to be the “premier Canadian provider of investment management and financial solutions to retail, institutional, and high net worth clients,” says Blake Goldring, chairman and CEO. Speaking at its Stakeholder Day as part of its celebrations for its 50 years in business, he said it plans to achieve its vision by capitalizing on strategic synergies within its businesses and making opportunistic acquisitions.


February 21, 2007

SERPs Arrangement Of Choice

SERPs appear to be the order of the day in Canada when it comes to rewarding executives. Speaking at ACS Buck Consultants’ Rewarding Your Champions: An Overview of Executive Retirement Arrangements, Marc-André Vinson, a senior consultant, retirement, said its survey of Canadian companies found 53 per cent had SERPs in place with 80 per cent of those firms using DB SERPs. As well, 40 per cent of companies had some sort of alternative retirement savings arrangements for their CEOs and presidents. Fifty per cent were paying for these arrangements on a pay-as-you-go basis out of general revenues while 20 per cent had their retirement promise secured with a letter of credit.

Amendments Needed To Keep DB Viable

A survey of pensions experts by Oxford University shows that Defined Benefit pension plans will not die out in the UK. However, they will need to be amended to remain viable. One suggestion is that benefits be restricted to only what the sponsor can afford to provide. Another is making them available only to certain sectors of the economy where they will not be a drag on corporate competitiveness. 

U.S. Investors Remain Optimistic

While colder weather and the rebound in oil prices have taken their toll on recent readings on U.S. consumer and business confidence, investors, in contrast, are taking a more optimistic slant. State Street Global Markets’ Investor Confidence Index increased by more than five points in February, more than fully reversing January’s modest decline and taking the index to its highest level since last June. Even though the latest twist of U.S. economic data has had a disappointing edge to it, hopes of U.S. interest rate cuts this year make investor optimism understandable.


February 20, 2007

‘Green And Grow’

You can be “green and grow,” says Sir Nicholas Stern, author of the Stern Review on the Economics of Climate Change. Speaking at an Economic Club of Toronto luncheon, he said rich countries should take the bulk of the responsibility for climate change because they are responsible for it. However, it is cheaper to deal with it now as a serious issue than to wait until it gets worse.

Total Benefits Reached With Single Sign-On

Total Benefits from Sun Life Financial has launched Single Sign-On, a product that provides plan members a secure link from their employee portal to their plan member services website. Members can access their plans without having to enter an additional access ID or password. “Single Sign-On represents a significant enhancement to the plan member experience,” says Bill McCollam, vice-president, total benefits. “Once the member has logged onto the employee portal, we can provide integrated access to potentially all of his or her plans without any additional access IDs or passwords.”


February 19, 2007

401(k) Plan Assets Move From Company Stock

401(k) investment in company stock continued to fall, from 19 per cent in 1999 to 13 per cent in 2005, says the Employee Benefit Research Institute (EBRI). It says the downward trend suggests a change in plan design away from company stock and a change in participants' behaviour. Overall, asset allocation of plan participants was unchanged between 2004 and 2005 with guaranteed investment contracts (GICs) and other stable value funds accounting for 13 per cent of plan assets; balanced funds, 11 per cent; bond funds, 10 per cent; and money market funds, four per cent.

Auto Enrollment Rises In U.S.

Auto enrollment at workplace savings plans where Fidelity Investments keeps records jumped 95 per cent in 2006. As well, employer adoption of automatic increase programs rose 26 per cent. “Employers are seeing that automatic plans have the ability to get more employees onto a path of greater retirement readiness, which is why plan adoption rates are growing," says Jeffrey Carney, president, retirement services.

What is Really Happening in Private Equity

Three of the world’s most experienced private equity lenders will share their expertise in a discussion titled ‘What is Really Happening in Private Equity’ at the next session in the Rotman Finance Speaker Series. Brent Belzberg, founder and senior managing partner, TorQuest Partners; Tim Dattels, partner, TPG Capital, LP; and Mark Wiseman, senior vice-president, private investments, Canada Pension Plan Investment Board; will be the featured speakers. It takes place March 5 at 5 p.m. in Toronto. For more information, eMail events

IAPA Unveils 90th Annual Conference

IAPA (Industrial Accident Prevention Association) has unveiled an action-packed week for its 90th annual Health & Safety Canada 2007 Conference and Trade Show, taking place in Toronto from April 16 to 18. The 2007 conference puts the safety of the worker and the work environment top of mind during three days of comprehensive learning in four key streams – Healthy Workplaces, Health & Safety Core Practices, Leadership and Management Breakthroughs, and Evolving Innovations Through Research. For more information, visit


February 16, 2007

Liberals Have Income Trust Alternative

The federal Liberals are offering an alternative to the government’s plan to tax income trusts. They are proposing that the government repeal its planned 31.5 per cent tax on trusts and replace it with a 10 per cent tax, to be paid by the companies, that would be refundable to Canadian residents. The Liberals suggest that this plan could return as much as two-thirds of the losses suffered by investors in the wake of the Conservatives’ proposed plan.

Governance Practices Examined

The best pension industry governance practices will be examined at Federated Press’ ‘Pension Governance.’ Experts from across the country will offer first-hand insight about pension governance. It takes place April 11 to 12 in Toronto. For more information, visit

Corporate Plans Benefit From Liability-matching

Funding reform has propelled some U.S. Defined Benefit pension plans to consider investment strategies otherwise left mostly untapped by corporate plans, says a report by the Russell Investment Group. The report suggests that DB plans can use both return-seeking and liability-matching investment strategies. For instance, a plan might consider swap contracts to manage interest rate exposure or may turn to more aggressive strategies, such as long-short investing and global tactical asset allocation, to pull in higher returns. Russell says derivatives, such as swaps or futures, provide the advantage of working with a margin which means more flexibility.

Future Of Active Management Discussed

‘Asymmetric Returns – The Future of Active Asset Management’ will be the topic at the next AIMA Canada luncheon. Alexander Ineichen, a senior investment officer with UBS Global Asset Management’s Alternative Investment Solutions team, will be the featured speaker. It takes place March 7 at 12:15 p.m. in Toronto. For more information, visit


February 15, 2007

Group RRSPs Under-utilized

Of the nearly 500,000 Sun Life members eligible for employer-sponsored RRSP programs, only 230,000 take advantage of them, says data from Sun Life Financial. Since many of these plans include company matching of employee contributions, this means Canadians are leaving money on the table, says Mary De Paoli, senior vice-president, group retirement services. In addition to retirement savings, group RRSP plans offer a number of additional benefits to employees. Group RRSP contributions are deducted pre-tax and through their employer. As well, employees gain access to a broad set of funds, many of which are available only to the high net worth market.

Private Equity Hits Record Levels

Dramatic growth in the Canadian buyout market led to record levels of private equity investment in 2006, says Canada’s Venture Capital and Private Equity Association (CVCA) and research partner Thomson Financial. The total value of disclosed investments into Canadian companies made by buyout funds during the year amounted to $10.9 billion, more than double the $4.5 billion reported in 2005. “There is clearly no shortage of attractive investment opportunities in the Canadian buyout sector,” says Rick Nathan, CVCA president and managing director of Kensington Capital Partners. “The dramatic growth in new capital committed to Canadian buyout funds – record levels in 2006 – still amounts to just half of the total value of direct buyout investments made by these funds into Canadian companies.”

State Street Services Putnam Assets

State Street Corp. is going to provide servicing to Putnam Investments and the Putnam Funds. It will provide custody, fund accounting, and investment manager operations outsourcing services in support of more than 450 retail, institutional, trust, and offshore portfolios. Putnam manages $169 billion in assets.

Nymex Buys Into Montreal Exchange

Nymex Holdings Inc., which owns the New York Mercantile Exchange, is buying a 10 per cent stake in the Montreal Exchange and the two companies together will open a business in Calgary that will offer trading and clearing for trades in futures and options on oil, natural gas, and electricity. The move targets the TSX's NGX business, which offers trading in natural gas and power. Nymex is the world's biggest energy exchange.

Claymore ETFs Start Trading

The Claymore International Fundamental Index ETF (TSX:CIE) and the Claymore Japan Fundamental Index ETF C$ Hedged (TSX:CJP) are now trading on the Toronto Stock Exchange. Som Seif, president and CEO of Claymore Investments, Inc., says “There is a real lack of good international focused ETFs designed for Canadian investors and we believe these two new products will give Canadian investors a great opportunity to get exposure to global markets, with the benefit of low management fees and a strong investment strategy.”


February 14, 2007

Plaintiffs Remind PM Of Position On Pension Surplus

Eighteen unions, employee associations, and retiree groups are urging Prime Minister Stephen Harper's government to intervene in the legal dispute over the $30.2 billion expropriation of federal public service pension surplus. In a letter addressed to the PM, the plaintiffs in the pension lawsuit point out that in 1999 Conservative members voted against Bill C-78, the legislation passed by the Liberal government allowing for the pension surplus grab.

Roadblocks Stop Flow Of Foreign Private Equity Cash

A web of counter-productive tax rules blocks the flow of needed foreign cash to Canada’s private equity sector, says a C.D. Howe Institute Study. ‘Financing Canadian Innovation: Why Canada Should End Roadblocks to Foreign Private Equity’ says these rules needlessly, and unprofitably for Canada, block hundreds of millions of dollars in foreign (mostly U.S.) investment capital. Canada’s private equity firms are not as well capitalized as their U.S. competitors and invest less, in turn, in promising Canadian companies. The study is available at

Canadian Economy Looks Good

The Canadian economy should again be the fastest growing among G7 nations in 2007, says Christian Langevin, senior vice-president and portfolio manager at GE Asset Management Canada. Speaking at its Institutional Luncheon Discussion, he said valuations of the Canadian market are very reasonable and inflationary pressures are abating. However, he warned the economy is starting to feel the “pinch” of the slowdown in the U.S. As well, Canadian manufacturers must address the challenge they face as a result of the strong Canadian dollar.

More Men Seek Support With Marital Issues

Who’s trying to save their relationship this Valentine’s Day? A new report from the Shepell·fgi Research Group says more men are seeking support for marital and relationship issues than women. Younger employees, between the ages of 20 and 39, are also more likely to seek support. “Age and gender play the largest role in the likelihood of an employee seeking help with personal relationship issues. We’ve seen that age and career maturity are key factors against relationship problems and well-being issues in general,” says Rod Phillips, president and CEO. Its ‘Till Stress Do Us Part: An EAP’s Perspective on Marital/Relationship Issues’ shows that 23 per cent of men who accessed EAP services did so to get support for issues related to their personal relationships. Only 18 per cent of women who accessed EAP services did so for the same problem.

Pension Funding Status Improves

The funding status of the typical U.S. Defined Benefit pension plan increased by 2.4 per cent in January, continuing a trend that started in the fourth quarter of 2002. The Mellon Pension Liability Indexes shows U.S. equities helped to drive up the value of assets in most pension plans by one per cent. Pension plans also benefited from a 1.4 per cent decline in liabilities, which was linked to a 10-basis-point increase in long-term rates. Continuing economic strength contributed to the higher long-term rates. The funded status of a typical U.S. plan improved by 10.9 percentage points for all of 2006.

Wellness In Workplace Examined

Aligning employee health needs and HR policy will be one of the areas examined at the 2nd Annual Health and Wellness in the Workplace conference. The Federated Press event will also show attendees how to integrate all the components of wellness into one package and channel efforts and outcomes to meet business needs. It takes place March 5 and 6 in Toronto. For more information, visit

G7 Needs Better Understanding Of Hedge Funds

G7 members need to have better understanding on hedge fund trading activity, says the Alternative Investment Management Association (AIMA) following the G7 finance ministers meeting. AIMA welcomed the G7 statement that hedge funds have contributed significantly to the efficiency of the financial system. However, the G7 statement referred to the possible development of a voluntary code of conduct. AIMA believes that such an idea has neither relevance nor meaning in the context of existing regulations.

ISE Rolls Out Fully-Displayed Market

The International Securities Exchange has completed the rollout of its fully-displayed stock market. Traders can now access approximately 6,000 National Market System (NMS) securities through both ISE’s non-displayed liquidity pool, MidPoint Match, and its displayed market. Among the symbols traded are all securities that comprise the S&P 1500 and Russell 3000.


February 13, 2007

Failure To Consider ESG Breach Of Duty

A long held view among pension fund trustees that the consideration of “non-financial” – environmental, social, and governance (ESG) – factors in investment decisions was in general conflict with fiduciary duty may not be true, says the National Round Table on the Environment and the Economy (NRTEE). It says recent research has revealed, in fact, that a failure to take ESG factors into consideration in investment decision-making is actually a breach of fiduciary duty. The NRTEE’s Capital Markets and Sustainability report says while pension funds are beginning to listen to the marketplace when it comes to integrating sustainability factors into strategic decisions, there remain significant market barriers. Because many ESG factors may only become material over long time horizons, an obsession with short-term performance goes against long-term sustainability – both in terms of not mitigating potential negative impacts but also in lost opportunities. Visit to see the report.

Key Dates For Trade Matching

April 1, 2007, is the date where policies and procedures must be in place to meet the requirement of National Instrument 24-101 – Institutional Trade Matching and Settlement, says Robert Smythe, vice-president, research and market development, at Stratix Consulting. The April 1 deadline is the first of three looming deadlines. October 1, 2007, trade matching agreements or statements must be in place and performance must be tracked from this point forward with the first exception report due by mid February 2008. June 30, 2008, changes to trade order management systems and electronic interfaces with dealers, custodians, and investment managers are expected to be required in order to achieve 70 per cent matching by 11:59 pm on trade date (T) and prepare for 95 matching on T by December 31, 2009. For more, see

Mandatory Retirement Issues Examined

‘Proactive Strategies for Managing Risk and Meeting Your Obligations’ is the theme for Osgoode Professional Development’s Employment Law 2007. The session will look at topics such as the end of mandatory retirement and the issues that are arising from that. The conference takes place April 10 with workshops set for April 11. It takes place in Toronto. For more information, visit

Dodge Speaks At Pension Summit

How pension leaders from Canada, the U.S., and the UK are dealing with today’s management issues and tomorrow’s plan stability challenges will be the focus of The Conference Board of Canada’s 2007 Pensions Summit. The theme is ‘Striking the Right Balance’ and the event features a wide range of experts including David A. Dodge, governor of the Bank of Canada, and Edgar Sullivan, managing director, General Motors Asset Management. The results of the fourth annual Conference Board/Watson Wyatt Worldwide survey of CFOs and senior HR leaders will also be released at the event. It takes place May 10 and 11 in Toronto. For more information, visit

Three Decades Celebrated

AIMSE will celebrate three decades of mentoring, access, and education at its 30th Annual Marketing & Sales Conference. Philip R. Houston, executive vice-president and co-founder of Business Intelligence Advisors, will be one of the featured speakers. His topic is how investment professionals use behaviour assessment to improve decision-making. It takes place April 29 to May 1 in Arizona. For more information, visit

Credit Trends Suggest Downward Shift

While credit trends remain good, there are some very small signs of a shift downward in the economy, says Don Carter, managing director and head of Moody’s Canada. Speaking at a CIBC Mellon Breakfast series session, he said an increase in the number of downgrades from 8.1 per cent to 10.2 per cent is one indicator. Another is reviews that result in a reduced credit rating are about two times that of reviews where an upgrade is made.


February 12, 2007

CPP Fund Grows

The CPP Fund, which includes investment earnings and the portion of CPP contributions not needed to pay current pensions, grew by $7.5 billion to $110.8 billion during the quarter ended December 31, 2006. For the quarter, the CPP fund generated an investment rate of return of 8.7 per cent, or an increase of $8.9 billion, while the fund paid out $1.4 billion for CPP benefits. The result is a $7.5 billion overall increase in the CPP fund since September 30, 2006. The CPP fund consisted of 66.8 per cent equities, 22.6 per cent bonds, 9.9 per cent inflation-sensitive assets, and 0.7 per cent cash and cash equivalents. 

Teachers Acquires GNC

Ares Management LLC and the Ontario Teachers’ Pension Plan are acquiring the parent company of General Nutrition Centers Inc. GNC, currently controlled by an affiliate of Apollo Management LP, is the largest global specialty retailer of nutritional products, supplements, diet, and energy products. Jim Leech, senior vice-president of Teachers’ Private Capital, says the acquisition of GNC, a leading retailer of health and wellness products, complements its growing portfolio of consumer brands.

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 March 2007 are now available at An Excel spreadsheet on the website contains worksheets for:

Minimum Interest on Employee Required Contributions (including the 12 month average rates).


February 9, 2007

Liability For MEPPs Challenged

The superintendent of FSCO may end up changing the rules for MEPPs (multi-employee pension plans. Speaking at the Fasken Martineau DuMoulin LLP’s 22nd Labour, Employment, Human Rights, Pension & Benefits Conference, Peggy McCallum said the superintendent believes that participating employers are liable for MEPP deficits. Currently, participation agreements for MEPPs limit employer to their negotiated contribution. She said a Financial Services Tribunal hearing is pending. However, if the superintendent’s view is upheld, it could result in a significant impact on corporate financial statements.

Who' Matters With Private Equity

Who you invest with matters more than how assets are allocated when it comes to private equity, says Janet Rabovsky, practice leader, Central Canada, for Watson Wyatt Investment Consulting. Speaking at Mindpath Financial’s ‘Alternative Investments for Institutional Investors,’ she said, however, it is hard for investors to get into the best funds. As well, she wondered if the private equity industry is getting too big. She said there are “lots of funds” and “lots of noise” for investors to sort through. 

Funded Ratio Continues To Improve

The favorable capital market conditions that pushed up U.S. pension plan financial results at the close of 2006 continued into January, says Towers Perrin’s Capital Market Update. Long bond yields moved up slightly while equities extended their run of strong returns. The bottom line for the benchmark plan’s funded ratio was a 1.2 percentage point increase to 90.6 per cent at the end of January. All three equity classes provided positive returns, continuing a trend that started back in August while bond yields inched up across the board in January.

Kensington Offers Global Fund

Fund of funds manager Kensington Capital Partners Ltd. has filed a preliminary prospectus in connection with the initial public offering of units of Kensington Global Private Equity Fund. The fund was created to provide exposure to a diversified portfolio of global private equity investments including private equity funds, funds of private equity funds, and direct investments in private companies. The fund will seek to diversify its exposure by developing a global portfolio of private equity investments focused on a variety of companies at various stages of their business life cycle.


February 8, 2007

ISS Releases Stock Options Accounting Tool

Institutional Shareholder Services (ISS) now has a program to help investors judge a company's stock options expense accounting. The Options Expensing Alert helps investors identify aggressive and conservative valuation practices and calculate the impact of companies' expensing assumptions on the quality of their disclosed earnings.

Hedge Fund Expert Speaks

Dr. Phelim Boyle, professor of finance, School of Business and Economics, Wilfrid Laurier University who is one of the world’s leading experts on hedge funds and risk management, will speak on ‘Hedge Funds: The Three Rs’ as part of the Rotman Master of Finance Speaker Series. It takes place February 27 at 6 p.m. in Toronto. For more information, visit

Advanced Investments Not Right For All

Moving to new and advanced investment strategies has the potential to backfire on pension plans without strong governance models, says Watson Wyatt Worldwide. To take advantage of alternative investment opportunities, companies need to devote considerable resources to managing and monitoring their investments. "The quick growth of alternative investments, such as hedge funds, private equity and infrastructure, might lead some to conclude that everyone can benefit from such tools, but that is not the case," says Carl Hess, director of investment consulting in North America. "Alternative investments will pay off consistently only for well-governed organizations. To delve into these investments before putting the needed governance in place is putting the cart before the horse."

Customizing Benefit Plans

‘Customizing Your Benefit Plan for Employee Needs’ is the topic of the next Benefits Breakfast Club session. Speakers will examine the benefit needs of younger workers and the impact of extending benefits beyond age 65. It takes place February 22 in Burlington starting at 8 a.m. For more information, visit


February 7, 2007

Teachers' And CPPIB Launch Private Equity Fund In Turkey

Teachers' Private Capital, the private investment arm of the Ontario Teachers' Pension Plan, and the Canada Pension Plan Investment Board (CPPIB) have jointly established Actera Partners, a private equity fund exclusively focused on investment opportunities in Turkey. Actera’s investment strategy focuses primarily on buyout and growth equity investments across a broad range of industries in Turkey. In addition, it will seek to partner with Turkish companies in order to assist in their expansion efforts outside of Turkey.

Automatic Rebalancing Now Available

Group Retirement Services, a division of Great-West Life, London Life, and Canada Life, now offers automatic investment rebalancing. The service is designed to help Capital Accumulation Plan and Investment Only plan members to keep their assets aligned with their original investment goals. Over time, investments in a portfolio can become out of alignment with a plan member’s original allocation instructions. Automatic rebalancing regularly measures the difference between the mix of a plan member’s current account against the original allocation and then adjusts the mix to rebalance them to the original alignment.

Northern Unveils 130/30 Strategy

Northern Trust Global Investments has unveiled a quantitative 130/30 core equity strategy. The new offering seeks to outperform the Russell 1000 Index by applying a multi-factor investment process and a risk-controlled approach. The strategy enables the portfolio manager to take short positions up to 30 per cent and long positions up to 130 per cent. It is designed to leverage the strategy's alpha while maintaining 100 per cent exposure to the market.


February 6, 2007

Sears Canada Moves To DC

Sears Canada Inc. is changing its pension plan and reducing post-retirement benefits for employees. The company says contributions by employees to the Defined Benefit pension plan will be discontinued and employees will keep all pension benefits accrued up to and including June 30, 2008. After that compensation growth in future years will continue to be included in the calculation of the DB component of the pension although no further service credit will be earned. Instead, it will offer a Defined Contribution component. The company also plans to discontinue post-retirement medical, dental, and life insurance benefits for associates who have not achieved the eligibility criteria for these benefits by December 31, 2008.

Wellness Programs Encourage Harder Work

Employer-sponsored wellness programs encourage employees to work harder and stay with their current employer, says the Principal Financial Well-Being Index. It says that employees also reported that both they and their family benefit from reduced costs linked to wellness programs. Lower personal healthcare costs would be one of the reasons they would sign up for a wellness program.


February 5, 2007

State Street Buying Investors

State Street Corp. plans to buy Investors Financial Services Corp. to broaden its reach in the hedge fund industry. Pending completion of the transaction, State Street will have more than $14 trillion in assets under custody, up from about $12 trillion now. In addition, State Street says it would "become the leading investment service provider to the offshore and hedge fund industries and gain capabilities for servicing the growing private equity fund market."

Aurion Celebrates

Aurion Capital celebrated its 10th Anniversary February 1 with a reception at the Gardiner Museum for nearly 100 people. Aurion was founded January 1, 1997, with eight staff, one client, and $1.4 billion under management. As of December 31, 2006, Aurion managed $4.4 billion for 13 clients with a staff of 23. The firm continues to focus on designing and delivering distinct investment products to investors in selected markets.

Large Institutions Adopt E-Trading In Japanese Equities

Japan's largest institutions are leading a long-awaited push into electronic equity trading with a strong move into algorithmic trading strategies, says a research report from Greenwich Associates. Its 2006 Japanese Equity Investors Study reveals that nearly 70 per cent of institutional equity trading volume in Japan is still conducted through traditional single stock transactions executed through broker sales traders. However, among Japan's largest and most actively trading institutions, this percentage has dropped to 60 per cent, as they are now executing 12 per cent of their equity trading volume through self-directed, single stock electronic trades, up from 10 per cent last year. That increase has been driven entirely by a shift in business to self-directed trades using algorithmic trading strategies.

Manitoba Looks At Canada’s Economy

The Manitoba CPBI Council is taking a look at the Canadian economy. Its Canadian Economic Outlook will discuss the findings of Watson Wyatt's 26th Annual Survey of Economic Expectations. It takes place Thursday, February 15, in Winnipeg, starting at 7:30 a.m. For more information, contact


February 2, 2007

Haggis Leaving OMERS

Paul Haggis will step down as president and chief executive officer of OMERS later this year. "When I was hired, my job was to set OMERS on the right path, build its investment presence globally, and deliver strong results. We've accomplished those goals so now it's time for change,” says Haggis. Haggis spent three and half years with OMERS.

CPPIB Wants Disclosure On Climate Change

The CPP Investment Board (CPPIB) wants Canada's 200 largest companies to disclose more information on the business risks and opportunities they face as a result of climate change by responding to the Carbon Disclosure Project's (CDP) questionnaire. The board is one of 284 institutional investors representing a total of US$41 trillion in assets under management who are supporting the project. The CDP plans to send the questionnaire to the world's largest 2,400 companies. 

Course Evaluates Role Of Alternatives

The International Foundation of Employee Benefit Plans, in partnership with the Wharton School of The University of Pennsylvania, has introduced a course on Hedge Funds, Real Estate and Other Alternative Investments. The program goes beyond an overview of hedge funds and equity real estate investments, and moves into the details. It takes place July 9 and 10 in San Francisco, CA. For more information, visit

Best Employers Of 50-plus Can Access Engagement Survey

All applicants for a 2008 Best Employers Award for 50-Plus Canadians will have access to a confidential employee opinion survey designed to measure engagement levels of mature workers. Survey questions are based on the newly-developed Workplace Institute Engagement Model for 50-plus Workers. The institute will collect and analyze the raw survey data and will produce a customized benchmarking report for the participating organization. "This confidential survey is important because Canadian companies currently have no way of understanding what engages their older employees," says Barbara Jaworski, founder and president of the Workplace Institute. The deadline for applications for The Best Employers Awards for 50-Plus Canadians is June 30. The awards will be presented at the 3rd Annual Summit on the Mature Workforce this fall. For more information, visit

All About You!

Industrial Alliance is launching an assisted enrolment program to help plan members prepare for retirement. All About You! guides members of group retirement plans through the process. Members can use an enrolment kit, Your Retirement Guide, which contains all the information needed to plan a retirement that lives up to their expectations. They can also perform the same steps by accessing Your Virtual Guide via CyberClient, Industrial Alliance’s secure Internet site.

Website Offers HR Resources

A new website unveiled at the HRPAO Annual Conference & Trade Show has amassed an array of tools integral for strategic HR. delivers the latest news, research, and insights. It integrates industry data, information on HR law and government issues, discussions, and HR-focused materials for purchase. For more information, visit


February 1, 2007

Great-West Buying Putnam

Great-West Lifeco Inc. plans to buy Putnam Investments Trust's asset management business and its interest in T.H. Lee Partners in a bid to expand into the U.S. mutual fund market. Putnam is one of the oldest and largest investment managers in the United States. The purchase gives Great-West a major presence in the mutual fund and institutional asset management industry in the United States.

Banks Managing Hedge Fund Risk

Canadian banks are taking a cautious approach to hedge funds and The Office of the Superintendent of Financial Institutions Canada believes that their risk management is adequate. Speaking to the Senate Standing Committee on Banking, Trade and Commerce in Ottawa, Julie Dickson, acting superintendent, says that a review of the major banks' exposure to hedge funds and their management of that exposure, was completed recently. “While OSFI does not currently have any concerns with the participation of Canadian financial institutions in hedge funds, activity in this area will continue to be evaluated as part of OSFI's ongoing supervisory process.”

HRPAO Unveils Training Resource

The Human Resources Professionals Association of Ontario unveiled HR eSource at the 2007 Annual HRPAO Conference & Trade Show. HR eSource is an e-learning solution available online or on CD-ROM for anyone requiring the latest training in human resources management. It is comprised of 40 bilingual modules covering topics such as recruitment, training and development, pay and benefits, and health and safety. For more information, visit

Ball Tickets Now On Sale

Tickets are now available for the CPBI Ontario region’s Benefit Ball in support of the Crohn’s and Colitis Foundation of Canada. This year’s theme is ‘Carnevale di Venezia,’ a carnival in Venice. CPBI is also looking for corporate sponsors for the event which takes place May 10 in Toronto. For more information, contact Jackie Ablett at 905- 823-7347 or

Northern Trust Launches Service For Over-the-Counter Derivatives

Northern Trust has launched a full suite of automated collateral management services which will help investors manage credit risk arising from their use of over-the-counter  derivatives. Features of the service include independent OTC valuation services and effectively managing collateral according to the terms of the credit support agreements.

Beyond Beta

‘Beyond Beta: Expanding the Opportunity Set with Portable Alpha’ will be the topic of a presentation by J.B. Kiley, vice-president of Goldman Sachs Asset Management at the Alternative Investments & Absolute Return Strategies for Institutional Investors Conference. It takes place February 8 in Toronto. His address will cover areas such as the constraints faced by long only managers and overcoming investment challenges using a portable alpha program. For more information, visit

Subscribe to Daily News Alerts

Subscribe now to receive industry news delivered to your inbox every business day.

Interactive issue now onlineSubscribe to our magazinePrivate Wealth Online