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News Archives - June / July 2008

Thursday, July 31, 2008

Active Managers Do Better

The investing environment was better for active managers in the second quarter of 2008 with 41 per cent beating the benchmark, up from a record low of less than 20 per cent in the first quarter, says data from Russell Investments. While the environment was more favourable, it still presented challenges for active managers because of its narrowness, with only the energy and materials sectors beating the benchmark. Active managers, on average, are underweight those sectors which together account for almost half the index, making it difficult to beat the benchmark. The data also shows that 81 per cent of growth managers beat the benchmark compared to just 12 per cent of value managers. That compares to just 25 per cent of growth managers and 27 per cent of value managers beating the benchmark in the first quarter of 2008. 

Staged Retirement Underway

U.S. companies have, or will develop, programs that let workers retire in stages, says a study by Hewitt Associates. It found that 61 per cent have, or are developing, programs to hold onto the experience of baby boomers and ease the difficulty of replacing their skills. Two-thirds of companies said offering part-time work year round was the most effective way to keep workers who are near retirement. Another strategy was giving workers access to retirement benefits while still employed. Some companies are even reconsidering their policies that ban rehiring retirees.

HRPA Honours Volunteers

The HRPA will again honour member volunteer contributions to the association, the profession ,and the elevation of the practice of human resources management with its ‘Volunteer Leadership Awards.Nominations are now open for awards and must be submitted on or before August 31 at 5 p.m. For more information, visit

Compensation Outlook Set For October 27

The Conference Board of Canada’s ‘2008 Compensation Outlook: Competitive Rewards and HR Innovations’ will take place October 27 in Toronto, ON. It features forecast information and insights from HR and compensation strategy experts that attracts Canada’s top public and private sector compensation and HR professionals to discuss top HR and compensation issues. For more information, visit


Wednesday, July 30, 2008

Meager Growth Predicted

The Canadian economy is poised to post just meager growth over the next few quarters, says Geoff Somes, senior economist, SSgA economics team. Writing on ‘Canada: Developments and Outlook’ in State Street Global Advisors ‘General Investing Market Commentary,’ he says for 2008 overall, the Canadian economy should expand around one per cent – substantially below its 2.8 per cent long run trend. The economy should start to reaccelerate during 2009 as the U.S. economy begins to regain its footing. However, the reacceleration could prove sluggish as the persisting global ‘subprime’ financial crisis weighs on confidence and credit availability, thus limiting the restorative power of domestic demand this time around.

U.S. Institutions Pick Up Pace In International Stock Trading

The amount of commissions paid by U.S. institutions to brokers on trades of international stocks increased 15 per cent last year as strong global equity markets attracted investor assets and generated new levels of trading activity, says Greenwich Associates. Driving the increase in trading activity has been the consistently strong performance of international stocks relative to U.S. equities and the corresponding inflow of institutional investment dollars into non-U.S. equities. U.S. institutional investors increased their allocations to international/global equities to 17.9 per cent of total assets in 2007 from 15.2 per cent in 2006 and 13.9 per cent in 2005. That increase represents an inflow of some $337 billion into international equity markets from 2006-2007 and roughly a $500 billion inflow since 2005.

FTSE Starts Frontier Index 

FTSE Group has extended its Global Equity Index Series to include coverage of the Frontier markets. The FTSE Frontier 50 is its first index to be created from an eligible universe of 23 new frontier markets. Further regional and country indices for frontier markets will be launched in phases throughout the remainder of 2008 and into 2009.

Severs Deals With Consultants

Matt Severs is head of consultant relations for corporate and institutional services business in North America for Northern Trust. He will assume responsibility for consultant relationships, working alongside relationship management, sales, product development, and operations to support all asset servicing touch points between Northern Trust and the consultant community.  

Tilford Joins CPPIB

William E. Tilford is vice-president and head of global corporate securities for the CPP Investment Board (CPPIB). Most recently, he spent 12 years at Connor, Clark & Lunn Investment Management. He previously held senior positions at BMO Capital Markets and Merrill Lynch Canada.

Technology Theme Of Law Conference

‘Technology and the Evolution of Labour and Employment Law’ will be the theme of Heenan Blaikie’s ‘Managing the Workplace 2008 Conference on Labour, Employment and Pension Law.’ Set for September 25 in Toronto, ON, it will feature topics that will appeal to both unionized and non-unionized employers. For more information, visit


Tuesday, July 29, 2008

GM Offers Retirement Packages

General Motors of Canada Ltd. workers in Oshawa, Ont., will be offered retirement incentives of up to $120,000 and $35,000 vouchers for new GM vehicles. Retirement incentives will range from the $120,000 for skilled trades workers with 30 years experience down to $37,500 for production workers with less than three years on the job. Workers with between 26 and 30 years experience will be paid 65 per cent of their wages until they reach the 30-year level. The retirement buyouts will come from a special fund and not its supplementary unemployment benefits fund which also receives contributions from the union. GM plans to close its truck plant in Oshawa next year.

Financial Markets Still Fragile

Financial markets remain fragile and a negative feedback loop between markets and the global economy appears to be materializing, says Jaime Caruana, director of the International Monetary Funds’ monetary and capital markets department. While financial markets “have made significant adjustments,” global financial markets remain fragile and indicators of systemic risks remain elevated. The downside risks outlined in the IMF's latest stability report in April “appear to be materializing, leading to a negative feedback loop between the financial system and the broader economy.”

Domestic Equities Perform Best

Approximately half of the pooled funds in the Morningstar Canada database had positive returns during the second quarter of 2008. The best returns generally came from domestic equity funds with natural resources equity the best-performing category gaining 11.2 per cent. The second-highest median return was the 9.3 per cent gain posted by the Canadian income trust equity category. Overall, 24 of the 41 pooled fund categories had positive median returns in the second quarter of 2008. The two worst performing groups were financial services equity and real estate equity with median losses of 9.7 per cent and 9.5 per cent, respectively.

Productivity Requires Measurement

Successful employers recognize that their ability to survive is directly related to the productivity of their employees and that managing employee productivity requires a comprehensive means of measurement, says InfoTech Inc., a Canadian company that works with global blue chip employers to measure, track, and correlate a broad range of factors impacting health and productivity. It cites a ‘Journal of Occupational and Environmental Medicine (JOEM)’ study which shows depression, balance of stress and satisfaction, and personal life challenges significantly impact on productivity loss for employees, limiting their ability to meet the normal demands of their job. As well, it says while health related issues play a significant role in employee productivity, non-health related issues, such as personal financial concerns, can be equal or greater in their significance.

Quality Of Service Not Up To Par

While the investment management industry is growing rapidly in Asia, the quality of service delivered by asset management firms to Asian institutions is not up to par with that seen in other markets, says Greenwich Associates’ ‘2008 Asian Investment Management Research’ study. Institutions have amassed more than an estimated $3 trillion in assets under management in Asia. However, the study shows that institutions across the Asian region do not have access to the same level of asset management service and investment expertise enjoyed by institutions in other regions because it is still a relatively small market. Asian institutions allocate only about $1 trillion in total to external investment managers. That compares to about $1.7 trillion allocated to external managers by institutions in the United Kingdom, $3.8 trillion in Japan, and more than $7.8 trillion in the United States.

Hedge Funds Undergo Change

As large hedge funds become institutionalized, the global hedge fund space undergoes more radical change, says Celent, an international strategy consultancy. It says large hedge funds are undergoing institutionalization as U.S. pension plans and endowment funds demand that players display vigorous operation capabilities to satisfy demanding due diligence requirements. U.S. endowment funds and foundations currently account for 40 per cent of hedge fund capital while pension plans, which control significantly more in assets, account for 50 per cent.


Monday, July 28, 2008

UK Expensive For Expat Accommodation

Singapore, the UAE, and the U.S. are the best locations to be an expat, says the HSBC Bank International Limited ‘Expat Explorer’ survey. The UK was the most expensive expat location for accommodation while India was the cheapest country. The Netherlands and Singapore were also identified as expensive locations. The survey also found that expats spend, save, and invest more than they did in their country of origin.

OMERS Gets Stake In Skyscrapers

OMERS Realty Corp. has acquired two Toronto skyscrapers that make up Brookfield Place. OMERS, part of the Ontario Municipal Employees Retirement System, acquired full ownership after triggering a shotgun clause in its partnership agreement with Brookfield Properties Corp. The $721 a square foot price is a record price for a large office building in Canada, surpassing the $625 a square foot paid for the Harry Hays Building in Calgary in 2007. Brookfield still owns 100 per cent of Bay Wellington Tower, 50 per cent of the complex's retail space, and 56 per cent of the parking at Brookfield Place.

Auto-enrollment Increasing

Employers are taking decisive actions to make 401(k) plan participation as easy as possible for employees, says the ‘2008 401(k) Benchmarking’ survey by Deloitte, the International Foundation of Employee Benefit Plans, and ISCEBS. Of the plan sponsors surveyed, 42 per cent now have an automatic enrollment feature, nearly double the 23 per cent total in the last survey. Another 26 per cent are considering auto-enrollment. Survey results indicate that employers and providers are taking decisive steps to help employees get involved in investing and preparing for retirement with less effort. Examples include an auto-enrollment default rate and step-up provisions that automatically increase deferral percentages on the participant's behalf.

Episodic Disabilities Focus Of Online Course

The HRPA (Human Resources Professionals Association), in partnership with the Canadian Working Group on HIV and Rehabilitation, has launched ‘Managing Episodic Disabilities,’ an interactive online course to help HR professionals better understand the current systemic barriers and promote opportunities for employees with episodic disabilities. Episodic disability describes conditions such as multiple sclerosis, HIV/AIDS, lupus, Hepatitis C, some forms of mental illness, cancers, and arthritis that may be lifelong and include alternating episodes of illness and wellness.

Ariely Speaks At IFIC

Dr. Dan Ariely, Alfred P. Sloan professor of behavioral economics at MIT, will be one of the featured speakers at this year’s IFIC conference. A behavioral economist, he will speak on predictably irrational investor behaviour. His research has shown that everyone succumbs to irrationality in situations where rational thought is expected. The 22nd annual conference takes place September 23 to September 25 in Toronto, ON. For more information, visit


Friday, July 25, 2008

Perfect Storm Challenges Investors

A perfect storm of economic factors – including the crisis in the U.S. housing market, sky rocketing oil prices, market volatility around the world, and the dramatic rise in the value of the Canadian dollar – have challenged investors across the country, says Don Reed, president and CEO of Franklin Templeton Investments Corp. Speaking at its annual ‘Investment Outlook and Opportunities Forum,’ he said this means Canadian investors must get back to the basics and stick to proven investing principles in times of market uncertainty. As well, Canada's maturing bull market is rife with risk as the number of top-performing sectors and stocks continue to shrink, said Garey Aitken, chief investment officer of Bissett Investment Management. Over the past five years, nine out of 10 sectors on the Toronto Stock Exchange produced positive returns. However, for the past 12 months, only mining and materials, energy, technology, and utilities were in the black.

Bill 68 Has Surprises

While Quebec’s Bill 68 has received assent, it contained several surprises, says a Watson Wyatt ‘InfoFlash. The bill amends various pieces of pension legislation in the province. Last minute amendments respond to the Quebec Court of Appeal (QCA) ‘Multi-marques Distribution’ decision and make changes to the province’s letter of credit (LOC) rules. As a result of ‘Multi-marques,’ Bill 68 was revised to state that Defined Benefit and hybrid pension plans cannot limit or reduce the crediting of service, the accumulation of benefits, or the amount or value of benefits accrued regarding service prior to a given valuation conditional on extrinsic factors, unless expressly permitted by the SPPA. Extrinsic factors include the financial position of the pension fund. The final version of the bill also provides for the temporary availability of LOCs. This section states that once an employer provides the plan’s pension committee with an LOC, both the employer’s minimum contribution and solvency amortization payments can be reduced.

Ruling Reconciles Duty To Accommodate Rights

The Supreme Court of Canada has issued an important ruling on an employer’s duty to accommodate employees who suffer from a handicap or disability within the meaning of the Quebec Charter of Human Rights and Freedoms and similar human rights legislation, says a Fasken Martineau DuMoulin Labour ‘Employment and Human Rights Law Bulletin.’ In ‘Hydro-Québec v. Syndicat des employés de techniques professionnelles et de bureaux d’Hydro-Québec, section locale 2000 (SCFP-FTQ),’ the court reconciles the fundamental rights of employees under the charter and the rights of an employer under the contract of employment. This decision clearly states that the duty to accommodate does not distort the contract of employment and, in particular, the employee’s duty to perform his or her tasks through regular work attendance.

Teachers’ Acquires SAESA

The Ontario Teachers' Pension Plan and Morgan Stanley Infrastructure have completed a transaction to jointly acquire SAESA Group (SAESA), a Chilean electricity distribution, transmission, and generation company. Under the agreement, each owns 50 per cent of the company. SAESA is the second largest electricity distributor in Chile serving 16 per cent of its population. It operates wind, hydro, and thermal power generation capacity.


Thursday, July 24, 2008

Teachers’ Releases Statement

Ontario Teachers' Pension Plan Board (Teachers') has released a statement saying it has no current intention of making an offer for It did confirm it made a preliminary approach, through its private investment arm Teachers' Private Capital, to's majority shareholder in relation to a possible offer. The statement was released at the request of the UK Takeover Panel.

Volume Up For Electronic Trading Systems

Electronic trading systems captured 20 per cent of institutional equity trading dollar volume in Canada from 2007 to 2008, up from 14 per cent the previous year, says Greenwich Associates’ ‘2008 Canadian Equity Investors Study.’ The increase was driven by a rise in the trading volume executed by Canadian institutions through regular electronic trades sent direct to market without the use of algorithms. The shift to electronic trading is expected to drive down trading costs for Canadian institutions. Electronic trades average 1.9 cents-per-share overall and 1.6 cents-per-share for the most active accounts compared to the ‘all-in’ blended commission rate which averages 3.4 cents-per-share overall and under 3.1 cents-per-share among larger accounts.

CIBC Faces Subprime Lawsuit

The Canadian Imperial Bank of Commerce (CIBC) is the first Canadian bank to face a lawsuit over exposure to the American subprime mortgage market. The suit alleges that the bank misrepresented its total exposure to U.S. subprime loans by saying it was “not a major issue.” The group of investors behind the suit claim the bank had exposure to billions of dollars of losses. The suit covers investors who bought shares in the company between May 31, 2007, and Feb. 28, 2008.

Appreciation Can Delay Retirement

A number of factors appear to contribute to a lack of job satisfaction, but feeling unappreciated appears to play a leading role, says a survey of recent retirees by the Employee Benefit Research Institute. Almost two-thirds of retirees were dissatisfied with their job at the time they made the decision to retire. They felt were not valued by the company or that their work did not have long-term value. Other significant factors include stress, no longer growing or learning, and not enjoying their work.

Pay Raises Steady In U.S.

U.S. companies are planning to keep pay raises steady next year, says a report by Watson Wyatt Worldwide. Employers are planning to give workers merit increases that will average 3.5 per cent next year, identical to the increase workers received this year and just slightly lower than the 3.6 per cent average increase in 2007. Companies also say they plan to provide larger raises to their better-performing employees. Employees whose
performance ratings exceed expectations will receive an average merit increase of 4.2 per cent, while those who far exceed expectations will receive an average six per cent increase.

Ambachtsheer Receives Award

Keith P. Ambachtsheer has been was awarded the James R. Vertin Award, which recognizes individuals who have produced a body of research notable for its relevance and enduring value to investment professionals. Ambachtsheer, who is director of the Rotman International Centre for Pension Management at the Rotman School of Management, University of Toronto, has been a key figure in the global pension arena for more than 30 years. In his 2007 book, ‘Pension Revolution: A Solution to the Pensions Crisis, he outlined how a new pension design called TOPS (The Optimal Pension System) offers an integrative solution to today's pension crisis. Ambachtsheer also authored ‘Pensions Fund Excellence – Creating Value for Stakeholders’ (with Don Ezra) in 1998, and ‘Pensions Funds and the Bottom Line’ in 1986. In 2005, Ambachtsheer helped establish the Rotman International Centre for Pension Management, which aims to be a leading exchange of best practices in global pension management, as well as a source of best ideas in pension fund legislation and regulation.


Wednesday, July 23, 2008

PSP Faces ABCP Writedown

The Public Sector Pension Investment Board has written down 23 per cent of its $1.97 billion in asset-backed commercial paper holdings. In addition to the writedown of ABCP, it wrote down $470 million related to its $1.4 billion exposure to collateralized debt obligations. PSP Investments is believed to have the second largest holding of Canadian non-bank ABCP, behind the $13 billion held by the Caisse de depot et placement du Quebec.

Credit Crisis Caused by Clashing Risk Management Systems

Clashing models of debt funding and the risk management systems associated with them engendered the credit crisis, says a C.D. Howe Institute ‘Commentary.’ ‘Anatomy of the Credit Crisis: The Role of Faulty Risk Management Systems’ says the crisis was due in part to risk managers making false assumptions about the liquidity and transparency of a new generation of credit instruments. The result was the creation of a shadow credit-banking system. The report says that the current crisis reflects not a liquidity problem, but a massive de-levering of that shadow system as the credit market model underlying it has been shown to be inadequate. It calls for review and reform of these systems and their regulation.

TD Asset Signs On To UN Principles

TD Asset Management Inc. has become a signatory to the United Nations Principles for Responsible Investment. A signatory to the principles makes three commitments about integrating environmental, social, and corporate governance factors into its investment analysis, and three commitments about encouraging the success of the principles, all in a way that is consistent with the signatory's legal obligations to its clients. "We have a long history of promoting good governance of the companies in which we invest," says Barbara Palk, president, TD Asset Management Inc. "We look forward to learning from the experiences of signatories from other countries who have developed sound approaches to integrating environmental and social factors into their investment analysis.”

Longevity Treatment Delayed In UK

The UK pensions regulator is delaying the introduction of changes to the way longevity is treated in the retirement plan funding regime. It says changes will not apply until the beginning of the next Defined Benefit plan valuation cycle starting in September 2008. Earlier this year, the regulator issued a call for public comment seeking views on how it expects pension plans to take account of future improvements on longevity. More than 80 responses were received as part of the call for public comment. This delay is to allow it to  fully consider all of the responses. It expects to publish a full response to the consultation and the final version of its new approach later in the summer.

Investor Confidence Rises

Global investor confidence rose by 3.6 points to 82.6 from a revised June level of 79, says the State Street Investor Confidence Index for July 2008. Asian investors were the key drivers of this as their risk appetite increased by 8.5 points from 74.4 to 82.9. The confidence of North American institutional investors decreased by 6.9 points to 84.7 while European institutional investors’ confidence fell by negligible 0.9 points to 80.5. The index shows that despite the market turmoil of the recent weeks, particularly in the financial sector, institutional investors perceive some value at current price levels and their willingness to take risk to capture that value continues to improve from December lows.

DB Plans Fall To Deficit

Defined Benefit plans sponsored by S&P 500 companies have seen aggregate funding status slip to a deficit of about $110 billion from $60 billion in overfunding at the end of 2007, says a Credit Suisse report. The report shows close to 60 per cent of companies are increasing their allocations to fixed income and decreasing allocations to equities. Close to 40 per cent boosted their allocations to ‘other’ strategies. The report also predicts continued growth in demand for LDI strategies.

Pension Terminology Examined

The ‘4th Annual The Essential Course in Pensions: A Legal and Practical Guide for Lawyers and Other Professionals’ will take place October 14 and 15. This Osgoode Professional Development program was developed to provide a comprehensive overview of critical pension issues to the many professionals and executives whose work involves pension issues or pension-related responsibilities. Topics to be covered include pension language and terminology and the legal responsibility for those responsible for pension plans. For more information, visit

Mather Discusses Real Assets

David Mather, of Integrated Asset Management Corp., will examine real assets at the ‘CPBI Atlantic 2008 Conference.’ He will explain why sponsors are moving to Real Assets, what Real Asset classes are available, and the unique characteristics that make them attractive. The conference takes place September 24 to 26 in Brudenell, PEI. For more information, visit


Tuesday, July 22, 2008

Sceptre In Alternative Investment Venture

Sceptre Investment Counsel Limited has announced a co-operative venture to provide alternative investment solutions to Canadian institutional and high net worth investors. Sceptre will advise Canadian investors about products offered by New York-based Fairfield Greenwich Group, a $16.6 billion global hedge fund and fund of hedge funds management firm. It will also distribute its fund of hedge funds products.

Multi-employer Plans Get Solvency Suspension

British Columbia has revised its ‘Pension Benefits Standards Regulations’ to exempt multi-employer plans from certain solvency funding requirements, says a Mercer Communiqué. The administrator of a Defined Benefit multi-employer negotiated cost plan (MENC) may apply for the superintendent’s consent to suspend solvency special payments that the plan would otherwise be required to make before December 31, 2010. The suspension cannot exceed three years from the date specified in the consent. As soon as the three-year suspension period ends, the administrator must file an actuarial valuation report. If the valuation indicates a solvency deficiency and the negotiated contributions in effect under the applicable collective agreement are not sufficient to fund the current service cost and the deficiency, then all participating employers will be required to make special payments in accordance with the standard solvency payment provisions of the regulations.

Investors Abandon Soft Dollars

Institutional investors are abandoning traditional soft dollars in favor of formal commission-sharing arrangements (CSAs), says Greenwich Associates’ ‘2008 U.S. Equity Research study.’ It found more than 45 per cent of institutions say they employ CSAs, up from the approximately 25 per cent of institutions last year. Overall, U.S. institutions are directing an estimated 16 per cent of total U.S. equity trading commissions via CSAs, and expect that to increase to 20 per cent over the next 12 months. Traditional soft dollar arrangements were used by more than 60 per cent of U.S. institutions as recently as last year.

June Unkind To Plans

June was not kind to the funded status of pension plans. Major U.S. and international public equity indices fell over eight per cent for the month and contributed significantly to a minus five per cent asset return under traditional strategies and -2.6 per cent under LDI strategies, says a Watson Wyatt ‘Investment Brief.’ In addition, declining interest rates increased the market value of liabilities. This represented a repeat of what happened in the first quarter of 2008. The funded status of a ‘typical’ corporate Defined Benefit plan managed under the traditional investment strategy is now 8.8 per cent below its January 1, 2008, level. The shortfall under the LDI strategy is 6.5 per cent.

Jenkins Moves To CPPIB

Mark Jenkins is vice-president and head of private debt at the CPP Investment Board (CPPIB). He will oversee the launch of a multi-faceted global private debt investment program. Most recently, he was managing director, co-head of leveraged finance origination and execution, for Barclays Capital in New York.

Oxford Adds Three

Oxford Properties Group has added three vice-presidents. Michael Kanuka is vice-president, global asset management. He was most recently at Citigroup's Toronto office where his practice concentrated on global markets in the disciplines of structured finance, investment underwriting, and relationship management.  Michel Vauclair is senior vice-president, global asset management. Previously, he was with UBS AG in Geneva where he was managing director, head of asset management for Europe. Neil Jacob is senior vice-president, global asset management. He was most recently with a real estate management and consulting practice where he focused on asset management, acquisitions, dispositions, and structured financings across all asset classes and both the public and private markets. Oxford invests in and manages real estate assets on behalf of OMERS. 

Schaffner Examines Credit Crunch

David Schaffner, of Leith Wheeler, will examine the origins and long-term impact of the credit crunch at the CPBI Western Region Conference. He will look at the subprime mortgage market blowup, excess use of leverage by investors, and the contribution of bond rating agencies. He will also provide his views on what the future may hold. Theme of the conference is ‘Global Warnings: Innovation, Growth and Sustainability.’ It takes place October 8 to 10 in Kelowna, BC. For more information, visit


Monday, July 21, 2008

BC Allows Letters Of Credit

British Columbia has revised its Pension Benefits Standards Regulations to permit the use of letters of credit to secure pension plan solvency deficiencies, says a Mercer ‘Communiqué.’ To qualify, a letter of credit must be irrevocable and unconditional, issued in Canadian currency by a bank or credit union that is not affiliated with the employer, and made out to the benefit of a fund holder in trust for depositing into the pension fund. The introduction of letters of credit as a funding option is welcome news for plan sponsors. Letters of credit are an effective form of security that permit financially healthy plan sponsors to secure the pension promise through the combination of funding or security that is most appropriate for the organization.

Mandatory Retirement Appeal Dismissed

The Supreme Court of Canada has dismissed an appeal by a New Brunswick employee contesting his forced retirement at age 65. In New Brunswick (Human Rights Commission) v. Potash Corporation of Saskatchewan Inc., the court ruled the Potash Corporation made the pension agreement in good faith and not from a position of age discrimination. Mandatory retirement laws were eliminated by New Brunswick in 1973, but some exceptions related to pension plan contracts or collective agreements remain. Under the province's Human Rights Act, companies cannot impose mandatory retirement, unless they offer employees ‘bona fide’ pension plans containing mandatory retirement provisions. The court decided that the Potash plan was ‘bona fide’ and, as a result, the mandatory retirement was proper.

Compensation Disclosure Rules Changing

The rules governing how and what Canadian companies disclose on their proxy circulars about executive compensation are changing, says Watson Wyatt ‘InfoCanada.’ In 2007, the Canadian Securities Administrators (CSA) introduced requirements under Form 51-102F6, Statement of Executive Compensation, calling for companies to clearly define compensation policies and objectives. The goal of the revisions is to provide more complete and transparent disclosure of executive compensation. It is also hoped that they will enhance corporate stakeholders’ understanding of and perspective on compensation amounts realized by executives in relation to both compensation opportunities provided and company performance. It is anticipated that the CSA will approve final changes by the end of this year, so that the revised rules can apply to the 2009 proxy season.

Canadian Pensions Recoup Some Ground

Soaring energy stocks lifted Canadian pension plans into positive territory in the second quarter despite lingering global credit concerns, says a survey by RBC Dexia Investor Services. Canada's energy rich equity market continued to buck the worldwide trend as high-flying oil prices made the S&P TSX Composite Index one of the best performers in the world – up 9.1 per cent for the quarter. Energy stocks were up 22.9 per cent for the quarter, accounting for more than three quarters of the gain. Global stocks continued to be the worst-performing asset class, slipping 3.4 per cent in the quarter.

Plans Fail To Retain Assets 

Defined Contribution plan service providers are largely unsuccessful at retaining participant assets after retirement, says research from the Diversified Services Group. It says this is due to insufficient focus on the retention issue, the inability to reach the plan participant at the appropriate time, and failure to build a relationship with the participant prior to retirement. The research also found that plan service providers miss opportunities to aggregate all of a plan participant's assets at the point of retirement. The majority of plan sponsors responding to the research indicated they do not care whether or not their participants take assets out of DC plans at the time of retirement, and more than 80 per cent of participants from the companies interviewed do take their assets at retirement.

CIBC Mellon Gets Rating

Moody's Investors Service has assigned a bank financial strength rating of B- and a long-term issuer rating of Aa2 to CIBC Mellon Trust Company. Reasons cited for the rating include the company's standing in its primary Canadian market (asset servicing and issuer services), robust governance discipline, excellent capitalization, a lack of material credit risk, and an operations and technology platform, available through its relationship with The Bank of New York Mellon, that allows CIBC Mellon to benefit from economies of scale and service.

Pensions Get Priority

Amendments to Canada’s bankruptcy legislation give unpaid pension contributions and unremitted employee pension deductions priority over all secured creditors in both bankruptcies and receiverships, says Heenan Blaikie’s ‘Labour & Employment In The News. There is no maximum amount for this priority and these claims. The priority does not apply to deficiencies in pension plan assets.

CSR Grows In U.S.

More than half of the United States' 100 largest publicly traded companies now report on their sustainability efforts and more than a third now incorporate elements of the Global Reporting Initiative (GRI) sustainability reporting guidelines, says a report by the Sustainable Investment Research Analyst Network (SIRAN), a working group of the Social Investment Forum (SIF). Key findings show that 86 of the S&P 100 companies now have corporate sustainability websites, compared to 58 in mid-2005, an increase of 48 per cent. As well, 49 of the leading U.S. companies produced a sustainability report in 2007, an increase of 26 per cent from 39 in 2005.

Hedge Funds Drive Commission Growth

Hedge funds continue to play a big role in driving the growth of U.S. equity trading commissions, says research from Greenwich Associates. The commissions paid by the typical U.S. institution increased to just more than $26 million in 2007/2008 from roughly $24.7 million in 2006/2007 and much of this commission growth was for hedge funds. They generated nearly 30 per cent of U.S. institutional equity commission payments in the year ending February 2008, up from 24 per cent in the prior year. Equity commission payments by traditional investment managers increased by nearly 30 per cent year over year and now account for some 47 per cent of the market-wide total.


Friday, July 18, 2008


General Motors’ efforts to boost its liquidity will include putting a halt on the establishment of a Voluntary Employees Beneficiary Association (VEBA) trust for retiree healthcare. GM will defer approximately $1.7 billion of payments that had been scheduled to be made to a temporary asset account over the balance of 2008 and 2009 for the establishment of the new UAW (United Auto Workers) VEBA. The agreement with the UAW to set up the trust was reached last September.

UK Firms Offloading DB

Almost half of UK private sector Defined Benefit pension schemes plan to offload their liabilities through a pension buyout or other type of transaction within the next 10 years, says Watson Wyatt’s ‘Pension Plan Design Survey 2008.’ More than 40 per cent expect to have closed to future accrual within the next five to 10 years. Only 14 per cent of final salary pension schemes are likely to remain open to new entrants over the next 10 years.

BNY Mellon Compares Managers

BNY Mellon Asset Servicing has introduced a 130/30 Large Capitalization Peer Group Universe through its Performance & Risk Analytics (P&RA) product line. The new universe allows institutional investors to compare managers overseeing 130/30 strategies as well as to compare the 130/30 Large Cap Universe's performance against a traditional ‘long-only’ universe. The comparisons can help investors determine the cost benefit of these alternative investment vehicles and allow investment managers to compare their performance against competitors.

Côté Moves To Ernst & Young

Nadine Côté is national lead, compensation advisory services, at Ernst & Young LLP. Formerly, she practiced employment law and executive compensation at Torys LLP.


Thursday, July 17, 2008

Finance Issues Comfort Letters

The Department of Finance has issued two comfort letters in response to the Pension Investment Association of Canada (PIAC) requests for two amendments to the proposed Non-Resident Trust (NRT) rules under Bill C-10, says a Mercer Communiqué follow-up. Finance, in its letters, confirms that it is prepared to support amendments to the bill which would, among other things, create an exemption from resident contributor and resident beneficiary status for ‘qualifying pension entities.’ The extension of the exempt foreign trust definition will not apply if the investors in the Canadian mutual funds include any person other than a qualifying pension entity.

JPMorgan Enhances Reputation

JPMorgan has enhanced its reputation among U.S. institutional investors by standing by its fixed income clients during the worst of the global credit crisis, says research from Greenwich Associates. Lehman Brothers and Banc of America were also recognized for their support of clients. The events of the past 12 months have altered the way individual fixed income dealers are viewed by their institutional clients in the United States, says the research. "As institutions think about allocating their future fixed income trading volumes, they are asking, 'Who stepped up for us last year?' 'Who consistently made two-way markets?' and 'Who was willing to pick up the phone?'" says Greenwich Associates consultant Tim Sangston. "While it remains to be seen how the performance of individual dealers throughout the ongoing credit crisis will affect this picture over the long term, the firms will not have to wait long to find out what immediate impact the events of the past year have had on their client relationships."

Managers Moving To Cash

Money managers are piling into cash as they prepare to withstand an economic slowdown, says a Merrill Lynch ‘Survey of Fund Managers.’ Its survey for July shows that investors are offering the clearest signal yet that the global economic slowdown is forcing them to overhaul their asset allocation. It notes that the credit crunch is leading to polarized investment allocations and is taking survey readings into uncharted territory with 53 per cent of asset allocators overweight cash, 40 per cent underweight equities, 32 per cent underweight eurozone equities, and 40 per cent are underweight U.K. equities.

Retirement Decision Made Quickly

The interval between when workers first begin thinking seriously about retirement and actual retirement is typically fairly short, says a survey of recent retirees by the Employee Benefit Research Institute (EBRI). It found that two years or less elapse between the start of serious consideration and follow-through. Twenty-two per cent reported they first began thinking seriously about retiring only six months before they left the company, while another 22 per cent began serious consideration about one year beforehand. Only 28 per cent gave their decision serious consideration for more than two years. Retirees likely to say they gave only about six months of serious consideration to their decision are those who were not at all satisfied with their job. On the other hand, retirees who retired before age 58 or who left due to their own health are more likely to have considered their decision for at least five years.

Plans Will Accept Less Risk

By 2017, corporate pension plans in the U.S. will achieve higher funding levels and will pursue investment policies that accept far less risk, says research from Russell Investments on the future for Defined Benefit pension plans. Russell expects only one plan in every four will have funding status below 90 per cent and that the number of plans with significant shortfalls will be greatly reduced. As part of this developing trend, it is forecasting that corporate contributions to pension plans will become more sensitive to investment returns.

Teachers’ Names Vice-presidents

Jason Chang is vice-president, fixed income capital management; and Kevin Kerr is vice-president, infrastructure, at the Ontario Teachers’ Pension Plan (Teachers’). Since joining Teachers’ in 1995, Chang has held progressively more senior positions, most recently as director, fixed income. Kerr joined Teachers’ in 1998 and has held positions of increasing responsibility in inflation-sensitive portfolios. Andrew Claerhout, Shael Dolman, and Glen Silvestri are vice-presidents with Teachers’ Private Capital. Claerhout joined Teachers’ in 2005 from EdgeStone Capital Partners. Dolman joined Teachers’ in 1997 with a background in corporate banking. Silvestri joined Teachers’ in 2001 with a background in mergers and acquisitions and finance.


Wednesday, July 16, 2008

Sponsors Review Reason For Being

The bursting of the tech bubble, the collapse of Enron, and the appreciation of the Canadian dollar have all caused the fundamental pension landscape in Canada to change, says Gregory J. Crispin, president and managing director of State Street Global Advisors (SSgA) Canada. Speaking at a State Street Briefing entitled ‘The Pensions Industry: Bridging the Gap,’ he said this has forced pension plan sponsors to review their reason for being. As well, the traditional methods of managing a fund are changing with more sponsors turning to strategies such as liability driven investing where they are trying to match their assets to their liabilities.

Executives Lack Awareness Of Mental Health Issues

Only 13 per cent of senior executives have a strong awareness of the impact of mental health on their organization, says a survey of human resources representatives by Mercer in conjunction with The Canadian Alliance on Mental Illness and Mental Health (CAMIMH). While it found that mental health issues are a growing concern for employers, it found 47 per cent of respondents reporting ‘no’ or ‘only some’ senior executive awareness have no plans or don’t know what they will do to improve the awareness of the executive team. The majority of respondents who reported strong executive awareness said the most effective means to combat the problem is by having a senior champion in the organization. Mental illness is estimated to result in 35 million workdays lost every year in Canada and low productivity related to mental illness adds significant cost to employers. 

GM Cutting Benefits For Retirees

General Motors will cut healthcare benefits for salaried retirees as part of its effort to raise $15 billion to help cover losses and turn around its North American operations. Those people will get a pension increase from the company’s overfunded pension fund to help compensate for Medicare and supplemental insurance.

Teachers’ Appoints Two

Ron Mock is senior vice-president, alternative investments, and Stephen Dowd is senior vice-president, infrastructure, at the Ontario Teachers' Pension Plan (Teachers'). Mock joined Teachers' in 2001 as director, alternative investments, and was, most recently, vice-president, alternative investments. Dowd joined Teachers' in January 2006 with almost 20 years' international experience in banking and the energy and utilities sectors.


Tuesday, July 15, 2008

Indexes Serve As Benchmarks For Infrastructure

Dow Jones Indexes and Brookfield Asset Management Inc. have launched the Dow Jones Brookfield Infrastructure Indexes, a global index series designed to serve as benchmarks of companies that are owners and operators of key infrastructure assets such as toll roads, pipelines, and ports. The new index family includes a composite index and sub-indexes for four regions and eight sectors. They include benchmark indexes to gauge active infrastructure portfolios as well as blue-chip indexes that can underlie financial products.

Automatic Provisions Have Desired Effect

The automatic provisions of the Pension Protection Act (PPA) of 2006 are beginning to have the desired effect, said speakers at the Employee Benefit Research Institute’s (EBRI) semi-annual policy forum. The legislation allows employers to automatically enroll new workers in their 401(k) plans, put employee contributions into age-appropriate default investments, and increase annual contributions. Research has showed that when 401(k) enrollment is voluntary and workers must actively decide to participate, a significant number do not participate, or, if they do, they do not save and invest appropriately. Automatic enrollment, for example, can nearly double participation in Defined Contribution plans such as 401(k)s.

Attention Shifts From Fixed Income

Australian superannuation funds plan are shifting their attention from fixed income toward alternative assets, says a Terrapin Australia survey. About 90 per cent of institutional investors surveyed plan to cut their allocation to Australian fixed income, while 57 per cent said will likely move away from international fixed income. Half of the respondents were pension plans. Over the next 18 months, they plan to boost their commitments to infrastructure, private equity, direct property, and other alternative options.

Women Need More Retirement Savings

Not only will women need more savings in retirement than men, but the gap between the amount they will need and their savings is greater than the gap for men, says a Hewitt Associates study. The study showed both women and men are on track to replace 85 per cent of pay at retirement, assuming average life expectancy. However, women need to replace 130 per cent of their final pay, while men need to replace 123 per cent of pay at retirement when differences in longevity are considered. As a result, the average woman will need to save two per cent more of pay more than the average man to have the same standard of living in retirement. Other factors contributing to a lack of retirement readiness for women is they save less than men and invest less aggressively.

Rogers Speaks At Forecast Dinner

Jim Rogers, co-founder of the Quantum Fund with George Soros; and Myles Zyblock, chief institutional strategist at RBC Capital Markets; will be the featured speakers at the Toronto CFA Society’s ‘51st Annual Forecast Dinner: Global Perspectives.’ It takes place October 2 in Toronto, ON. For more information, visit

Super Bowl Of Indexing In Phoenix

The ‘13th Annual Super Bowl of Indexing’ will take place December 7 to 10 in Phoenix, AZ. It brings together staff and board members from public, corporate, and Taft-Hartley pension systems; endowment, foundation, trust, and faith-based investors; and other institutional investors. The program is also the annual meeting for the Index Business Association, whose membership comprises the users and providers of indexes and index products. For more information, visit


Monday, July 14, 2008

SEI Adds Target-date Suite

SEI has added a suite of target-date portfolios for Defined Contribution plan sponsors in the U.S. The portfolios utilize collective investment trust vehicles with retirement dates in five-year increments from 2010 to 2050. The focus of the portfolios is to generate higher returns in the earlier years and to protect accumulated capital in the later years, while continuously minimizing risks including shortfall, poor market performance, drawdown, longevity, and inflation. 

UK Moving To Multi-boutique

The UK asset management industry is moving towards a multi-boutique business model to cope with increasing competition from specialist managers, says a Fitch Ratings report. ‘UK Asset Management Industry – Dynamics and Challenges Managers’ says managers are expanding investment product offerings to include a broader range of absolute return products. Some large asset managers may acquire niche investment firms to transform themselves into a collection of autonomous smaller entities with independent investment and profit objectives.

Private Equity Value Beats Public Companies

The enterprise value (EV) growth of private equity-owned businesses firms beat that of public companies for the third straight year, says an Ernst & Young study. The global study of the 100 largest private equity exits in 2007 shows that their EV growth rate was 24 per cent, double that of public companies. The focus of private equity investors on implementing a clear plan for growth and performance improvement combined with the discipline of an expectation of exit within a defined time frame is cited as one reason for the added value creation.

Healey Moves To Fogler, Rubinoff

Priscilla H. Healy is moving to Fogler, Rubinoff LLP. A frequent contributor on pension issues to Benefits and Pensions Monitor, she was with Pallett Valo.


Friday, July 11, 2008

Pension Funding Strain Global Issue

Pension funding strain in an era of falling fertility rates and rising life expectancy is one of the five top risks in the global economy, says a report from a Goldman Sachs Markets Institute panel of corporate executives, academics, and policy specialists. The demographic changes have come without corresponding adjustments to the funding of post-retirement programs, it says. This has resulted in issues such as how to provide for longer retirement periods and resulting strains on pension and healthcare systems. Political unrest could result if these are not addressed.

Minimum Withdrawal Needs Revision

Minimum withdrawals from Registered Retirement Income Funds (RRIFs) should be reduced or abolished, says a study by the C.D. Howe Institute. ‘A Better Riff on Retirement: The Case for Lower Minimum Withdrawals from Registered Retirement Income Funds’ says since the last adjustment to the minimum withdrawals was made, life expectancy is up and real returns on investment are down. As a result, RRIF holders are facing erosion in the purchasing power of tax-deferred savings in their later years. It says the present-value cost to governments of tax deferral in RRIFs is not major, but for RRIF holders, being forced to run down RRIF assets poses a threat. The Income Tax Act requires RRIF holders to withdraw a minimum of four per cent of the beginning-of-year balance at age 65, then an escalating minimum until, from 94 onward, holders must withdraw 20 per cent of their balances each year. 

Calculation Helps Set Retirement Expectation

Forty-one per cent of workers think they need to accumulate at least $500,000 by the time they retire to live comfortably in retirement, says the EBRI’s ‘2008 Retirement Confidence Survey.’ It also found 26 per cent think they will need to save less than $250,000 for a comfortable retirement, while 16 per cent feel they need between $250,000 and $499,999. Workers who have performed a retirement needs calculation (27 per cent) are more than twice as likely than those who have not (12 per cent) to expect they will need to accumulate at least $1 million before retirement. Almost half (49 per cent) of workers who reported saving for retirement said they now have less than $25,000 in total savings and investments (excluding the value of their home and Defined Benefit plans).


Thursday, July 10, 2008

Wild Ride For Pension Plans Continues

The wild ride for Canadian pension plans continued into 2008, says an analysis by Watson Wyatt Worldwide. Following significant net improvement through 2006 and 2007, there has been little net change, but significant volatility, in the GAAP funded positions of Canadian pension plans over the first half of 2008. Reflecting the sharp decline in equity markets early in the year, typical pension funded ratios dropped three percentage points from 106 per cent to 103 per cent in the first two months of 2008. This decline was followed by an eight percentage point gain from March to May and then another four percentage point drop to 107 per cent in the month of June. It says the small net improvement in funded ratios in 2008 can be attributed to increases in the yield rates available on AA Corporate Bonds rather than stock markets. However, there is a very real possibility that this trend in yields could reverse.

Incentives May Keep Older Workers On Job

Employers have a window of up to two years in which they may be able to change retiring workers’ decisions by offering them incentives to remain with the company, says a survey by the Employee Benefit Research Institute (EBRI). Although no single incentive is likely to motivate the majority of retirees to stay longer with their employer, employers may be able to assemble a tool kit of alternatives that would be effective in retaining substantial numbers of workers. The timing of the offer of a delayed retirement incentive is important, the survey found. Nearly two-thirds of retirees (63 per cent) report that these offers would have been a lot more effective if the retirees had known about them in the two years before they communicated their intention to retire. Possible incentives that might encourage retiring workers to postpone retirement include feeling truly needed and receiving a pension while working. Half of retirees (48 per cent) indicate that feeling truly needed for an assignment would have been extremely or very effective in encouraging them to delay their retirement. As well, half of retirees with a Defined Benefit pension state that receiving a full pension while working part time would have been effective in delaying their retirement.

Markets Go In Opposite Directions

The U.S. and Canadian markets could be going in opposite directions, say investment managers surveyed in the latest ‘Russell Investment Manager Outlook.’ The survey reveals an interesting turnaround in manager sentiment. The U.S. market had been considered the world’s economic Achilles heel for the better part of the past year, yet bullishness towards U.S. equities climbed from 33 per cent to 45 per cent and bearishness dropped 13 per cent to 31 per cent. In contrast, bullishness towards Canadian equities has dropped from 43 per cent to 33 per cent. Digging deeper, bullishness towards the materials sector – dominated by gold stocks – plummeted from 62 per cent to just 32 per cent.

Pilots Using Best Doctors

The Air Line Pilots Association International (ALPA) Canada board has selected Best Doctors’ unique diagnosis evaluation as a valuable service to its members. Best Doctors Canada connects seriously ill Canadians and their treating physicians with world renowned specialists to confirm the right diagnosis and the right treatment options. Eligible Canadian ALPA members, with serious or complex medical conditions, can access Best Doctors to obtain an expert diagnostic assessment of all of the pertinent medical information in their case. The findings are delivered to both the member and the treating physician, so they can work together to ensure the diagnosis is correct and determine the best course of treatment. ALPA is the world's largest airline pilot union, representing nearly 55,000 pilots at 40 airlines in Canada and the U.S.

AEGON Canada Using RBC Dexia

AEGON Canada will use RBC Dexia for investment accounting of its $8.5 billion portfolio. This represents the expansion of a longstanding working relationship between the two. One of the key features of this relationship involves the integration of AEGON Canada's investment accounting employees into RBC Dexia's operation in Toronto.

First Annual Hedge Fund Awards Announced

The Hedge Fund Hotel will celebrate its second birthday by announcing the inaugural ‘Canadian Hedge Fund Awards.’ There will be five awards presented including one for ‘Personality of the Year – 2008.’ They believe this is an opportunity to put the Canadian hedge fund industry in the spotlight and celebrate the critical – and often misunderstood – role that hedge funds play in capital markets. The presentations will take place September 16 in Toronto, ON. For more information, visit

Adatia Appointed CIO

Sadiq S. Adatia is chief investment officer at Russell Investments Canada Limited. He joined the firm in 2006, leading its Canadian equity funds and LifePoints portfolios.


Wednesday, July 9, 2008

Fund Pioneer Dies At Age 95

Sir John Templeton, an investment fund pioneer, has died in hospital in the Bahamas. He was 95 years old. “Sir John Templeton built the investing foundation that we as a company now proudly stand upon,” says Don Reed, president and CEO of Franklin Templeton Investments Corp. “When the Templeton organization flew me to Nassau in 1989 and recruited me to run the company in Canada, John Templeton was the biggest reason I joined. I will miss him greatly.” Templeton started his career on Wall Street in 1937 and went on to create some of the world’s largest and most successful international investment funds.

GWL Offers Access To Advice

Great West Life (GWL) has introduced an investment advice service for group retirement pension plan members. ‘Member Investment Selection Service’ gives plan members access to advice on their plan investment options. As well, it protects plan sponsors from the ramifications of this advice. Its process guides plan members through asset allocation, risk assessment, funds group matching, and fund rebalancing decision to create a stable financial platform. Plan sponsors are protected because GWL will take responsibility for the decisions made by members involved in the service.

Standard Life Launching India Fund

Standard Life Mutual Funds Ltd., an affiliate of The Standard Life Assurance Company of Canada, is launching the Standard Life India Equity Focus Fund, one of the first funds in Canada to capitalize on opportunities in India’s fast growing economy. This fund is part of a wider launch, which also includes a T-Series for 10 Standard Life existing funds, as well as the two new Portrait Portfolio fund-of-funds – Dividend Growth & Income Funds and Global Portfolio. The India Equity Focus Fund will be managed by Standard Life Investments Limited (SLI) in the UK. It will focus its investments in 20 to 50 companies.

AIMA Publishing Global Guide

The Alternative Investment Management Association (AIMA) – the global hedge fund industry association – plans to publish a global guide to sound practices for fund of hedge funds managers. The guide is due for publication in early 2009. It will focus on areas including risk management, disclosure to investors, valuation, management of conflicts of interest, and other operational issues.

SITQ Appoints Three

Daniel Fournier is executive vice-president and chief investment officer and Marc Doré and Yves-André Godon are managing directors for the United States and Canada, respectively, for SITQ, the real estate investment, management, and development firm owned by six financial institutions and pension funds including the Caisse de dépôt et placement du Québec. Fournier's mission is to bring a unique and forward-looking vision to its overall portfolio to enable it to take advantage of opportunities in capital markets. Godon and Doré are responsible for building and maintaining ties with SITQ's various partners and supervising all operations within their markets.


Tuesday, July 8, 2008

Sun Life Offers New Plan Member Statement

Sun Life Financial has launched ‘my statement,’ the next step in the evolution of its ‘my money’ plan member education strategy. It gives plan members a clear and concise snapshot of their plan, while plan sponsors get a valuable communication tool. Content management technology, ‘MessagePoint,’ delivers targeted, member-specific calls to action that promote awareness and decision-making. Key features include a summary of information, personalized for each individual to show plan balances, rates of return, and investment mix.

Northern Trust Introduces Suite Of Minority Brokerage Reports

Northern Trust has introduced five new reporting templates that can be used by U.S. public pension funds and other institutions to determine the use of minority- and women-owned firms to execute trades on behalf of the fund. Increasingly, regulatory and legislative mandates require U.S. public entities to source a portion of their activities to designated minority-owned firms. These new reporting templates will allow plan sponsors to view data aggregated across multiple investment managers, thus improving their ability to identify the total portion of the fund’s trading activity that is executed using minority and women owned firms.

Surrey Selects CIBC Mellon

The city of Surrey, BC, has selected CIBC Mellon Global Securities Services to provide asset servicing and accounting support for its investment book of business. Vivienne Wilke, general manager, finance and technology, says its client service model and “technology, specifically Workbench, gave us the confidence to know that they could meet our evolving asset servicing and accounting needs." Surrey is British Columbia's second largest city.

Goldman Sachs Opens Office In Toronto

Goldman Sachs Administration Services has opened a hedge fund administration office in Toronto, ON. The office expands the fund accounting and investor servicing areas of its hedge fund administration operations. It expects to grow the new location over the next five years.

Teachers Provides Best Service

The Ontario Teachers’ Pension Plan provides the best-in-class pension service in North America, says a report from CEM Benchmarking Inc. It ranked the Teachers’ plan first among its peers in North America, based on an evaluation of 11 service categories, ranging from the payment of pensions to contact with members. Teachers’ also tied for first place internationally. Teachers’ scored 89 of a possible 100, compared with a median score of 74 for North American and 60 for Canadian pension plan peers. With $108.5 billion in net assets as of December 31, 2007, the Ontario Teachers' Pension Plan is the largest single profession pension plan in Canada. It invests the pension fund assets and administers the pensions of 278,000 active and retired Ontario teachers.

UBS Appoints Head Of Canadian Business

Marcel Larochelle has been appointed head of UBS Global Asset Management’s Canadian business. Based in Toronto, he will focus on the development and expansion of its institutional, wholesale, and consultant relationships. He has held senior roles with a number of consulting firms in Canada, including Mercer Investments, Towers Perrin, and Buck Consultants.


Monday, July 7, 2008

CVs Calculation Rules Changing

The rules used by plan administrators and actuaries when calculating commuted values (CVs) for Defined Benefit pension portability benefits are about to change, says a Watson Wyatt ‘InfoFlash.’ In general, the changes will lead to lower CVs to better reflect the theoretical value of a pension. They will also immediately decrease the solvency liabilities of practically every pension plan in Canada. Among the changes is increasing the discount rate on non-indexed pensions by between 25 and 50 basis points and on indexed pensions by between 50 and 75 bps. The use of a higher discount rate reflects the fact that a deferred pension being commuted is highly illiquid. Therefore, it is important to base the discount rate on yield underlying financial instruments that have a similar level of illiquidity.

BCE Agrees To Terms

BCE Inc has agreed on the terms of its $35 billion sale to an Ontario Teachers' Pension Plan group. The deal is expected to be completed by mid-December. The announcement ends speculation that the banks funding the buyout were trying to back out or renegotiate the terms. However, the final agreement eliminates BCE common share dividend payments until the deal closes. Eliminating the dividend increases BCE's cash position by at least $500 million.

Growth In Pension Plans Resumes

After only a modest gain in 2005, membership in employer registered pension plans (RPPs) resumed normal growth in 2006, says Statistics Canada. The country's 18,594 employer sponsored registered pension plans added 77,700 new members in 2006, representing growth of 1.4 per cent. In 2005, (RPPs), added only about 20,000 people. Gains in 2006 were distributed evenly between the public sector, which added 39,400 members, and the private sector, which added 38,300, despite the fact that the public sector accounts for less than 10 per cent of all registered pension plans. In 2006, 38.1 per cent of paid workers had a registered pension plan, down marginally from 38.5 per cent in 2005. For a second year, membership of Defined Benefit pension plans declined slightly. However, these plans remain the main type of plan, with nearly 80 per cent of all memberships.

 SRI Thwarted By Short-term Focus

European pension funds are having a difficult time adding environmental, social, and governance factors to their portfolios because of the short-term focus of their asset managers and consultants, says a survey by ASSET4 and Germany’s federal environment ministry. The survey shows that most investors in financial markets act in a short-term manner because consultants and asset managers are compensated on a short-term basis and the companies in which they invest have short-term performance objectives. However, most respondents agree that sustainability research integrated into mainstream research will best lead to future performance.


Friday, July 4, 2008

Québec Adopts Phased Retirement Amendments

Amendments to Québec’s phased retirement rules have been passed into law with some modifications, says a Mercer ‘Communiqué.’ Under the new rules, plan members can, subject to certain conditions, receive a pension from a Defined Benefit plan or a Defined Contribution plan while employed. The amendments were made to keep workers age 55 and over in the workforce and to encourage retirees to continue working, provided they reach an agreement with their employer to that effect. The new measures also offer employers additional flexibility. Employers will have the freedom to conclude agreements with their employees and define the applicable conditions, taking into account their labour needs and their overall costs, including the costs of the pension plan.

FSCO Issues Wind-Up Report Bulletin

The Financial Services Commission of Ontario (FSCO) has released a policy bulletin dealing with the allocation of assets in multi-jurisdiction pension plans on a full or partial wind-up when benefits are guaranteed in whole or in part by the Pension Benefits Guarantee Fund, says the ‘Buck Outlook – June 2008.’ For wind-up reports filed on and after December 18, 2006, liabilities would need to include any benefit enhancements resulting from the application of section 74 of the Ontario Pension Benefits Act. For wind-up reports filed prior to December 18, 2006, liabilities would not need to include any benefit enhancements resulting from the application of section 74 of the Ontario Pension Benefits Act.

Few DC Members Will Meet Retirement Needs

Less than one in five employees who participate in their companies’ 401(k) plans will be able to meet all of their estimated needs in retirement, says research from Hewitt Associates, When inflation and increases in medical costs are included, Hewitt predicts employees will need to replace about 126 per cent of their final pay at retirement. This is significantly more than the traditional estimates of 70 per cent to 90 per cent of pay replacement.


Thursday, July 3, 2008

TFSAs Coming To Workplace

Many Canadian employees may soon have the option of contributing to a Tax Free Savings Account (TFSA) at their workplace, says research from Hewitt Associates. It found 43 per cent of employers were either likely or highly likely to add a TFSA to their employee benefits program with another 45 per cent unsure, but not ruling out adding a TFSA. The primary reason employers cite for offering TFSAs is the desire to add another vehicle for tax-favoured retirement savings. As well, they want to provide greater flexibility for their employees. Legislation makes TFSAs available to Canadians as of January 1, 2009. Any Canadian resident over the age of 18 will initially be able to contribute $5,000 a year to this new savings vehicle with no tax paid on capital gains or investment income or when the funds are withdrawn.

SERP Disclosure Increasing

The disclosure of executive pension arrangements has increased significantly in recent years and will continue to increase with the new disclosure requirements proposed by the Canadian Securities Administrators, says Mercer’s ‘Supplemental Executive Retirement Plans (SERP) Database.’ Its database shows 55 per cent of organizations sponsor at least one SERP and this percentage has remained relatively stable during the past few years. Larger organizations are more likely to sponsor a SERP and there is a trend to provide SERPs for a larger portion of the employees affected by the maximum pension limit. In 2007, 45 per cent of organizations had SERPs covering all employees. Ten years earlier, only 30 per cent of organizations that had a SERP covered all employees. During the past 10 years, the percentage of SERPs that are secured has increased from 28 per cent to 43 per cent.

Public Sector Benefits Cost More

Benefits in the public sector cost employers almost twice those of benefits in the private sector in the U.S. in 2007, says the June 2008 ‘EBRI Notes.’ It reports that in September 2007, private sector employers spent $7.66 per hour worked on benefits for their workers, compared with $13.24 for state and local government employers. The average cost per employee per hour worked for health insurance for state and local government workers was $4.35, compared with $1.85 for private sector employers. Retirement and savings plans cost state and local government employers $3.04 per hour worked in September 2007, compared with 92 cents for private sector employers. Reasons for the differences include the fact that unionization rates also are higher in the public sector than in the private sector.

CFA Puts Out ESG Manual

The CFA Institute Centre for Financial Market Integrity, the global policy authority on professional and performance standards, financial reporting, and capital markets, has launched ‘Environmental, Social, and Governance Factors at Listed Companies: a Manual for Investors’ to assist investors in understanding how companies deal with environmental, social, and governance (ESG) issues. The manual will help clarify and decipher the ESG information provided in the current financial reports coming from companies. ESG is growing in importance as a 2007 report from the Asset Management Working Group of the UN Programme Finance Initiative says there is a positive correlation between a company’s ESG behavior and an impact on its bottom line. Some of the largest investment firms – such as Citigroup, Goldman Sachs, JP Morgan, UBS, and West LB – currently have dedicated ESG units.

Ades Heads FTSE Unit

Ronnee Ades is business unit head, alternatives, at FTSE Group. She was, most recently, senior director of institutional markets at Dow Jones Indexes. She will be responsible for driving growth within FTSE’s existing alternative asset class index series.

Hubbs Joins HSBC Debt Group

Jamey Hubbs is managing director and head of debt capital markets at HSBC. He is responsible for Canadian debt origination. He was with TD Securities where he held a number of senior positions across sales, trading, derivatives, and debt origination.

Fortin HR Vice-president

Sophie Fortin is senior vice-president, human resources and corporate services, at The Standard Life Assurance Company of Canada. She has more than more than 20 years of experience with national and international companies.  

ATMS Courses Set For September

The International Foundation of Employee Benefit Plan’s ‘Advanced Trustee Management Standards (ATMS)’ educational programs will be held in September in Vancouver, BC. The ATMS program offers education for trustees and other senior level policymakers in areas such as compliance, governance, and funding and plan design. ATMS – Part III Pensions and Part II Pensions run September 22 and 23.  Part IV and Part II Group Benefits take place September 24 and 25. For more information, visit


Wednesday, July 2, 2008

BCE Defers Dividend

BCE has deferred the declaration of a dividend on the company's common shares for the second quarter of 2008. The money that would have been paid to shareholders will be kept by the company as it works to complete the proposed deal with an Ontario Teachers' Pension Plan consortium.

Asset Allocation Problems In 401(k)s

Only 43 per cent of 401(k) accounts have the proper amount of equity exposure, says a study from the Vanguard Center for Retirement Research (CRR). Among the remainder of the accounts examined, about 30 per cent had serious asset allocation problems ranging from no equity holdings at all to too much of a single stock issue. The remainder had significant equity investments, but their equity exposure was too aggressive or too conservative. Many participants failed to take advantage of additional diversification opportunities, such as diversifying holdings with international or small-capitalization stocks or high-quality bonds.

URAC Proposes Wellness Program Standards

URAC has convened an expert advisory group for creation of accreditation standards and measures for wellness programs in response to employers' requests for quality standards and measures for both comprehensive and focused wellness programs. The more than 50 advisory committee members include employers, health plans, public benefits organizations, healthcare professional associations, healthcare providers, and wellness promotion companies. The group represents a variety of perspectives from the healthcare industry and has been collaborating to draft the standards, which were released for public comment today. The deadline for public comment is August 7.

Pension Plan Commuted Value Interest Rate Assumptions For August

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


Monday, June 30, 2008

Decision Simplifies Managerial Misconduct Laws

The Supreme Court of Canada has significantly reduced a punitive damages award given to a former employee of Honda Canada, says ‘Labour & Employment Law In the News’ from Heenan Blaikie. The employee, who suffered from chronic fatigue syndrome, sued the automaker claiming he was wrongfully dismissed. While he was originally awarded more than $1 million including 15 months salary in lieu of notice, $500,000 punitive damages, and $600,000 in legal fees, the Supreme Court decided there was no justification for punitive damages which are restricted to advertent wrongful acts that are so malicious and outrageous that they are deserving of punishment on their own. The decision simplifies the law surrounding managerial misconduct during dismissal and reduces corporate exposure to massive awards claimed by dismissed employees in recent years.

Surplus Distribution Rejected

The Federal Court of Appeal has found that the federal Pension Benefits Standards Act (PBSA), unlike the Ontario Pension Benefits Act (PBA), does not require surplus to be distributed when a pension plan is partially terminated, says Anthony Devir, of Osler, Hoskin & Harcourt LLP. A group of former employees of Marine Atlantic Inc. had argued that the reasoning in the Monsanto case in respect of the PBA also applied to federally regulated pension plans and thus compelled a distribution of surplus on any partial termination of a federally regulated pension plan. The court concluded that the federal legislation was materially different from the PBA and thus the reasoning in Monsanto was not applicable in the federal sphere.

‘Automatic’ 401(k) Features Likely to Be Big Help

New analysis by the nonpartisan Employee Benefit Research Institute (EBRI) finds that the ‘automatic’ 401(k) features in the Pension Protection Act of 2006 (PPA) – such as auto-enrollment of workers and auto-escalation of their savings contributions – are likely to have a very significant positive impact in generating additional retirement savings for many workers, especially for low-income workers. Its analysis found that, when results are aggregated across all income categories, the increase in the value of 401(k) accumulations at age 65 as a multiple of final earnings for those currently ages 25 to 29 would be approximately 2.4 to 2.6 times final salary by switching from voluntary enrollment to automatic enrollment. Although the aggregate results favor automatic enrollment, distributional analysis of the differences between the two systems indicates that the higher paid are not likely to benefit as much from such a change.

Sigma Assistel Certified ISO 9001:2000

Canadian telephone assistance pioneer Sigma Assistel has obtained ISO 9001:2000 certification. A subsidiary of Desjardins Financial Security, it has successfully passed a stringent audit of its internal quality management system and can now join the ranks of the small number of assistance services companies that have obtained this certification in Canada. Its services include health assistance, legal assistance, home assistance, travel assistance, psychological assistance, and roadside assistance.


Friday, June 27, 2008

Thinking On Hedge Funds Unchanged

Last year's downturn in hedge fund performance has not caused institutions to shift their thinking with regard to their hedge fund investments, says research from Greenwich Associates. The share of hedge fund capital provided by institutions was unchanged from 2006 to 2007 following several years of steady growth. Nevertheless, pension funds, endowments, and foundations remain strongly committed to the asset class. They directly provide 13 per cent of the average hedge fund's assets under management. Institutions also commit assets to hedge funds through their investments in fund of funds, which account for an additional 23 per cent of hedge fund assets.

DC Plans Become Linchpin

Defined Contribution pension plans such as 401(k)s are growing and changing fast as they evolve into a linchpin of Americans' retirement savings, says a McKinsey & Co.  study. Boosted by a widespread shift to automatic enrollment and other factors, the DC market is estimated to double in size by 2015 to $7.5 trillion to $8.5 trillion in assets under management. That will make it three times larger than the once-dominant market for Defined Benefit pensions.

Benefits Employment Incentive

Benefit packages rank third and pensions fifth when it comes to employment incentives for Gen X and Y, says a survey by David Aplin Recruiting. Advancement opportunities was the number one incentive for 96 per cent of respondents in the Gen Y demographic, those born 1980 and after, and 90 per cent for Gen X, those born 1962 to 1979. Performance-based bonuses and salary increases and new challenges and a variety of interesting projects round out the top five incentives for these groups. However, hiring managers commonly offer support of local charities and a casual dress code as their leading incentives for Gen X and Y workers.

Alternative Assets Grow During 2007

Alternative assets managed on behalf of pension funds by the largest global money managers grew by 40 per cent to $822 billion from $586 billion during 2007, says Watson Wyatt research. Real estate – $512 billion; fund of hedge funds (FoHFs) – $146 billion; and private equity fund of funds – $139 billion; topped the list followed by infrastructure and commodities. However, these are growing alternatives classes with the top infrastructure managers responsible for $43 billion and commodities managers with $16 billion.

Standard Life Introduces New Tool

The Standard Life Assurance Company of Canada has introduced a new website to allow group savings and retirement plan members to take ownership of their plans. Offering an ‘retirement dashboard,’ the site provides members with an overview of their planning activities, their contributions, account balances, asset allocations, and projected retirement assets, every time they log on to the website. At the same time, Standard Life introduced a second website that it believes will change the way plan sponsors do business. The ‘VIP Room’ is designed to motivate and involve plan members in the retirement planning process and to keep them coming back. For plan sponsors, it is designed to save them time and offer them cost-effective administrative solutions.

Attitudes Influence Participation

Participant attitudes strongly influence the level at which they contribute to their retirement plans, says a Spectrem Group report. On average, it found plan participants contribute seven per cent of their salary to their company's retirement plan. Close to half (44 per cent) contribute six per cent or more to the plan and of these, half contribute 10 per cent or more. Six in 10 (57 per cent) plan participants contribute less than six per cent and more than half (56 per cent) of these contribute less than four per cent. In determining how much of their salary to defer, a slight majority (51 per cent) said they save what they can afford. Other strategies included targeting a percentage of earnings to save (20 per cent) and wanting to save something (13 per cent).

Report Identifies Insurance Costs

A 65-year-old couple in the U.S. needs $85,000 on average to cover insurance costs for long-term care such as nursing home stays in retirement, says a study by Fidelity Investments. The finding underscores the need to financially prepare for the possibility of eventually needing assistance to get by – a burden that often falls on elders' adult children, who can jeopardize their own finances by caring for an ailing parent while finding they must cut their work hours. The $85,000 for long-term care insurance – which can cover costs for everything from regular visits to a home by a caregiver, to living in a nursing home – is in addition to $225,000 needed for other healthcare.

Use Of Wellness Incentives Grows

The use of incentives for employee participation in, and completion of, health and wellness programs continues to grow, says a survey by the ERISA Industry Committee (ERIC), the National Association of Manufacturers (NAM), and IncentOne Inc. It found that currently 77 per cent of employers offer formal health and wellness programs, up from 72 per cent in 2007. More than half of those currently without programs plan to add them within six to 12 months. The proportion of employers offering incentives for health and wellness programs increased from 62 per cent in 2007 to 71 per cent in 2008. Gift cards are the most common incentives offered for health and wellness programs in 2008 (28 per cent), followed by premium reductions (26 per cent), and cash bonuses (24 per cent). Incentives are most frequently offered to drive program participation and program completion.

Walker Top Consultant

Jacquie Walker, of Buck Consultants, an ACS company, has been named one of Consulting magazine’s ‘Top 25 Consultants for 2008.’ Walker is a principal in the firm’s Toronto, ON, office and a Fellow of the Certified Employee Benefit Specialist (CEBS) program. "Being selected for this prestigious list is truly one of the highlights of my 27-year consulting career," says Walker.


Thursday, June 26, 2008

Mentoring Programs To Expand

The Million Dollar Roundtable new executive committee will focus on expanding mentoring programs, succession planning, and boomer retirement, says Walton Rogers, the incoming president. Speaking to delegates at its annual meeting, he says one of the mentoring goals will be to help more agents reach MDRT standards. In terms of succession plans, he said advisors need to create succession plans for themselves and their clients. This will be a growing issue as more baby boomer reach retirement.

Family Income Participation Determinant

Family income and education affect participation in an individual retirement account (IRA), says the May 2008 ‘EBRI Notes.’ They report that 23 per cent of workers, ages 21 to 64, owned an IRA at the end of 2005, an increase from 15.9 per cent at the end of 1996. However, IRA ownership increased with family income. Among workers with family income of $75,000 or more, 35.1 per cent owned an IRA at the end of 2005. This compares with 8.3 per cent of those with family income of $10,000 to $19,999 who owned an IRA. IRA ownership also increased substantially with education, growing from 2.7 per cent of workers without a high school diploma to 46.5 per cent of those with a graduate degree.

Pre-retirees Overestimate Draw Down

Almost seven in 10 (69 per cent) pre-retirees overestimate how much they can draw down from their savings, says MetLife's first ‘Retirement Income IQ Test.’ It found 43 per cent believe they can withdraw 10 per cent or more each year while still preserving their principal. Most retirement experts suggest a withdrawal rate of no more than four per cent annually. Significant gaps also exist around average life expectancy and other retirement income issues. Six in 10 underestimate life expectancy and almost half (49 per cent) underestimate the amount of pre-retirement income they'll need once they retire. This is particularly concerning because poor retirement planning assumptions are compounded after retirement by today's much longer life expectancy.

SWF Suggested To Help Pension Fund

A ruling party panel in Japan believes a sovereign wealth fund would help the country better manage its pension funds. At present, the country’s state-run pension fund invests roughly two-thirds of its $1,391 billion in Japanese bonds. A SWF would impact the Japanese government bond market if the pension fund drastically changed its portfolio by investing in stocks and similar securities. One concern is that such a fund would expose the nation’s pension fund to more risky investments.


Wednesday, June 25, 2008

Nortel Faces Pension Class Action

A class action lawsuit has been filed in Ontario Superior Court against Nortel Networks for changes it made to its employee pension plan in 2006. In June 2006, Nortel made changes to its pension packages including closing its Defined Benefit pension plan as of January 1, 2008, to all but certain employees who met a series of criteria. The lawsuit was filed on behalf of those employees who did not meet the criteria and were moved to a Defined Contribution plan. The suit must still be certified by the court.

Index Beats Active Managers

Only 8.2 per cent of Canadian equity active fund managers outperformed the S&P/TSX composite index for the first quarter of 2008, says the ‘Standard & Poor’s Indices Versus Active Funds Scorecard’ (SPIVA) for Canada. Active managers in the Canadian focused equity category fared better with 46.3 per cent beating the blended S&P/TSX composite benchmark (comprised of 50 per cent S&P/TSX composite, 25 per cent S&P 500, and 25 per cent S&P/Citigroup EPAC PMI). In the Canadian small/mid cap equity category only 24.1 per cent of active managers outpaced the S&P/TSX completion index.

Global Code For Pension Funds Launched 

The CFA Institute Centre for Financial Market Integrity has launched the ‘Code of Conduct for Members of a Pension Scheme Governing Body’ to help such individuals manage their ethical responsibilities. The code sets forth 10 fundamental ethical responsibilities for individuals who sit on the governing bodies of pension funds worldwide. Though voluntary, the CFA Institute Centre encourages pension plans to adopt the code to establish an ethical framework for governing board members and to demonstrate their commitment to serving the best interests of participants and beneficiaries.

Insufficient Income Most Undesirable Scenario

Insufficient retirement income from Defined Contribution plans tops the list of the 10 most undesirable scenarios identified by institutional investors that could happen in 10 years, says a Watson Wyatt survey. While the pension industry’s attention has remained largely focused on Defined Benefit schemes, the global assets invested in DC schemes are likely to exceed those in DB plans within the next five to six years. However, many DC plan members spend a disproportionately small amount of time each year thinking about their pensions. Despite this, Watson Wyatt says there is a new generation of DC plans and members looking to take advantage of recent innovations.

Disconnect Over Value Of Benefits

A significant disconnect exists between employers’ views about their workplace benefit program and the perceptions of employees, says a MetLife study. Its ‘Employee Benefits Trends Study’ says 55 per cent of smaller company employers – those with fewer than 500 employees – contends that benefits play a very important role in employee retention and that such retention is a top corporate objective. However, only 34 per cent of workers at these smaller employers say their benefits are a very important reason to remain with their employer.

HOOPP Selects SimCorp

The Hospitals of Ontario Pension Plan (HOOPP) has selected SimCorp Dimension for back office and accounting operations for all of its public market investments. SimCorp Dimension is an integrated, enterprise-level tool that provides front, middle, and back office solutions for the investment management industry.

Mawer Names President

Michael Mezei is president of Mawer Investment Management Ltd. He has been an investment industry executive since 1994, with senior roles at Franklin Templeton Investments and ATB Investor Services in Calgary.  

Calgary Office Gets Two

Jeff Vathje is a senior consultant and Michael Alvarez is a compensation consultant at Hewitt Associates’ talent and organizational consulting practice in Calgary, AB. Vathje was, most recently, with EnCana Corporation. Alvarez has worked at two other human resources consulting firms, collaborating with both international and local clients.


Tuesday, June 24, 2008

Need Growing For Financial Advisors

Having enough financial advisors to meet the needs of future clients is a key challenge facing the industry, says Kevin Dougherty, president of Sun Life Global Investments. Speaking at the Million Dollar Round Table annual meeting, he said the industry offers enormous opportunity because of mega-trends such as “healthcare costs, an aging population, and the decline of Defined Benefit pension plans.” Greater than these trends, however, is the “systematic withdrawal of governments all over the world from providing healthcare, pensions, and survivor benefits.” This is leaving a “huge insurance vacuum for us to fill.”  

Equities Primary Component

Because people are living longer, there will be a long period in which money needs to be managed, says Earl Bederman, president of Investor Economics Inc. Speaking at the Investment Industry Association of Canada annual conference, he said this means equities will be the primary component of investment portfolios. At the end of 2007, equities made up 45 per cent of $2.5 billion in household wealth. This could grow to 58 per cent of $5.5 billion by 2016.

CIBC Mellon Extends Russell Relationship

CIBC Mellon Global Securities Services Company has been reappointed by Russell Investments Canada to provide global custody, fund accounting, foreign exchange, and securities lending services. Raj Vijh, of Russell, says "We firmly believe that the strong partnership we have developed with CIBC Mellon brings us an unmatched level of efficiency, accuracy, and attention to our needs."

RBC Buys Into O'Shaughnessy

Royal Bank of Canada has agreed to buy a 10 per cent stake in O'Shaughnessy Asset Management LLC. It is part of the bank’s efforts to expand its money management business. The Stamford, CT, money manager oversees about $9.6 billion including about $6 billion in Canada for Royal Bank clients through 10 funds and pools including a Canadian equity fund.

Hedge Funds Attract Attention In U.S.

Despite weaker returns in 2007, U.S. institutional investors plan to increase their allocations to hedge funds, says research by Greenwich Associates. It reports 23 per cent plan to increase hedge fund allocations over the next three years. Institutions also passed high net worth individuals as investors in hedge funds. They provided hedge fund firms managing $1 billion or more with 25 per cent of their assets under management, compared to 22 per cent from high net worth clients.

Warmbold Now COO

Benita M. Warmbold is senior vice-president and chief operations officer for the CPP Investment Board. Most recently, she spent 11 years as managing director and chief financial officer for Northwater Capital Management Inc. She previously held senior positions with Canada Development Investment Corporation and KPMG.


Monday, June 23, 2008

Banks To Stand By Commitment

The large banks lending to the Ontario Teachers' Pension Plan group will stand behind their original commitment to the BCE Inc transaction. Citigroup, Deutsche Bank AG, Royal Bank of Scotland PLC, and Toronto-Dominion Bank said in a joint release they are negotiating financing documents in good faith and expect that the transaction will close in accordance with the definitive agreement signed last June. Friday, the Supreme Court of Canada reversed a Quebec appeal court decision in favour of BCE's bondholders paving the way for the deal to be completed. The deal is expected to finalize in August.

CPPIB Buys Stake In Toll Road Developer

Canada Pension Plan Investment Board (CPPIB) has purchased a 10 per cent stake in Transurban Group, an international toll road developer and manager. It operates tollways in Australia and the U.S.

Effective ‘Food Chain’ Needed

Pension funds need to create a more effective "food chain" that provides better value for money, says a Watson Wyatt report. Annual investment costs at pension plans rose more than 50 per cent between 2002 and 2007. The report says this would be acceptable if value had risen faster, but this has not been the case. It suggests that they introduce full-time in-house investment expertise to allows governing boards to concentrate on issues of strategic importance. The investment executive would translate the strategy into action.

Paper Examines Plan Data

MassMutual's Center for Behavioral Research has released a white paper to help plan sponsors and retirement plan advisors gain the most value from recordkeeping data collected for retirement plans. ‘Why Data Matters: Generating Value from Retirement Plan Data’ outlines the process through which retirement plan data can be used to enhance plan value, performance and participant engagement; streamline or reduce administration; and help plan fiduciaries meet their obligations.


Friday, June 20, 2008

OSFI Seeks Comment On FRE Securitization Exposures

The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments on a draft advisory on the capital treatment of securitization exposures for Canadian Federally Regulated Entities (FREs). "This draft advisory takes into account some observations made during the," says Superintendent Julie Dickson. She notes that during the recent turmoil in Canadian and international securitization markets, Canadian banks backed their own asset-backed commercial paper (ABCP) conduits even when not legally required to do so. "This action demonstrated that, despite legal and expert opinions to the contrary, the risk was not, in fact, fully transferred, and established the need for a capital charge which more appropriately reflects the risk taken on by the institutions."

RCMP Charges Ex-Nortel Execs

Three former Nortel Networks executives have been charged with fraud by the Royal Canadian Mounted Police. Former CEO Frank Dunn, chief financial officer Douglas Beatty, and corporate controller Michael Gollogly have been charged. Dunn is charged with fraud affecting the public securities market, as well as with falsification of accounts and documents and involvement in issuing a false prospectus. Beatty and Gollogly face similar charges. The RCMP alleges they fraudulently misstated financial results from the beginning of 2002 to mid-2003.

Court Dismisses Claim Against Imperial Oil

The Alberta Court of Queen's Bench has dismissed the claims of former Imperial Oil employees in Alberta that the company breached the terms of its pension plan and its fiduciary and other duties in amending the plan to alter the eligibility requirements for an ancillary benefit, says Ian McSweeney, of Osler, Hoskin & Harcourt LP. These same claims were also the subject of litigation in Ontario in 1995, but were dismissed by the Pension Commission of Ontario (PCO) without appeal. The Alberta Court of Queen's Bench dismissed the plaintiffs' claims on the basis that it has already been judged due to the prior PCO decision as well as on the merits, finding that the company did not breach the terms of its pension plan or the EPPA, nor did the company breach any fiduciary duty or duty of good faith.

Julius Baer Now Artio

Julius Baer Investment Management LLC has become Artio Global Management LLC. The goal of our new company is to build on the success of Julius Baer and ushers in a new phase of its evolution as a U.S.-based asset management company.

Brickburn Selects RBC Dexia

RBC Dexia Investor Services has been selected by Brickburn Asset Management Inc. to provide a full range of investor services. These services include global custody, fund valuations, and unitholder recordkeeping for its newly-launched family of mutual funds.

Fortin Joins Standard Life

Sophie Fortin is senior vice-president, human resources and corporate services, at Standard Life Assurance Company of Canada. She has more than 20 years of experience with national and international companies such as MAAX, Bristol-Myers Squibb, and Agropur.

Laporte Moves To Osler

Jean-Pierre A. Laporte is joining the pension and benefits practice at Osler, Hoskin & Harcourt LLP. He was previously with Hicks Morley.


Thursday, June 19, 2008

DB Outperforms 401(k)

Rates of return for Defined Benefit pension plans outpaced those for employee-directed 401(k) plans during the most recent bull market from 2003 to 2006, says analysis by Watson Wyatt Worldwide. The comparison of investment rates of return between DB and Defined Contribution plans found that DB plans outperformed 401(k) plans by 1.7 percentage points in 2003, two points in 2004, 1.1 points in 2005, and 1.6 points in 2006. Overall, from 1995 through 2006, DB plans outperformed DC plans by an average of about one percentage point per year over this 12-year period. This would translate into a cumulative dollar difference of nearly 14 per cent for money invested at the start of the period.

Committee’s Plan Challenged

The Pan-Canadian Investors Committee for Third-Party Structured ABCP says proceedings have been taken by a number of corporate noteholders in the Ontario Court of Appeal seeking to challenge the Ontario Superior Court of Justice decision that sanctioned its plan to restructure $32 billion of third-party asset-backed commercial paper. The Ontario Court of Appeal will hear the matter on June 25 and 26. The committee will ask the court to dismiss the proceedings and to leave in place approval of the restructuring plan that the overwhelming majority of affected noteholders voted in favour of in April.

Standard Publishes ‘Summary’

The Standard Life Assurance Co. of Canada has published the latest edition of its ‘Summary of Pension Legislation.’ It has been updated to keep pace with changes in federal and provincial legislation affecting group pension plans in Canada. First launched a decade ago, the ‘Summary’ is intended for its clients who offer group retirement plans.

EAFE Managers Recover

The median manager in the InterSec Research EAFE Plus universe returned 7.05 per cent for the first two months of the second quarter 2008. For the year to date ending May, the median manager returned -2.28 per cent, out-performing the EAFE index by 75 basis points. Growth managers have continued to produce higher returns in 2008. Year to date, the median growth portfolio return of -2.15 per cent out-performed the median value return of -2.79 per cent.

FTSE Agrees To Develop Asian Real Estate Indices

FTSE Group and the Asian Public Real Estate Association (APREA), along with the National Association of Real Estate Investment Trusts (NAREIT) and the European Public Real Estate Association (EPRA), have formalized a partnership to develop new indices for Asia Pacific’s real estate sector. Many Asian countries have introduced or are set to introduce REIT regimes.

Sibson Opens Montreal Office

Sibson Consulting has opened an office in Montreal, QC. Known as Conseillers Sibson in Quebec, it is located at 1250 Rene Levesque Blvd. W., Ste. 2200, Montreal, QC. It says the decision to open the office is the direct result of its success in growing its human resource and benefits consulting business in Canada.

Marotta Joins Bentall

John Marotta is a senior vice-president at Bentall Capital. Based in Calgary, AB, he will have responsibility for development in its western region which consists of Alberta, Saskatchewan, and Manitoba. Most recently, he was vice-president of commercial properties at Pauls Properties Corporation.

Marmoreo Regional Vice-president

Michael Marmoreo is regional vice-president, sales, group pensions, central and western Canada, at Industrial Alliance Insurance and Financial Services Inc. He joined the company in 2004 as the regional sales director, group pensions, in the Toronto, ON, office.


Wednesday, June 18, 2008

Court Delays BCE Decision

The Supreme Court of Canada has delayed its ruling on whether to approve or reject the buyout of BCE Inc by an Ontario Teachers' Pension Plan group. It is being asked to decide if BCE bondholders were treated fairly and its decision could add billions of dollars to BCE's market value if it approves the $34.8 billion transaction to take the company private. It would rank as the world's largest leveraged buyout. However, if it sides with bondholders who want the deal blocked on the grounds that it would saddle BCE with too much debt, it could force companies to consider more than the interests of shareholders when weighing buyout proposals. It is not yet known when the court will hand down its decision, however, there is a June 30 deadline for the transaction to close.

Partial Auto-enrollment Possible

Some Canadian employers are finding that they can attain partial auto-enrollment in Defined Contribution pension plans by obtaining consent for pension plan participation and deductions in the contract of employment, says Watson Wyatt ‘InfoCanada.’ However, this only enrolls new hires into the DC plan and does not assist in enrolling longer term employees who did not avail themselves of the plan at the time they were hired. Legislative changes are necessary to most provincial employment statutes in order for Canada to fully implement automatic enrollment.

Study Calls For Pandemic Preparedness

"The probability that an influenza pandemic can adversely affect a company's employees is greater than the probability that a fire could adversely affect a company's property," says Dr. Amin Mawani, author of a Schulich School of Business study that assesses the micro-economic impact of an influenza pandemic on individual companies. Presented at the World Conference on Disaster Management, Mawani, an associate professor in the health industry management program, said according to world health experts, it's not a matter of "if," but "when" the next influenza pandemic will strike. An influenza pandemic could result in corporations experiencing severe absenteeism of 30 to 40 per cent among its employees and “since employees are a company's revenue drivers, prolonged absenteeism would have a significant adverse impact on a corporation's revenues and profits.”

Entrepreneurs Should Relax

Entrepreneurs should turn off their blackberries and make relaxation a priority this summer for the sake of their physical and mental health, says Desjardins Financial Security's ‘National Health Survey.’ Entrepreneurs who participated in the survey were asked to rate their current level of financial security, mental and physical health, and their stress level compared to the previous year. Close to 92 per cent said they were financially sound and 77 per cent were in very good physical and mental health. However, when asked to comment on their stress level, 31 per cent said their stress had increased. As well, 78 per cent said that they had gone to work sick or exhausted in the past. They had done so on average seven times in the last year, most often to meet business deadlines and out of a sense of personal duty.

ABCP Write-down Sufficient

Industrial Alliance Insurance and Financial Services Inc. is still comfortable with the 15 per cent write-down it took on non-bank asset backed commercial earlier this year, says Yvon Charest, president and chief executive officer. Speaking at its ‘Investor Day’ for the institutional investment community, he said because of the conduits to which they were exposed, they do not expect any further action will be needed.

Canadians Retire In Summer

More Canadians retire in the summer months, says a Fidelity Investments survey. The third annual ‘Fidelity Canadian Retirement Survey’ shows that June, July, and August are the months when the highest numbers of Canadians retire. However, this year's survey shows that more retirees are finding retiring is getting harder. It shows that 40 per cent of retirees continued to work after retiring. Compared to last year's survey, fewer retirees report that their transition into retirement was as easy as they thought it would be. In the ‘2006/2007 Fidelity Canadian Retirement Survey,’ 48 per cent of respondents reported that their transition into retirement was easier than they expected. This year, only 39 per cent of retirees reported that their transition into retirement was easier.

Clemons Speaks At Session

Michael ‘Pinball’ Clemons, Toronto Argonauts CEO, will be the keynote speaker at the ‘Group Benefits And Retirement Services Fall Section Meeting’ set for November 12 to 14 in Niagara-on-the-Lake, ON. For information, contact LOMA Canada, (416) 234-5661,, or visit


Tuesday, June 17, 2008

Teachers’ Has Plans For BCE

The Ontario Teachers' Pension Plan will attempt to makeover BCE Inc. if its effort to take the company private fails, says a report in the Globe and Mail. It says Teachers, BCE's largest shareholder with a 6.3-per-cent stake, will meet with BCE directors and ask them to implement some version of its strategy to operate the company. Teachers’ launched the takeover attempt because it was unhappy with the way the company was being operated. The fate of the deal now rests with the Supreme Court of Canada which has been asked to rule on an appeal that BCE bondholders were not given proper consideration when BCE agreed to the deal.

Canadian FX Volumes Increase

Canadian foreign exchange trading volumes increased 70 per cent from 2006 to 2007, with growth spanning almost all products, including swaps, forwards, and emerging markets currencies, says a report from Greenwich Associates. The year-to-year growth of the Canadian foreign exchange business easily surpassed the growth in global trading volume which rose 30 per cent from 2006 to 2007, continuing a steady run of double-digit annual growth. FX volume increases in Canada were generated mainly from financial institutions.

Griggs Heading CCGG

Stephen Griggs has been appointed managing director of the Canadian Coalition for Good Governance (CCGG). Griggs brings a corporate law background to the coalition as well as nearly 15 years of experience in investment management. He was, most recently, president and CEO of Legg Mason Canada Inc.

Foot Speaks At TMAC

Dr. David Foot, professor, author, demographer, and economist, will be a featured speaker at TMAC's ‘26th Annual Conference & Trade Show.’ Set for September 21 to 23 in St. John’s, NL, it will also feature Stan Marshall, president and chief executive officer of Fortis Inc. For more information, visit


Monday, June 16, 2008

Employers Opt For QDIA

Nearly eight-in-10 (78 per cent) of U.S. employers offer a qualified default investment alternative (QDIA), says a Fidelity Investments survey. Most (63 per cent) use lifecycle funds. QDIAs provides a fiduciary liability safe harbor for employers that choose lifecycle funds, a balanced fund, or managed accounts as the investment to which participant dollars are defaulted in the absence of an investment election. This was the biggest factor in driving employers to change default options (53 per cent), followed by their concern for their employees' ability to be retirement ready (27 per cent).

Group May Adopt ESG Indicators

The European Federation of Financial Analysts Societies (EFFAS) may adopt a set of 30 key performance indicators for environmental, social, and governance issues. Investment analysts say they currently cannot get enough financially relevant and comparable information on ESG issues from companies. Adoption of the indicators is expected to put pressure on companies to report clearly to investors on issues such as carbon emissions, energy efficiency, staffing policies, preventing corruption, and supply chain management.

Reynolds Heads Putnam

Robert L. Reynolds will become president and chief executive of Great-West Lifeco Inc.’s Putnam Investments as of July 1. He replaces Charles E. Haldeman who will become chairman of Putnam. Putnam was acquired by Great-West Lifeco last fall.

Workshop Takes In-depth Look At Hedge Funds  

‘The Masterclass In Hedge Funds – An Advanced Learning Seminar & Workshop on Hedge Funds’ will take place in Jordan, ON, July 15 to 17. Course instructor is Tammer Kamel, president of The Iluka Consulting Group which is an alternative investment strategies advisory firm. He has spent 10 years working with hedge funds, designing and implementing trading models and risk management systems for fixed income arbitrage, convertible arbitrage, and statistical arbitrage. For more information, visit


Friday, June 13, 2008

Employer DB Risk Challenged

Common assumptions about who bears the risk in Defined Benefit pension plans are overly simplistic and questionable, says a study by the C.D. Howe Institute. In ‘Risky Assumptions: A Closer Look at the Bearing of Investment Risk in Defined Benefit Pension Plans,’ James E. Pesando, an economist at the University of Toronto, examines whether employees, employers, or both, ultimately share the risk for poor investment performance in DB plans. The study found members of DB plans may bear substantial investment risk. The key issue is the extent to which members of DB plans grant wage or other concessions based on the contributions made by the plan sponsor, including any additional contributions required as a result of investment shortfalls. As a result, while there is a strong case for clarifying the ownership rights to investment surpluses that may emerge in DB plans, the argument that sponsors are entitled to plan surpluses because they bear all of the downside risk of investment performance may not withstand closer scrutiny.

Market Value Of Funds Increases Slowly

The market value of retirement savings held in employer-sponsored pension funds increased at its slowest pace in five years in 2007 with only marginal gains in the last two quarters of the year, says Statistics Canada. Assets in these pension funds closed 2007 with a market value of $966 billion, up 4.8 per cent over 2006. This was the smallest increase in value since the devaluations of assets in 2001 and 2002. Pension fund assets held in stocks and equity funds accounted for 37.2 per cent of total assets. The share of assets held in bonds and bond funds increased to 33.8 per cent. Domestic holdings rose slightly to 69.9 per cent of total fund assets in 2007, while the share in foreign holdings edged down from 30.9 per cent to 30.1 per cent.

Venture Capital Fund Launched

A $205 million fund which will invest primarily in Ontario-focused venture capital and growth funds has been launched. The Ontario Venture Capital Fund is a limited partnership between OMERS Capital Partners, RBC Capital Partners, Manulife Financial, the Business Development Bank of Canada, TD Bank Financial Group, and the Ontario government. The province is investing $90 million into the fund with the balance coming from the other partners.

LOMA Hands Out Best Practices Awards

Assumption Life, AEGON Canada, and Desjardins Financial Security have been awarded LOMA Canada’s ‘2008 National Corporate Awards for Best Practices in Learning and Development.’ Assumption Life won the award in the small company category for its orientation and training program. All new full-time and part-time employees at all job levels start a 15-week training program their first day on the job, ensuring they are familiar with the company, the industry, their department, and their role in the company. AEGON Canada was presented an award in the large company category for its competency coach program. The on-line ‘coach’ helps all employees understand how to practice and demonstrate its nine personal leadership competencies. Desjardins Financial Security’s e-learning course on the automation of address changes in WEBi was developed to teach the personnel of financial centres how to make accurate address changes in WEBi. The awards are dedicated to the memory of Andre Mailhot, who was vice-president and general manager, human resources, at Industrial-Alliance Life Insurance Company.

New Brunswick Eliminates Sexual Distinction

New Brunswick is joining other Canadian pension jurisdictions in eliminating the distinction between same sex and opposite sex spouses and partners, says a McInnes Cooper ‘Pension Law Update.’ Bill 31 makes changes to the New Brunswick Pension Benefits Act with respect to legal and common-law spouses. While it has received Royal Assent, it has not yet been proclaimed into law. Once Bill 31 becomes law, pension plans will need to be amended and plan administrators should advise members of the changes, in particular the right of some same sex spouses and common-law partners to request the conversion of a pension in pay to a joint and survivor form.

State Street Combines Solutions

State Street is combining its alternative investment solutions unit with its hedge fund, private equity, and alternative risk units. This will allow it to offer a complete set of fund accounting, fund administration, and risk services to hedge funds and private equity funds.

Employees Want Financial Advice

Employees are showing increasing interest in receiving financial advice in the workplace, says a MetLife ‘Study of Employee Benefits Trends.’ It found 49 per cent of respondents were interested in having access to financial planners to assist with 401(k)s, up from 38 per cent in 2006. Similarly, 44 per cent were interested in having planners assist with all financial needs at the workplace, as compared with 30 per cent in 2006.

Compensation Programs Hurt IT Investment

Compensation programs based on short-term performance may be a major reason insurance companies are not spending more to update their IT processes to take full advantage of them, says Ross Morton, of RGA Re. Speaking at the 2008 LOMA Canada Annual Conference, he said the fact that CEOs and other senior executives are compensated for quarterly or annual performance makes them unwilling to invest in programs which will benefit future executives. Sultan Akif, of Microsoft Canada, said one solution is to break these projects down to smaller steps towards the ultimate target.

DB Plan Health Improves Again

The financial health of Defined Benefit pension plans sponsored by companies in the S&P 500 improved for the second straight year in 2007, with aggregate pension assets surpassing aggregate pension liabilities for the first time since the end of 2001, says Mercer research. It shows aggregate pension plan assets of $1.56 trillion exceeding aggregate pension liabilities of $1.5 trillion in 2007. The funded status improved due to net asset returns generally going past expected 2007 targets, along with a 30 to 50 basis point increase in the discount rates used to value the actuarial pension liabilities.

Ginsler At Gluskin Sheff

Brian Ginsler is vice-president, corporate development, at Gluskin Sheff + Associates Inc. Previously, he was a vice-president with a leading Canadian wealth management firm. Tim Stinson is vice-president, risk management. He has more than 20 years of experience in the private-client investment management industry.


Thursday, June 12, 2008

Ethical Investing ‘Negative’

‘Michael Jantzi does not like the term “ethical investing.” Speaking on socially responsible investing (SRI) at the Morningstar Investment Conference, the president of Jantzi Research said ethical investing is one-dimensional and focuses on the negative. He said SRI is being embraced by companies which believe that including social, environmental, and governance considerations in their business model will improve their bottom line. As well, this means that investors can focus on companies which are the best in their sector, regardless their industry. 


The TSX Group Inc. will become the TMX Group Inc. The name change follows the completion of the business combination with Montreal Exchange Inc. Directors of the TMX Board are Luc Bertrand, Tullio Cedraschi, Raymond Chan, Denyse Chicoyne, Wayne C. Fox, Raymond Garneau, John A. Hagg, Harry A. Jaako, J. Spencer Lanthier, Jean Martel, Owen McCreery, John P. Mulvihill, Carmand Normand, Kathleen M. O'Neill, Gerri B. Sinclair, Jean Turmel, and Laurent Verreault.

Auto Enrollment Suggested For Retirees   

The Retirement Security Project is proposing that 401(k) participants be automatically enrolled in lifetime income vehicles upon retirement. In a paper, the group says the private market is responding to the changing retirement income landscape and fears of outliving retirement savings by developing new lifetime income products. However, it says these products will have varying success at matching consumers' preferences and need, and they may only reach a select group of consumers. Adding ‘automatic’ (default) features to 401(k)s allows inertia to work in favor of lifetime income, as it has done in increasing 401(k) participation rates and contribution levels.

RI Investment Levels To Rise

Global asset managers predict that the level of assets they manage according to responsible investment (RI) criteria will rise by more than $700 billion in the next two years, says the ‘RI Landscape Asset Managers 2008 Survey.’ The rise is predicted to be sharper among fund managers who do not already run their assets on a 100 per cent RI basis which suggests that fund managers are increasingly recognizing responsible investment as a mainstream approach.

Systematic Approach To Multi-generation Workforce

With four distinct generation groups now functioning together in workplaces, businesses need to start addressing differing needs in more systematic ways, said Sanjiv Kumar, managing director, human capital management, at a Buck Consultants seminar. Organizations need to first plan ahead, he said, and ensure their operational workforce strategies are aligned with workforce supply/demand issues. When a workforce culture is properly defined, multi-generation needs can be accurately addressed through flexible total rewards, non-financial rewards, talent retention strategies, and by using various forms of technology to target messages at multi-generation workers.

AXA Launches Guaranteed Investment Funds

AXA Group has launched a line of guaranteed investment funds. ‘accumulife’ option funds offer the potential of mutual funds combined with guarantees. It has 12 investment options ranging from fixed income to maximum growth portfolios,

FEI Canada Celebrates 60 Years

Financial Executives International Canada (FEI Canada), the professional membership association for senior financial executives, has started a series of celebrations to commemorate 60 years of members, professional development, and advocacy. In 1948, representatives from Hamilton and Montreal came together to create the first two Canadian chapters of Financial Executives International. Thomas Van Zuiden, the 2008 recipient of the Frank S. Capon Distinguished Service Award and a 43-year member of FEI Canada, said, “FEI Canada has come a long way since the days of being an extension of FEI U.S. to being the definitive voice of senior financial executives in Canada.” He was recognized for his contributions to FEI Canada and the financial community at large. The award honours Frank Capon is credited with bringing FEI to Canada in 1948.


Wednesday, June 11, 2008

Door Open For Better Year In 2009

The Bank of Canada and U.S. Fed decisions to cut interest rates sharply to deal with downside risks to the economy and the credit squeeze have greatly reduced the possibility of a major economic downturn and opened the door for 2009 to be a better year for the Canadian and U.S. economies than 2008, says John W. Johnston, chief strategist for The Harbour Group at RBC Dominion Securities Inc. Commenting in its ‘Quick Comment’ on the decision of the Bank of Canada to keep rates at three per cent rather than cutting them to 2.75 per cent as was widely expected, he said after a year of falling interest rates, the scales are tipping as downside economic risks give way to the possibility of higher inflation. The critical risk for investors in the coming year is that inflation and interest rates surprise on the upside. This is a toxic environment for long-duration fixed income assets, but also a major headwind for equities via their depressing impact on price-earnings multiples.

Media Portrayal Of Drugs Needs Improvement

The media has a crucial part to play in reporting new drug development in Canada, but news can often be unfair and incomplete, said Alan Cassels, a drug policy researcher at a MEDIUM seminar on how pharmaceuticals are portrayed by the media. Media attention on drugs deeply influences usage and treatments, he said, but reports frequently fail to consider the powerful commercial forces at work and downplay side effects. To get the real story, Cassels said the media should more closely examine clinical studies such as how drug manufacturers express benefits, length of studies/treatment, number and nature of participants involved, dropout rates, harms, and other contradictions.

JPMorgan Launches Derivatives Collateral Offering

JPMorgan, faced with explosive demand for over-the-counter (OTC) derivatives processing, has launched a solution designed to help financial institutions handle higher volumes, lower position breaks, and reduce credit risk. Its Derivatives Collateral Management (DCM) solution uses automated reconciliation technology designed to work in conjunction with TriOptima’s triResolve automated position reconciliation service to increase the efficiency and risk management of trading records. The amount of collateral in circulation in the marketplace is estimated to be well over $2.1 trillion. The amount is expected to increase significantly, as institutional investors continue to use collateral coverage to help reduce the credit risk of dealing with counter-parties.

Teachers Life Added As Distributor

The Spencer Dental discount dental benefit has added Teachers Life Insurance as its newest distributor. Teachers Life, a distributor of insurance to teachers and related educational staff for more than 67 years, joins a growing number of insurers, TPAs, and brokers distributing the benefit.

Liquidity Risk Mismanaged

Liquidity risk and model risk are arguably the two most mismanaged risks in portfolios today. At a June 17 Toronto CFA Society luncheon, Ranjan Bhaduri, managing director – head of research at AlphaMetrix Alternative Investment Advisors, LLC, will examine areas such as underestimating the value of liquidity, liquidity buckets, and liquidity derivatives. For more information, visit

Best Workplaces Examined

A panel of three senior executives from companies ranked among the Best Workplaces in Canada 2008 will examine the issue at the ‘12th Annual Health Work & Wellness Conference 2008.’ Set for October 15 to 18 in Calgary, AB, the panel will include Bruce MacLellan, founding president and CEO, Environics Communications; Richard Gotfried, vice-president corporate communications, Trico Homes; and Barry Munro, managing partner, Calgary office, Ernst & Young. For more information, visit


Tuesday, June 10, 2008

Court Hears VEBA Arguments

General Motors Corp. and the United Auto Workers have had the final court hearing to present arguments for the establishment of an independent trust for the voluntary employees’ beneficiary association (VEBA) fund negotiated between the two last year. The fund will be independent from GM’s pension plan and will be run by UAW. It would pay life, sick, accident, and similar benefits to plan members. If approved by the court, it would take about 180 days to set up the fiduciary body and hire managers and consultants.

Derivative Firms Discuss Single Clearinghouse

Financial firms that account for 90 percent of derivatives trading are discussing creating a single clearinghouse for credit default swaps. The 17 are meeting with U.S. and foreign regulators. The proposed reforms would include creating a central credit house for credit default swaps; a program to reduce the number of outstanding contracts through netting; a protocol to manage eventual defaults; and automating trading and settlement. Analysts have expressed concerns that credit default swaps – a market with little transparency – may be the next problem area. The notional value of over-the-counter credit default swaps worldwide stood at $42.6 trillion in June 2007.

European Competition Opens Up

Instinet Europe Ltd.’s efforts to open up competition in the European trading market via the region’s new regulatory regime known as MiFID has seemingly improved execution. The key findings of its best execution policy review, conducted for the first six months operating under MiFID, shows that has connected to, and is successfully trading on, the NYFIX Euro Millennium platform, the only new multi-lateral trading facility to launch during the period. Additionally, Instinet Europe expects to continue to link to new MTFs – including Turquoise, BATS Europe, NASDAQ OMX, and NYSE Euronext’s SmartPool – and systematic internalizers as they are introduced. It also became a member of the Riga, Tallinn, and Vilnius stock exchanges.

RBC Dexia Analyzes Fixed Income Portfolios

RBC Dexia Investor Services has introduced Fixed Income Analytics, a service that provides asset managers with detailed analysis of fixed income portfolios. The service has been specifically designed to analyze fixed income portfolios and has features such as an in-depth breakdown of returns (on a daily basis and at the security level), using a yield-curve based attribution model and customized, drill-down reporting, where analysis is aligned with the client's investment management process and performance overview.

Kloet CEO At TSX

Thomas Kloet is chief executive officer of TSX Group Inc. He has spent the last five years as the senior executive vice-president and COO of Fimat USA, LLC and its successor company, Newedge USA, LLC. Prior to that, he was the CEO of Singapore Exchange Ltd. TSX Group has been looking for a CEO since Richard Nesbitt left early this year to head CIBC World Markets.

Brodersen To Replace Bancroft

The Alberta Teachers' Retirement Fund Board has announced the retirement of Ken Bancroft as chief investment officer effective August 31. He has successfully led its investment operations for the past 14 years. Derek Brodersen has been appointed as his replacement. He has played a senior leadership role in the investment operations of the board since 1997 and has 20 years of diversified financial and investment experience.

Varley Moves To Fogler, Rubinoff

John Varley has joined Fogler, Rubinoff LLP. Previously with Pallett Valo LLP, he will continue his insolvency and pension insolvency practice.

Lépine Presima CIO

Vincent Lépine is chief investment officer and strategist at Presima, an affiliate of the Caisse de dépôt et placement du Québec. He will be responsible for managing portfolios containing global real estate securities and their related investment strategies. Most recently, he was vice-president, research, global asset allocation, at CIBC Global Asset Management.

Oxley Speaks At Conference

Michael Oxley, vice-chairman at NASDAQ, will be a featured speaker at the Canadian Investor Relations Institute’s ‘2008 Annual Investor Relations Conference.’ He will discuss the future of the Sarbanes-Oxley Act. It takes place June 15 to 17 at Mont Tremblant, QC. For more information, visit


Monday, June 9, 2008

Africa Offers Investment Potential

Africa has great investment potential for pension funds, however investors need to be patient, says Jason Paltrowitz, vice-president of the Bank of New York Mellon. Speaking at IMNs ‘7th Annual Canada Cup of Investment Management,’ he said these ‘frontier countries’ – countries which are beyond emerging markets – are currently as far down as they can go, they can’t drop any lower. However, since they can’t go anywhere but up, if problems such as civil war and a lack of financial exchanges can be resolved there is potential for growth because of their rich natural resources.

BCE Delays Dividend

BCE Inc. has deferred its decision on declaring a dividend on the company's common shares for the second quarter of 2008. The $294 million set aside for the quarterly dividend will be retained by the company as it works to be acquired by an investor group led by Teachers' Private Capital, the private investment arm of the Ontario Teachers' Pension Plan; Providence Equity Partners Inc.; Madison Dearborn Partners, LLC; and Merrill Lynch Global Private Equity. The board expects to make a decision regarding the declaration of a dividend by late June.

Code Of Conduct Set Out

The CFA Institute has set out a code of conduct for members of pension scheme governing bodies, says the Hewitt ‘Monitor.’ The ‘Code of Conduct for Members of a Pension Scheme Governing Body represents best practice for the individual members of the pension governing body when complying with their duties to the pension scheme. Whether public or private, each pension scheme board that adopts the code will demonstrate its commitment to serving the best interests of participants and beneficiaries.

Corporate Plans Adding Alternatives

Corporate pension plans will pull $115 billion from equities in 2008, with $65 billion going into physical long duration bonds and $50 billion in alternatives, says a Merrill Lynch report. It forecasts that another $65 billion will flow into fixed income duration extension and interest swap overlay strategies from fixed income allocations, bringing total LDI inflows to $130 billion.


Friday, June 6, 2008

Court Sanctions ABCP Plan

The Ontario Superior Court of Justice has sanctioned the Pan-Canadian Investors Committee for Third-Party Structured ABCP’s plan to restructure $32 billion of third-party asset-backed commercial paper. It accepted a proposed amendment that would allow certain noteholders, under specified conditions, to pursue claims of fraud against ABCP dealers. Implementation of the restructuring plan is expected to be completed by the end of June.

Retirement Income Guaranteed For Life

Manulife Financial has developed the first group retirement savings plan in Canada which guarantees income for life. Studies by behavioral finance teams – including researcher Dr. Shlomo Benartzi who maintains an exclusive Canadian relationship with Manulife – point to a growing need for some portion of guaranteed income as the foundation of a complete retirement income strategy. This plan gives capital accumulation plan members an effective option for establishing this foundation. Available with any of Manulife's group retirement savings plans, it has no minimum initial or continuing contributions, making it accessible to all plan members.

Immigration No Solution

There is zero per cent chance that immigration will help solve the impending labour shortage in Canada, says Dr. Linda Duxbury, a professor at the Sprott School of Business, Carleton University. Speaking at the Blevins Insurance Group ‘Client/Carrier Appreciation Day,’ she said by 2016 there will be zero labour force growth in the country, due to the combination of an aging population and a shortage of youth. For every two people who retire, there will only be one person to replace them. While Canada currently lets in more than 230,000 immigrants per year, only about 60,000 are labour force ready. However, there will be stiff competition for immigrants, especially those with skills. Canada is not an attractive destination as it takes more than two years for a skilled immigrant to get into the country compared to, for example, three months to relocate to Australia.

Infrastructure Requires Long-term Horizon

One needs a long-term investment horizon when investing in infrastructure, says Srikant Dash, head of global research and design at Standard & Poor´s Index Services, because of its unique characteristics. Speaking at a session entitled ‘Infrastructure Investments – Onward and Upward’ at IMN’s ‘11st Annual Canada Cup of Investment Management,’ he said investors need to be aware of the regulatory and credit risks associated with the asset class. As well, when building models for infrastructure, one needs to factor in realistic risk and return aspects because what has happened in the past may not happen in the future. Infrastructure can be used for a variety of purposes including cash management.

Preparing For IFRS Impact Now

Although full compliance to International Financial Reporting Standards (IFRS) is not required until 2011 in Canada, preparing for the consequences now and understanding early market adoption is essential, Cameron McNeill, president and CEO of Buck Consultants, said at its ‘Convergence to International Financial Reporting Standards (IFRS): What's the fuss?’ seminar. Particularly for those involved in employee benefit accounting processes, transitioning to IFRS may be a complex process. Among other things, it will require “as at” measurement dates with no lag time, so it’s important to agree on timing with actuaries, administrators, and fund managers. He suggested plan sponsors consider the level of employee benefits and begin open discussions with boards, banks, employees, and trade unions as IFRS will impact areas such as surplus recognition, prior service costs, and settlements and curtailments.

Allocations To Hedge Funds To Rise

Institutional investment managers are expected to increase their hedge fund allocations 25 to 50 per cent over the next several years, says a professor at the Wharton School of Business. Christopher C. Geczy says that the recent high-profile hedge fund meltdowns won’t significantly impact the long-term outlook for funds as investors are often searching for diversification in these investments. In a market with 15,000 funds, some failures are normal. Institutional investment managers today place about 10 per cent of their portfolios in hedge funds, up from five per cent just two years ago. Over the next two years, that allocation will likely rise to 12.5 per cent to 15 per cent of their portfolios.


Thursday, June 5, 2008

Mandatory Retirement Violates Charter

An arbitrator has decided that the mandatory retirement provisions of the Canadian Human Rights Act (CHRA) has violated the Canadian Charter of Rights and Freedoms (Charter) for some federally regulated employees, says a Mercer Communiqué. In CKY-TV v. CEP, Local 816, the arbitrator found that the employer’s mandatory retirement policy was clear and adequately communicated to employees. It was reasonable and consistent with the CBA. He concluded, however, that the “normal age of retirement” exception in the CHRA violated the charter and allowed the grievance. Although this decision only binds the parties to the arbitration and only with respect to the actual position of the grievor, it may well lead to the elimination of mandatory retirement for federally regulated employees.

Real Estate Rules Ambiguous

While pension funds have been moving into real estate investment for the past 25 years, the rules and regulations governing what they can and cannot do remain ambiguous, says Chris Huband, a partner in the real estate group at Blakes. Speaking at an event billed as a primer for pension funds and their advisors, he likened the situation to golf where the failure to sign a score card or teeing off at the wrong time can lead to disqualification. Pension funds which take one false step when it comes to investing in real estate can lose their tax-exempt status on the investment, he said.

Healthcare Accord Progress Falls Short

Despite the nationwide commitment to build real and lasting change and the infusion of billions of dollars brought about by the ‘2003 Accord on Health Care Renewal,’ progress falls short of what could, and should, have been achieved by this time, says the Health Council of Canada. Its ‘Rekindling Reform: Health Care Renewal in Canada, 2003 to 2008’ says it is concerned that five years later, governments' commitment to the spirit of the agreement may be waning. The 2003 accord has been a catalyst for change in some areas including improvements in the way waiting lists are managed and providing better access to publicly insured prescription drugs. However, action has been slower, less comprehensive, and less collaborative in areas such as catastrophic drug coverage and safe, appropriate prescribing.

Electronic Trading Volumes Increasing

Electronic foreign exchange trading volumes increased 21 per cent from 2006 to 2007, but that impressive performance was not enough to keep pace with the surge in global FX markets last year – a sign that the electronic trading business could be entering a phase of more mature development, says Greenwich Associates' ‘2008 Global Foreign Exchange Research Study.’ It says by almost any standard, last year was a good one for electronic trading systems. In addition to the overall increase in trading business, e-trading systems continued to attract new users, especially among the world's most active FX traders.

DC Funds Flow To Fixed Income

Defined Contribution plan members in the U.S. chased performance in the face of first-quarter 2008 volatility with money moving “decisively” into U.S. fixed income, stable value, and money market offerings, says the Callan ‘Defined Contribution Index.’ Money generally flowed out of risky assets hardest hit by market volatility such as domestic large cap. The index also shows that target-date funds now represent two-thirds of asset allocation funds offered by DC plans. As well, the average DC plan has underperformed the average corporate DB plan by more than 1.8 per cent on an annualized basis.

Teachers Opt For DB

More than three-quarters of members of the $908 million West Virginia Teachers’ Defined Contribution Plan have elected to move their retirement savings into the $3.6 billion Defined Benefit Teachers’ Retirement Plan. Under a state law adopted early this year, DC plan participants can switch over to the DB plan if 65 per cent of DC plan participants elected to switch. Concerned that many DC plan participants lack adequate retirement savings, West Virginia state officials have been working for several years to allow participants to move their assets into the DB plan.

Presenteeism Strategies Discussed

Proactive strategies employers can implement to help them manage the rising costs of absenteeism and presenteeism will be among the topics covered at ‘Mental Health: Make It Your Business.’ Set for June 18 in Toronto, it will feature Michele Nowski, director, disability, early assistance and rehabilitation, at Desjardins Financial Security. She has more than 25 years of experience in the insurance industry, the majority in disability claims. For more information, email

Conference Theme Is ‘Dare …'

CPBI Quebec's 14th Annual Regional Conference is set for September 8 to 10 in Gatineau, QC. Theme for this year’s event is ‘Dare …’ For more information, visit

Courses Designed For Trustees 

The International Foundation of Employee Benefit Plans’ ‘Foundations For Trustees’ will take place August 9 and 10. The courses are designed to inform trustees of their responsibilities and provide a strong knowledge base on which to build. ‘Foundations for Trustees 1’ runs August 9 and 10. ‘Foundations for Trustees 2 – Pensions’ will be held August 9 and ‘Foundations for Trustees 2 – Group Benefits’ runs August 10. For more information, visit


Wednesday, June 4, 2008

Lamoureux Wants Pension Summit

Claude Lamoureux is calling on the federal finance minister to convene a national meeting of ministers responsible for pensions in November. The retired president and chief executive officer of the Ontario Teachers’ Pension Plan and now a special advisor to the Canadian Institute of Actuaries told the Economic Club of Toronto the summit would address a range of pension issues including the steady decline of DB pension plans. He said that DB plans will soon be available only to politicians and civil servants and "imagine how taxpayers will feel about supporting these plans through their taxes, when their own workplace offers either a less effective program or none at all.”

Sponsors Willing To Trade Higher Returns For Less Volatility

Risk avoidance and volatility are the top priorities for Canadian plan sponsors in the wake of the credit crisis and the ongoing turbulence in the capital markets, says an ‘SEI Global Quick Poll.’ It says nearly two-thirds (62 per cent) of Canadian pension plan sponsors polled favoured volatility control over increasing returns. “The longer the roller-coaster, the more pension sponsors want to get off the ride – even if it means sacrificing potential returns,” says Andrew Kitchen, managing director of strategies and solutions, SEI Canada. “While the specific risks might vary, the demands of controlling the risk are taking their toll on financial executives – and hindering day-to-day strategic decisions to improve the bottom line.”

Julien Heads CLHIA Board

Pierre-Yves Julien, president and chief executive officer, Medavie Blue Cross, is chairman of the Canadian Life and Health Insurance Association Inc. (CLHIA). The new board also includes chairman elect Paul Reaburn, president and chief executive officer, Transamerica Life Canada (AEGON Canada Inc.); past chairmen Yvon Charest, president and chief executive officer, Industrial Alliance Insurance and Financial Services Inc.; and Peter McCarthy, president and chief executive officer, AIG Life Insurance Company of Canada; Ronald Beettam, president and chief executive officer, The Equitable Life Insurance Company of Canada; Alain Brunet, president and chief executive officer, National Bank Life Insurance Company; Dominic D'Alessandro, president and chief executive officer, Manulife Financial; Mary Forrest, head of North America (Life), Munich Reinsurance Company; Mario Georgiev, president, Optimum Reassurance Inc.; Gordon Henderson, president and chief executive officer, BMO Life Insurance Company; D. Allen Loney, president and chief executive officer, The Great-West Life Assurance Company/London Life Insurance Company/The Canada Life Assurance Company; and Donald A. Stewart, chief executive officer, Sun Life Financial Inc.

Nova Scotia Seeks Pension Comments

The Pension Review Panel in Nova Scotia has requested submissions from pension stakeholders by July 4, says a McInnes Cooper ‘Newsletter.’ The panel is undertaking the first comprehensive review of pensions in Nova Scotia since 1998. It has released a discussion paper which sets out the key objectives it is considering. They include enhancing the availability and affordability of pension plans and the elimination of unnecessary rules and regulations. The discussion paper can be found at

Natural Resources Perform Best

Natural resources equity and precious metals equity were the best-performing investment fund categories in May, says preliminary performance data from Morningstar Canada. Fuelled by rising energy prices, the natural resources equity index gained 8.5 per cent last month. Finishing a strong second among fund indices was the precious metals equity index, up six per cent in May, as the price of gold rose 2.9 per cent. Overall, gains outweighed losses by a wide margin for fund investors, as 33 of 42 fund indices produced positive returns.

Davies Heads Canadian Commodities

Derek Davies is a managing director and head of Canadian commodities at Deutsche Bank Securities Inc. Previously, he was with UBS where he was a managing director and, most recently, the head of European power, gas, and emissions marketing.

Croft Speaks At CPBI

‘Life in the Aftermath of the Great Credit Crisis’ will be one of the topics covered at the 2008 CPBI Atlantic Conference. Patti Croft, of Phillips, Hager & North Investment Management Ltd., will discuss the outlook for global growth, inflation, interest rates and currencies, and current asset allocation strategy. Theme of this year’s event is ‘Beaches, Bridges and Baby Boomers.’ It takes place September 24 to 26 in Brudenell, PEI. For more information, visit

Trustee Program Runs August 7 To 10

The International Foundation of Employee Benefit Plans’ ‘ATMS (Advanced Trustee Management Standards)’ program takes place August 7 to 10 in Halifax, NS. The program sets quality standards in pension fund and group benefit management for Canadian trustees. ‘ATMS – Part I’ and ‘ATMS Part II – Group Benefits’ will be offered August 7 and 8. ‘ATMS – Part IV’ will be held August 9 and 10 while ‘ATMS Quality Series – A New World for MEPP Funding’ takes place August 10. For more information, visit


Tuesday, June 3, 2008

Court To Hear BCE Appeal

The Supreme Court of Canada will hear BCE Inc’s appeal of a May 22 Quebec Court of Appeal decision. The Quebec Court of Appeal had ruled that holders of company bonds had not been treated fairly in the attempt by an Ontario Teachers' Pension Plan-led group to acquire the telecommunications company. The court has set aside June 17 for hearings.

Employers Top Source Of Advice

Employers and human resource departments are the number one source consulted for advice during benefits open enrollment season, says MetLife’s ‘2008 Open Enrollment Survey.’ It found 63 per cent of employees turned to their employer followed by co-workers (55 per cent), spouse (54 per cent), and benefits advisers (39 per cent). More than a quarter (27 per cent) plan to listen to and act on their HR department's advice during their next benefits selection period. Among those reporting access to resources to help them make informed decisions, 82 per cent were satisfied with their benefits offerings while 51 per cent stated that they didn't get the resources they needed.

Investors Pull Back From Emerging Markets

Investors are pulling back from emerging markets real estate as the credit crunch dents both global transaction volumes and occupancy, says the ‘RICS Global Commercial Property Survey.’ It says investors are losing their risk appetite for emerging markets in Europe, Asia, and Latin America. The result has been decline or stagnation in real estate business.

Adatia CIO At Russell

Sadiq S. Adatia is chief investment officer at Russell Investments Canada. Currently the head of Russell’s Canadian equity funds and LifePoints Portfolios, he will have overall responsibility for the Canadian investment team. 

SSQ Appoints Senior Managers

Marie-Josée Blanchette is senior vice-president, investments, at SSQ Financial Group. She has been chief executive officer of SSQ General Insurance for the past 10 years. Serge Boiteau is senior vice-president, finances and compliance. He joined the firm 25 years ago and is currently senior vice-president of corporate actuarial and investments.

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

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

Halifax Hosts Benefits Conference

The International Foundation of Employee Benefit Plans’ ‘41st Annual Canadian Employee Benefits Conference’ is set for August 10 to 13 in Halifax, NS. This annual conference offers a selection of concurrent sessions, workshops, and roundtables covering the latest, need-to-know information on legal and fiduciary issues affecting Canadian plans. For more information, visit

Hedge Fund Managers Meet Investors

Canadian hedge fund managers will meet investors June 5 in Toronto, ON. Managers on hand include Barry Allen, of Marret Asset Management; Sean Wynn, JC Clark; and Allan Meyer, of Wickham Investment Counsel. For more information, contact

HR Conference Set For Ottawa

The 2008 Eastern Ontario HR Conference & Trade Show takes place September 18 in Ottawa, ON. This year's conference is produced in partnership by Ottawa Human Resources Professionals Association (OHRPA) and the Human Resources Professionals Association (HRPA). Keynote speakers include Leonard Brody, author of ‘Innovation Nation: Canadian Leadership from Jurassic Park to Java’ and a leading technology forecaster and business strategist. He will share his insights on business leadership, innovation, and competitiveness. For more information, visit

Delong Speaks At Summit

David Delong, author of ‘Lost Knowledge: Confronting the Threat of an Aging Workforce,’ will be the keynote speaker at the ‘4th Annual Summit on the Mature Workforce.’ It takes place November 5 in Calgary, AB. The theme of this year's conference is ‘Age Diversity: the Evolution of Workplace Culture.’


Monday, June 2, 2008

Custodians Under Pressure

Global custodians are facing pressure to support shorting capabilities, says Ross Whitehill, of Ross Murray. Speaking at IMN’s ‘Third Canadian Summit on Securities Lending and Global Custody,’ he said a key challenge for custodians is how to process a corporate action on a negative position. They also face challenges from the increasing shift by institutional investors into the alternatives space.

CPPIB Enters ‘Relationship Investments’

The Canada Pension Plan Investment Board (CPPIB) has hired ESL Investments, Knight Vinke Asset Management, and ValueAct Capital to run $1.2 billion in “relationship investments.” These are equity investments where plan representatives engage public companies “on issues critical to long-term performance,” says the CPPIB’s annual report. The strategy may expand next year to include direct investments “in a collaborative initiative with the management and board of a public company.”

Rousseau Leaves Caisse

Henri-Paul Rousseau has stepped down as president and CEO of the Caisse de Depot et Placement du Quebec. He is expected to become vice-chairman of the boards of Power Corp. of Canada and Power Financial, a unit of Power Corp. and parent of Putnam Investments. Richard Guay was named interim president and CEO while a search is conducted for a permanent replacement.

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