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


News Archives - October / November / December 2009

Wednesday, December 23, 2009

FST Ruling May Soon Be Academic

A Financial Services Tribunal decision that annuities need not be purchased for Ontario members affected by a partial wind up who elected to receive their pensions from the plan may soon become academic, says a Fogler, Rubinoff ‘Pension Alert.’ It says measures in Bill 236, which reforms sections of the Pensions Benefits Act, clearly permit members affected by a partial plan wind up to continue receiving their benefits from the plan. As well, it would abolish partial wind ups altogether. Once the partial wind up rules are no longer operative, members affected by terminations who chose immediate or deferred pensions will only have their pensions annuitized if it is convenient for the employer/administrator to so do.

Drug Testing Law May Evolve

It will be interesting to see how the law will evolve with the update of the Canadian Human Rights Commission ‘Policy on Alcohol and Drug Testing’ and the continual development of methods of drug testing, says Fasken Martineau’s ‘The HR Space.’ It says in the event that technology progresses and drug impairment can be detected on the day of testing, random drug testing could be permitted for many safety-sensitive positions. The Supreme Court of Canada has yet to weigh in on the issue of drug and alcohol testing in the workplace. However, with the potentially contradictory lines of argument developing, it may be time. Currently, drug and alcohol addiction are considered disabilities. As such, individuals who suffer from such addictions are protected from discrimination under human rights legislation. Drug and alcohol testing is, therefore, limited essentially to situations where there is reasonable cause to suspect impairment while at work.

More Women Participate

Overall, female wage and salary workers ages 21 to 64 in to the U.S. participate in a retirement plan at a lower level than males do, says an ‘EBRI Issue Brief.’ However, among full-time, full-year workers of these same ages, females had a higher level of participating in a plan than men: 56.2 per cent for women, compared with 53.7 per cent for men. Across all of the worker status categories, females were more likely to participate in a retirement plan than males. This result has persisted since 2001, when the full-time, full-year females’ participation level was slightly higher than the males’ level, at 58.5 per cent to 58.1 per cent. Concerning earnings level, the proportion of females participating in a retirement plan was higher than it was for males at each earnings level. Consequently, it appears that female workers’ lower probability of participation in the aggregate was a result of their overall lower earnings and lower rates of full-time work in comparison with males. 


Tuesday, December 22, 2009

Canadian Savings Adequate

Canadians are doing relatively well in ensuring that they have adequate savings for their retirement, says a research paper on retirement income adequacy produced for the federal-provincial-territorial ministers of finance for their meeting in Whitehorse, YK. For those failing to save adequately, declining pension coverage may not be to blame. Those with registered pension plans actually have less retirement income than those without RPPs, except for those in the highest income quintile. Those with pension coverage are more likely to be retired between the ages of 67 and 72 than those without coverage, indicating that declining RPP coverage may result in an increasing proportion of Canadians deferring retirement to older ages.

Nobrega Wants To Make It Easier To Save

The president and chief executive of Ontario Municipal Employees Retirement System (OMERS) wants the Ontario government to enact legislative changes immediately to make it easier for people in the province to save for their retirement. Michael Nobrega would like to see the Ontario government allow individuals to join major pension plans already in existence such as OMERS and Ontario Teachers' Pension Plan. Nobrega has previously called for the province to require pension funds to consolidate into ‘superfunds’ to better manage their assets.

Ignoring Conventional Leads To Change

By ignoring the conventional, profound change can occur, says George Klar, president of Alternativ Solution Inc. In the article ‘In Praise Of Innovation: What Investors Should Consider About Both MPT And Behavioural Finance’ at, he says throughout history, whether accidental or deliberate, innovation has led to great change, including in finance. Prof. Harry Markowitz’s Modern Portfolio Theory is one example. However, market volatility over the past few decades resulted in considerable attention being focused on its assumptions. As well, the development of behavioural finance shows individual investor behaviour is at odds with the long-term theories of Markowitz. The bottomline, says Klar, is to expect more innovation in financial theories.

Trading Moves Away From Some Firms

Across Europe, institutions in 2009 shifted fixed income trading flows away from financial service firms whose balance sheets took significant hits during the global financial crisis, says Greenwich Associates' ‘2009 European Fixed Income Study.’ This trading business was redirected to a handful of dealers viewed as the most financially secure and best positioned to be reliable fixed income liquidity providers and sound derivatives counter-parties. More than half of the largest and most active European institutions shifted fixed income trading volumes to dealers with the least amount of counter-party risk from 2008 to 2009, as did almost 40 per cent of European institutions as a whole.

Banks Settle On ABCP

Canadian Imperial Bank of Commerce, National Bank of Canada, and various brokerages will pay a total of $134 million in fines and penalties to settle regulators’ claims they improperly sold asset-backed commercial paper in Canada just before the market collapsed in 2007. The banks agreed to settle for their roles in selling commercial paper in late July and early August of 2007, before the market collapsed on concern about ties to U.S. subprime mortgages. About $32 billion of the debt became insolvent, leading to a court-ordered plan in which the short-term debt was swapped for longer-term notes in Canada’s biggest restructuring. Bank of Nova Scotia’s Scotia Capital unit, Laurentian Bank, HSBC Bank of Canada, Canaccord Financial Ltd., and Credential Securities Inc. are also involved in the settlements.

Sanofi Acquires Gold Bond Brand

Sanofi-Aventis has moved into the over-the-counter drug market with the purchase of Chattem Inc., whose brands include Gold Bond body powder and Cortizone ointment. The deal creates the world's fifth-largest consumer healthcare company. Sanofi is trying to diversify from prescription drugs, many of which will lose patent protection in the coming years.

Torrie Adds CEO Duties

Alan Torrie is chief executive officer Morneau Sobeco Income Fund. He also continues as president. Prior to joining the company as president in 2008, he had served as a trustee since 2005. His previous roles include chief operating officer of one of Canada’s largest seniors’ housing and care companies, president and CEO of MDS Laboratories, and president and CEO of Joseph Brant Hospital. Bill Morneau is executive chairman. In this position, he will lead the organization’s executive team in building and further expanding client relationships and services in pensions, benefits, and the growing field of absence and disability management. He remains as chairman of the board.

Frost Joins AGF

Peter J. Frost is vice-president and portfolio manager at AGF Investments Inc. and will assume lead responsibility for its Canadian Balanced Value Fund. A seasoned investment professional with 17 years of industry experience, he spent six years in pension consulting, two years at a large, bank-owned wealth management firm, and the past nine years as a portfolio manager at a leading Canadian money management firm.

Zavitz Serves As Chair

Terry Zavitz is chair of the board of directors of Advocis, The Financial Advisors Association of Canada. A member of Advocis since joining the industry, she has served the organization in a number of leadership roles including chair of the national membership task force and vice chair of the board of directors.


Monday, December 21, 2009

Public Talks To Start On Retirement System

Ottawa and the provinces have agreed they now have enough information to start negotiating on actual reforms to the Canadian retirement savings system. The process will start with cross-country public consultations early in the New Year. The ministers will then meet again to consider how the retirement system should change. Both Alberta and British Columbia will take part on the process. They talked about setting up their own supplement to the Canada Pension Plan unless Ottawa started moving towards a national system. The options being considered include:

•  a national, voluntary supplement to the CPP
•  regulatory reform to give financial services firms more leeway to set up group savings plans
•  expanding the CPP by increasing premiums and benefits
•  maintaining the status quo and increasing efforts to educate the public about the savings vehicles available

Canadians Not Pushing For Risk Changes

Unlike their counterparts in the UK and U.S., employers in Canada are not rushing to make changes to better manage the risks associated with their Defined Benefit pension plans, preferring to take a more cautious approach to pension risk management says a Hewitt Associates survey. It says one reason for their position is that of the 84 per cent of respondents expecting to make higher contributions as a result of the credit crisis, only four per cent felt that the additional contributions would have a significant impact on their business. And, 55 per cent of Canadian employers indicated they would not be taking advantage of solvency relief measures, primarily because they are not cash constrained. Canadian employers are taking some action, however, with 45 per cent of organizations with DB plans saying they are measuring their pension risk more often. In addition, in terms of investment changes, there are two dominant strategies: a greater diversification of return-seeking portfolios (out of Canadian equities and into alternative asset classes and foreign equities), as well as a net movement towards more liability-driven investment strategies (liability-matching assets, liability driven investment (LDI) strategies, and dynamic asset allocation).

Privacy Issues Raised

The case of an IBM employee from Quebec whose disability benefits were cut off by the insurance company after it saw pictures of her on Facebook raises interesting privacy issues, says Lyne Duhaime, a lawyer in the Montreal, QC, offices of Fasken Martineau DuMoulin LLP. In the article ‘The HR Space – When The Virtual And Real Worlds Collide’ on Benefits and Pensions Monitor’s ‘website, she asks whether photos posted on a social media website personal information and if employers, disability carriers, and other organizations are prohibited from using such information? While the answer varies across the country, she suggests employers learn the rules in each jurisdiction and then, if relevant, establish policies in which employees are warned that the employer may monitor the Internet and make use of any information it learns about them. To read the article, visit

CPPIB Acquires Shopping Centre

A joint venture between Anglo-French property investor Hammerson and the Canada Pension Plan Investment Board has acquired the Silverburn shopping centre near Glasgow, Scotland. Hammerson, one of the UK's largest shopping mall owners, will be the venture's asset manager. The shopping centre had been the subject of intense bidding from property investors looking for prime assets.


Friday, December 18, 2009

Living Standard In Retirement Will Decline

A “significant minority” of middle and upper-income Canadians will see their living standard decline in retirement because government pension programs do not replace a enough of their pre-retirement incomes and they are not saving enough to replace the shortfall, says an Ontario report on Canada's pension system. The report says there has been a sharp decrease in poverty among the elderly in Canada since the 1970s, however, much of the improvement was achieved by the mid-1990s. Since then the situation has stabilized or deteriorated mildly. This is compounded by the fact fewer workers today are covered by employer pension plans and their retirement periods are growing as they live longer. And, despite the decline of company pensions, there has been no increase in personal savings to make up for this. The study offers no proposals to resolve the situation, but it does warn that if nothing is changed, some future retirees may not have as much retirement income. The report will be tabled at a meeting of federal and provincial finance ministers today in Whitehorse, YK. 

Ottawa Pension Obligations Volatile 

Fair-value accounting reveals Ottawa’s pension obligations to be larger and more volatile than they appear, creating risks for plan participants and under-appreciated exposure for taxpayers, says a study by the C.D. Howe Institute. In ‘Supersized Superannuation: The Startling Fair-Value Cost of Federal Government Pensions,’ authors Alexandre Laurin and William B.P. Robson evaluate the Defined Benefit pension plans for federal employees using fair-value accounting principles, which value assets and liabilities using current market prices and interest rates. Both past tallies on government balance sheets and current accruals on government income statements, they find, may understate the true cost of public sector employment in Canada and understate the risks that exist.  Restating recent federal government financial statements, the authors calculate an accumulated deficit, or federal debt, of $522 billion at the end of fiscal year 2008/09 using fair-value pension accounting. That total is $58 billion higher than the $464 billion reported at the end of fiscal year 2008/09. As well, they point out, many of the budget surpluses Ottawa has shown since the beginning of the decade would have been deficits, and the latest deficit would have been $7 billion larger.

More Details Needed On Prudent Governance Practices

The Canadian Association of Pension Supervisory Authorities thinks that "plan administrators need more detailed information on prudent governance practices to improve their funding and investment processes,” says a Blakes ‘Bulletin on Pension & Employee Benefits.’ Its ‘The Prudence Standard and the Roles of the Plan Sponsor and Plan Administrator in Pension Plan Funding and Investment’ consultation paper says, in particular, each pension plan should have documented processes and standards to comply with plan documents and legislative requirements such as the prudent person rule. On the basis of this view, it provides considerable detail on the "best practices" to be followed by plan sponsors and administrators when performing their investment and funding activities. These include development of a funding policy, development of an investment policy, development of procedures respecting related party transactions, adoption of processes for the retention and monitoring of qualified experts, and clear documentation of funding and investment processes. Deadline for comments on the paper is January 29.

Grow-in Increases Cost

The Ontario government’s proposal to extend grow-in increases cost and reduces a plan sponsor’s ability to provide benefits that support workforce planning objectives, says Mercer ‘Communiqué.’ Applying grow-in on such a broad basis illustrates how governments can retroactively increase the cost of defined benefits that have already accrued. The extension of grow-in will likely lead to more sponsors looking to remove enhanced early retirement benefits from their plans. As well, it says stage one of the pension reform proposals does not encourage sponsors to maintain Defined Benefit plans. It looks to stage two of the reform for measures that provide material support for DB plan sponsors such as better funding rules and the introduction of pension security trusts to deal with future access to surplus.

BCE Contributes To Plan

BCE Inc. will make a $500 million contribution to its pension plan. This plus a 15 per cent return in its plan assets this year means it will reduce its pension plan deficit to $1.3 billion, making it 90 per cent funded.

Desjardins Opens Calgary Office

Desjardins Financial Security has opened a group retirement savings sales office in Calgary, AB. "We are very excited about this new venture because we can now provide hands-on, face-to-face service that our clients have come to expect," says Margo Fairburn, vice-president of operations. The Calgary sales office follows the opening of an office in Vancouver, BC.


Thursday, December 17, 2009

Retirees Call For Pension Trust Fund

The Canadian finance ministers meeting in Whitehorse on pensions are being urged to deal with the plight of pensioners who will see significant benefit cuts as their employers face bankruptcy. Unions representing forestry workers and Nortel pensioners association have sent a letter to the finance ministers asking them to "make sure we don't abandon pensioners and other workers who, through no fault of their own, face major cuts to their retirement and replacement incomes because their employers took refuge in the bankruptcy courts." The Communications, Energy and Paperworkers Union of Canada and Nortel Retirees and former employees Protection Canada are calling for a National Pension and Investment Fund. The fund is based on the premise that pension plans of employers facing bankruptcy would be allowed to continue in a trust fund, rather than being terminated.

Half Hope To Transition To Retirement

The mass exodus of Canadian baby boomers may not be as dramatic as originally expected, says Desjardins Financial Security's ‘8th annual Rethink Retirement’ survey. In fact, more than three in 10 people (31 per cent) between the ages of 53 and 62 said they were more than five years away from retirement and only 23 per cent hope to stop working completely once they retire. Close to half (47 per cent) indicated they hope to transition to retirement by gradually reducing their hours. On the other hand, only one in five current retirees retired gradually, while close to three quarters of them (72 per cent) made a clean break. Another consideration is whether employees will actually be able to continue working. According to Statistics Canada, four in 10 Canadians over the age of 65 (1.7 million people) suffer from some sort of disability that makes performing daily activities difficult or reduces the quality or type of activities they can participate in because of an impaired physical or mental state, or from some other health problems.

Pension Meeting Unprecedented

The unprecedented meeting of finance and pension ministers in Whitehorse is a significant milestone – one that should set Canada on the road to a comprehensive pension summit, says the Canadian Institute of Actuaries. Canada's actuaries believe this meeting should result in clear outcomes that include setting aside individual jurisdictional perspectives to focus on moving forward with a common understanding of the pension system, its problems, and what each minister needs to contribute to the necessary reforms of the system overall. The profession’s pension reform document, ‘Retooling Canada's Ailing Pension System Now, For The Future,’ calls for pensions to be included on the national agenda and for a national summit of ministers to discuss pension issues, solutions, and timelines for action.

Funds Eye Provincial Assets

The Ontario Teachers' Pension Plan (OTPP) and Ontario Municipal Employees Retirement System (OMERS) say they would bid on assets such as Hydro One Inc., Ontario Power Generation, the Ontario Lottery and Gaming Corp, and the Liquor Control Board of Ontario if the Ontario government decides to privatize any of them to reduce its growing debt, estimated to be $24.7 billion this year alone. The province is reportedly looking at all options to reduce its debt and that could include selling some or all of these assets. If they do go on the market, other potential buyers could include private equity companies such as Onex Corp. and Clairvest.

Insurance Industry Does Well

The life and health insurance industry in Canada ably weathered the impact of the economic downturn, says the Canadian Life and Health Insurance annual industry report. Key statistics for 2008 show that total industry premiums for all lines of business rose 3.8 per cent to $76.3 billion. Annuity premiums rose to $34.7 billion (up 1.2 per cent over the record high set in 2007) driven by continued high contributions to segregated fund products and increased deposits to fixed-return general fund products. Premiums for supplementary health and disability insurance products rose 7.4 per cent to almost $26.7 billion and life insurance increased 3.7 per cent to $14.9 billion.

One-in-three Not Saving

One-in-three Canadians (32 per cent) have not started saving for retirement yet, compared to one-in-four (24 per cent) in 2008, says the ‘20th Annual RBC RRSP Poll.’ The study also found only 36 per cent say they are planning or have planned for retirement, down from 42 per cent in 2008. The decline is most noticeable among those aged 55 and over, with fewer (53 per cent) doing any retirement planning compared to 2008 (67 per cent).

Integrated Buys Northern Rivers

Integrated Asset Management Corp. and its subsidiary BluMont Capital Corp. have agreed to buy Northern Rivers Capital Management Inc. Toronto, ON-based Northern Rivers operates investment funds including the Northern Rivers Innovation Fund LP, the Northern Rivers Conservative Growth Fund LP, and the Northern Rivers Global Energy Fund LP.

Eckler Using GEMS, ADVISE

Eckler Ltd. will use DFA Capital Management Inc.’s GEMS Economic Scenario Generator and ADVISE Advanced Stochastic modeling platforms. ADVISE is a fully scalable software platform enabling risk managers, actuaries, and other insurance decision-makers to thoroughly model and analyze their businesses by simulating forward-looking numerous risk scenarios. GEMS enables users to simulate future states of the global economy and financial markets including derivatives and alternative asset pricing.

Lee Associate At bfinance

Barry Lee is an associate for bfinance. Prior to joining the firm, he was at KPMG before moving to Atlas Capital, a fund of hedge funds, where he was a research analyst covering strategies including long/short equities and distressed assets.


Wednesday, December 16, 2009

No Solution Expected From Meeting

Ontario’s finance minister doesn’t believe any agreement on how to enhance Canadians’ retirement savings will be reached at a meeting of Canada’s finance ministers this week in Whitehorse. Various media outlets report Dwight Duncan saying he hopes the session will help narrow down a list of pension reform options which would eventually be discussed at a pension summit involving Prime Minister Stephen Harper and the premiers sometime next year. Duncan did not outline his preference for a solution beyond saying he wants a “pan-Canadian” approach.

Companies Could Switch To Government Plan

Creating a government-run plan to address the need for better pension adequacy may fall short of accomplishing that goal and could have unintended consequences, says Joseph Iannicelli, president and CEO of Standard Life. In a letter to the federal finance minister, Jim Flaherty, he says employers who currently sponsor an occupational pension plan for their employees in the private sector could see this as an opportunity to transfer fiduciary responsibility to the government by switching to the government plan. As well, if structured as a defined contribution adjunct to a government plan, such an arrangement could create an expectation from members that benefits will be guaranteed by the government, he says. “Alternatively, it is our opinion that government should leverage the long-standing expertise of the Canadian life and health insurance industry in the delivery of financial services to Canadians. An insurance industry solution would give Canadians the ability to save for retirement under a registered pension plan.”

Extensive Changes Promised For Plan Mergers

Ontario’s Pension Reform Bill contains extensive changes to the provisions of the Pension Benefits Act relating to plan mergers, plan splits or divisions, and the transfer of assets between pension plans on the sale of a business, says a Blakes ‘Bulletin on Pension & Employee Benefits.’ The proposed legislation will accommodate the provision of different “pension and other benefits” in the successor pension plan (in the case of a business sale asset transfer) or in the merged or importing plan (in the case of a plan merger) provided the commuted value of the benefits of the transferred plan members is protected. Interestingly, however, if the assets to be transferred relate to the provision of defined benefits in the original plan, the transferred assets must be used to provide defined benefits in the successor plan. As well, it says, at this stage, it is not clear whether the new legislation will apply on a retroactive basis to pending asset transfers and plan mergers.

Finance Addresses HST

The Department of Finance has released a backgrounder containing technical legislative proposals addressing recent court decisions which may have created uncertainty respecting the scope of the definition of “financial service” in the Excise Tax Act. The legislative proposals reaffirm the policy intent and provide certainty respecting the GST (and, where applicable, the Harmonized Sales Tax) treatment of certain administrative and management services and promotional services by clarifying that such services are not financial services under the Excise Tax Act and are, therefore, taxable for GST purposes. The proposals specify that investment management services, including discretionary investment management services, are not financial services.

Market Value Of Savings Increases

The market value of retirement savings held in employer-sponsored pension funds increased by $35.4 billion, or 4.5 per cent, between the first and second quarters of 2009, says Statistics Canada. This was the first increase since the second quarter of 2008. Employer-sponsored pension funds amounted to $826.5 billion at the end of the second quarter, but were still down 13.4 per cent from a high of $954.6 billion at the end of 2007. Revenues of $26.6 billion exceeded expenditures of $16 billion in the second quarter for a positive cash flow of $10.6 billion. This was a reversal from the previous quarter and the first positive cash flow since the second quarter of 2008. In total, about 5.9 million Canadian workers are members of employer pension plans. Of this group, 4.8 million workers are members of trusteed plans. The remaining 1.1 million members with employer pension plans are managed principally by insurance company contracts.

Interest Renewed In HR Systems

As companies prepare for the economic recovery, many are poised to enter 2010 with renewed interest in improving their HR technology systems, processes, and organizational structures, says Watson Wyatt. It identified several emerging themes for 2010 including more scrutiny of vendor relationships and sourcing options where contracts are up for renewal. For example, employers that aren’t satisfied with their HR business process outsourcing might decide whether to stay in their contracts next year, or revert to outsourcing to multiple vendors with specialized services. As well, it says a growing number of multinational organizations are expected to focus on standardizing their HR processes, organizational structure, and systems such as payroll, across borders. 

Support For Stress Testing Developing

Strong support is developing for enterprise-wide stress testing as way to help manage potential large market disruptions such as the one that hit world economies in 2008, says an MSCI Barra poll. Some 73 per cent of pension plans and 26 per cent of asset managers in the survey do not run stress tests, but the majority of participants promised they would put more focus on stress testing. It is, they said, a critical component for integrating qualitative and quantitative information, enterprise risk management and liquidity, and counter-party risk analysis. As well, only 40 per cent of asset managers and 18 per cent of pension funds surveyed run stress tests by shocking factors within a factor model. The most common stress tests were macroeconomic shocks (including shocks to currencies, commodities, interest rates, etc.) and market-wide asset class shocks.


Tuesday, December 15, 2009

Great-West Offers Retirement Solution

The Great-West Life Assurance Company has developed what it calls “a practical, 'made in Canada' solution” to Canada retirement system. "Pension reform is an important issue for working Canadians and one which Great-West Life believes needs to be dealt with on a fully-informed basis," says Bill Kyle, senior vice-president of group retirement services. It calls for a collaborative approach between government and industry to identify modifications to existing pension legislation to make Defined Contribution pension plans more attractive. As well, RRSP rules could be adapted to recognize a Group RRSP product type with features benefiting both plan members and sponsors, such as auto enrolment, auto escalation of contributions, and no payroll tax on employer contributions. Kyle says its solution would be practical to implement as it builds on current products such as RRSPs and Defined Contribution Pension Plans. Great-West Life administers nearly 30 per cent of capital accumulation plans (Defined Contribution Pension Plans, Deferred Profit Sharing Plans, Group RRSPs, and Group Tax Free Savings Accounts) in Canada.

CLHIA Wants Retirement Changes

The Canadian life and health insurance industry is calling for changes in legislation that will significantly increase the opportunities for Canadians to save for retirement. In letters sent to federal and all provincial and territorial finance ministers on behalf of the industry, the CLHIA laid out proposals that would promote greater use of employer-based retirement savings. Its proposals include permitting multi-employer Defined Contribution pension plans so that individual employers do not have to take on the costs and administrative burden of being a plan sponsor. It also suggests allowing employers to use auto enrolment and allowing variable contributions by employees as their age and salary levels change.

Ontario Disappoints Plan Sponsors

Many plan sponsors likely will be disappointed with what Ontario has announced thus far in terms of pension reform, says a Morneau Sobeco ‘Special Communiqué.’ It says it may, generally, be fair to reserve full judgment on the reforms announced since Ontario’s pension reform is expected to have a second stage in the spring and these are primarily of technical issues. Nevertheless, even though Ontario is at odds with every other jurisdiction in Canada concerning grow‑in rights, these provisions have been expanded rather than curbed. Grow-in exacerbates the problem of funding adequately for a hypothetical wind-up without overfunding on a going-concern basis. Requiring grow‑in for single employer plans, when multi‑employer and jointly sponsored plans can elect not to provide grow‑in benefits, is unfairly onerous on the dwindling percentage of single employers who still provide Defined Benefit pension plans. As well, none of the changes suggest the government is encouraging the formation of new pension plans or the expansion of pension coverage.

Running Of Bulls Continues

The running of the bulls is expected to continue into the New Year, says a Russell ‘Investment Manager Outlook.’ It shows optimism abounds as 83 per cent of investment managers believe the S&P/TSX will experience gains in 2010. “This confidence is built on a foundation of strong bank earnings, improving economic statistics, rising commodity prices, and a rebounding residential real estate market. Indeed, despite continuing high unemployment numbers, Canada’s relative prosperity remains the envy of the world,” says Sadiq S. Adatia, chief investment officer.

SLI Using RBC Dexia

RBC Dexia Investor Services has been selected by Standard Life Investments (Asia) Ltd. to provide global custody, investment administration and shareholder services for that company’s newly-established Australian-domiciled fund. Standard Life Investments is a wholly owned subsidiary of Standard Life Investments (Holdings) Limited, which in turn is a wholly owned subsidiary of Standard Life plc. It operates in the UK, Canada, Ireland, Hong Kong and the USA, and has representative offices in Germany, France, South Korea, Beijing and Australia. Standard Life Investments also operates in India through a joint venture, HDFC AMC.


Monday, December 14, 2009

Employers Would Have Surplus Option

Surplus sharing settlements would not be subject to historical plan terms under Ontario’s proposed pension reforms, says an Osler ‘Pensions & Benefits Alert.’ On a full plan wind up, employers would have the option of establishing legal entitlement to the surplus or entering into a surplus sharing agreement (similar to the federal system). The Technical Notes indicate that if a surplus sharing agreement is entered into, no review of historical plan documents would be required to obtain regulatory approval, provided the agreement complies with the existing membership consent and certain other requirements. It appears, however, that the ‘old regime’ will continue to apply to surplus distributions on partial wind-ups as long as they last. Partial wind-ups would be eliminated except for those with an effective date prior to 2012.

Canada Won’t Force Pension Changes On Provinces

Canada’s federal government won’t force the provinces to make changes to the country’s pension system though it will urge them to consider ways to boost retirement savings, says Ted Menzies, the finance minister’s parliamentary secretary. Provincial and federal government officials will receive a report on pensions when they meet December 18 in Whitehorse, Yukon. The study will outline options, but policy decisions will be left to the individual provinces. The federal government will look at the research presented this week to determine whether there are also private sector options and for ways to incent people through the taxation system. The government’s position is to encourage retirement savings, short of forcing mandatory pensions, and encourage provinces to “work together” in a bid to ensure all Canadians are “treated equally.”

Reform Provisions Cause For Concern

While some of Ontario’s proposed pension reforms, such as the elimination of partial wind-ups and changes to the asset transfer rules, will come as welcome news to plan sponsors, there are a number of provisions that will cause sponsors considerable concern, says a Watson Wyatt ‘InfoFlash.’ Chief among these is the requirement for single employer plans to provide grow-in benefits to all involuntarily terminated employees. This change to the Pension Benefits Act’s current grow-in rules may, if implemented, significantly increase the costs borne by sponsors of Ontario-registered Defined Benefit plans when they terminate workers.

Large DB Plans Shift Into High Gear

Large U.S. Defined Benefit plan sponsors have shifted their risk management programs into high gear compared to 2008, says a Hewitt Associates survey. It found most of the large-sized corporate respondents say they have changed the way they fund, invest, and design their pension plans. This is a major shift from last year when sponsors were primarily focusing on small and conservative steps to protect themselves from volatile economic conditions. Almost 40 per cent of plans have cut their equity exposure and many are increasing their fixed income allocation with assets that better match liabilities, such as corporate bonds (37 per cent) and/or treasury bonds (19 per cent). There is also a growing number of U.S. companies (15 per cent) implementing dynamic investment policies, a new framework that defines an asset rebalancing strategy that changes as the plan's funded ratio improves.

Workers Change Saving Habits

More workers (36 per cent) than retirees (25 per cent) said they changed their saving habits in the past 12 months, even though more than half of all retirees (53 per cent) saw their savings and investments shrink, says Desjardins Financial Security's ‘2009 Rethink Retirement’ survey. It found one-third of Canadian workers and retirees claim to have altered their saving habits over the past year. When asked how their habits changed, more than a quarter (27 per cent) said they had less money to save, while 23 per cent indicated they put more money aside.

Pension Index Up In November

The net result of strong equity returns and a decline in corporate bond yields in November was a 1.6 per cent increase in the Towers Perrin Pension Index to 68.5, says its Capital Market Update. The index reflects the asset/liability performance of a hypothetical benchmark pension plan. With the increase in November, the index is now up 3.8 per cent from its 66.0 value at the start of 2009, but down six per cent from its November 30, 2008, level of 72.9. Additionally, the benchmark investment portfolio used in the index recorded a 3.5 per cent return for November, which pushed up the year-to-date return to 18.1 per cent. 


Friday, December 11, 2009

Reforms May Add Cost To Pensions

Towers Perrin believes that some of the pension reforms proposed by Ontario, such as the elimination of partial wind ups, are long overdue and will be welcomed by sponsors of Defined Benefit pension plans. However, it believes that other reforms, such as the application of grow-in provisions to all involuntary terminations without cause, will add to the cost of sponsoring DB plans. Also, proposed member communication requirements, particularly those targeted to former employees, would add to the costs of pension administration. These additional costs would, however, be at least partially offset by a reduction in administration costs associated with the elimination of partial wind ups. It says pension plan sponsors will welcome other changes that Bill 236 proposes including elimination of the requirement to purchase annuities on partial wind up of a pension plan and elimination of the requirement to review historical plan documents for surplus entitlement language, with member agreement.

ACPM Welcomes Ontario Reforms

Scott Perkin, president of the Association of Canadian Pension Management (ACPM), welcomes the Ontario government's announcement to reform the Pension Benefits Act, building on the recommendations of the Ontario Expert Commission on Pensions. "The recent report from the OECP identified several important issues that need to be addressed. We are pleased they have begun to address them with these proposals," says Perkin. He says the association believes every Canadian should have an adequate retirement income, "but this goal has been undermined because some Canadians simply aren't saving enough. They are intimidated by the amount they think they need to retire and many find the array of pension saving options overwhelming. Fewer employers are offering pension plans as current rules make it more and more difficult to do so." While Canada has a strong foundation for retirement income in the CPP, OAS, and GIS, reforms are needed to support the increased participation of Canadians and their employers in the process.

Pension Fund Standard Gets Last Look

The Actuarial Standards Board hopes to have its pension fund standard in place by the end of 2010, says Charles McLeod, chair of the board. Speaking at the Actuarial Standards Oversight Council public meeting, he said an exposure draft should be released in February followed by a short comment period. The standard calls for increased disclosure especially for hypothetical valuations. This means more information will be provided in actuarial reports. An exposure draft issued last April received about 20 comments. While little is changed in this version, the board feels it should be released for comment before final standard is adored. This is the first major review of the standard in 20 years. 

Alberta Sells Bonds To Fund Teachers’ Liability

Alberta is selling $600 million in bonds to help pay down the unfunded liability portion of the teachers' pension plan. The amount is part of $1.2 billion the province will borrow to repay money it owes the post-1992 portion of the Teachers' Pension Plan to fund an $8.5 billion unfunded liability generated in the teachers pension plan prior to 1992, a deal it agreed to in November 2007 in exchange for five years of labour peace. The first installment is due January 1, 2010.

Solvency Relief Comes With Funding Provision

While the Quebec’s solvency relief does not require plan members’ consent, the relief is only available for the first complete actuarial valuation after December 30, 2008, and written direction from the employer to the pension committee is required for that valuation, says a Watson Wyatt ‘InfoFlash.’ Consistent with the regulation released in May Regulation, the revised regulation requires that a sponsor that takes advantage of temporary solvency relief immediately becomes subject to the permanent funding requirements of Bill 30 which include a provision for adverse deviation (PfAD), immediate funding of improvements where solvency levels are below or fall below 90 per cent, and annual valuations. These Bill 30 provisions may deter some plan sponsors from seeking solvency relief, it says.

Investors Expect Gains

Canadian investors admit that their confidence has been shaken by the recent financial market crisis, but most still expect to make solid gains over the next 12 months, says a survey sponsored by Standard Life. However, their view is still very much long term, since their primary investment objective is having enough money for retirement. As for investment goals, 83 per cent of retail investors said it was "very important" to have enough money for retirement. Forty-seven per cent chose having enough money to retire early as "very important.

Christmas Gifts In Minority

Only 19 per cent of employers will provide their employees with a holiday gift or bonus at the end of this year, says Hewitt's ‘31st Annual Salary Increase Survey.’ Generally, they will be giving cash (38 per cent), a gift card or certificate (32 per cent), or a gift chosen by the company (22 per cent). However, for most employees, not receiving a holiday gift or bonus will be nothing new. Only eight per cent of employers who do not currently offer a gift or bonus did so in the past and have discontinued their program. The survey also found Canadian employers have scaled back their plans for salary increases. Whereas a few months they were planning to provide average salary increases of 2.8 per cent in 2010, that number has now dropped to 2.6 per cent. However, while more than a third of employers were considering a salary freeze earlier this year – providing no increases in 2010 – that number has since decreased to 27 per cent.

Government Role Concerns Connor

The president of Sun Life Financial Canada is concerned about increasing the role of government through creation of provincially-run pension plans or expanding the Canada Pension Plan to add a supplementary pension. Speaking at the Economic Club of Canada, Dean Connor said these proposals bring additional risk or responsibility to government at a time when all governments in Canada are in a long period of deficit financing on top of escalating healthcare costs. He also warned against the introduction of a system of mandatory worker contributions. "Reducing people's choices is the wrong approach in today's world. Auto-enrollment with an opt-out provision is the right approach," he said. "It is the difference between a 'nudge' and a 'shove'." He urged finance ministers attending a meeting in Whitehorse next week to endorse multi-employer pension plans as a solution for challenges facing Canada's retirement savings and income system.

Caldwell Picks Custodian

State Street Corporation and IFDS Canada have been appointed by Caldwell Investment Management, Ltd to provide custody, fund accounting, fund administration, registered trustee services, foreign exchange, transfer agency, and unit-holder recordkeeping services for its fund complex. It is now expanding its business outside of North America so it needed a global and scalable service offering that would allow it to focus on its core business objectives, says Brendan Caldwell, its president. Caldwell Investment Management Ltd. has managed financial assets for families, individuals, corporations, trusts, and foundations on a discretionary basis since 1980. IFDS is a joint venture between affiliates of State Street Corporation and DST Systems Inc., a provider of shareholder accounting services and proprietary systems.

Investment Capsules Now Online

Industrial Alliance Insurance and Financial Services Inc. has installed online the first two capsules in a series of videos featuring its portfolio managers. These capsules seek to bring portfolio managers and plan sponsors closer and to make the company’s products and services better known. Two video capsules are currently online. In one, Julie Caron, fund manager and institutional advisor, explains dynamic asset management services, a personalized financial solution designed to respond to the specific needs of small and medium pension funds, similar to solutions offered to big pension plans. In the other, portfolio manager Marc Gagnon explains the management strategy of the Canadian equity growth fund. Industrial Alliance plans to post new video capsules regularly in the coming year.

Manulife Expands In China

Manulife Financial is expanding again in China as its Manulife-Sinochem Life Insurance Co. Ltd. has received approval from the China Insurance Regulatory Commission (CIRC) to operate in the city of Jinhua and has also been granted licenses for five additional satellite offices across three provinces. With this approval, Manulife-Sinochem is now licensed in 39 cities that are home to more than 280 million individuals.


Thursday, December 10, 2009

First Stage Of Reform Technical

Ontario is laying the groundwork for what it promises will be a major reform of the province’s pension system. In the first part of a two-stage process, it will extend benefits that allow laid-off workers to qualify for early retirement to make it available to more people, eliminate partial pension windups after 2011, make it easier for plans to restructure when companies do, enhance regulatory oversight, and make it easier for plan members and pensioners to access information. Finance Minister Dwight Duncan says these are technical changes with more controversial ones coming in 2010. Most of these proposals are based on recommendations made by Harry Arthurs, who headed the province’s expert commission on pension. There are more than 7,500 pension plans registered in Ontario with about two million members.

Prudence Means Process

Theoretically, a pension could have good investment returns and still have failed to fulfill its fiduciary duties under CAPSA’s ‘The Prudence Standard and the Roles of the Plan Sponsor and Plan Administrator in Pension Plan Funding and Investment’ guidelines, says Nancy Chaplick, of Osler, Hoskin & Harcourt LLP. Speaking at its ‘Pensions Seminar – Reform on the Horizon?’, she said the guidelines place a great deal of emphasis on process. Based on the premise that process is prudence, not returns, it calls for pension funds to set out processes for everything from investment to reviewing the process for establishing processes. It then requires them to follow these processes and then document how they have followed. It creates the unlikely scenario where a fund with good returns is unable to fulfill its fiduciary duty because it cannot back up its processes. However, she says it is unlikely a fund with good return would see its processes come under the scrutiny of the regulator.   

Howard Skeptical About Harmonization 

Despite talk that pension law harmonization will be discussed at the National Summit on Retirement Income, Evan Howard, of Osler, Hoskin & Harcourt LLP, is skeptical. At its ‘Pensions Seminar – Reform on the Horizon?’, he pointed to the various solvency relief measures proposed by various jurisdictions across the country over the past year as the basis of his skepticism. If harmonization was likely, he said, why did each jurisdiction put forward its own slightly different rules for solvency relief?

Firm Size Makes Difference

Workers at firms with fewer employees are significantly less likely to participate in a retirement plan than are workers at large firms, says the Employee Benefit Research Institute. Participation in a retirement plan increases for full-time, full-year private-sector wage and salary workers ages 21–64 as firm size grows. Workers in this category are considered to have the strongest connection to the work force. One potential explanation for the lower participation levels at smaller firms could be that these firms hire workers with characteristics associated with lower participation, such as being younger or lower paid. However, when controlling for age, workers at small employers still had a persistently lower level of participation across the age groups.

No Loss No Argument

A Quebec court has dismissed an argument that because Defined Benefit plan members have not incurred individual losses their class action suit should not be certified. Granted, said Julien Ranger-Musiol, at Osler, Hoskin & Harcourt LLP’s ‘Pensions Seminar – Reform on the Horizon?’, the process is still in an early stage and courts give plaintiffs greater latitude to justify their action. The Quebec Superior Court ruled in Syndicat general des professeurs et professeures de l’Universite de Montreal v Gourdeau that the members have a legal standing and are entitled to bring the claim on the basis that the plan should hold all the assets that it should hold. The defendants argued that since the members of the plan were promised a specific benefit and the plan was ongoing that they had not suffered an actual loss. The members allege the pension fund breached its fiduciary duty be investing in a hedge which later collapsed.

National Plan Concerns IFIC

Governments may do more harm than good as they try to repair the way Canadians save for retirement, says the Investment Funds Institute of Canada. The concern arises from increasing proposals to create a voluntary public investment option based on the Canada Pension Plan. If no national solution comes forth, some provinces plan to pursue this option on a regional basis and invite others to join. The mutual fund industry would be impacted because leaving retirement savings in a public alternative to RSPs could prompt Canadians to no longer seek personal financial advice.

Communication Prompting Legal Action

Employees are bringing more legal actions against employers and their pension funds for problems with plan communications, says Paul Litner, of Osler, Hoskin & Harcourt LLP. He told its ‘Pensions Seminar – Reform on the Horizon?’ that courts are increasingly willing to treat pension fund communications as legally binding and are using information provided in places other than the plan documents to influence the court decisions. He suggested that the threat of increased legal action of communications for Defined Contribution pension plans was even greater as members of these plans are more reliant of the employer for information. One suggestion he offered is to put a disclaimer on all communications which states that the plan documents are the final word on the plan.

Guidelines Set For Charging Expenses

The Supreme Court of Canada’s decision in Kerry Canada has laid down guidelines for charging expenses to a pension fund, says Louise Greig, of Osler, Hoskin & Harcourt LLP. Speaking at its ‘Pensions Seminar – Reform on the Horizon?’, she said expenses paid from the fund must be administrative, necessary, and reasonable. As a result of the decision, it would be prudent of plan sponsors to review their existing expense policies to ensure that they are consistent with the principles laid down by the Kerry decision. As well, if an employer does not have a policy, it would be wise to establish one. The court ruled in the Kerry case that absent language in the plan documents, a pension fund could pay for expenses incurred for the exclusive benefit of the plan members.


Wednesday, December 9, 2009

Trustees ‘Totally Failed’

Trustees of the Canadian Commercial Workers Industry Pension Plan "totally failed" in restricting how much money was invested into questionable Caribbean hotels and resorts, says the Ontario Court of Justice. The Financial Services Commission of Ontario charged the trustees in 2006 with 15 act violations including "failing to exercise the care, diligence, and skill," that prudent people would expect in handling other people's money. The court dismissed most of the other charges against the trustees relating to the handling and propriety of the investments after the Crown did not introduce any expert testimony at the trial. It found, however, the trustees did nothing to make sure they limited investments in the Caribbean ventures to 10 per cent or less of the book value of the plan's assets in 2002 and 2003. Under the legislation, the defendants could receive penalties of up to $100,000 each for the guilty finding on supervision for investment restrictions. A sentencing date will be set in January. The plan, which has assets of about $1.4 billion, provides benefits to about 380,000 current and former members of the United Food and Commercial Workers union.

Eckler Backs TBPP Model

Eckler fully supports the possibility of enacting legislation that would extend the Target Benefit Pension Plan (TBPP) model beyond the multi-employer environment. In a letter to Ted Menzies, parliamentary secretary to the federal minister of finance, Ian Edelist and D. Cameron Hunter ask the federal government to modify the Income Tax Act and Regulations to allow all TBPPs to be registered with the Canada Revenue Agency as Specified Multi-Employer Pension Plans. They say this offers a simple and effective solution to promoting the growth of private pension coverage in Canada. They says this would allow employers to offer meaningful retirement benefits to their employees while maintaining control over pension costs and provide employees with significantly more secure retirement income than Defined Contribution plans.

Workout Regime Most Interesting

The most interesting feature of the federal Minister of Finance’s announced reforms to the federal Pension Benefits Standards Act, 1985 is the establishment of a workout regime that is intended to be of assistance to employers in financial difficulties who cannot meet their near-term funding requirements, says a Fogler, Rubinoff ‘Pension Alert.’ It says that funding requirements can push an employer into insolvency, which may not be the best resolution for any of the stakeholders, and can be seriously prejudicial to plan members. However, in two recent insolvency situations, Air Canada and Stelco, the federal and Ontario governments respectively enacted special regulations to deal with the funding of the company's underfunded pension plans. In both cases, the funding of the plans had contributed to the insolvency. The federal proposals appear to be intended to address the funding problem before it triggers an actual corporate insolvency.

Pay Hikes Average 2.7 Per Cent

Canadian workers can expect average pay increases of 2.7 per cent next year, a slightly higher rate of growth than the actual salary increases handed out in 2009, says the Conference Board’s ‘28th annual Compensation Planning Outlook’ survey. It says public sector employees can expect higher wage gains than their private sector counterparts. Increases of 3.2 per cent are anticipated for non-unionized public sector employees, compared to 2.5 per cent for private sector employees. For unionized employees, increases of 2.1 per cent are projected – 2.3 per cent in the public sector and two per cent in the private sector. In 2009, actual increases averaged 2.4 per cent, down sharply from 4.2 per cent in 2008, and one in five employers gave no increases in 2009. In 2010, only 8.3 per cent of employers are expecting overall salary freezes.

Employers Turn To Retirees 

Many employers seem to be turning to retirees to fill positions left empty by the mass retirement of baby boomers, says Desjardins Financial Security's ‘2009 Rethink Retirement’ survey. Close to one in six retirees (16 per cent) continue to work. Some have gone back to work because they need money for personal projects (46 per cent) and others because the economy has decimated their retirement income (29 per cent). Young retirees, aged 55 to 64, are the most likely to continue working (25 per cent), whereas only one in 10 retirees over 65 works (11 per cent).

Chapman Leads Sales Effort

James (Jim) Chapman is vice-president, sales and marketing, at Benecaid. In this role, he will lead the sales and marketing efforts for the company's two products categories, health spending accounts and group health benefit plans. Previously, he was vice-president and general manager of Dell Canada's corporate division.


Tuesday, December 8, 2009

Ignatieff Opts For Top Up

Liberal leader Michael Ignatieff wants Canadians to be able to top up their retirement savings through the Canada Pension Plan. The Globe and Mail reports Ignatieff is expected to recommend allowing individuals to invest cash in a “supplementary” version of the CPP. He will also call for new measures to protect the company pensions of workers when a business goes bankrupt.

Plans Need Investment Policy

The Canadian Association of Pension Supervisory Authorities (CAPSA) is calling for the adoption of an overall investment policy by a plan administrator to complement the mandatory SIPP required by pension legislation, says a Borden Ladner Gervais ‘Pension Alert.’ An investment policy is broader in scope and more detailed in outlining administrative procedures. CAPSA’s consultation paper, ‘The Prudence Standard and the Roles of the Plan Sponsor and Plan Administrator in Pension Plan Funding and Investment’ has been released for comment. The consultation paper is part of CAPSA's strategic initiative to promote consistency in the governance of pension funds and funding by examining the issues surrounding the application of the prudent person rule and developing a common approach to funding policies, recognizing the link to fund governance. The guidelines contained in the paper, if adopted, are not legal requirements, but are best practices. Stakeholders are invited to provide their feedback by January 29.

Companies ‘Cautiously Optimistic’ On Salaries

Canadian companies took even more severe measures than originally planned for 2009 with hiring freezes, salary freezes, and a range of other measures designed to manage expenses in line with dramatically reduced revenue. And their outlook for 2010 can best be described as “cautiously optimistic,” says research from Towers Perrin. Although nearly half of the 143 Canadian companies surveyed froze salaries in 2009 (a much higher proportion than was anticipated in a similar January 2009 survey), only 11 per cent anticipate a general salary freeze for 2010, although that number increases to 18 per cent when it comes to senior executive salaries.  And plans to reduce workforce-related costs in other areas look very different for 2010, with fewer companies looking to reduce costs further in areas such as salary reductions, training, benefits, and overtime. Perhaps because of doubt around the timing of the economic recovery, companies are being conservative with their salary budgets.  The median salary increase for employees is 2.5 per cent, an increase relative to 2009 for many companies, but down about one per cent from pre-crash norms in Canada.

Use Of Social Media Increasing

In order to communicate messages to workers in a complex business environment, a majority of companies plan to increase their use of social media in the coming year, says a survey by Watson Wyatt. The Watson Wyatt ‘2009/2010 Communication ROI Study’ found almost two-thirds (65 per cent) of companies plan to increase their use of social media in 2010. Overall, 78 per cent of global respondents have increased their electronic communication in the last 24 months and 55 per cent have increased face-to-face communication. While interest is growing, many employers report common hurdles to implementing social media. Among employers that did not expand their use of social media, more than one-third (36 per cent) cited the lack of information technology support or inadequate technical capability. Forty per cent indicate limited knowledge of the topic and nearly half (45 per cent) of companies cite the lack of staff or resources.

State Street Adds Index Strategy

State Street Global Advisors has launched a U.S. Community Investing Index strategy that seeks to match the returns and characteristics of the U.S. Community Investing Index. The underlying investment approach for the strategy is to buy and hold securities with the aim to minimize turnover and transaction costs, trading only when the composition of the index changes or when cash flow activity occurs in the strategy. Launched in 2005, the index is comprised of more than 300 large- and mid-cap companies spanning all sectors that have demonstrated successful and proactive engagement with economically underserved populations in rural and urban communities in the United States.

AGF Using Eagle System

AGF Management Limited has selected Eagle Investment Systems LLC’s investment management suite to be delivered via its application service provider, Eagle ACCESS. The firm will leverage Eagle to standardize its data management functions across several AGF entities. Based in Toronto, AGF provides investment management services to advisor, institutional, and high-net-worth clients from its offices across Canada and subsidiaries around the world.

Mawer Picks Up Awards

Mawer Investment Management picked up several awards at the 2009 Canadian Investment Awards. Its Canadian Balanced Retirement Savings Fund won the Gold in the category of Global Balanced Funds. The fund invests in a mix of Canadian, U.S. and international equities, and Canadian bonds. Its World Investment Fund won a Gold and a Silver in the category of International Equity Funds and International Equity Pooled Funds respectively. The fund invests in non-North American securities. The Canadian Balanced Pooled Fund won Gold in the category of Global Balanced Pooled Funds. A Silver award went to its Canadian Equity Pooled Fund in the category of Canadian Equity Pooled Funds and its Canadian Diversified Investment Fund earned a Bronze award in the category of Global Balanced Pooled Funds.

McIntyre Responsible For Ontario

Kirk McIntyre is vice-president, group business (Ontario), for Medavie Blue Cross. In this role, he will be responsible for group underwriting and group sales throughout Ontario. He has more than two decades of senior management experience.

Hutcheson Heads Oxford

Blake Hutcheson is chief executive of Oxford Properties Group, the real estate arm of the Ontario Municipal Employees Retirement System. Most recently, he ran the global real estate arm of Mount Kellett Capital Management, a New York-based private equity firm. Prior to that, he worked at CB Richard Ellis for 14 years and headed up the Canadian, Latin American, and Mexican operations. He takes over February 1.


Monday, December 7, 2009

Benefits Annuitization Not Required

The Ontario Financial Services Tribunal (FST) has determined that in the context of a partial wind up under the Pensions Benefits Act Ontario (PBA), a plan administrator could meet its obligations to provide pensions for members affected by a partial plan wind up by providing those pensions through the on-going plan and is not required to annuitize benefits of affected members who have chosen a deferred pension. A Blakes’ Bulletin says the decision in Imperial Oil Limited v. Superintendent Financial Services is directly contrary to the policy W100-231 of the Financial Services Commission of Ontario (FSCO), which says all immediate and deferred pensions in the wound up portion of the pension plan must be provided through the purchase of life annuities from an insurance company licensed in Canada to provide such annuities. The FST concluded that the option of providing pensions through a continuing pension plan in a partial wind up is not precluded by the PBA. The FST said that this was consistent with FSCO’s own approach to the “distribution” of the employer-owned portion of surplus triggered by a partial wind up, where it permitted that money to be left in the pension plan rather than paid out. However, it attached two caveats. It notes that it has only considered “the facts and arguments raised in this case” and states that there was no question in this case about IOL’s ability to accept the liabilities and continue to provide the benefits. It also appears to leave open an argument with respect to the requirement to annuitize based not on the definition of what constituted the distribution, but rather on whether the conditions in s.70(6) have been satisfied.

Sun Shuffles Senior Officers

Dean A. Connor is chief operating officer at Sun Life Financial. Currently the president of Sun Life Financial Canada, he assumes responsibility for MFS Investment Management, Enterprise Services, and Human Resources. He also retains oversight for SLF Canada and SLF Reinsurance. Kevin P. Dougherty is president, SLF Canada, assuming operating responsibility for SLF Canada and SLF Reinsurance. He also retains his current role as president, Sun Life Global Investments (SLGI), including responsibility for Sun Life's International Investment Centre and McLean Budden.  

Managers Discuss Alternatives

Real estate, infrastructure, private equity, hedge funds, and currency hedging will be among the strategies examined at the 4TH Annual Alternative Investments for Institutional Investors Conference. Sponsored by Benefits and Pensions Monitor and MindPath, it will feature industry thought-leaders who will share their views on the latest trends, information, and investment opportunities. It will also feature ‘Meet-the-Manager Roundtables’ where investors will have the opportunity to meet informally with a selection of chief investment officers and senior portfolio managers. It takes place February 22 in Toronto, ON. For more information, visit:


Friday, December 4, 2009

B.C. Prefers National Plan

B.C. Finance Minister Colin Hansen wants to kill talk the province's plan to create a supplementary pension plan could morph into a regional plan open only to westerners. In an interview with Canwest News Service, he said "the more we can develop a pan-Canadian plan the better" and he has asked his western counterparts to stop talking about a "regional plan" because it implies provinces east of Manitoba could not join. Any plan produced by one or more of the provinces should be "designed in a way that would allow other provinces to sign on in the future." The B.C. government has promised to unveil a new pension option as early as next year that would allow residents without workplace pensions to supplement the benefits from the Canada Pension Plan.

Private Equity Perceptions Damaged

Perceptions of private equity have been damaged within many LPs’ own organizations, says Coller Capital’s ‘Global Private Equity Barometer.’ It found two-thirds of LPs have changed how they manage private equity since the credit crunch. Concerns about inadequate GP reporting, conflicts of interest, and fund terms and conditions will lead more than three-quarters (79 per cent) of investors to refuse commitments to new funds from their current managers in 2010. Two thirds of LPs have also changed the way they manage private equity as a result of the downturn with 60 per cent saying they have changed their risk appetite and investment criteria and around half deepening their due diligence prior to committing to a fund.

Retirees Say Situation Deteriorated

Canadian workers and retirees experienced last year's recession very differently, says Desjardins Financial Security's ‘2009 Rethink Retirement’ survey. It found two in five retirees say their financial situation deteriorated in 2009, compared to three in 10 workers. Even more striking is the fact that more than one in four workers (26 per cent) said that things improved, compared to one in 10 retirees (eight per cent). Retirees cite stock market losses and a higher cost of living as reasons for the deterioration of their financial situation. Because of this deterioration, they say they are just barely covering their expenses.

MFC Launches SMA Website

MFC Global Investment Management (MFC GIM), the institutional asset management arm of Manulife Financial Corporation, has launched a Canadian separately managed account (SMA) website to better serve its sub-advisory client relationships. MFC GIM provides sub-advisory investment management services for SMA providers in Canada. With an SMA, financial advisors create an individual portfolio for clients that takes into consideration individual risks and objectives. The website is at

Investors Don’t Understand Purpose

Some investors in U.S. target date funds apparently do not understand the purpose of the funds and could end up with a potentially inferior portfolio in terms of risk/return tradeoff, says a study by the Benefit Research Institute. Because target date funds were designed to be ‘all-in-one’ portfolios that diversify asset allocations and rebalance over time based on a defined target date horizon, participants who lack financial literacy or desire to use institutional expertise in asset allocation and portfolio rebalancing may benefit from investing in these funds. However, holding TDFs with other funds could result in a potentially inferior portfolio in terms of risk/return tradeoff with more assets allocated to some sectors than the designers of the target date funds had planned. These ‘mixed’ target date fund investors apparently fail to understand that a TDF is designed as an ‘all-in-one’ portfolio solution.

Evans Named Lifetime Volunteer

Clifford R. Evans has been awarded the International Foundation of Employee Benefit Plans’ ‘2009 Canadian Lifetime Volunteer Award.’ Evans, who was chair of the foundation’s Canadian board in 1989, served as director of international operations and international vice-president of the United Food and Commercial Workers International Union. An early proponent of self-funding, he promoted a network of health and welfare plans for more than 200,000 active workers on a multi-local basis. He also helped establish, and was a principal union trustee of, the Canadian Commercial Workers Industry Pension Plan which provides pension accruals and payments for more than 500,000 people.

Benefit Ball February 4

CPBI Ontario's Benefit Ball takes place February 4 in Toronto, ON. The annual networking charitable event for the pension, benefits, and investment industries raises funds for the Crohn's and Colitis Foundation of Canada. For information, contact the Ontario regional office at 877-599-1414 or


Thursday, December 3, 2009

Stress Testing Guidelines Adopted

Federal regulators have adopted final guidelines setting out how financial institutions should carry out their stress testing. The Office of the Superintendent of Financial Institutions received a number of comments from banks, insurance companies, and actuaries and has modified the guideline in response to the comments. The primary changes deal with the timing of the guideline’s implementation. The draft guideline suggested that an insurer’s annual dynamic capital adequacy testing (DCAT) would be available to the board of directors no later than six months after year end. OSFI says the commenters pointed out that requiring this to be completed in that time frame “does not mesh well with many insurers’ planning cycles and that uncoupling DCAT from the planning cycle reduces its effectiveness as a management tool.” The requirement was clarified by eliminating a specific timeline for the annual DCAT and emphasizing that DCAT and stress testing are complementary processes which each institution needs to complete in a way which will maximize their benefit.

More Than Half Adopt LDI

More than half (54 per cent) of Defined Benefit plan sponsors have adopted liability-driven investment strategies, up from 20 per cent in 2007, says an SEI ‘Global Quick Poll.’ It found that globally, 90 per cent of respondents said “controlling year-to-year volatility of funded status” is their primary objective of LDI. The poll included pension executives from Canada, Netherlands, the United Kingdom, and the United States. Despite the increase in take-up by plan sponsors, SEI found less agreement about just what LDI actually is. Some 40 per cent define LDI as matching duration of assets to duration of liabilities, while 32 per cent said it is a portfolio designed to be risk managed with respect to liabilities.

Stromberg Earns Career Award

Glorianne Stromberg, a former commissioner of the Ontario Securities Commission and now Chair of the Public Accountants Council for the Province of Ontario, has earned a Career Achievement Award at the Canadian Investment Awards. She was honoured for her long-term contributions to the financial services and investment funds industry through her ground-breaking reports, as well as her important contributions to regulatory change and policy development. CI Investments Inc. took home the most prizes – seven – including one for Eric Bushell as Morningstar equity fund manager of the year. The awards recognize leadership in the investment industry and represent Canada's wide range of investment products, including mutual funds, pooled funds, and hedge funds.


Wednesday, December 2, 2009

Out-of-date Rules Need Repair

Canada already has good retirement savings systems in place, but some necessary fixes to out-of-date and restrictive rules should be implemented to increase savings, says a Canadian Bankers Association report. It found that families save in many different ways depending on factors such as whether or not they have an employer-sponsored pension plan. In light of these findings, the CBA cautions against rushing into a one-size-fits-all public approach, such as creating a new government pension plan, when it may not be the best solution and could duplicate existing private retirement savings and employer-sponsored pension programs. The CBA does make a number of recommendations about how the current retirement savings system could be improved. These include encouraging the development of multi-sponsor or third-party plans open to a wider range of membership. The CBA says such plans could lower costs because of economies of scale, offer small and medium sized businesses effective alternatives to setting up their own plans, and be open to self-employed individuals. It also says harmonizing pension laws across the federal and provincial jurisdictions would remove barriers for companies operating in more than one province when considering whether to offer pension plans to their employees.

CP Makes Pension Prepayment

Canadian Pacific is making a half-billion-dollar voluntary prepayment to its pension plan. The object is to reduce how much it will be required to pay into the plan next year under the terms of the pension agreement with its employees. Canadian Pacific now estimates its 2010 pension contributions to be between $150 million and $200 million.

Cordiant Managing ICF Debt Pool

Cordiant Capital Inc. has signed an agreement to manage the Infrastructure Crisis Facility Debt Pool (ICF Debt Pool) launched at the annual meeting of the World Bank Group in October. Cordiant was chosen following a competitive selection process involving financial institutions from around the world. As manager of the ICF Debt Pool, it will enable vital support to promising infrastructure projects in emerging countries by ensuring they are financed on a timely basis, and on commercial terms.

BlackRock Merger Closes

BlackRock's merger with BGI has closed creating the world's biggest money management firm with roughly $3.2 trillion in institutional and retail client assets under management. BlackRock will be retained as the combined firm's name, while keeping the iShares brand for BGI's exchange-traded funds business.

State Street Acquires Mourant

State Street Corporation is expanding its global fund administration and alternative servicing capabilities by acquiring Mourant International Finance Administration (MIFA).  Headquartered in Jersey in the Channel Islands with approximately $170 billion in assets under administration, MIFA is a provider of fund administration services, particularly for alternative investments such as private equity, real estate, and hedge funds. With the acquisition, State Street expands its reach in Europe and Asia and broadens its capabilities for servicing investors’ growing real estate administration requirements.

Casquinha Heads CPBI

Peter Casquinha is CEO of the Canadian Pensions and Benefits Institute. Previously, he was executive director of the Canadian Society for Civil Engineering as well as senior deputy director of The Institute of Canadian Bankers. 

Maxwell Senior Associate

Sean Maxwell is a senior associate in the pensions and benefits group at Blake Cassels & Graydon, LLP. His practice focuses on all issues relating to pension and employee benefits plans including fiduciary duties, plan terminations, ongoing plan administration and compliance issues. Kevin MacDonald and Lindsay McLeod, who were recently called to the Ontario Bar, have joined the pension and benefits group.

First Canadian Elected As President

Susan D. Cranston is the first Canadian to be elected president of the International Society of Certified Employee Benefit Specialists (ISCEBS). She is currently assistant vice-president communications, HR and communications management, at Manulife Financial in Waterloo, ON. She previously served as secretary/treasurer of the society and has been on the governing council for the past two years. In 2007, she was instrumental in founding the fourth Canadian ISCEBS chapter in Kitchener-Waterloo.


Tuesday, December 1, 2009

Lack Of Responsible Leaders Caused Crisis

The current global financial and economic crisis was caused by the lack of responsible leadership at the highest levels of some financial services companies, but not by risk-taking per se, says Joseph Iannicelli, president and CEO of The Standard Life Assurance Company of Canada. Speaking at the Canadian Club of Montréal, he said he believes that confidence in financial institutions has been severely damaged and the only way to fix it is through strong, responsible leadership. “We have a duty to cultivate leaders who hold strong values, who understand their responsibility to ensure that Canadians are confident in our financial system; and who are capable of balancing risk, innovation and growth,” he said. In line with the logic of responsible leadership, no institution should be too big to fail, and “we need to be devoutly capitalist, letting the market decide who will survive and who will disappear. Financial institutions led by leaders who understand and respond to their responsibility to the wider community, will survive and flourish.”

Cash Flow Top Concern

Most finance executives remain concerned about several financial and risk management issues, most notably cash and cash flow, and Defined Benefit pension plan volatility, says a survey by Towers Perrin. It found 54 per cent of finance executives surveyed reported an increased level of concern around pension plan volatility, more than such issues as risk management, access to short- and long-term financing, and executive compensation. However, only about one-third have changed pension plan investment strategy as a result of the financial turmoil and even fewer (12 per cent) have changed pension plan hedging policies.

Economy Stresses Workers

Stressed-out U.S. workers are calling in sick more often and turning to employee assistance programs for help in greater numbers in the wake of layoffs at many firms, says a survey by Watson Wyatt Worldwide Inc. It found nearly half of the 282 large companies that responded say they have seen more use of employee assistance programs, which typically offer counseling or stress management help. Twenty-two per cent say they have seen an increase in unplanned absences. The survey said 78 per cent of employers cited "excessive work hours" as a leading cause of worker stress.

Connor Speaks To Economic Club

‘Nudges or Shoves – Practical Approaches to Improving Retirement Savings in Canada’ will be the focus of a speech by the president of Sun Life Financial Canada to the Economic Club. Dean A. Connor will share his perspectives on how some simple legislative changes, combined with the power of behavioural economics, can narrow the retirement savings plan coverage gap and help more Canadians save for the future. It takes place December 10 in Toronto, ON. For more information, visit

Interest Rate Assumptions For January

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


Monday, November 30, 2009

Bill Would Protect Pensions

A New Democrat MP has proposed a private member's bill that could help protect employees and pensioners if their employer fails. Wayne Marston, a Hamilton-area MP, wants to change the federal Bankruptcy and Insolvency Act so that former workers and pensioners would become preferred creditors in situations of corporate bankruptcy. Currently, former workers, such as those who were with Nortel Networks Corp., which filed for bankruptcy in January, are considered unsecured creditors and do not receive any priority in a bankruptcy proceeding.

B.C. Teachers Consult On Pensions

The B.C. Teachers’ Federation has been holding consultations to find out if members want to pay significantly more in premiums or forgo extended health coverage along with part or all of the indexing that ensures monthly benefits keep pace with inflation, says a report in the Vancouver Sun. If teachers want to maintain current benefits, the province will be asked to cover the employers’ contributions shortfall which could be as high as $3 million. While the drop in investment returns accounts for some of the shortfall, a growing number of teachers are retiring with full pensions as soon as their age plus years of service add up to 90. As a result, there are now just 1.7 active teachers for every retiree, whereas a few years ago, there were about 2.85 active teachers for every retired teacher.

RBC Dexia Gets Mandate

RBC Dexia Investor Services has been awarded a mandate by Aberdeen Asset Management to provide unit registry services for the funds which it recently purchased from Credit Suisse. It is currently the sole provider of unit registry services to Aberdeen's Asia Pacific operations and has the capability to provide Aberdeen with consolidated reporting in the Asia Pacific region regardless of which country its clients choose to invest in.


Friday, November 27, 2009

Court Dismisses Nortel Appeal

The Ontario Court of Appeal has dismissed an appeal by the union representing former workers at Nortel Networks Corp. The decision involves the Canadian Auto Workers union, employees who retired from Nortel, and former workers who were fired. The union and former employees had argued that the collective labour agreement between Nortel and its union covered current workers and those who were retired or laid off. They argued that retired workers should receive termination and severance payments in addition to monthly retirement payments. However, the court upheld a ruling from the Ontario Superior Court that rejected arguments that Nortel violated the law when it refused termination, severance, and vacation pay to the former employees. The Court of Appeal also ruled that the collective labour agreement only applied to current employees, and not retired workers.

Caisse Completes Debt Offering

The Caisse de dépôt et placement du Québec, through its subsidiary CDP Financial, has completed a US$5 billion initial global debt offering under its new refinancing program. The proceeds of this refinancing program will be used to replace certain short-term debt with longer term debt, thus better matching the duration of the Caisse's sources and uses of financing, and increasing the stability of financing sources. This program will not increase the total leverage of the Caisse. As announced earlier this year, the Caisse's goal is to continue to reduce its use of leverage. Depending on market conditions, the program could raise up to C$8 billion in total. As a result, CDP Financial does not intend to issue notes in the Canadian market until 2010.

Milette Joins Dexia

Jean-François Milette is vice-president and senior relationship manager of Canadian operations for Dexia Asset Management. He brings more than 22 years of senior experience in the Canadian financial services industry to the position. Previously, he was with MFC Global Investments where he was vice-president, institutional investments for Eastern Canada.


Thursday, November 26, 2009

Call For OAS Increase

The federal government should increase Old Age Security benefits to help offset the lack of retirement income from private sources facing many Canadians, says a report for the Canadian Centre for Policy Alternatives. It says increasing OAS payments, as well as the Guaranteed Income Supplement for the country's poorest seniors, is the best approach to help working Canadians who do not have workplace pensions and are not saving enough for retirement. It says to offset the increased cost of higher OAS benefits, the government should consider reducing taxpayer subsidies to RRSPs and workplace pensions that benefit only the 38 per cent of employed Canadians who have a workplace pension and the 31 per cent making RRSP contributions. Tax subsidies for registered pension plans and RRSPs in 2010 is estimated to be $28.9 billion – greater than the total cost of OAS benefits, which are estimated at $27.6 billion for the 2009-10 fiscal year.

Canadians Want Consumer Healthcare

Canadians increasingly want to be treated as consumers rather than as patients when it comes to their healthcare, says research by Deloitte. They also want improved service, personalized programs, greater access to their health records, and more education and options for health self-management. And, they are willing to work collaboratively with industry stakeholders to achieve these goals while keeping costs in check and using existing resources. The 2009 Canadian healthcare consumer survey found Canadians feel unprepared to handle future healthcare costs. Although three-quarters (75 per cent) of Canadians report having private health insurance (primarily through their employer,) only one-quarter (25 per cent) feel well-insured across their public and private insurance plans and only 39 per cent feel they are well-prepared to handle future healthcare costs. A majority support expanding private care, as long as it has no impact on the public system and a reduction in wait times.

BMO Completes Acquisition

BMO Financial Group has completed the acquisition of the group retirement recordkeeping business of ICMC Group Retirement Services Inc (Integra GRS), a subsidiary of Integra Capital Management Corporation. The acquisition of the group retirement recordkeeping business gives it an entry into this business and allows it to make available a full suite of its investment products as further investment options for the capital accumulation plan sponsors and members. Joan Johannson, president of the acquired business, will continue as president of BMO Group Retirement Services.

Investor Confidence Down In November

The State Street Investor Confidence Index for November 2009 fell by 7.6 points to 100.8 from October’s level of 108.4. The most pronounced decline was evident among Asian investors, where confidence fell 4.1 points from 95.3 to 91.2. In other regions, confidence was somewhat more upbeat. The risk appetite of North American investors was largely unchanged, ticking up 1.1 points from 101.1 to 102.2. European investors struck a somewhat more optimistic note, and their confidence rose 3.7 points from 101.8 to 105.5. A reading of 100 in the index represents a neutral level where institutions are neither allocating towards nor away from risky assets.

Sun Life Appoints Pair

Diana Deverall-Ross is assistant vice-president, group benefits marketing and communications, at Sun Life Financial. Since joining the company in 2000, she has held a number of leadership roles in sales, distribution, marketing, and product development, including, most recently, the roles of vice-president, individual health insurance, and vice-president, eBusiness and Marketing. Lori Casselman is assistant vice-president, health and productivity solutions. She was formerly a vice-president at Buffet & Company Worksite Wellness.

Aon Adds Trio

Aon Consulting has made several recent appointments across Canada. Aman Sangha joins the Toronto, ON, employee benefits outsourcing practice as senior consultant. Autom Tagsa is manager, national marketing and external communications, with the Toronto marketing and communications team. Kamila Giesbrecht is a senior consultant with the Vancouver, BC, investment consulting team.


Wednesday, November 25, 2009

Employee Awarded Damages

An Alberta court has put to the test the principles set out by the Supreme Court of Canada in Honda v. Keays. In Soost v. Merrill Lynch Canada, the Alberta Court of Queen's Bench followed the Supreme Court's principles, although this time against the employer, says a Fasken Martineau ‘The HR Space.’ Soost, a former financial advisor, was awarded damages of $2.2 million – including $1.6 million for the manner in which Merrill Lynch terminated him and to compensate him for his inability to compete fairly after he was fired. Consistent with Keays, the court did not award an arbitrary extension of the notice period or any punitive damages. The decision reinforces the concept that there is no ownership in a client and highlights the implications of the way in which brokerages compensate financial advisors when enticing them from other firms. It also follows other courts in again rejecting the automatic extension of the notice period in order to compensate for an employer’s bad faith.

Tools To Fix System In Place

The tools and system are already in place, all that is needed is the resolve to make the changes necessary to make Canada's pension system work, says Neil Craig, a senior pension consultant at Stevenson and Hunt. Speaking at the CPBI Ontario region's 'Pension Summit,' he said the proposal for superfunds is not the solution and could cause a lot of unemployment in the private financial services sector if they are forced to compete with government run supplemental plans and superfunds. One necessary step to increase pension plan coverage in the country is to get employers involved by, for example, offering them incentives to establish plans and contribute to them. Employee participation in plans jumps from 10 per cent to 85 per cent if the employer contributes to the plan, he said.

Leadership Needed On Pensions

John Tory is calling on governments to tell the truth and lead the country out of the current pension and retirement savings crisis. The former leader of the Ontario Progressive Conservative leader told Mindpath's '4th Annual Top Advisors Investment Strategies Symposium' that leadership is about anticipating problems and providing solutions to them, not reacting when it becomes a crisis. However, in terms of the pensions and retirement savings crisis, he is not seeing leadership from anyone. Solutions must start with honest discussions, he said, however, among people in public life there is a disinclination to be honest and “level with” people. As well, he said this is not the time to find solutions because solutions offered during a crisis are often of the knee-jerk variety or involve “cherry-picking,” and just making the easiest decisions.

Whitehorse As Pension Reform Centre?

Whitehorse should be made the pension reform centre of Canada and the government officials from across the country meeting there next month to discuss pension issues should be forced to stay until they find a solution, says Keith Ambachtsheer, president and founder of KPA Advisory Services. He told the CPBI Ontario region's 'Pension Summit,’ that the pension reform train is leaving the station and we will soon see who is onboard. He believes the country needs a working group to look at the current rules and regulations and bring them into the 21st Century. While the current situation with Defined Benefit plans is challenging, there is a “lot of low hanging fruit” that can be changed quickly and will have a positive impact on the country's pension system.

Emerging Markets Becoming Dominant

Emerging market economies such as China and India are moving to become dominant global economies, says Philip Petursson, director, institutional equities, at MFC Global Investment Management. Speaking at Mindpath's '4th Annual Top Advisors Investment Strategies Symposium,' he said they now rank second and fourth respectively among world economies. As well, emerging market economies account for a greater share of global GDP moving from 23 per cent in 1995 to 43 per cent in 2007. Another indicator of the growing strength of these economies is that they emerged faster from recent global financial crisis. In fact, Petursson said that crisis was more of a development markets phenomena.

Providers Could Create Plans

Canada's Defined Contribution pension plan providers should be allowed to create national multi-employer plans for employers who have no employer pension plans, says Tom Reid, senior vice-president, group retirement services, at Sun Life Financial. Speaking at the CPBI Ontario region's 'Pension Summit,' he suggested it was better to improve the existing system than to create new plans. As well, he said the natural role of government is to provide regulation and oversight and it should not be competing with the private sector in the provision of pension plans. To get his proposed system in place, there needs to be agreement on public policy goals and approaches and the current barriers need to be dismantled. At the same time, the regulatory framework must be overhauled to encourage saving via the workplace.

Chan Moves To Hablis

Mandy Chan is investment director of HSBC Global Asset Management’s active fundamental investment specialist, Halbis. She will join the Chinese investment team to manage Chinese equities. Prior to joining HSBC, she worked for Fortis Investment Management and spent three years in Canada managing investment portfolios at TD Asset Management Limited.


Tuesday, November 24, 2009

Pension System Poorly Positioned

Almost nine out of 10 (89 per cent) of Defined Benefit plan sponsors believe Canada's pension system is either poorly positioned or average when it comes to Canada's future pension prospects, says an RBC Dexia Investor Services survey. It also found 41 per cent of respondents cited investment risk as the type of risk they are most concerned with shortfall risk (the risk of pensions not generating sufficient returns to offset obligations) ranking a close second, at 36 per cent. To understand what might be adding to the pessimism among plan sponsors, the survey asked respondents to identify their single biggest challenge in 2010. Almost half, 48 per cent, indicated that their main focus will be on aligning future liabilities with assets, while 38 per cent said they expected low returns to continue to be a significant challenge. While plan sponsors were generally pessimistic about the current Canadian pension system, the survey revealed that 72 per cent of respondents rank Canada's pension system as equal to, or better than, other systems globally.

Manulife Enters China

Manulife Financial has signed an agreement to purchase Fortis Bank SA/NV's 49 per cent ownership in ABN AMRO TEDA Fund Management Co., Ltd. The new joint venture, which will be called Manulife TEDA Fund Management Company Ltd., will provide traditional retail and institutional asset management across the Chinese market. The asset management industry in China is expected to become one of the largest in the world in the coming decade. Current industry assets under management of US$338 billion are forecast to grow significantly and exceed US$1 trillion by 2014. China has one of the world's highest savings rates at 51 per cent of GDP and, to date, a very high proportion of household wealth is held in the form of deposits.

Pension Trust Proposed

AbitibiBowater and the Communications, Energy and Paperworkers Union of Canada want governments to back a proposed pension trust. In the proposal, retirees' pensions would be moved to a trust to be guaranteed by various levels of governments. However, for that to happen, government pension funding rules would have to be changed. The company is under court protection while it negotiates with creditors in the United States and Canada under the Companies' Creditors Arrangement Act and restructures its finances. The company's pension plans are underfunded by about $1.3 billion. The union represents about 250 workers at Abitibi's Thorold, ON, plant and about 900 retired and currently-employed workers – unionized and non-unionized – have a stake in Abitibi pensions.


Monday, November 23, 2009

Toronto To Be Retirement Centre

Three of Canada’s largest pension funds want to make Toronto a global hub for the retirement financial sector. The Ontario Teachers' Pension Plan, Canada Pension Plan Investment Board (CPPIB), and the Ontario Municipal Employees Retirement System (OMERS) are supporting the Toronto Financial Services Working Group's plan and have signed a statement of support for its ‘Partnership and Action: Mobilizing Toronto's Financial Sector for Global Action’ report. The report identifies four priority opportunities that have the potential to add 25,000 to 40,000 jobs and up to $5 billion in annual GDP over a five-year time horizon. These include building on the region’s concentration of important players and thought leaders in the retirement financing solutions area to create a hub of expertise to address the questions of how best to optimize use, efficiency, and effectiveness of registered private pension plans and personal savings.

Fairfax Quits NYSE

Fairfax Financial Holdings Ltd. is delisting from the New York Stock Exchange, having decided that the expense and hassle of being listed in the United States outweigh the benefits. The company has been listed on the exchange for about seven years. For a time, the company felt that a U.S. listing was necessary to enable its American employees to own its shares, and to attract U.S. investors. But these days it's relatively simple for U.S. investors to use the Canadian exchange, and Fairfax's ability to easily raise $1 billion through a share offering in September has demonstrated its ability to attract investors.

Iarocci Now Vice-president

Nick Iarocci is vice-president, investment program, group savings and retirement at Standard Life. He joined the company in 2006 as regional vice-president, sales, Eastern region, group savings and retirement, bringing with him more than 20 years of experience with some of Canada's leading asset management firms.


Friday, November 20, 2009

Super Fund No Solution

Super pension funds will not solve the coverage and adequacy problems facing Canada’s pension system, says Murray Gold, a partner at Koskie Minsky. Speaking at the ACPM Ontario Regional Council's 2009 impACT on ‘Superfunds: The Answer to increasing pension coverage?’, he said they do have potential at the supplementary level as an attractive choice for higher income earners and those with higher retirement saving preferences. However, he said they fail several tests including making them mandatory and their cost. Part of the dilemma facing the pension system, he said, is that employers are increasingly focusing on their core businesses and are finding pension plans do not really attract or retain workers. They are realizing, he said, that they are not in the business of providing pension funds.

No Perfect DB Alternative

For employers looking for a financially stable pension arrangement, with less administrative hassles, there is still no perfect alternative to traditional Defined Benefit plans, says Stephanie Kalinowski, of Hicks Morley, at the firm’s ‘2009 Pension And Benefits Update.’ Plan sponsors must be more creative than ever when tailoring their DB alternative solutions, and need to remain aware of the challenges facing each alternative. As the most traditional DB alternative, Defined Contribution plans may not be the answer for those that want to decrease administration and governance, she says, as investment selection and member investment education can be onerous. Sponsors can consider multi-employer pension plans (MEPPs), since they promise no additional liabilities and administrative hassle, but employers end up surrendering a great deal of control over MEPP plan terms. Jointly sponsored pension plans are an appealing alternative because members share in surplus and deficits, but contributions can fluctuate and shared governance can present problems.

Time For Coherent System

The time has come to turn Canada's supplemental pensions jumble into a coherent system with a clear goal and a clear plan to achieve it, says Keith Ambachtsheer. In the ‘2009 Annual Benefactors Lecture,’ published by the C.D. Howe Institute, Ambachtsheer proposes a two-pronged plan for turning supplemental pension arrangements into an integrated, effective system. He says reform should be guided by the principles of using pension plan designs to target a post-work standard of living that is adequate, achievable, and affordable; give all workers should have a simple, accessible, portable opportunity to participate in pension plans that have explicit post-work income-replacement targets; ensure all forms of retirement saving receive equal tax, regulatory, and disclosure treatment across all sectors of the Canadian workforce; and pension management and delivery structures should be expert, transparent, and cost effective. To turn these principles into practice requires bringing the outdated rules and regulations governing supplementary pensions into the 21st Century, and creating a simple, low-cost pension plan for workers without a pension plan.

Sponsors Move From Traditional Allocation

Plan sponsors are moving away from the traditional 60/40 pension fund allocation policies to customized investment policies as a result of the financial crisis, says Monica McIntosh, business leader for Towers Perrin’s Canadian asset consulting practice. She told the ACPM Ontario Regional Council’s 2009 impACT in the session ‘Defined Benefit Funding Crisis’ that this was occurring before the financial crisis hit. However, now they are turning to it to de-risk their portfolios because market risk is dominating interest rate risk and many plans cannot get out of equities at this time because of funding problems. They are turning to customized policies as a result of the need to identify strategies that best meet their objectives. This approach can also help them avoid getting caught up in the optimism of future equity market rallies.

LDI Use Picks Up

The use of liability-driven investing has picked up sharply among pension funds in the U.S., the UK, the Netherlands, and Canada, says an SEI Institutional Solutions survey. Fifty-four per cent of the 150 corporate and public pension fund executives surveyed are using an LDI strategy this year, up from 37 per cent in 2008, and 20 per cent in 2007. Most respondents said market volatility increased the value of an LDI approach.

Target Date Fund Use To Increase

We can expect to see an increase in the use of target date funds as they are the best option to assist unsophisticated Defined Contribution pension plan members to impose reasonable asset mix structure, says Colin Ripsman, vice-president at Phillips, Hager & North Investment Management, in a session ‘’What’s New In The DC World?’ at the ACPM Ontario Regional Council’s 2009 impACT. However, he expects them to evolve to better meet the needs of members. These improvements may include longer glidepaths, better inflation sensitivity, and more flexible decumulation options. However, plan sponsors will need to do more work to ensure they select appropriate products.

Canadian Bond ETF Launched

Claymore Investments, Inc. has launched its Advantaged Canadian Bond ETF. The ETF seeks to provide a low cost, tax-efficient exposure to a diversified Canadian bond portfolio. The return of the fund is based on the price and performance of the DEX DLUX Capped Bond Index net of fees and expenses. It is designed to track Canadian investment grade government and corporate bonds, with target exposure allocations of 60 per cent and 40 per cent, respectively.


Thursday, November 19, 2009

Funding Policy Delicate Task

One only has to attempt to draft a funding policy for distribution to the regulator and plan members and former members to realize how delicate a task this will be, says Kathryn Bush, of Blakes. Speaking on plan governance at its 'Recent Developments in Pension & Employee Benefits Law' session, she said both the Ontario and Alberta/British Columbia pension reform reports call for requiring pension plans to have funding policies. The Alberta/BC report suggests, for example, that this policy include areas such as a summary of the risks to which the plan's funded status is exposed and a description of the policies adopted to protect it against these risks. However, she said many competing principles – such as Monsanto, corporative objectives and funding security – will make this a very sensitive document.

Economy Shows Positive Factors

The Canadian economy is showing a number of positive factors, says Pierre Ouimet, chief strategist at UBS Global Asset Management. Speaking at the Investment Counsel Association of Canada’s annual meeting, he said he expects domestic demand to continue to improve and the labour market in Canada remains far healthier than the U.S. market. In addition, signs of a rebound in the Canadian housing market are also having a positive impact on the state of consumer confidence which is fuelling a return to consumption.

Default Option Cries For Regulatory Relief

Using target date funds as the default option in Defined Contribution pension plans cries out for some regulatory relief, says Randy Bauslaugh, of Blakes. In a talk on auto enrolment and target date funds at its 'Recent Developments in Pension & Employee Benefits Law' session, he said both need some sort of safe harbour for employers using these. He said they are being promoted widely in the investment and consulting communities to address issues such as employee apathy and to increase employee retirement income security. However, they present serious legal risks for employers and plan administrators.  Several jurisdictions, for example, allow employees to be enrolled in a pension plan without their consent. However, several call for express written consent from plan members to permit pension plan payroll deductions. The creates a legal quandary for those who use auto enrolment.

Canada Viewed Differently

Canada is being viewed differently by investors and money managers and this will change the investment landscape in the country, says Andrew Auerbach, chairman and director of BMO Harris Investment Management. Speaking on a panel discussion at the Investment Counsel Association of Canada's annual meeting, 'Strategies for Success in the New Economic and Financial Order,' he said Canada is attracting more interest as more wealth is created in the country. Canada has the capital and the rule of law, he said, to attract foreign investors. However, its regulatory system may have discouraged foreign players in the past. He often heard them say they would like to come to Canada, but didn't understand the system. However, he says this will change as more wealth is created. This will force them to understand the regulations and enter the country.

Buschau Decision Important

The latest chapter in the Buschau series of cases is important for a number of reasons, says Deron Waldock, of Blakes. Speaking at its 'Recent Developments in Pension & Employee Benefits Law' session, he said the federal court of appeal's findings on the right to revoke mergers and reopen pension plans may have a significant application. It decided the superintendent's decision to allow the plan to reopen and revoke a merger was based on reasonableness and that continuing the plan better served the interests of the plan and the PBSA.

Funded Status Improves

The funded status for a typical U.S. fund managed under a traditional strategy improved on a market liability basis, while the funded status for a typical fund managed under a LDI strategy did not, says a Watson Wyatt Investment Brief. During the month of October, asset levels decreased primarily due to negative equity performance and liabilities decreased due to increasing swap rates. The funded status for a corporate plan managed under the traditional investment approach was 31.6 per cent below its January 1, 2008 level. Over the same period, the funded status for a corporate plan managed under an LDI strategy was 21.1 per cent below its January 1, 2008 level – a 10.5 percentage point preservation of funded status over the past 22 months.

Reforms Signal Need For DC Rules

Proposed federal pension reforms may signal a desire by the government to design rules for Defined Contribution pension plans instead of trying to accommodate them within the Defined Benefit plan regulatory framework, says Elizabeth Boyd, of Blakes. She told attendees at its ‘Recent Developments in 'Pension & Employee Benefits Law' session that it is proposing to clarify the responsibilities of parties involved with DC plans using the Joint Forum of Financial Regulators' Capital Accumulation Plan Guidelines. In fact, it looks like they will implement some of these guidelines and she finds this encouraging.

Environment Concerns Endowments And Foundations

U.S. endowments and foundations, concerned with the potential negative effects of a low investment return environment, are balancing their preference for investment strategies that promise higher returns with their concerns about risk management and funding their operating budgets, says a Pyramis Pulse Survey. Endowments, which ranked a low investment return environment as their top concern (29 per cent), are increasing allocations to strategies such as real estate, private equity, and commodities with a view to enhancing returns while balancing those investments which often require extended time commitments with more liquid strategies like global and emerging markets equities. Foundations, citing the ability to fund operating budgets as their top concern (34 per cent), are sticking with more liquid, traditional asset classes such as global and emerging markets equities as well as Treasury Inflation Protected Securities.

Administrators Get More Responsibility

Bill 133, the Ontario act which hopes to reconcile some of the differences between pension law and family law when it comes to the division of assets on marital break-up, will create more responsibilities for plan administrator, says Susan Slattery, of Blakes. Speaking at its 'Recent Developments in Pension & Employee Benefits Law' session, she said while it will set out the methodology to be used to divide the pension assets, it will not be retroactive which means orders, awards, and domestic contracts which predate proclamation of the bill will be determined using current methods. However, the extent of the administrator issues cannot be assessed until the regulations go into effect.


Wednesday, November 18, 2009

Benefits Important With Job Decisions

Almost two thirds (65 per cent) of working Canadians say that the availability of an employee health benefits plan plays a “very important” role in their decision to accept a new job, says research conducted for Benecaid. In fact, the vast majority of Canadians (78 per cent) would expect a compensation increase of at least 10 per cent to offset the absence of a benefits plan. However, workers, particularly younger ones (aged 25-34 years), are seeking control over their benefits coverage. Overall, 77 per cent of workers say they want complete control over their benefits spending with only 21 per cent comfortable with a plan chosen for them. A disproportionately higher number (85 per cent) of workers aged 25-34 years prefer control. In fact, the majority (76 per cent) of all workers say that they’d accept a smaller amount of money for health benefits if they could have control on how to spend it.

Salary Freezes To Reverse

As Canadian companies prepare for the economic recovery, many expect to reverse hiring and salary freezes in the coming months, says Watson Wyatt. While companies cautiously anticipate improving business results, many firms remain concerned about the impact of the recession on their ability to attract and retain workers. Among Canadian companies that instituted hiring freezes, 35 per cent expect to reverse them in the next 12 months, while nearly half (49 per cent) are not certain when they will reverse their freezes. Among companies that implemented salary freezes, more than half (53 per cent) expect to reverse them in the next 12 months; however, 21 per cent are not certain when they will reverse their freezes.

Err On Side Of Caution With H1N1

Employers should err on the side of caution when dealing with H1N1, says Michael McFadden, of Ogilvy Renault. Speaking at its ‘H1N1 and Pandemic Planning: Employer Health and Safety Imperatives in the Workplace’ seminar, he said employers should be more lenient towards employees who need to stay home because they are suffering from the flu or caring for family members who are suffering from it. In some cases, this may be necessary to ensure their workforce is not exposed to the virus. The difficult issue is paying these employees. If the company can afford it, he suggests they just pay the employee’s salary. For companies which cannot, he said while there is no legal obligation to pay employees who are off sick, a company could, for example, suggest an employee use their vacation allotment. Or they could, if possible, allow the employee to work from home. He also warned that companies need to monitor the situation because things could change if the pandemic becomes more serious.

Caisse Goes Back To Basics

The Caisse de dépôt et placement du Québec has gone back to basics in its investment strategy, says Michael Sabia, its chief executive officer. Speaking at a Caisse-sponsored conference on entrepreneurship in the changing global economic order, he said it has regrouped its basis functions and accelerated a plan of action to better manage risk. As well, it has simplified structures and investment strategies and moved away from complex derivative products. The Caisse posted huge losses last year in the financial meltdown due in part to its holdings of toxic non-bank asset-backed commercial paper market as well as high-risk derivatives, real estate, and private equity.

Governance Overhaul Cancelled

Canada’s securities regulators have decided not to proceed with the overhaul of the corporate governance regime proposed last December, says Torys LLP. The proposals would have introduced a more principles-based regime focusing on disclosure in relation to nine high-level corporate governance principles and eliminating the bright-line tests in the current definition of independence, leaving independence determinations to the reasonable judgment of the board of directors. In so doing, the proposals would have moved Canada’s corporate governance regime further away from the U.S. regime, which focuses increasingly on mandatory requirements.

Chwalka Moves To SEI

Michael Chwalka is head of institutional sales at SEI Investments Canada. He will focus on new business development for Canadian pension plans, endowments, foundations, and other institutional investors. Most recently, he was executive director and head of Morgan Stanley Investment Management’s Canadian institutional business.

Mahaffy On Investment Board

Douglas W. Mahaffy has joined the board of directors of the CPP Investment Board. He will retire in March 2010 as chairman of McLean Budden. With more than 35 years of experience as a financial executive, he has held senior finance positions at Merrill Lynch Canada Inc., Hudson’s Bay Company, and Eli Lilly Canada Inc.


Tuesday, November 17, 2009

Wellness Strategies Deal With Mental Health

The most powerful drivers for wellness strategies among Canadian employers are mental health issues with stress, work/life balance, and depression topping the list, says Buck Consultants’ third annual global wellness survey. ‘WORKING WELL: A Global Survey of Health Promotion and Workplace Wellness Strategies’ shows improving productivity by keeping employees healthy and at work is emerging as the top business objective for employer-sponsored wellness programs around the world. It found an emerging concept in health promotion and wellness is that of a ‘culture of health,’ defined as an organizational climate that promotes healthy lifestyle choices. Fifty-four per cent of Canadian respondents indicated that they have a strong or fairly strong ‘culture of health’ in the workplace and 40 per cent are actively pursuing a ‘culture of health’ for the future.  Yet, in contrast to North America as a whole where 77 per cent of respondents indicated they have successfully implemented a wellness strategy, only 12 per cent of Canadian employers have a wellness strategy in place.

Strategic Innovations Introduced

Multinational companies are introducing strategic innovations to benefit programs to help with cost control in the longer term, says a report by Mercer. It says while companies relied on tried and tested cost control tactics to weather the recession, including reducing contributions to Defined Contribution plans and stopping accruals in Defined Benefit plans, they are also adding wellness programs and allowing employees to tailor their own benefit packages through the implementation of flexible benefit programs. Companies are also assessing whether the level of certain benefits provided can be linked to profitability, such as introducing a profit-sharing component into DC plans.

BIMCOR Using RBC Dexia

RBC Dexia Investor Services has been appointed by BIMCOR Inc, the pension fund investment manager, to provide custody, fund administration, and securities lending for its North American pooled funds for the next five years. BIMCOR is a pension fund investment manager and a wholly owned subsidiary of BCE Inc. In business since 1983, it currently manages approximately $10 billion in pension fund assets.

Gascon Named Vice-president

Brigitte Gascon is regional vice-president of sales for Eastern Canada in group savings and retirement at the Standard Life Assurance Company. She has worked for more than 15 years at major financial services and insurance companies including Sun Life and Desjardins. She also chairs the Regional Council of Québec of the Canadian Pension and Benefits Institute (CPBI).

Proposed Legislation Examined

Healthcare strategies and current and proposed legislation affecting plans will be among the areas covered at the International Foundation of Employee Benefit Plans’ ‘Canadian Legal & Legislative Update.’ It takes place April 29 and 30 in Toronto, ON. For more information, visit


Monday, November 16, 2009

CIA Makes Important Recommendations

The Canadian Institute of Actuaries (CIA) report, ‘Retooling Canada’s Ailing Pension System Now, for the Future: Canada’s Actuaries Advocate Change,’ should be taken into account by Canada’s finance ministers in preparation for their meeting in December on pension reform, says a Heenan Blaikie Pension Pulse. It says the report contains a number of very important recommendations and adds to the growing momentum for pension reform. The report contains 10 recommendations for Defined Benefit pension plans including a call for regulators to develop a principles-based approach to the supervision and monitoring of pension plans and introducing employer-funded pension security trusts that  would permit employers to make contributions to amortize solvency deficiencies to separate trusts which could be refunded to employers in the event a pension plan is later fully funded.

Nova Scotia Permits Phased Retirement

Nova Scotia will now allow phased retirement, says a Mercer Communiqué. It will allow phased retirement benefits in the manner permitted by the Income Tax Act. Phased retirement would require a written agreement between the member and employer, as well as spousal consent where a joint and survivor pension was in pay. During a period of phased retirement, plan membership and pensionable service would continue, phased retirement benefits would be paid from the plan while the member was also actively employed and receiving remuneration, and the pension payable after full retirement would not be reduced to take the benefits paid during phased retirement into account.

Insurers Should Watch Reforms

Banks may have been at the forefront of the financial crisis, but insurers should pay attention to the regulatory reforms that are in the works as many of the same issues may impact them, says Julie Dickson, superintendent of Financial Institutions. Speaking on how the financial crisis may affect life the regulation of insurance companies at a forum in Cambridge, ON, she said “Globally we need to move to a regime where there is more similarity between prudential regulation of banks and life companies. While most discussions around future regulatory changes are currently bank centric, this will evolve as many of the prudential regulators around the table are integrated regulators.” She noted that certain lessons from the crisis apply equally to other sorts of financial institutions, not just banks. For example, in the area of compensation and governance, she observed that, “One particular weakness globally has received a lot of attention: the role of boards in setting compensation and then subsequently monitoring the incentives it created ... It is hard to imagine that only banks were susceptible to these forces.”

Caisse Issuing Bonds

The Caisse de dépôt et placement du Québec will issue up to $8 billion in bonds in Canada, the U.S., and Europe by the end of 2010 depending on market conditions. The proceeds of the refinancing will be used to replace certain short-term credit instruments with longer-term debt to increase the stability of its financing. Moody’s Investors Service says that there are no rating implications associated with the debt issuance program.

Industrial Alliance Adds Life Portfolios

Industrial Alliance Insurance and Financial Services Inc. is acquiring the individual life insurance portfolio of MD Life Insurance Company from MD Physician Services Inc. MD Life is a life and health insurance company that offers life insurance and annuity products to Canadian physicians. It is 55 per cent owned by MD Physician Services and 45 per cent by Industrial Alliance.

McCain Appoints State Street

State Street Corporation has been appointed by McCain Foods Limited to provide custody, accounting, benefit payments, and investment analytics for its Canadian pension plans. McCain Foods Limited has offered pension benefits to its Canadian employees since shortly after its founding in the 1950s. The McCain Foods Limited Canadian pension plans currently administer more than $300 million in assets.

Mills Rising Star

Lisa Mills, a partner in the pension and benefits practice group at Hicks Morley Hamilton Stewart Storie LLP is a Lexpert Rising Star Under 40. Mills joined the firm in 1998 and was instrumental in growing the pension practice group from two to 11 lawyers. She develops clients through speaking engagements, writing for the firm and industry publications (including Benefits and Pensions Monitor), and participating in industry organizations. Her significant mandates include representing Hydro One Inc. in Hydro One Inc. v. Superintendent of Financial Services; the Ontario government in Kranjcec v. Ontario; and the University of Western Ontario, for which she created the first customized registered retirement income fund.


Friday, November 13, 2009

Reports Enhance RI Adoption

Two reports commissioned by the Social Investment Organization (SIO) and funded by Environment Canada will set the stage for enhanced adoption of responsible investment practices in the Canadian foundations and pensions sectors. ‘Best Practices in Responsible Investment for Canadian Pension Funds,’ authored by Mercer's responsible investment team, provides an overview of responsible investment in Canada – the trends, the drivers, the global initiatives, and how the Canadian pension community is involved. It also provides recommendations that could help pension funds move from consideration of responsible investment to implementation. ‘Education and Training on Responsible Investing for Canadian Foundations and Endowments: An Inventory and Needs Analysis,’ co-authored by RI consultants Betsy Martin and Coro Strandberg, looks at the availability of resources and training on RI targeted at Canadian foundations and endowments. The report sets out a needs analysis for future training and education requirements and makes a number of recommendations for action by the SIO and the foundation umbrella groups to mount training initiatives to increase capability in responsible investment by foundation trustees and managers.

ATS Jury Still Out

The jury is still out on alternative trading systems (ATS), says Kevan Cowanpresident, TSX Markets, and group head of equities, TMX Group. Speaking at the CIBC Mellon Presentation Series session ‘The Revolution in Canadian Equities Trading: Why You Should Care,’ he said proponents of ATS claim they are good for the market, cheaper, and drive liquidity. However, Cowan notes they fragment the market, cause costs to rise, and mostly just carve into the existing trading “pie.” While he said the “pie” is growing, it may turn out over time that these systems are just cannibalizing each other.

Employers Must Watch Trends

Alcoholism and mental illness are two trends which employers are facing, says Michael Worb, president of Pal Benefits. He told attendees at its ‘Taste of Trends’ session, as many as five million Canadian are considered high risk drinkers. As well, mental illness can no longer be ignored as two million Canadian workers will lose an average of 40 working days each year to their illness. Worb said it is important for plan sponsors to watch these and other trends because it helps them to understand where things are going and budget accordingly.

Paperworkers Face Reduced Pensions

More than 1,000 retired paperworkers at Fraser Papers could lose up to 40 per cent of their pension benefits, says Dave Coles, president of the Communications, Energy and Paperworkers Union. "These are the latest victims of employers hiding behind bankruptcy legislation – taking pensioners money to pay off investors," he says. Fraser Papers, which filed for bankruptcy protection last June, informed the union this week that it would seek court approval to 'wind up' the pension plans of its 1,000 pensioners. The company owes $171 million to its pension plans, which represents a shortfall of up to 40 per cent. The union is meeting with New Brunswick government officials to discuss the union's proposal for a pension trust that will continue to provide benefits. Creation of the trust would mean that pension plans would not 'wind up,' but, rather, would continue to operate. This requires government support and regulatory approval, but no cash infusion from governments.

Positive Trends For Retirement Savings

The Toronto Board of Trade’s annual survey on compensation and benefits has some promising results for worker retirement savings, says Mark Dowdell, vice-president and chief operating officer at Pal Benefits. Speaking at its ‘Taste of Trends’ session, he said the survey shows 40 per cent of employers and employees are contributing between four and six per cent of their wages to Capital Accumulation Plans. The median employer contribution is now five per cent, up from four per cent in 2005. As well, 50 per cent of employers with Defined Benefit pension plans use a two per cent benefit formula to determine retiree pensions. The survey also shows there has been an increase in the number of DB plans which require contributions from employees, with the average employee contributing five per cent.

Pension Assets Up Three-fold Since 1990

There were $1.8 trillion in pension assets in Canada at the end of 2008, down from $2.1 trillion in 2007, but nearly four times greater than the holdings of $0.5 trillion in 1990, says Statistics Canada’s Pension Satellite Account study. Of total pension assets at the end of 2008, social security comprised 7.6 per cent, employer-sponsored plans 58 per cent, and individual registered savings plans 34.4 per cent. The $1 trillion earned in investment income accounted for most of the increase in pension assets between 1990 and 2007. Contributions of $1.4 trillion narrowly exceeded the $1.3 trillion in withdrawals, for a net inflow of $0.1 trillion. There was a net gain of $0.5 trillion from the revaluation of asset values, which include capital gains and losses, before last year's financial turmoil. Assets in employer-sponsored pension plans rose over three-fold from $302 billion in 1990 to $1,064 billion in 2008. Employer-sponsored plans relied on investment income for three-quarters of their growth and revaluations for the rest. Withdrawals exceeded contributions between 1990 and 2007, despite a doubling of contributions since 2002.

CPPIB Assets Recover

The Canada Pension Plan’s investment fund’s assets grew by 6.2 per cent to $123.8 billion between the first and second quarters of the fiscal year. This means the fund has  regained a large portion of the loss it experienced over the past year as equity markets fell. Still, its assets are still below their value of $127.7 billion in the first quarter of fiscal 2009, before the financial crisis hit. The fund is currently comprised of a 55.8 per cent weighting in equities, 30.7 per cent in fixed income investments, including bonds and money market securities, and 13.5 per cent in inflation-sensitive assets like real estate and infrastructure.

Benefits Can Reward Employees

While employers may be forced to keep pay increases and bonuses down this year, they can still reward valuable employees by offering them wellness and work/life balance benefits, says Steve Osiel, vice-president, total rewards, Pal Benefits. Speaking at its ‘Taste of Trends’ session, he said employees do not need to be rewarded with cash. Instead, they can offer employees flexible hours or telecommuting or limit reductions in health or dental benefits. He said the average increase this year will be 2.7 per cent. However, companies are giving lower increases to average performers and rewarding their top performers with four and five per cent increases.

Caisse Denies Missing Equity Rebound

Quebec’s Caisse de depot et placement pension fund denies it will have a five or six per cent return on investment for 2009, while other Canadian pension funds are on target for an average of 10 to 12 per cent. Quebec’s finance minister had criticized the plan claiming it missed out on the stock market rebound because it was underweight in equities during the financial crisis. It had 34 per cent of its assets in the market at the end of September, compared with 22 per cent at the end of 2008. The Caisse transferred $8.5 billion of its fixed income investments, primarily bonds, into shares between the end of March and the end of September.

Stock Ownership Value Drops

Chief executive officers at the largest companies in the U.S. saw the value of their company stock ownership plunge last year as the U.S. equities market declined, says an annual study by Watson Wyatt. The ‘2009/2010 Report on Executive Pay: Moving Beyond the Financial Crisis’ study found that the total value of CEO stock ownership and outstanding equity awards and bonus payouts for CEOs decreased by 42 per cent in 2008, which is larger than the 34 per cent decline experienced by a typical shareholder at those companies. The stock market recovery this year, however, has mitigated some of the overall loss incurred in 2008. In aggregate, the CEOs analyzed in the study lost a combined $53.7 billion – roughly $55 million for the average CEO – in 2008, compared with $3.2 trillion for shareholders of the same set of companies.

Markets At Inflection Point

Markets have reached another inflection point, says James Fairweather, chief investment officer at Martin Currie. Writing in its ‘Press Briefing,’ he says the likelihood is that fiscal and monetary support will remain in place. “Our central, big picture view is that while growth will resume, in developed markets that growth will be below pre-crisis levels as households rebuild their savings and governments exercise fiscal restraint. The real growth engines of the next cycle will be Asian and emerging economies, whose rise to political and economic influence has been hastened by the global financial crisis.” However, as this year’s relief rally gives way to a new environment in which financial quality, value, and earnings are rewarded, “we can see the potential for the market to undergo a period of volatility. Hence our stance is one of optimism – albeit leavened with a dash of paranoia.”

ADP Expands Services

ADP Canada has expanded its comprehensive outsourcing services to include time and attendance management services. The expanded service is aimed at businesses seeking to effectively reduce administrative costs associated with managing a workforce. It provides organizations with a ‘virtual’ payroll and HR administration department that can manage a flexible and scalable combination of payroll, HR, and benefits administration. It says outsourcing can provide quick cost savings, citing a Gartner Inc. report that states that payroll outsourcing can deliver an average cost saving of 20 to 30 per cent, realized within as few as four to six months, on average.

Leadership Strategies Offered

The Employee Assistance Program Association Of Toronto (EAPAT) will present ‘The Five Core Skills For Great Leadership, Personal Success & Outstanding Results!’ Dave Crisp, of Crisp Strategies, will explain the five practical principles that provide the tools to manage and excel against today’s escalating workloads.  It takes place December 3 in Toronto, ON. For more information, call 416-410-8913.


Thursday, November 12, 2009

Two-tier System Possible

Canada could end up with a two-tier pension system if its Western provinces create their own voluntary, supplementary pension scheme, says Graham Steele, the finance minister of Nova Scotia. British Columbia and Alberta have said they will go ahead with their own plan if a national consensus is not reached on creating a second pension plan for Canadians who do not have employer sponsored plans. He hopes a national approach will emerge from a meeting of federal, provincial, and territorial finance ministers in December.

Generic Price Discounts Available To Sponsors

The Alberta government is to be congratulated for developing a system that makes generic price discounts available to all Albertans, including employer sponsored plans, says a Mercer Communiqué. In other jurisdictions, such as Ontario, this is not the case and employers are left to fend for themselves while government plans enjoy the pricing discount. It says the second phase of the Alberta Pharmaceutical Strategy also allows pharmacies to continue to accept rebates from generic drug manufacturers, unlike other jurisdictions. These rebates had ranged from 20 per cent to 80 per cent of the product price. However, it is expected that the rebates will be substantially reduced as a result of the price reduction for new generic drugs.

Caisse To Trail Other Plans

The Caisse de dépôt et placement du Québec will probably trail other major Canadian pension funds this year because it missed the stock market rebound, says Raymond Bachand, Quebec’s finance minister. In an interview with CBC Radio, he said the Caisse was underweight in stocks when the stock markets rebounded. The Caisse reported a 25 per cent loss last year, compared with an average return of minus 18 per cent for other major plans. In August, it reported that it suffered a difficult first half of the year, with $5.7 billion in writedowns related to risky commercial real estate loans and private equity bets. The writedowns wiped out the five per cent return the Caisse had earned on other investments to June 30, resulting in a “neutral” performance overall up to that date.

Buyout Activity Slower

Canada’s buyout industry is performing in line with its peers globally, says a report by the CVCA – Canada’s Venture Capital & Private Equity Association and Thomson Reuters. Buyout industry investment levels continued at a measured pace in the third quarter of 2009 as the industry continued to be affected by the global economic slowdown. There were 28 disclosed, completed, and pending buyout transactions in Canada in the third quarter of 2009, down from the 40 transactions reported in the third quarter of last year. Canada is now on pace for 99 private equity buyouts for the whole 2009 year, down from the 120 buyouts recorded in all of 2008. As such, Canada's investment activity levels are now consistent with levels prior to the market peak.


Wednesday, November 11, 2009

Quebec Revises Solvency Proposals

Plan sponsors with Québec-registered plans will need to amend their actuarial valuation processes, implement PfAD (a funding reserve required to be included in actuarial valuations) calculations, and determine their interest and/or need in acquiring letters of credit as a result of the revised version of the Regulation respecting supplemental pension plans. A Watson Wyatt InfoFlash also says pension committees will need to establish a policy on the desired PfAD level in respect of the liabilities for plan members eligible to retire. While the revised regulation is not effective immediately, it must be applied immediately for those sponsors who utilize the temporary solvency relief measures. This means they will be required to apply various elements earlier such as the new valuation rules and the requirements for annual valuations and PfADs.

Hedge Funds May Benefit From Change

The largest hedge funds in the world say investors could actually benefit from some of the fast and furious changes the global financial crisis spurred, says an Ernst & Young survey. ‘Weathering the storm’ shows respondents from 100 of the world's largest hedge funds called recent increases in transparency and governance as dramatic improvements for hedge fund investors. However, the survey does highlight some areas of concern such as managers' opinions about increased regulatory oversight and further consolidation of the industry.

Georgian Using RBC Dexia

RBC Dexia Investor Services has been selected by Georgian Capital Partners to provide a full suite of services including custody, fund accounting, and recordkeeping for its inaugural hedge funds – the Georgian Equity Growth Fund and the Georgian Income Growth Fund. "Ultimately, Georgian Capital Partners’ decision to work with RBC Dexia was based on their extensive experience and leadership position in the industry," says David Knight, president of Georgian Capital. "It’s certainly reassuring to know we have the expertise, stability, and global infrastructure of a proven provider like RBC Dexia in our corner was we work to grow these funds."

Conference Looks At Cost Control

The Canadian Health and Wellness Innovations Conference will look at the hottest trends in cost control and wellness. The International Foundation of Employee Benefit Plans event will examine alternative treatments for traditional healthcare and the cost driver components that can alter the face of healthcare. It takes place February 21 to 24 in Phoenix, AZ. For more information, visit


Tuesday, November 10, 2009

Alberta Pushing National Solution

Alberta Finance is prepared to step up efforts to persuade the federal government to establish a voluntary, supplementary plan atop the existing Canada Pension Plan. In an interview with Canwest News Service, Finance Minister Iris Evans says they believe this is the best solution to resolve the country’s pension gap situation where less that 40 of Canadian workers belong to an employer plan. She intends to present the province’s position at a December meeting on pensions with Finance Minister Jim Flaherty and her provincial counterparts. Alberta and British Columbia believe a national approach that supplements an individual's CPP and private savings is the best solution. However, they are prepared to launch their own plan if Ottawa and the provinces cannot agree on a national approach.

Communication Engages Employees

In a business environment that remains tumultuous, companies with highly effective internal communication programs are better placed to keep employees engaged and retain key talent, says a survey by Watson Wyatt. Its 2009/2010 Communication ROI Study found that 61 per cent of companies that are highly effective communicators report that their managers are effective at dealing openly with resistance to change, compared with only 18 per cent of low-effectiveness communicators. Similarly, 64 per cent of highly effective communicators report that their managers are effective at addressing the needs and concerns of their current employees, compared with only 22 per cent of companies that are low-effectiveness communicators. It also identified the best practices of companies that are highly effective communicators. These include communicating how employees will be affected as the business changes, trusting and training leaders to talk about change, and following up with measurements and metrics.

Venture Capital Activity Falls

Activity in Canada’s venture capital market continued to fall in the third quarter of 2009, says a report by the CVCA-Canada’s Venture Capital & Private Equity Association and Thomson Reuters. Deal activity in Canada’s venture capital market continued to lag in the third quarter of 2009, as a total of $191 million was invested nationwide, down 51 per cent from $388 million invested during the same period in 2008. The trend was felt in most regions, though Ontario-based disbursements experienced an especially steep year-over-year drop of 87 per cent. Domestic activity in the quarter was the weakest recorded in 14 years. Furthermore, dollars invested at the end of the first nine months of the year, totaling $682 million, was 36 per cent shy of the $1.1 billion invested at the same time in 2008. This suggests that final 2009 outcomes might well slip below the $1 billion mark for the first time since 1995.

T. Rowe Moves Into India

T. Rowe Price has acquired a 26 per cent share in Indian money manager UTI Asset Management Co. in an effort to expand into that country. UTI is the fourth largest asset manager in India with approximately US$17.2 billion in average assets under management in October, which represents a 10.1 per cent market share of the mutual fund industry in India. The transaction is subject to regulatory approval and is expected to close in the fourth quarter.


Monday, November 9, 2009

Constructive Dismissal Possible Outcome

A unilateral change in a benefits policy can constitute constructive dismissal where the benefit has become an integral part of the employee's contractual benefits, says a Krieger + associates CommuniK. It says although employees may be more understanding of cuts to benefit plans during economic uncertainty, if an employer reduces an employee’s compensation they may be at risk for constructive dismissal. The Ministry of Labour suggests that up to 10 per cent is generally permissible. However, no constructive dismissal will occur when there is no contractual entitlement to the benefit, it says.

Large Scale Changes Needed

The federal government’s proposed changes to the Pension Benefits Standards Act represent a move in the right direction, says a Heenan Blaikie Pension Pulse. However, many of the changes are quite technical in nature, rather than the sort of large scale changes needed to restore confidence in the pension regulatory system and, in particular, to encourage participation in Defined Benefit pension plans in the private sector. As well, they would affect only a small percentage of pension plans and pension plan members in Canada, applying only to employers governed by federal legislation. These include employers in the banking, airline, railway, interprovincial transportation, and telecommunications industries. This represents about seven per cent of pension plans in Canada, including about 400 Defined Benefit pension plans.

Employers Must Balance Rights

Employers must balance their own rights and obligations to manage and protect the workplace with the individual privacy interests of employees when developing a pandemic plan, says Hicks Morley FTR Now. It says employers have a general obligation under health and safety law to take all reasonable precautions in the circumstances to protect their workers. Moreover, employees will expect that their employers have given thought to this issue in a proactive manner, so they need to have a plan in place now. Employers can take proactive steps to promote disease prevention by steps such as educating employees about the disease and informing employees of ways they can prevent the spread of disease.

Plan Participation Drops

Participation in U.S. employment-based retirement plans decreased by small amounts for most categories of workers in 2008, but those with the strongest connection to the work force experienced the smallest decline: 0.5 percentage point, says a study by the Employee Benefit Research Institute (EBRI). Additional decreases are possible in 2009/2010, depending on economic trends, the study adds. The percentage of all workers participating in an employment-based retirement plan decreased from 41.5 per cent in 2007 to 40.4 per cent in 2008. Worker participation in a retirement plan is strongly tied to macroeconomic factors such as stock market returns and the labour market. Better conditions of the late 1990s resulted in higher levels of participation, while worse conditions of the 2000s led to lower levels of participation.

Private Equity Leaders Discuss Industry

Senior leaders in the Canadian private equity industry will discuss and debate the issues of the day facing their firms and the industry around them at a CVCA – Canada's Venture Capital & Private Equity Association roundtable. ‘What You Want to Know But Haven’t Had The Opportunity To Ask’ will be discussed by private equity leaders such as Don Morrison, senior managing director, OMERS Private Equity; and Erol Uzumeri, senior vice-president, Teachers’ Private Capital. It takes place November 24 in Toronto, ON. For more information, visit

Session Looks At Pension Plan Basics

‘Pension Plan Basics: An Introduction to DB and DC’ will be discussed as the next CPBI Pension & Investments Fundamentals session. Nichola Peterson and Jason Eatock, both of Morneau Sobeco, will examine areas such as the difference between Defined Benefit and Defined Contribution pension plans and how they are regulated. It takes place November 12 in Toronto, ON. For more information, visit


Friday, November 6, 2009

Nova Scotia Plans Get Relief

The Nova Scotia Government has implemented solvency relief, providing some funding relief to pension plan sponsors and administrators in the wake of the 2008 financial crisis and resulting decline in global equity markets, says a McInnes Cooper Pension and Benefits Legal Update. The measures are consistent with what was announced by the prior Nova Scotia government in April and bring the province into step with relief already implemented in other Canadian jurisdictions early this year. Key provisions include temporarily extending the amortization period for a solvency deficiency from five years to 10 years. This applies to both existing and new solvency deficiencies. However, within the first five years, plans may not be amended to increase benefits (unless the cost of the benefits has been fully funded) nor to decrease employee contributions. The measures do not provide for plan sponsors to utilize letters of credit as alternate funding vehicles.

Improving Efficiencies Create Challenges

Improving efficiencies in emerging markets are creating challenges for active managers, says Aquico Wen, senior portfolio manager, Esemplia Emerging Markets. Speaking at the Legg Mason THINK Symposium 2009, he said right now these markets are reasonably inefficient which allows managers to capture alpha. However, as corporate governance in these countries improves and the markets mature and become more liquid, these inefficiencies are diminishing. Key to managing in this asset class, he said, is to look at emerging markets as 25+ markets with high levels of volatility and low correlations between countries.

Funding Ratios Improve

While Canadian companies saw better investment returns and improved funding ratios for Defined Benefit pension plans in the third quarter, this may not mean improved financial results in 2010, says Towers Perrin’s 2009 Third Quarter Capital Market Update. Its analysis shows the benchmark plan’s 60 per cent equity / 40 per cent fixed income portfolio reported gains of 13.6 per cent in 2009 year-to-date. However, discount rates used to measure DB plan obligations have dropped in 2009, which could more than offset investment gains in financial results. This could impact company cash flows as plan sponsors could face significant demands for cash payments to repair new or larger pension deficits.

Credit Drag On Recovery

Despite recent events, the economic recovery has left markets down from their highs of late 2007, says Steve Bleiberg, president and chief investment officer at Legg Mason Global Asset Allocation. Speaking at its THINK Symposium 2009, he said people have gotten past the fears from late last year that the world on the verge of another depression. However, while things are improving, they still have a long way to go. One drag on the recovery is what is happening in credit. After a spike upwards, the price of credit has dropped back to normal levels. Yet, the volume of credit continues to drop and will likely stay down until the banks can improve their balance sheets and resume lending.

Equitable Provides Wellness Resource

Equitable Life has teamed up with Novus Health and Ceridian Canada Ltd. to provide Canadian health and wellness resources as part of its group benefit plans. connects all group clients and their employees with health and wellness information, support, and tools through Equitable HealthConnector and LifeWorks Online to help them lead healthy and balanced lives. Every day, millions of Canadians go online to locate general health resources and to find information about specific workplace concerns such as the H1N1 Flu Virus. In fact, a January 2009 Ipsos Reid study revealed that 70 per cent of online Canadians visited a healthcare website in the past year. “With, our group benefit clients can rest assured that their employees are getting reliable Canadian resources on the same website where they access their benefit information,” says Karen Mason, senior vice-president – group, Equitable Life of Canada. “This helps them and their families live healthy and balanced lives and, in turn, be their most productive at work.” 

Lack Of Breadth Requires Grouping

The lack of breadth in some sectors of the Canadian markets means analysts must treat it differently, Adam Petryk, senior director and global investment strategist for Batterymarch  Financial Management, told the Legg Mason THINK Symposium 2009. In some sectors, such as energy and financial, it is possible to compare stocks within the peer group to rank them. In other cases, assets classes without breadth may be grouped together forcing analysts to compare, for example, tech and healthcare companies for ranking purposes. As well, it may be possible to take a global view and compare, for example, RIM with its peers, Apple and Google.

CPPIB Acquires IMS Health

IMS Health, a global provider of market intelligence to the pharmaceutical and healthcare industries, is being acquired by investment funds managed by TPG Capital and the CPP Investment Board. Operating in more than 100 countries, IMS Health had $2.3 billion in 2008 revenue. Its offerings include market intelligence products and services including product and portfolio management capabilities; commercial effectiveness innovations; and managed care and consumer health solutions.

VIA Re-appoints RBC Dexia

RBC Dexia Investor Services has been re-appointed as investor services provider for VIA Rail Canada Inc.’s $1.5 billion pension plan. It will provide VIA Rail with a range of services including custody, securities lending, and investment analytics services. The re-appointment extends until 2014.

Managers Open Hearts

The sixth annual Open Your Hearts to the Children Gala raised more than $130,000 bringing its total to date to more than $1 million. The event, organized by Hedge Funds Care Canada, attracted more than 150 leaders of Canada’s hedge fund industry. Hedge Funds Care Canada was established in 2003 to provide prevention services to children and families who are at risk for abuse and/or neglect, and treatment to children who have been victims of abuse. A special award was also presented to Sprott Asset Management in appreciation of its role as Hedge Funds Care Canada’s lead supporter and largest donor.

Drug Plan Management Examined

Drug Plan Management is the focus of an ISCEBS Kitchener-Waterloo Chapter Program. Barbara A. Martinez, principal, health and benefits, Mercer Human Resource Consulting, will examine how plan sponsors are responding to the challenges resulting from Ontario’s Bill 102, the Transparent Drug System for Patients Act. It takes place November 17 in Waterloo, ON. For more information, visit


Thursday, November 5, 2009

Integrating Programs Reduces Absences

By integrating attendance support with disability management, employers can leverage their EAP programs to help employees prior to the first day of absence, says Patricia Ulbricht, director of business development, client relationships, at Shepell*fgi. Speaking at an ISCEBS Toronto chapter program on EAPs and disability management, she said this approach provides employers with the “biggest bang for their buck.” For example, the approach can reduce absence by as much as 16 per cent and pre-disability absences by 27 to 37 per cent because it starts solving problems immediately.

Three-tiered Prescription Pricing In Ontario

Ontario has moved to a three-tiered system for prescription costs, says Wendy Murkar, vice-president, claims administration, at Green Shield Canada. Speaking at its 2009 Benefits Forum, Crisis … What Crisis?, she said the current system of the Ontario Drug Benefit plan and rebates and professional allowances means that the provincial plan pays about 50 per cent of the manufacturer’s list price. Pharmacy benefit managers and some large companies have been able to negotiate their own price for prescriptions which means the highest price is being passed on to consumers because there are no regulations on how much pharmacies can mark prices up. She cited the example of Lipitor where the price for the ODB is $202.18 for a prescription and it is $218.60 for PBMs and $267.76 for the public and re-imbursement co-pay plans.

Employers Turn To Auto Features

The number of U.S. employers adopting 401(k) auto plan features is increasing dramatically, says a Hewitt Associates study. The biennial survey of more than 300 companies found that 401(k) plan auto enrollment jumped from 34 per cent in 2007 to 58 per cent in 2009. As well, 69 per cent of the programs used automatic enrollment into default target date funds, up from 50 per cent in 2007. The number of employers defaulting employees into contribution rates at three per cent or higher increased from 83 per cent in 2007 to 89 per cent in 2009 and the number of companies offering automatic contribution escalation increased to 44 per cent in 2009, up from 35 per cent in 2007 and almost five times higher than in 2005 (nine per cent).

Infrastructure Index Launched

Dow Jones Indexes and Brookfield Asset Management Inc. have launched an index that measures the highest-yielding stocks in the Dow Jones Brookfield Global Infrastructure Composite Index. The index takes a yield-oriented approach to measuring the performance of infrastructure companies and measures the performance of companies that exhibit strong infrastructure characteristics. It includes a composite index, regional indexes for the Americas, Europe, the Asia-Pacific, and Global ex-U.S., and eight sector indexes for airports, communications, diversified, oil and gas storage and transportation, ports, toll roads, electricity transmission and distribution, and water.

Companies Set To Propose ‘Say On Pay’

A handful of Canadian companies are set to propose “say on pay” resolutions in their upcoming proxy circulars, says Risk Metrics. It says the companies have agreed in principle on a draft resolution that will appear on proxy ballots in 2010, based on a draft ‘say on pay’ policy crafted by the Canadian Coalition for Good Governance. The CCGG, which is encouraging companies to standardize these policies, released its draft policy in late October and is seeking comments on it by November 25.

Barrier Broken Again

The custody industry has again broken through the US$100 trillion barrier, says This milestone was passed for the first time back in September 2007, with the aggregate value reaching $115 trillion before falling stock markets in 2008 brought it back down. The recent rise in equity values and increases in business by some custodians has enabled it to top the US$100 trillion barrier for the second time. 

Canadian Strategies Examined

The Investment Counsel Association of Canada (ICAC) is bringing together a number of leading speakers to discuss Canada’s economic, political, and regulatory direction over the next few years as the country adapts to the new economic and financial order. Speakers at Strategies for Success in the new Economic and Financial Order include Doug Hyndman, chair and CEO of the Canadian Securities Transition Office, and General Rick Hillier, former chief of defense staff of the Canadian Armed Forces. It takes place November 18 in Toronto, ON. For more information, visit


Wednesday, November 4, 2009

Actuaries Want Pensions On National Agenda

Putting pensions on the national agenda with the goal of creating a new environment that maintains and strengthens pension plans is just one of the recommendations from the Canadian Institute of Actuaries to help governments and regulators combat the erosion in Canada’s pension system and safeguard the financial security of Canadians when they retire. It has set out a 10-point action plan which includes proposals such as examining and rectifying disincentives in the current retirement system to working past a fixed age and giving Canadians better information, at an earlier age, to help them understand the risk factors associated with retirement and how to manage those risks effectively. Robert Howard, the institute’s president, says its proposal “contains measures that help balance the concerns of pensioners, plan sponsors, politicians, and others who are concerned with overhauling a system in need of major repairs.”

Proposed Changes Lack Substance

While the federal government’s proposed changes to the pension system will be extensive and have a far-reaching effect on plan governance and plan disclosure requirements, they don’t have the substance needed to encourage plan sponsors to maintain their Defined Benefit plans, says a Buck Update. As well, plan sponsors who have Defined Contribution pension plans, or a DC component within a DB plan, should brace themselves for the legislative plan amendments that will be required. Ottawa’s reforms include a proposal for a legislated process to help troubled companies facing big pension deficits to resolve the problem without collapsing.

Gap In Pensions Narrows

"The status of women within the Canadian pension system is not the same today as it was 30 or 40 years ago,” says Jean-Claude Ménard, chief actuary, Office of the Chief Actuary, Office of the Superintendent of Financial Institutions Canada (OSFI). Speaking to the House of Commons Standing Committee on the Status of Women on Women and Pension Security, he said the gap in Canada Pension Plan pensions between males and females is narrowing, even if it is not expected to disappear completely." However, the combination of Old Age Security, the Guaranteed Income Supplement, and compulsory contributory pension plans has contributed significantly to reducing poverty among seniors over the past three decades. This has put Canada in an enviable group of countries that includes Netherlands, Norway, Sweden, and Denmark, where the incidence rate of low income seniors is less than five per cent.

Chronic Pain Takes Toll

Chronic pain is taking a toll on the country’s workplace with four-in-10 (37 per cent) unemployed or retired Canadians living with chronic pain and not working as a direct result of their condition, says the Chronic Pain in the Workplace study. It also shows one-third of working chronic pain sufferers have had to scale back the amount of hours they work as a result of their pain, while those living with severe chronic pain also miss an average of 3.4 work days a month. Chronic pain, defined as pain of at least six months’ duration, affects nearly one-quarter of the Canadian population. The survey was conducted for Janssen-Ortho Inc. in consultation with Shepell.fgi.

Pensions Need Priority Status

The federal NDP want to give pensions priority status when companies close. It is proposing legislation that would close loopholes in the Bankruptcy and Insolvency Act to ensure that failed companies make good on their underfunded pension liabilities. More than 5,700 Canadian companies filed for bankruptcy in the year ending August 31. The proposed measures were tabled as a private member's bill.

‘New Normal’ Now Exists

The recent financial crisis has created a ‘New Normal,’ says Melody Rollins, senior vice-president and an account manager in the New York office of PIMCO. Speaking at its seminar, Investing in the New Normal: How to Rise to the Challenge and Seize the Opportunities, she said the new normal will be marked by a slowdown in growth, but not a depression. As well, corporate profits will be under pressure and business and employment will evolve, but be more volatile. It will continue the hand-off of global growth to emerging economies.

Long-term Care Concerns Workers

An aging American workforce is increasingly concerned about long-term care needs and the benefits available through employers, says Prudential’s Study of Employee Benefits: 2009 and Beyond. This latest report looks at long-term care insurance. It shows only a small number of employees understand the benefits of long-term care insurance, with only as about one-quarter of workers planning to use insurance to fund long-term care expenses.  

Pensionable Earnings Increase

The maximum pensionable earnings under the Canada Pension Plan for 2010 will rise to $47,200, up from $46,300 in 2009, says the Canada Revenue Agency. The new ceiling is calculated according to a legislated formula that takes into account the growth in average weekly wages and salaries in Canada. The employee and employer contribution rates for 2010 will remain unchanged at 4.95 per cent, and the self-employed contribution rate will remain unchanged at 9.9 per cent. The maximum employer and employee contribution will be $2,163.15, and the maximum self-employed contribution will be $4,326.30. The maximums in 2009 were $2,118.60 and $4,237.20.

RBC Dexia Sub-custodian

RBC Dexia Investor Services has been appointed Canadian sub-custodian for Clearstream Banking Luxembourg, a subsidiary of Clearstream International, the international central securities depository (ICSD) part of Deutsche Börse Group. “We have performed a thorough analysis in order to ensure that our high standards for service excellence and operational efficiency are met,” says Mark Gem, member of the executive board and head of business management at Clearstream Banking Luxembourg. “Therefore, we feel confident to have taken the appropriate decision.”

Pair Join Lavery

Josée Dumoulin and François Parent have joined the labour and employment law group as partners in the Montreal offices of Lavery. They will specialize in pension and benefits law with an emphasis on pension plan administration, statutory compliance, and surplus pension assets and their use.

Flexible Benefits Focus Of Session

Kim MacFarlane, product director with Manulife; Rob Crowder, with The Benefits Trust; and Kenton Needham, a human resource consultant; will discuss the relative merits and pitfalls of flexible benefits and healthcare spending accounts at a Benefits Breakfast Club session. Set for November 26 in Mississauga, ON, it will also explore the impact on employee health of introducing these arrangements. For more information, visit

Diamond Keynote Speaker

Daryl Diamond, president of Diamond Retirement Income Planning Ltd. and author of ‘Buying Time – Trading Your Savings for Income and Lifestyle in Your Prime Retirement Years’ will be the keynote speaker at Mindpath’s 4th Annual Top Advisors Investment Strategies Symposium: Turning The Current Retirement Income Crisis Into Opportunity. Other speakers include Ray Chong, vice-president of Ipsos Reid, who will speak on changing investor mindsets and what they mean. It takes place November 24 in Mississauga, ON. For more information, visit


Tuesday, November 3, 2009

Ontario Students To Get Financial Education

Financial education classes will be offered to Ontario students from grades four to 12 starting in September 2011. Ontario currently does offer finance topics to students in high school, but they are scattered through other courses such as business studies and mathematics. Teaching financial literacy to students was identified as a need in the last federal budget and numerous people in the financial industry have been calling for this for years, including those in the pension industry who believe it is one way to help raise awareness of the need to save for retirement.

Public Sector Better Prepared For Pandemic

Public sector employers believe H1N1 is more likely to reach pandemic proportions than those in the public sector, says a Morneau Sobeco 60 Second Survey. It found 25 per cent of public sector respondents believe this is likely, compared with nine per cent of those in the private sector. As a result, public sector employers are more likely to be taking steps to deal with a pandemic. In the public sector, 63 per cent indicated that they had identified a pandemic team and were in the process of implementing an action plan, while only 39 per cent of private sector respondents were already implementing an action plan.

Active Funds Challenged

Fewer active funds posted higher returns than their benchmarks in the third quarter of 2009, says Standard & Poor's Indices Versus Active Funds Scorecard (SPIVA) for Canada. Between July and September 2009, only 36 per cent of Canadian Equity active funds and 31.8 per cent of active funds in the Canadian Small/Mid Cap Equity category beat the S&P/TSX Composite Index. This quarter has been challenging for active funds with exposure to markets outside of Canada. Almost 70 per cent of the Canadian Focused Equity funds that outperformed the blended S&P/TSX Composite Index in the second quarter posted returns below the index in the third quarter.

Federation Using State Street

State Street Corporation has been appointed by the Saskatchewan Teachers’ Federation to provide a range of investment services for its $2.2 billion in pension and group benefit fund assets. State Street will provide custody, fund accounting, and securities lending services to the federation.

BNY Mellon Acquires Interest In Siguler

BNY Mellon Asset Management has acquired a 20 per cent minority interest in Siguler Guff & Company LLC (and certain related entities), a multi-strategy private equity firm with approximately $8 billion in assets under management and committed capital. Siguler Guff’s focused investment offerings include fund of funds targeting distressed security investing, investing in emerging markets and investing in small cap buyout opportunities. It also says its acquisition of Insight Investment Management from Lloyds Banking Group is now complete. Insight specializes in liability driven investment, active fixed income, and absolute return solutions for its clients which include some of the UK's largest pension schemes.


Monday, November 2, 2009

Pension Issues Remain For Majority

The legislative and regulatory changes proposed by the federal minister of finance will not address the pension and retirement income issues that the large majority of Canadians face, says FSNA, the National Association of Federal Retirees. While it is pleased to hear that the government of Canada is taking action to strengthen the pension framework and enhance benefit security for some workers and retirees, it says those measures are related only to the seven per cent of pension plans which are federally regulated. They will not affect the situations of the 11 million working Canadians who are not covered by a company pension plan. FSNA says it is especially interested to see legislation that will enhance the effectiveness and resilience of the CPP while ensuring it remains affordable and fair for future generations.

Minority Of Retirees Getting Benefits

A Statistics Canada study shows only 31 per cent of Canadian ‘boomers’ will be entitled to employee group healthcare benefits upon retirement, says Eckler GroupNews. As well, it says another survey shows more than 50 per cent of Canadian employers are considering the elimination of post-retirement benefits for most retirees. It says the universal healthcare system in Canada, delivered through the various provincial and territorial health insurance programs, covers only basic needs. It suggests the creation of corporate and personal tax incentives that will help preserve employer-sponsored retiree benefit programs and encourage individuals to put money aside to cover medical expenses in retirement.

Study Looks At Pension Gender Issues

Education International (EI), a global union federation representing teachers and education workers across Europe and around the world hopes to make a strong case for the necessity of comprehensive gender impact assessment in pension plan reform in Europe. It says by showing what is being done across a wide range of European jurisdictions, unions will be empowered to evaluate pension reform proposals and to advocate for appropriate changes. The study, Pension Reforms in Europe and Their Impact on Women, aims to show how pension reforms may affect the gender disadvantages facing women once they are dependent on retirement income. Proper attention to key features of pension redesign discussed in this study can make a vital difference in improving the circumstances of retired women, it says. 

December Interest Rate Assumptions

The interest assumptions required to calculate commuted values for an event which occurs in any month up to and including December 2009 are now available at An Excel spreadsheet on the website contains seven worksheets:


Friday, October 30, 2009

Hudson Bay Case Appealed

Application for leave to appeal to the Supreme Court of Canada in Burke v. Hudson's Bay has been granted. In a decision last year, the Ontario Court of Appeal ruled that the Canadian employer does not have to share a portion of its pension surplus with employees of a unit it sold two decades ago. That decision overturned a lower court ruling that Hudson's Bay had to transfer a share of a $93.9 million surplus to a pension plan created for the Northern Stores Division it sold in 1987. Former employees filed a complaint in 1994 asking for a court order that Hudson's Bay transfer a share of the surplus to the new plan or to a trust. A lower court judge concluded that some employees had a reasonable expectation, based on written communications, that part of the surplus would be used to improve their pensions and that the company did not own the surplus. The Court of Appeal, though, ruled that the company had no obligation to transfer any portion of the surplus under the terms of its pension plan documentation and the absence of legislation mandating such transfers.

Increased Regulation Adds Cost

Private equity and venture capital firms will face increased costs and reporting requirements as a result of the call for new regulatory regimes to prevent another financial crisis, says Sheryl Kennedy, chief executive officer, Promontory Financial Group Canada ULC. In a discussion on how events of the last year impacted the regulatory environment for banks, investors, and the PE and VC-backed community in Canada and abroad at the CVCA’s State of the Nation – The Economic and Regulatory ‘New’ Reality session, she said the industry will take some time to come to terms with the proposed changes. For example, SEC regulations on foreign private equity will decrease the pool of managers of mid-sized PE funds seeking funding for U.S. institutional investors. However, the shift in the regulatory burden will create opportunities for first movers.

Member Understanding Top Challenge

Limited member understanding (77 per cent) and poor investment returns (71 per cent) are the top challenges facing Canadian sponsors of Defined Contribution pension plans, says Mercer’s 2009 Global DC survey. Almost 90 per cent of respondents indicate they are making it a high priority to improve member understanding and education, and just over 50 per cent say they will change investment arrangements to reduce costs and/or improve investment returns over the next two years. Few Canadian plan sponsors said they have made, or are planning to make, reductions or suspensions of DC plan contributions. In fact, 92 per cent of respondents say they have decided not to make any changes to DC contributions in the near future, whereas over 20 per cent of their American counterparts report that they have reduced or are planning to reduce company contributions in response to the recent economic downturn.

Importance Of Change Management Discussed

“The inability to change is the new illiteracy” facing businesses, says Peggy Grall, a certified executive coach and former psychotherapist. Grall examined the key steps involved in effectively implementing and managing change within organizations, at the Employee Assistance Program Association of Toronto’s (EAPAT) fall seminar. Compared to years ago, organizations now undergo greater levels of change – negatively impacting employees and company culture in various ways. To ensure change is successfully applied throughout an organization, she highlighted the importance of establishing a vision for the change, skills needed to handle change, incentives giving workers a reason for the change, resources needed to accomplish goals, an action plan, and a communication plan so employees aren’t kept in the dark. Leaving any of those elements out of the process could result in frustration and resistance among employees, Grall said.

Focus Returns To Profitability

The current economic climate brought the focus back to profitability, says Neil Shafrom, managing director of Kirchner Private Capital. That focus was lost somewhat in recent years, he told the CVCA’s State of the Nation – The Economic and Regulatory ‘New’ Reality in a discussion of what venture capital and private equity-backed businesses learned from this economic downturn. However, the benefits of focusing on the bottom line helps in the day-to-day management of companies as well as in exit strategies. The latter is most important these days as no-one is interested in acquiring businesses which will be a drag on the bottom line.

Matrix Asset Forms

SEAMARK Asset Management Ltd. and GrowthWorks Ltd. have formed a mid-sized, diversified asset management company that will enhance the competitive position of both companies. The new company, Matrix Asset Management Inc., will combine the strength of the two firms. SEAMARK has a 27-year track record of delivering investment management services to institutions and high net worth individuals. GrowthWorks has built a reputation in Canada's venture capital industry and in the management of retail mutual funds.

Silver Tsunami Coming

Action needs to be taken now to avoid the impending silver tsunami, says Daniel Perry, executive directory of the Alliance for Aging Research. Speaking at the CARP Conference ‘A New Vision of Aging,’ he said as the population ages, the potential exists for a rise in chronic diseases which will dwarf all other issues. What is needed, he said, is to ensure that people are not just living longer, but are kept healthy and functional.

Markets Have Come Too Far

The financial markets have come too far, too fast, says Derek Holt, vice-president, capital markets research, Scotia Capital. Speaking in a discussion of the validity of the stimulus measures taken by governments and the actions of the Bank of Canada heading out of the recession at the CVCA’s State of the Nation – The Economic and Regulatory ‘New’ Reality session, he said there are several reasons to be skeptical about the sustainability of the current recovery. For example, the zero pricing for risk during 2006 and 2007 led to excessive financing and enabled many to buy items such as cars and homes before they were ready. As a result, many industries made the mistake of building inventory to match this distorted peak in demand. However, he doesn’t see the sustained growth in demand needed to maintain the momentum of the recovery or reduce this inventory.

Investors Binge On Risk

Institutional investors have binged on risk since equity markets hit their lows in March, says the State Street Investor Confidence Index. It has been in risk-seeking territory since February and in August touched highs last seen in September 2003. Two consecutive monthly falls have followed, bringing the index down to 108.4, levels seen in May. Investors have been rewarded, it says, but valuations are no longer distressed and macro uncertainty has not gone away.

Morphet CIO At Empire

Gaelen Morphet is senior vice-president and chief investment officer at the Empire Life Insurance Co. He was previously with CIBC Asset Management. Lieh Wang is senior portfolio manager and Nessim Mansoor is portfolio manager. They too were also at CIBC Asset.


Thursday, October 29, 2009

Ontario Starts Reform Next Month

Ontario will move ahead with the first part of its pension reform next month as it seeks to get the province’s plans on more solid footing, says Dwight Duncan, Ontario’s finance minister. The province’s reforms will come in two stages – the first in November and the second sometime in 2010. Duncan says the plan will largely be based on recommendations made by Harry Arthurs, former president of York University in Toronto, who headed the Ontario Expert Pension Commission. His report included recommendations such as calling for the province to enhance its pension guarantee fund and to appoint a full-time pension advocate.

ACPM Welcomes Federal Leadership

The Association of Canadian Pension Management (ACPM) welcomes the federal finance minister's leadership on reforms to the federal private pension legislative and regulatory framework. Scott Perkin, ACPM president, says "The federal government's recent consultation paper identified several important issues that need to be addressed. We are pleased they have begun to address them with this framework.” He says the reforms will encourage the “kind of pan-Canadian discussion required to provide federal-provincial solutions.”

CIA Wants To Dig Deeper

Federal Finance Minister Jim Flaherty has begun to address a broad range of important issues, but, in the opinion of the Canadian Institute of Actuaries (CIA), he needs to dig deeper into the elements that will strengthen the legislative framework to solve fundamental pension funding problems and secure benefits for pensioners and plan members. As well, steps need to be taken to create a more positive environment that would encourage employers to set up or maintain Defined Benefit pension plans. The CIA says, for example, raising the pension surplus threshold from 10 per cent to 25 per cent is an important piece of the puzzle. However, it is doubtful that plan sponsors will take advantage of this opportunity unless there is a mechanism in place that would enable sponsors to have greater access to funds not needed once adequate benefit security is provided.

Much Needs To Be Done For Global Economy

While much has improved in the global economy, there is still much to be done, says Brett Gallagher, chief investment officer and senior portfolio manager for Artio Global Management. Speaking at its New World Order: Positioning global portfolios within a new economic paradigm session, he said, for example, consumers are still over-leveraged and if the consumer situation is not fixed, then the economy is not fixed. Consumer debt in the U.S. now sits at 97 per cent of its GDP and it needs to get back to the 65 per cent levels of the 1990s. To do that, consumers would need to save about $800 billion a year for six years. However, consumers pulling back will lead to lower GDP growth, he said.

Small Cap Tops Large Cap

For the third consecutive quarter, Canadian small cap managers outperformed large cap managers, says the Russell Active Manager Report. The median small cap manager return of 19.5 per cent in the third quarter of 2009 was more than nine per cent ahead of the median large cap manager return of 10.2 per cent. The report shows 41 per cent of large cap managers were able to beat the S&P/TSX Composite Index in the third quarter of 2009, compared to the 38 per cent of large cap managers that outperformed the S&P/TSX index in the second quarter. There was minimal difference between the performance of growth and value managers in the third quarter, with value managers slightly outperforming. The median value manager return was 11 per cent compared to the median growth manager return of 10.7 per cent.

Fixed Income Traders Move To Electronic

In the midst of the global financial crisis, Canada's largest and most active institutional fixed income traders led a long-awaited move into electronic trading, says research from Greenwich Associates. Faced with gaps in sell-side coverage and a sudden and dramatic widening of spreads, Canada's institutions turned to electronic trading platforms as a new and alternative source of liquidity. In 2008, only 36 per cent of institutions generating more than $10 billion in annual fixed income trading volume used electronic trading platforms for this business. In 2009, that proportion surged to 61 per cent, driving the overall share of Canadian institutions trading electronically to 43 per cent from 40 per cent.

Pooled Funds Post Gains

More than 98 per cent of the 1,065 pooled funds in the Morningstar Research Inc. Canadian database of institutional pooled fund performance posted gains for the third quarter, including all but one of the 592 equity-focused funds. All 41 of the Canada pooled fund indices had positive returns for the quarter. Sixteen of the indices returned more than 10 per cent over the three-month period, with five of them gaining 15 per cent or more. The best-performing fund index was the one that tracks the natural resources equity category, which gained 25 per cent.

GTAA Chooses CIBC Mellon

CIBC Mellon Global Securities Services Company has been chosen by the Greater Toronto Airports Authority (GTAA) to provide global custody services for the authority's group of investment funds. The GTAA operates and maintains Toronto Pearson International Airport. In 2008, 32.3 million passengers used Toronto Pearson, making it Canada's busiest airport.

Upgraded Dashboard Launched

J.P. Morgan Worldwide Securities Services has launched an upgraded securities lending dashboard that allows clients to view and monitor key aspects of their securities lending activities in a customized view.  The platform provides clients with transparency across their program, including real-time information. The enhanced dashboard also provides clients with snapshots of critical portfolio data.

HSBC Offers India Fund

HSBC Investment Funds (Canada) Inc. has launched the HSBC Indian Equity Fund, providing investors with access to the substantial opportunities anticipated from India over the coming decades. India has been the second fastest growing economy in the world, after China, for the last 10 years and is predicted to become one of the world’s largest economies by 2040. The fund follows a disciplined investment philosophy targeting long-term capital appreciation using a diversified equity portfolio. The Asia-based portfolio management team will target key sectors and companies that it believes will benefit from India’s rapid economic expansion.

Gilliland Joins Leith Wheeler

Jim Gilliland is head of fixed income at Leith Wheeler Investment Counsel Ltd. He has extensive investment experience in Canadian and U.S. fixed income markets through his time at, most recently, Barclays Global Investors and HSBC Asset Management/M.K. Wong & Associates.


Wednesday, October 28, 2009

Ottawa Proposes Pension Relief

Ottawa will prevent firms from taking ‘contribution holidays’ and skipping payments to pension plans unless their workplace funds are running a surplus of at least five per cent under proposals from the federal government to protect employee pensions in federally regulated industries. The reforms would apply to industries such as telecommunications, railways, and airlines. The reforms also include a proposal for a legislated process to help troubled companies facing big pension deficits to resolve the problem without collapsing. It is based on the system used earlier this year to help Air Canada restructure its pension. Companies in critical financial condition will be given more time to repair pension deficits if their boards declare they cannot make necessary pension payments and the relief is approved by the finance minister.

Caregiving Impacts Work

An estimated 300,000 Canadians over the age of 65 have Alzheimer's disease and by 2031 more than 750,000 Canadians are expected to have Alzheimer's or a related disease, says Work Life Harmony. It says in 2007, about 2.7 million Canadians aged 45 and over, or approximately one-fifth of the total in this age group, provided some form of unpaid care to seniors (people 65 years of age or older) who had long-term health problems. Most caregivers are women and most of these caregivers (70 per cent) were also in the work force. This caregiving has had some significant job-related consequences. Individuals providing four hours or more of care per week were more likely to reduce their work hours, change their work patterns, or turn down a job offer or promotion. Statistics from the U.S. suggest that 40 to 75 per cent of caregivers have significant psychological illness as a result of their caregiving and 15 to 32 per cent have depression.

Insurance Industry Adopts Mental Health Strategy

Canada's life and health insurance industry has taken a leadership role by committing to a strategy to address the issue of mental health in the workplace. The mental health strategy incorporates principles that establish the benchmarks for best practices in the industry. These principles embrace working to improve knowledge and awareness of the impact of mental health in the workplace; encouraging development and promotion of best practices and programs; supporting practices that facilitate prevention, early detection, and intervention; promoting fair and effective disability management practices; and focusing on products and services that address the needs and issues related to mental health. As the principal provider in Canada of individual and group benefits products and services, the industry plays a significant role in wellness, disease prevention, and in supporting recovery. Canadian life and health insurers paid out $5.4 billion in disability benefits under group contracts in 2008. As well, the industry is itself a major employer, with more than 131,900 Canadians working in the industry.

Liquid Derivatives Use Rising

U.S. institutions are increasing their use of highly liquid "flow" equity derivatives, says a report from Greenwich Associates. The proportion of institutions using listed/listed ‘look-alike’ options increased to 88 per cent in 2009 from 79 per cent in 2008. While a stable 74 per cent of institutions traded single-stock options in 2008 and 2009, the use of index options increased to 72 per cent of U.S. institutions from 59 per cent. Fifty-two per cent of institutions say they expect to increase their use of flow equity derivatives, including approximately 10 per cent of institutions reporting that they plan to increase usage significantly.

Report Analyzes Transition Management

Northern Trust has introduced a new pre-trade analysis report for transition management designed to help institutional investors evaluate the potential costs and risks associated with a decision to switch investment managers or change asset allocation policy. Its pre-trade report includes a number of market-leading risk metrics such as 20-day performance comparisons of target and legacy portfolios, detailed industry sector analysis, a corporate earnings announcement calendar for relevant securities, and a summary of trades by time zone for global portfolios.

IFEBP Publishes 12th Glossary

The 12th edition of the Benefits and Compensation Glossary has been released. Published by the International Foundation of Employee Benefit Plans, the glossary includes terms used by employee benefits professionals in the United States and Canada. Terms from accounting, compensation, healthcare, human resources, investment, and labor relations are defined as they apply to the benefits field. Government regulations and legislation impacting the profession are noted to provide the reader with a comprehensive understanding. The 12th edition includes more than 200 new terms.


Tuesday, October 27, 2009

Quebec Stepping Into Nortel

The Quebec government will move to try and safeguard the pension assets of the 3,750 Nortel employees in the province if their pensions are terminated while the company is under bankruptcy protection. Quebec legislation allows the Regie des rentes du Quebec to administer the benefits of retirees whose benefits have been reduced following the termination of their pension plan due to their employer's bankruptcy for a maximum offive years.

Liberals May Expand CPP

Liberal leader Michael Ignatieff says his party is considering expanding the Canada Pension Plan to prop up retirement saving for Canadians. Speaking at a party roundtable on pensions, he said “That basic commitment that Canadians make to each other about a secure and dignified retirement is now in some question. There is a widespread feeling … of insecurity.” The party will provide its own proposals within the next month or so and these could include expanding the Canada Pension Plan, more tax incentives for savings, and prioritizing pensions in the event of corporate bankruptcy.

Say On Pay Model Policy Created

The Canadian Coalition for Good Governance has published for public comment its Say on Pay Policy. Its model policy gives guidance to boards on their engagement with shareholders, expected disclosure on their approach to executive compensation, a recommended form of the advisory resolution, and what should be done with the results of the vote. A copy of the draft policy is available from The comment period will close November 25, 2009.

RCMP Fund In Surplus

The actuarial value of the assets in the RCMP Pension Fund is $2,821 million and the actuarial liability is $2,776 million, resulting in an actuarial surplus of $45 million, says OSFI’s actuarial report on the plan. As at March 2008, the asset mix consisted of 61 per cent equity, 25 per cent fixed income securities (including inflation-linked bonds), and 14 per cent real return assets. The assumed asset mix for plan year 2009 consists of 58 per cent equity, 25 per cent fixed income securities, and 17 per cent real return assets. The RCMP pension assets have been managed by the Public Sector Pension Investment Board since April 2000.

Caisse Joins With AXA Private Equity

The Caisse de dépôt et placement du Québec and AXA Private Equity have entered into a partnership to better support Québec- and European-based businesses with international development prospects. Through this joint effort, the partners will share their respective market knowledge and networks in North America, Europe, Asia, and the Middle-East with companies. The agreement will consolidate the firms' alliance and contribute to the growth of businesses by placing practical tools at their disposal. These include allowing companies to join a global distribution network, search for suppliers, conclude a research and development joint venture, strike up an alliance with a foreign company, or take over an international competitor.

U.S. Plans Show Gains

U.S. institutional investment plan sponsors posted a second consecutive quarter of strong gains in the period ending September 30, 2009, with a median return of 10.9 per cent, says the Northern Trust Universe. In fact, the second and third quarters of 2009 are the best back-to-back quarters on record, according to its database, which has tracked institutional investment performance since 1997. In the third quarter, corporate pension plans posted a median return of 12.7 per cent, while public funds were up 11.6 per cent and foundations and endowments gained 9.9 per cent.

CPBI Hosts Pension Summit

Keith Ambachtsheer, the president and founder of KPA Advisory Services, and Tom Reid, senior vice-president, group retirement services at Sun Life Financial, will discuss how best to reform Canada’s retirement income system at the CPBI Ontario region’s Annual Pension Summit. They will examine whether the problems that have surfaced can be solved and, if so, how and by whom. It takes place November 24 in Toronto, ON. For more information, visit


Monday, October 26, 2009

Increased Surplus Limit Proposed

The federal government may allow Defined Benefit pension funds to accumulate larger surpluses as part of a series of reforms to the Canadian pension system, says a report in the Globe and Mail. A bill outlining the proposals is expected to be introduced by December. The Income Tax Act forces employers to halt contributions to a pension plan as soon as a surplus equals 10 per cent of its liabilities. The cap exists to limit federal tax revenue lost on tax-deferred pension contributions. However, there have been calls to raise this threshold to 20 or 30 per cent, or even scrap it entirely, to allow funds to accumulate cushions in the event of market downturns.

Current Debate Ill-informed

The plight of retirees and other members of Nortel’s and other insolvent pension plans brings into focus the need for intelligent solutions to complex pension issues, says Mark Newton, of Heenan Blaikie. Writing in its Pension Pulse, he says, however, much of the recent public debate has been unbalanced, ill-informed, and has failed to properly recognize the policy objectives of insolvency legislation and pension legislation. Bankruptcy and insolvency legislation in Canada were recently amended to provide greater protection for pension plan members and now provide a super-priority for employee and employer contributions to Defined Contribution pension plans and employee and employer “current service” contributions to Defined Benefit pension plans. This means that these amounts rank ahead of claims of ordinary creditors and secured creditors. The calls to further amend bankruptcy legislation to give a super-priority for the entire underfunding of pension plans in the event of insolvency or bankruptcy would place the burden of pension underfunding on a plan sponsor’s creditors, he says.

CARP Calls For Universal Plan

CARP is recommending the establishment of a Universal Pension Plan modeled on the Canada Pension Plan as its solution for the pension funding situation in Canada. Its position paper says it is not putting forward an absolute prescription. Its plan would utilize the existing payroll deduction mechanism, use professional management, and ensure a governance role for the members. The mandate of the need plan would focus entirely on optimal performance and independence from government or any single employer.

Solvency At 88 Per Cent

The average estimated solvency ratio of federally regulated Defined Benefit private pension plans at June 30, 2009, was 0.88, meaning the total value of assets of all federal plans was 12 per cent lower than liabilities, calculated on a solvency basis, says the Office of the Superintendent of Financial Institutions (OSFI). This compares to an estimated solvency ratio of 0.85 in December 2008. As part of its regular monitoring activities, every six months OSFI estimates the ratio of plan assets to plan liabilities for the 400 DB plans it regulates. OSFI follows up with individual pension plans where the results raise potential concerns. The private pension plans subject to OSFI regulation currently represent seven per cent of all private pension plans in Canada, accounting for approximately 12 per cent of private pension assets.

Delicate Balance Required  

Employers must strike a delicate balance between their employees’ health, wellness, and freedom of choice and the unique challenges presented by a pandemic, says Buck Consultants. Its InsightOut says failing to keep that balance can have a disastrous effect on business continuity and society. Employers are being encouraged by health officials to prepare for the worst-case scenario which involves a review of current policies, procedures, and coverages. As well, appropriate communication is needed that addresses employees’ understanding and awareness of the issues.


Friday, October 23, 2009

NDP Proposes Pension Insurance

A self-financing mandatory insurance system that would ensure pension fund payouts is one solution to the underfunded situation facing Canadian pension plans, says the federal New Democratic Party. It has set out its solutions to fix Canada pension system and is calling for the insurance system which would up to $2,500 a month for workers who suffer a decrease in their plan payouts. It also wants more money put into the Guaranteed Income Supplement, as well as a doubling of CPP/QPP benefits. The CPP proposal would require an additional payroll deduction of about 2.5 per cent, but it says this is less than what most people pay for the administration of their registered retirement savings plan investments. It is also proposing the creation of a financial vehicle to adopt "orphaned" workplace pension plans, rather than converting them to annuities. This vehicle would be managed by the CPP Investment Board.

Number Of Plan Members Increased

The total number of Canadian pension plan members covered by registered pension plans increased between 1997 and 2007, says the Office of the Chief Actuary. Its Registered Pension Plan (RPP) and Retirement Savings Coverage Fact Sheet based on 2007 data shows a 16 per cent increase in the total number of plan members covered by an RPP from 5.1 million in 1997 to 5.9 million in 2007. The number of RPP members as a percentage of the labour force, however, declined from 34 per cent in 1997 to 33 per cent in 2007. RPP coverage in the public sector decreased from 88 per cent to 84 per cent from 1997 to 2007, while the number of members increased from 2.4 to 2.8 million. In the private sector, RPP coverage decreased from 28 per cent to 26 per cent, while the number of members covered increased from 2.7 to 3.1 million. In addition to the decline in RPP coverage, there has been a shift from Defined Benefit to Defined Contribution plans and other hybrid plans. Overall, the proportion of plan members in DB plans has declined from 86 per cent to 77 per cent over the last 10 years. While the shift has been greatest in the private sector (from 78 per cent to 62 per cent), it has also occurred in the public sector (from 95 per cent to 93 per cent).

Canadians More Confident About Retirement

Canadians are facing the economic downturn with resolve and have changed their spending habits as a result, says the Sun Life Financial Canadian Unretirement Index. Sixty per cent of Canadian workers have reduced their debt, with almost the same number (59 per cent) saying they have spent less since January. As well, Canadians are feeling more confident about their retirement prospects, with more respondents anticipating that they will not be working longer than they originally intended and more Canadians believing their retirement will be as comfortable as they had hoped. It found 55 per cent of Canadians now believe they will be retired at age 66, up from 51 per cent in December 2008, while 45 per cent believe they will be working either full-time or part-time. Canadians had mostly positive reasons for intending to work past the traditional age of retirement, such as remaining mentally active and enjoyment of career.

Mawer Launches Mandate

Mawer Investment Management Ltd. has launched a global equity mandate utilizing its existing investment philosophy. It has been managing international and U.S. equities for more than two decades and global small cap equities since 2007, with approximately $2.4 billion in assets invested outside Canada. It says global equity represents a natural extension of these mandates, offering clients the choice of a global equity or individual asset class approach to portfolio construction.

Focus On Professional Development Needed

Focusing on professional development will help individuals survive and thrive in these challenging economic times, says Susan D. Cranston, the first Canadian president of the International Foundation of Employee Benefit Plans. Speaking at its annual CEBS Graduate Luncheon, the vice-president of communications, HR and communications management, at Manulife Financial, said for many who do not recall the last recession in the early 1990s, this is a new experience. Focusing on professional development helps individuals to deal with it. As well, she said it is important to plan and strategize to deal with an increasingly complex work environment and to help achieve a work/life balance.


Thursday, October 22, 2009

High-frequency Regulations Supported

Institutional investors around the world would support new regulations on high-frequency trading, says a Greenwich Market Pulse. However, much of this support appears centered on specific practices such as the use of flash orders and indications of interest that are widely seen as elements of front-running and may inaccurately be lumped into the debate on the merits of high-frequency trading. Plus, these institutions are sharply divided between those that see high-frequency trading practices as malevolent or benign, as adding liquidity to global markets, or preying on traditional stock investors.

Pensioners Demand Action

More than 2,000 pensioners, terminated, and disabled employees of Nortel Networks rallied in Ottawa Wednesday voicing their concerns over the lack of pension security in Canada. Their target is the Bankruptcy and Insolvency Act which now has pensioners, terminated, and disabled employees grouped with bondholders and suppliers when it comes to the distribution of assets from a bankruptcy. Pensioners are calling for the federal government to give employment related claims preferred status over unsecured creditors. More than 2,000 companies are currently under bankruptcy protection in Canada.

Budgeting For Liquidity Needed

The first lesson institutional investors need to learn when managing risk is to assume liquidity is not there when you need it, says a Callan report. Looking back at previous financial crises, it suggests that to prepare for the next liquidity crisis, investors should define their ongoing short- to medium-term liquidity needs and budget for them accordingly. This process identifies the reliable sources of cash flow from investments (interest income, stock dividends, maturing high-grade paper) that do not depend on selling long-term capital at risk, such as long-duration credits or equities. It says this risk-budgeting exercise should be an integral part of a strategic asset allocation policy.

Gains Higher From ‘Sin’ Stocks

Pension funds may be missing out on higher returns by not investing in so-called ‘sin’ stocks, says a study by Marcin Kacperczyk, of NYU, and Harrison Hong, of Princeton University. Their paper, ‘The Price of Sin: The Effects of Social Norms on Markets’ in the Journal of Financial Economics, suggests the return of ‘sin’ stocks – publicly traded companies involved in alcohol, tobacco, and gaming – may be 2.5 per cent higher than returns from stocks with comparable characteristics such as beverage, food, and entertainment companies. It says there is a societal norm against funding operations that promote vice and that some investors, particularly institutions such as pension plans which are subject to this norm, pay a financial cost in abstaining from these stocks.

Stable Markets Rejuvenate Fund Returns

Stable global credit markets and rebounding equities continued to rejuvenate Canadian pension fund returns in the third quarter, says a survey by RBC Dexia Investor Services. Within the RBC Dexia universe, pension plans earned 7.2 per cent in the quarter ending September 30, 2009, boosting year-to-date results to 14.3 per cent. Domestic stocks remained the top performing asset class for Canadian pensions, growing 10.6 per cent in the quarter and 29.6 per cent over the year-to-date. However, in foreign equity, currency losses continue to overshadow global stock market gains. Year-to-date, the MSCI World index climbed 20.3 per cent in local currency terms, but pension plans only increased by 10.5 per cent once converted into Canadian dollars. Canadian bonds also contributed, advancing 3.4 per cent in the quarter and 8.2 per cent year-to-date.

Employers Cut Retirement Benefits

Corporate America’s commitment to workers’ retirement plans, measured by benefit values as a percentage of pay, has dropped consistently over the last decade, says research by Watson Wyatt. The research found that companies that shifted from Defined Benefit plans to Defined Contribution plans had the steepest drops, whereas companies that had only DC plans actually had small increases in benefit value, albeit from lower levels. The analysis found that the total retirement benefits – DB, DC, and retiree health plans – provided to employees decreased from 7.8 per cent of pay in 2002 to 6.9 per cent of pay in 2008.

PIMCO Clients Get Seminars

PIMCO Canada is launching Fundamentals Client Education Seminars, a monthly series taking place in the Toronto, ON, office. These courses offer its clients the opportunity to gain a better understanding of the industry's most widely-used, least understood fixed income concepts and instruments. Topics being covered include credit default swaps, negative basis packages, hedging duration, and foreign income sectors.

Social Responsibility Examined

‘Transformational Corporate Social Responsibility: The Next Wave of Business Leadership, Innovation and Performance’ is the theme of the 7th Annual Summit on Corporate Social Responsibility organized by Canadian Business for Social Responsibility (CBSR). The theme highlights new, creative ideas to transform business and propel companies into the post-recession economy. It takes place November 5 in Toronto, ON. For more information, visit


Wednesday, October 21, 2009

Quebec Nortel Effort Raises Issues

A Québec Supplemental Pension Plans Act amendment allowing plan members to transfer their pension funds to the Régie des rentes du Québec (the Régie) when their employer files for bankruptcy and their pension plan is terminated in an underfunded position may not apply in the Nortel situation, says an Osler’s Pension & Benefits Law. Late in September, Quebec’s minister of employment and social solidarity pledged to adopt an exemption regulation to make Bill 1 applicable to the Québec members of the Nortel pension plan. However, the Nortel pension plan is registered in Ontario and it does not have a separate Québec pension fund. As a result, unless Nortel’s pension plan is fully terminated, the exemption regulation will need to provide for the segregation of the funds attributable to Québec retirees and the termination of the portion of the Nortel plan attributable to the Québec retirees. This would allow the Québec Nortel retirees to exercise their option of having their funds transferred to the Régie. In addition, it is unclear at this point whether the proposed regulation will cover all plans sponsored by companies under Companies’ Creditors Arrangement Act protection or only Nortel’s plan.

Rebate System Introduced

Employers should review the current GST/HST filing positions of their pension plans to assess the financial impact of the Department of Finance of Canada amendments’ to the Goods and Services Tax/Harmonized Sales Tax (GST/HST), says a Mercer Communiqué. The proposals introduce a rebate system that will replace the current GST/HST input tax credit mechanism for many pension plans. It will apply to all employer-sponsored pension trusts and certain pension corporations, irrespective of whether they are currently GST/HST registrants. The Communiqué says the legislation is complex and its interpretation very much depends on the government’s view of the governing tax policy, a view that may not always be shared by the courts. They will also need to determine whether they can, given their pension documents and the current state of the law on expenses, use the rebate sharing and “adjustment note” procedures.

Russell Canadian Assets Grow

Russell Investments’ institutional business in Canada has grown to more than $5.37 billion, as of October 1, 2009 – an 88 per cent increase over the past 12 months. It also reports more than $200 million in new Defined Benefit mandates that further add to its institutional business. Andrew Doman, its president and chief executive officer, says it is set to ramp-up its resources in the coming months as the company finalizes its extensive search for its next president of its Canadian operations. 

CFA Members Back Regulatory Reform

More than 90 per cent of Canadian CFA Institute members agree that the current securities regulatory system needs to be reformed, says the Canadian Regulatory Structure Survey Report.  The report, by the Canadian Advocacy Council for Canadian CFA Institute Societies, also shows most respondents (73 per cent) think securities regulation should be a combination of principles and rules-based. Seventy-five per cent of respondents support a single national regulator, of which 62 per cent favour a federal system and 13 per cent favour a single inter-provincial regulator jointly overseen by provincial authorities.

Maxxam Acquires Cantest

Maxxam Analytics International Corp. has acquired BC-based lab company Cantest Ltd. Cantest is British Columbia's largest independent analytical laboratory business, specializing in environmental, food, and pharmaceutical laboratory services. Maxxam, which is owned by OMERS, already owns Canada's largest medical laboratory company, LifeLabs.

Switch To IFRS Means Significant Changes

The transition to IFRS will mean significant changes for thousands of publicly accountable enterprises with fiduciary responsibility for investors’ funds was the message from an RBC Dexia Investor Services online event. A panel of IFRS conversion experts from Ernst & Young provided insights and answered questions about the switch to IFRS. Some institutional investors – including pension plans, money managers, and insurance companies – will need to implement a number of reporting changes well in advance of the 2011 deadline in order to create ‘prior year comparisons’ for use in 2011 and beyond. International Financial Reporting Standards (IFRS) is a collection of financial reporting standards developed by the International Accounting Standards Board and supported by professional accountancy bodies from around the world, including the Canadian Accounting Standards Board.


Tuesday, October 20, 2009

Employee Benefit Cost Biggest Concern

The price of employee benefits is the biggest concern of 77 per cent of U.S. chief financial officers and senior comptrollers, says a Grant Thornton LLP survey. It says 26 per cent said their company is reducing its 401(k) match, 42 per cent of respondents indicated their firm is reducing salary increases, and one-third reported their firm is reducing its healthcare benefits costs. The survey found other benefits costs being reduced are life insurance and disability benefits.

Americans Value DC Plans

Americans who participate in employer-sponsored Defined Contribution plans value these plans greatly and continue to support them, says a survey by the ING Institute for Retirement Research. It found 84 per cent of survey respondents stated that their employer's plan was a "very important" part of their retirement strategy with 92 per cent stating that the best way to save was by having their investments automatically deducted from their pay. The survey findings also show that employees did not radically change their behaviour or abandon workplace plans in response to the market downturn. Since the fall of 2008, more people (nearly 40 per cent) reported joining an employer's plan or increasing their contributions than decreasing or stopping contributions (less than 30 per cent).

Fund Of Hedge Funds Service Enhanced

State Street Corporation has enhanced its fund of hedge funds service offerings, which build on its suite of services spanning the hedge fund investment cycle. Fund managers can now benefit from a solution that includes not only custody, fund accounting, cash management, registration, risk services, investor services, and credit, but also integrated portfolio construction tools that incorporate current and prospective fund investments. The fund of hedge funds services can be customized as a full-service model, a cross-enterprise service solution, or as a targeted set of services to meet each customer’s unique needs.


Monday, October 19, 2009

Members Confident About Funds

Participants still have confidence in target-date funds, says research by AllianceBernstein. It found that 76 per cent of Defined Contribution plan participants using target-date funds think that these funds provide better performance than a mix of investments they selected on their own would. As well, 84 per cent of members who say they enjoy making retirement savings and investment decisions intend to maintain or increase the amount they have invested in target-date funds over the next two years. This compares to 88 per cent of those who don't enjoy investing, don’t pay much attention to it, and are not confident in their ability to make investment decisions.

CalPERS Reviewing Fees

The California Public Employees Retirement System (CalPERS) is launching a "special review" of fees paid by some of its money managers to an investment advisory firm run by one of its former board members. The review was sparked by the receipt of information provided to CalPERS by investment funds that reported the payment of more than $50 million in fees over a five-year period to Arvco Financial Ventures LLC. Earlier this year, CalPERS adopted a policy calling for external managers to disclose fees and other information about the placement agents hired to seek CalPERS asset management business. The announcement also corresponds with the signing of a bill in California that requires disclosure of fees paid by investment firms to placement agents.

Managed Accounts Examined

Dr. Ranjan Bhaduri will discuss ‘Managed Accounts & Managed Futures: Why Many Pension Plans are Insisting on Them’ at a Toronto CFA Society event. The managing director and head of research at AlphaMetrix Alternative Investment Advisors, he will also examine how the hedge fund community may be forced to adapt to changing pension plan requirements. It takes place October 27 in Toronto, ON. For more information, visit

Gala Helps Prevent Child Abuse

The Sixth Annual Hedge Funds Care Canada gala will take place November 4 in Toronto, ON. Hedge Funds Care Canada (HFCC) helps local foundations and charities prevent and treat child abuse and neglect. Ticket and sponsorship options are now available. For more information, visit


Friday, October 16, 2009

Pension System Ranks Fourth

Canada’s retirement income system ranks fourth – just behind Sweden – in a global pension index that compares private and public pension systems from around the world and ranks them based on adequacy, sustainability, and integrity. The inaugural Melbourne Mercer Global Pension Index gives the Netherlands the top ranking followed by Australia, Sweden, and Canada. It recommends Canada’s system could be improved by increasing the level of coverage of employees in occupational pension plans, possibly through a more efficient system; introducing a mechanism for ensuring that voluntary retirement savings are preserved for retirement purposes; introducing a mechanism to increase the pension age as life expectancy continues to increase; and increasing the level of household savings. Japan had the lowest ranking retirement income systems.

Retiree Suit Dismissed

A class action law suit against the Business Development Bank of Canada by a group of its retirees from a Defined Benefit pension plan alleging a breach of fiduciary duties when it amended the pension plan solely for the benefit of active employees, took contribution holidays, and paid for expenses from the pension fund has been dismissed by the British Columbia Supreme Court, says a Heenan Blaikie Pension Pulse. In Lieberman v. Business Development Bank of Canada, the court distinguished between the roles of administrator and employer, confirming that not all duties undertaken in respect of a pension plan are fiduciary in nature. It ruled an employer’s decision to amend a pension plan to either enhance or reduce benefits in respect of a particular class of pension plan members, provided it otherwise complies with regulatory requirements, does not constitute a breach of fiduciary duties.

Return To Saving Debated

Will Americans keep saving or return to spending as soon as the economy turns was a debatable point at AIMA Canada’s ‘Under the Hood of Hedge Fund Strategies III – Taming the Bear’ session. Denis Gartman, of The Gartman Letter, said the recent recession scared the baby boomers and turned them from spenders to savers. A generational shift is taking place and boomers will continue to pay off their debts and keep saving. Since they “own the world,” it will be some time before their influence is no longer felt in the economy. However, Stuart Kovensky, of Onex Credit Partners, says this is not the first time a financial crisis has frightened people into paying off their mortgages and paying down their debt. The recession of the late ’80s prompted everyone to decide to scale down their lifestyle, he said. Yet, as the economy turned around and recovered, they quickly charged their ways and “went crazy,” he said.

Assets Shifted Back To Equities

Participants in 401(k) plans are moving from fixed income to equities, says Hewitt's 401(k) index. It says total average equity allocations in 401(k) plans increased to 57.2 per cent from 56.2 per cent in August. Average equity allocations have inched up since February, but the September average is still below the 58.8 per cent reached a year ago.

Risk Management Examined

The CPBI Ontario Region’s ‘5th Annual Pension Investment Forecast’ breakfast will bring together senior investment professionals from some the country’s most influential pension plans. Among the issues they will discuss are what they are doing in terms of risk management, their liability concerns, and their views on alternatives. It takes place January 13 in Toronto, ON. For more information, visit

Panel Looks At Mentally Healthy Workplaces

‘Managing through Stressful Times: Designing Mentally Healthy Workplaces’ will be the topic at the Desautels Centre for Integrative Thinking’s annual Mental Health in the Workplace Forum. It will feature a panel of Ian Arnold, chairperson of the Workforce Advisory Committee of the Mental Health Commission of Canada; Jennifer Berdahl, associate professor of organizational behaviour, Rotman School of Management, University of Toronto; David Goldbloom, senior medical advisor, Centre for Addiction and Mental Health and professor of psychiatry, University of Toronto; and Bonnie Kirsh, associate professor, department of occupational science and occupational therapy, University of Toronto. It takes place October 21 in Toronto, ON. For more information, visit


Thursday, October 15, 2009

Flexible Benefit Plans Control Costs

Organizations that offer employees benefit plan options may have an advantage when it comes to weathering economic highs and lows, says a survey by Hewitt Associates. It found a majority of employers with flexible benefits plans find they have enabled them to contain benefit cost increases and, as Canada moves from recession to recovery, these employers are well-positioned to attract and retain the employees they need to regain and grow their business. The survey found 60 per cent offer a benefits plan with a flexible component, up from 41 per cent in 2005 when Hewitt last conducted this survey.

Recovery Will Be Tepid

The recession has ended in the west, however, the recovery will be tepid and slow, says Dennis Gartman, publisher of the Gartman Letter. Speaking at the Toronto CFA Society’s 52nd Annual Forecast Dinner, he said the slow recovery will be due, in part, to the fact that baby boomers in the U.S. are saving like they never have before. Where the saving rate was close to zero, it has now risen to four and five per cent and he expects it to reach 10 per cent in the near future. Since saving destroys economic growth, he said there will be a recovery, but the growth numbers will be nothing like those seen coming out of recessions in the past.  

OSFI Sets Out Termination Expectations

OSFI has published an instruction guide that sets out its expectations for filing and reporting requirements where a Defined Benefit pension plan has terminated, in whole or in part, under the Pension Benefits Standards Act, 1985 (PBSA). This includes plans with both a Defined Benefit and Defined Contribution component. This guide comes is effective immediately and replaces the draft guide issued in March 2008. It has also developed a standardized approval request form that must accompany the termination report.

CPPIB Buying Livingston

The Canada Pension Plan Investment Board and private equity firm Sterling Partners are purchasing the Livingston International Income Fund. CPPIB will own about 40 per cent. Livingston International Income Fund, through its operating subsidiaries, is Canada’s largest customs broker and the number three entry filer in the United States as well as an important North American provider of transportation and integrated logistics services. Based in Toronto, ON, it was established in February 2002 to acquire Livingston International Inc. and its subsidiaries.

AIMCo Cutting External Management

The Alberta Investment Management Corp. is reducing its use of external money managers. It plans to drop its budget for external managers to about $100 million from $175 million over the next two or three years. It currently runs more than 75 per cent of its $69 billion in assets in-house. Based in Edmonton, AB, AIMCo oversees 27 pension, endowment, and government funds.

Money Managers Optimistic

Money managers are increasingly optimistic about improving global corporate profits, says a BofA Merrill Lynch survey of fund managers for October. Nearly two-thirds of fund managers say a global recession is unlikely in the next 12 months, up from 47 per cent in September. Also, 72 per cent believe corporate profits will improve in the next year, compared to 68 per cent last month. Thirty-nine per cent of respondents said global corporate profits will rise by at least 10 per cent in the next 12 months, up from 25 per cent in September. Respondents were optimistic about the eurozone, while Japan was regarded as the least attractive region.

Monahan Becomes President

Thomas S. Monahan is president and chief executive officer of both CIBC Mellon Global Securities Services Company and CIBC Mellon Trust Company. Currently head of CIBC Wood Gundy and chairman and CEO of CIBC Investor Services, he assumes his new role on November 2. He succeeds Thomas C. MacMillan who will become the chair of CIBC Mellon's board of directors.

Charette Joins Caisse

Frédérick Charette is executive vice-president, talent and organizational development, at the Caisse de dépôt et placement du Québec. Previously, he was head of people at KPMG Australia.

Vandewiele Leads Canadian Growth

Christophe Vandewiele is head of Dexia Asset Management’s Canadian office. Based in Toronto, ON, he assumes responsibility for the leadership and growth of its Canadian operations. Prior to joining Dexia in 2005, he held a number of senior positions with financial organizations in Canada and the Benelux.

Flexible Benefits Debated

Flexible benefits and healthcare spending accounts are the focus of the Benefits Breakfast Club’s second meeting of the 2009-10 season. Kim MacFarlane, product director with Manulife; Rob Crowder, of The Benefits Trust; and Kenton Needham, a human resource consultant; will debate the relative merits and pitfalls of flexible benefits and healthcare spending accounts. It takes place October 29 in Kitchener, ON. For more information, visit


Wednesday, October 14, 2009

Managers Optimistic On Economy

Institutional investment managers polled by Northern Trust Global Advisors in the third quarter of 2009 expressed near-consensus optimism on the economy. Fully 83 per cent expect corporate earnings to increase in the coming quarter and 84 per cent believe that global growth will accelerate in the next six months. However, managers, still hesitant to call a buoyant V-shaped recovery, see potential fragility in the system. Three-quarters (76 per cent) expect interest rates to hold steady, reflecting a view that central banks will be hesitant to raise interest rates for fear of choking off early signs of recovery.

Adequacy Concerns Trustees

Trustees of multi-employer health and welfare funds are concerned about the adequacy of their current investment strategy to provide the returns needed at an acceptable level of risk, says a Segal ‘NewsLetter.’ Those invested in guaranteed investment vehicles are concerned about record-low interest rates and the guarantees provided, whereas those invested in bonds and equities are concerned about volatility and market values in the current economic conditions. It says, however, a strategy to meet these concerns includes alternative investment structures that, in the long term and in the right mix, will generate a sufficient return and provide the required liquidity, or cash requirements (especially during cycles of unfavourable economic conditions), without exposing the health fund to undue risk.

Manager Profits Squeezed

Global money managers’ profits are being squeezed by lower revenue margins, higher distribution costs, and clients switching to lower fee strategies, says a McKinsey & Co. survey. Managers expect this year to be worse than 2008 in terms of profits, setting the scene for a potential new wave of consolidation in asset management. It found that savings managers made through cost cuts are not enough to compensate for severe drops in net revenues globally. Assets under management shrank by 19 per cent globally for 2008. Institutional managers, however, generally lost less in assets under management than retail firms because of their more conservative asset mix.

Service Available Globally

J.P. Morgan’s ‘Projections & Simulations’ service is now available globally. Part of the Securities Collateral Management product, it provides securities borrowers with a set of tools to assess the impact of potential changes to their portfolios, helping them minimize risk and expense while maximizing returns. Using these tools, borrowers can optimize their collateral allocations by viewing the results of ‘what if’ scenarios that analyze both actual and synthetic portfolios. 

Disability Management Examined

‘EAP and Disability Management’ is the topic of the next ISCEBS Toronto Chapter Program. Karen Seward, senior vice-president, business development and marketing, at Shepell-fgi will discuss leveraging EAPs in an effort to mitigate disability costs and assist employees in the challenges they face in the return to work process. It takes place November 4 in Toronto, ON. For more information, visit

Pension Language Covered

Pension language, terminology, and plan design (with an explanation of differences in the U.S. and potential cross-border issues) will be one of the areas covered at Osgoode Professional Development’s ‘5th Annual Essential Course in Pensions.’ Other sessions will look at topics such as regulatory/statutory pension regimes and requirements applicable to public and private pension plans. It takes place October 27 to 28 in Toronto, ON. For more information, visit

Impact Of Market Decline Discussed

In the Wake of the 2008 Market Decline, How are we coping? What’s on the Horizon for 2010?’ is the focus of the ACPM Ontario Regional Council’s ‘impACT 2009.’ Sessions will cover topics such as the future of employer sponsored retirement plans and investment policy responses to the Defined Benefit funding crisis. It takes place November 19 in Toronto, ON. For more information, visit


Tuesday, October 13, 2009

Global Markets Transitioning

Global markets are transitioning to a new set of norms in the aftermath of the financial crisis and the new norms will fundamentally change investing and the concept of asset allocation, says Mohamed El-Erian, CEO and co-chief investment officer at PIMCO. The author of the book ‘When Markets Collide: Investment Strategies for the Age of Global Economic Change’ told a Toronto CFA Society session that the financial crisis shocked the core of the global financial system and that global markets will, ultimately, have lower growth potential. As well, new norms will change the concept of asset allocation. Rather than designing portfolios around different asset classes, investors will build portfolios based on risk classes, classifying their investments in terms of their exposure to equity risk, default risk, inflation risk, public policy risk, and other types of risk.

Court Backed Superintendent

The Federal Court of Appeal has agreed that the federal Superintendent exercised her jurisdiction properly in the Buschau case, says a Fogler, Rubinoff ‘Pension Alert.’ The superintendent had accepted Rogers Communications Inc.’s revocation of a proposed plan merger, refused to wind up the plan, and accepted a plan amendment adding a new class of members. Rogers sought to utilize the surplus in the plan and attempted a plan merger in 1992, at which time the actuarial surplus amounted to $11 million. Members and former members sought to set aside the merger, have the plan wound up, and the surplus paid to them. The decision means the standard of review of the decisions of a pension regulatory authority or tribunal is reasonableness in matters of fact, the exercise of discretion, and its interpretation of pension statutes. As well, members cannot force a wind up of a pension plan and, while trust law applies to mergers of pension trusts, the merger of pension plans does not affect the existence of separate pension trusts.

National Instrument Examined

Detailed commentary on the recently adopted National Instrument 31-103 Registration Requirements & Exemptions – including key features of the rule surrounding capital, insurance, and operational requirements and the impact on industry participants – will be provided at an Alternative Investment Management Association – Canada session. Christopher Jepson, senior legal counsel at the Ontario Securities Commission, will also address the current regulatory changes underway in the U.S. and the EU and the potential impact on Canadian managers. It takes place October 27 in Toronto, ON. For more information, visit


Friday, October 9, 2009

Reduction In Retiree Benefits Sanctioned

The British Columbia Supreme Court has decided that a reduction in retiree benefits for a group of 27,000 government retirees was within the legislative authority of the government and did not constitute either a breach of contract or a breach of fiduciary duties toward the retirees, says a Heenan Blaikie ‘Pension Pulse.’ It says while the decision in ‘Bennett v. British Columbia’ involves government retirees covered by a statutory regime, there are aspects of the decision that are of interest to private sector employers, in particular the discussion of what the “contract” is between an employer and employees vis-à-vis retiree benefits. The court discounted the legally binding nature of employee and retiree communications. The court’s discussion of fiduciary duties and whether employees could reasonably expect to have premium-free retiree benefits for life is also of interest. However, employers wishing to modify retiree benefits must always tread carefully, it says.

U.S. Moving To Fee Disclosure

Fee disclosure, investment advice, and target date funds are the most likely Defined Contribution pension plan regulatory and legislative changes coming in the U.S. in the near future, says Neil Lloyd, of Mercer (Canada). Speaking at the ‘2009 CPBI Western Regional Conference’ on ‘DC Plans Around the Globe: What Can They Teach Us?’, he said the current trends towards more auto enrollment features and increased levels of participant support in terms of financial, investment, and pre- and post-retirement guidance will continue. However, he doesn’t see much happening in terms of universal coverage or the provision of incentives to offer plans in the foreseeable future.

Employers Reviewing Pension Plans

Many Canadian employers are devoting significant time to their retirement programs this year, says a survey by Hewitt Associates. The ‘Canadian Retirement Trends 2009’ survey shows two-thirds of CAP sponsors are likely to conduct a comprehensive review of their investment fund offerings. Half of respondents with a DB pension plan are very likely to perform funding and accounting projections and 41 per cent are very likely to assess risks (financial and non-financial) based on current strategies.

Lehman Failure Huge Mistake

Allowing Lehman Brothers to fail as the credit crisis was escalating was a huge mistake, says George Klar, of Alternativ Solution Inc. In a session entitled ‘After the Credit Crunch: Lessons on Asset Mix and Institutional Investing’ at the ‘2009 CPBI Western Regional Conference,’ he said Lehman was a huge player in the credit default swaps field and allowing it to fail meant that there was no facility to make trades. This escalated counter-party risk and resulted in increased costs of borrowing and an end to inter-bank lending. As a result, the market seized up and, since there was no credit available, a liquidity crisis ensued.

CIBC Mellon Acquires Felcom

CIBC Mellon Global Securities Services Company is acquiring the unitholder recordkeeping and fund administration business of Felcom Data Services Inc., a wholly-owned subsidiary of Jovian Capital Corporation. The transaction, which is expected to close on or about October 23, involves the transfer of Felcom's client contracts. Felcom has been providing recordkeeping and fund administration services to investment fund manufacturers since 2001 and offers a total solution to address all investment product administrative requirements.

Building Healthy Workforce A Challenge

Building a healthy workforce is a challenge for organizations of all sizes, says Karen Seward, of  Shepell-fgi. Speaking at the ‘2009 CPBI Western Regional Conference’ on ‘Successful Strategies to Improve Employee Health,’ she said those organizations which can support strategic healthcare measures will see a return on investment. For example, every $1 spent on intervention can reduce absenteeism costs by $5. Employers can mitigate employee health risks by focusing on integrated wellness and health programs.


Thursday, October 8, 2009

Quebec Offers Nortel Retirees Help

The Quebec government is offering to help Nortel Networks Corp. retirees by taking over management of their pension plan. It says it will amend provincial regulations to give the Régie des rentes du Québec the ability to manage assets for Nortel pension plan members in Quebec, if they approve the option. Almost 6,000 Nortel pension plan members are in Quebec. At current funding levels, they would receive 69 per cent of their pensions if their plan were wound up today. The Nortel plan has about $2.5 billion in assets and roughly $800 million belongs to the Quebec members.

PSHCP Keeps Sun Life

Sun Life Financial will continue to administer the federal government's Public Service Health Care Plan (PSHCP). It was the first ranked bidder under a competitive government tendering process. Sun Life has been the administrator of the plan since 1996. The PSHCP is the largest employee benefit plan in Canada, representing three per cent of the group market share with more than 580,000 active and retired plan members.

Employers Cautious About Increases

Employers remain cautious about salary increases for 2010, says a survey by the Ordre des conseillers en ressources humaines agréés. It found they are prepared to agree to an average salary increase of 2.57 per cent in Québec and 2.67 per cent across Canada, marking a record 10-year low. It also shows while cost control remains a major concern for employers in the coming year, they also plan to work on other total compensation issues such as their performance management and reward strategy, salary structure, job evaluation systems, and pay equity.

DC Plans Getting Simpler

The trend is toward simpler solutions for Defined Contribution pension plans, says David Charbonneau, of Desjardins Financial. Speaking on ‘CAPS for Small Business – Defined Contribution Pension Plan or Group RRSP?’ at the 2009 Ontario Regional CPBI Conference, he said, however, these simpler approaches do provide participants with comprehensive solutions including a range of asset classes and investment styles. The trend is also seeing fewer funds being offered with sponsors opting for 11 to 25 offerings, with most closer to 11. This is in response to growing evidence that too much choice can cause inertia among plan members.

U.S. DB Plans Face Steep Bills

Unless they receive funding relief from the federal government, U.S. employers will be required to contribute $89 billion into their Defined Benefit pension plans in 2010 and more than $146 billion in 2011, says an analysis by Watson Wyatt. “The combination of a deep recession and new pension law has landed employers in extraordinary circumstances, and they need temporary funding relief to lessen the enormous pension contributions required in the next few years,” says Mark Warshawsky, director of retirement research at Watson Wyatt. The analysis found that past relief granted by legislation and regulations had lowered required contributions for corporate pension plans to $32 billion in 2009 from $38 billion in 2008. However, without further action, employers’ contributions would explode to more than $146 billion in 2011.

Two Join Invesco Trimark

Michael Hatcher and Jeff Feng are vice-presidents with the global equities team at Invesco Trimark. Hatcher has more than 13 years of investment management experience. Most recently, he held the position of vice-president at Burgundy Asset Management Ltd. where he focused on European equities. Feng has more than 10 years of investment management experience. He also most recently worked at Burgundy, where he was vice-president, EAFE equities.


Wednesday, October 7, 2009

Low Expectations Drive Alternative Interest

Pension funds are turning to alternative investments because of low expectations for returns from traditional investments, says Brian White, of Aon Consulting. Speaking at the 2009 Ontario Regional CPBI Conference on ‘Alternative Investments – A Practical Guide,’ he said sponsors are finding the alternatives sector offers more investment opportunities and they can be used to reduce risk in a portfolio. Still, from a plan sponsors' perspective, there are some issues of concern including high fees, a perceived lack of liquidity, and increased due diligence time and expense.

U.S. Institutions Stick To Policies

Despite the economic recession, The Conference Board says all major categories of institutional investors (including pension funds, mutual funds, insurance companies, savings institutions, and foundations) in the U.S. have remained fundamentally committed to the same investment policies they were adopting prior to the credit crunch. Its ‘Institutional Investment Report’ found losses in 2008 alone erased years of steady growth. At the end of 2008, when measured as a percentage of outstanding U.S. financial assets, institutional assets had reached their lowest level since 1980. The industry reported substantial losses across virtually all asset classes, with total institutional assets plunging 21.3 per cent to $22,251.7 billion, a level similar to what was recorded in 2004. However, the recession did not alter the institutional landscape. Declines in capitalization occurred fairly evenly across the institutional investor spectrum, without significant changes to the share of total institutional assets held by type of institution. Today, pension funds were still the leading category, holding 38.6 per cent of total institutional assets.

Signs Show Economic Decoupling

Signs of economic decoupling are starting to be seen, says Patricia Perez-Coutts, of AGF. Speaking at 2009 Ontario Regional CPBI Conference on 'The New Frontier of Emerging Markets,' she said emerging market economies are starting to trade more amongst themselves and are finding opportunities for growth without relying on the U.S. and other developed economies. She said structural reforms of the mid-’90s have made the investment environment in these countries more stable. As well, this foundation has helped them to better weather the recent financial crisis. Still, she said the markets have yet to respond and she believes this offers a winning combination from a long-term perspective.


Tuesday, October 6, 2009

Auto Features Found Around World

The adoption of automatic features to Defined Contribution pension plans is not just a U.S. development these days, says a 33-country survey by Mercer. One-third of the employers surveyed use automatic enrollment, one-third use automatic contribution escalation, and over one-fifth offer automatic rebalancing features. Of the close to 80 per cent of companies that have a default investment option, lifecycle funds are the most common default instrument, used by 67 per cent.

PIAC Honours Bertram

Robert Bertram has received the Pension Investment Association of Canada’s highest honour – the Chuck Harvie Award for Distinguished Service. Bertram served on the PIAC board twice during his long career, once representing Telus and once representing Ontario Teachers, becoming chair of the board in 1997.  He led the task force that documented its pension fund governance best practices which was presented to the federal government.

Portfolio Returns Buoy Plans

Continued strength in portfolio returns helped buoy pension plans in the third quarter as the cost of purchasing annuities climbed, says the Mercer Pension Health Index. While government bond yields were stable over the quarter, the assumed credit premium over the yields decreased, sending solvency liabilities higher. The index increased to 72 per cent, up one per cent from the beginning of the third quarter and up 13 per cent since the start of the year. All major asset classes posted positive returns during the third quarter of 2009 with Canadian equities the best performing asset class returning 10.6 per cent for the last quarter.

Asian Investors Curtail External Management

Asian institutional investors outside of Japan curtailed their use of external investment managers in response to the world financial crisis, says a Greenwich Associates study. Its '2009 Asian Investment Management Study’ found that in the first quarter, 15 per cent of Asian institutions outside of Japan planned to increase outsourcing of offshore assets and 18 per cent planned to use external managers to run domestic assets. That’s lower than in the first quarter in 2008, when 92 per cent planned to have more external managers run offshore assets, and 45 per cent planned to increase outsourcing of domestic assets. The decrease is the result of the performance of those investors’ internally managed portfolios being equal to or better than those run externally during last year’s financial crisis. Approximately 87 per cent of Asia’s estimated $5 trillion in assets is managed internally.

Brisebois Joins Eckler

Chris Brisebois is an investment consultant in Eckler Ltd.’s Toronto, ON, office. He has 15 years of actuarial, pension, and investment management experience, and has worked for a large cross-section of clients including corporate, public sector and not-for-profit organizations, as well as multi-employer pension plans.  

Value Investing Examined

‘Value Investing After the Financial Crisis’ will be discussed at a Rotman School of Management session. Irwin Michael, president, I.A. Michael Investment Counsel; Kim Shannon, president and CEO, Sionna Investment Managers; and Jonathan Wellum, CEO and chief investment officer, Portland Investment Counsel; will share their expertise and views on value investing. It takes place November 10 in Toronto, ON. For more information, visit


Monday, October 5, 2009

Crestline Buys Northwater Assets

Crestline Investors, Inc., a Texas-based alternative investment manager, has acquired hedge fund of funds and beta overlay investment management businesses assets from Northwater Capital Management, Inc. It will also open a Canadian office to serve that business. The acquisition increases its total assets under management to approximately US$5.8 billion, including US$683 million of Northwater hedge fund of fund assets and US$1.5 billion of client beta overlay investment management business. Paul Robson, former president of Northwater, will become president of Crestline Canada, Inc.

IA Buys Inhance

IA Clarington Investments Inc. is purchasing the socially responsible investing mutual fund business of Vancity’s Inhance Investment Management Inc. The two organizations will also enter into a long-term strategic relationship for the distribution of IA Clarington mutual funds through Vancity branches. Inhance has approximately $75 million of mutual fund assets under management. “The addition of Inhance’s SRI mutual fund business represents a natural evolution of IA’s commitment to corporate social responsibility and a continuation of IA’s best-of-breed investment philosophy through the addition of a top-rated Canadian SRI investment advisor,” says Normand Pépin, executive vice-president of Industrial Alliance.

People Question DC

With Defined Contribution pension plans poised to grow at an accelerated rate, people are beginning to question whether DC, as it exists today, is up to the job, says Watson Wyatt’s ‘Making DC Fit For Purpose.’ The paper looks at what can be done to ensure that, going forward, DC is fit for purpose. DC has rapidly become the dominant structure for private sector pension schemes in the UK and has recently been stress-tested as never before. The paper says employers need to review all aspects of DC plan design including structure, delivery, allocation of cost, contributions, investment, communications, annuity purchase, and governance.

Impact Of Volatility On Benefit Programs Examined

‘Economic Outlook – And The Impact On Pension & Benefit Programs’ is the focus of a Manitoba CPBI breakfast seminar. Louis Martel, managing director and chief client strategist, Greystone Managed Investments Inc., will discuss how the high level of volatility in financial markets has brought home the risk of investing in different financial markets around the world, making risk management one of the most important governance aspects for all pension and benefit programs. He will also discuss the implications of this high volatility on the funding of pension and benefit programs and how risk management should be integrated within investment and funding policies. It takes place October 22 in Winnipeg, MB. For more information, visit


Friday, October 2, 2009

Monitoring Sustainability Continuous Process

Monitoring the financial sustainability of social security systems is a continuous process for many countries, says Jean-Claude Ménard, chief actuary, Office of the Chief Actuary, Office of the Superintendent of Financial Institutions. In a speech to the International Social Security Association Technical Seminar on Pensions, he explained a survey done by Canada on self-adjustment mechanisms. During this process, he said solutions appropriate for specific countries’ situations were examined. The survey is aimed to present an overview of the existing mechanisms, hoping it will help countries around the world to improve governance, sustainability, and health of social security systems and to stimulate the development of new solutions.

Financial Community Grows

LeeSide Capital Management has joined the Atlantic Canada financial community. Based in Halifax, NS, with an office in Saint John, NB, it is led by three money management professionals with a track record that spans more than 20 years – Robert McKim, George Loughery, and Don Wishart. It has a risk-averse approach to investment and a philosophy that patience and continuous research are fundamental steps to success as it invests in high quality equities and holds them for the long-term.

BIMCOR Outsources Holdings

BIMCOR, manager of BCE Inc.'s pension fund, is outsourcing day-to-day management of its Canadian and U.S. equity and short- and mid-term corporate bond holdings as part of its efforts to cut costs. It has laid off about 12 money managers and traders as result of the change. The pension will continue to focus on investment strategy and oversight and will also retain responsibility for risk management and investment in long government bonds. BIMCOR manages about $13 billion in assets.

Interest In SI Rising

Interest in sustainable investment (SI) projects is on the rise as institutional investors look for alternate investment structures after the collapse of the markets in 2008, says Watson Wyatt. However, investors could face additional risk if they invest in these projects without educating themselves or determining whether they align with their investment beliefs. Most investors will fall into one of three categories – advocate, neutral or dissenter – depending on how they feel sustainability factors influence asset class returns, whether sustainability risks are incorporated into share prices in general, and so on. Sustainable investment is a broad term encompassing a variety of approaches that incorporate environmental, social, or corporate governance (ESG) factors in investment processes and ownership activities. Examples include investing in environmental infrastructure, clean energy, or sustainable transportation.

Coaching Integrated Into EAP

Shepell.fgi is integrating health coaching into Employee Assistance Programs (EAP) for the first time in Canada. It says expanding the capacity of EAP to include access to confidential support for physical health issues responds to a growing desire among employees for reliable health information and support for making personal changes that lead to improved physical health. It subsequently helps employers further contain health and other benefits costs in an efficient way. Health coaching not only addresses issues, it also facilitates risk prevention for diseases and conditions such as diabetes and high blood pressure. With this enhancement to EAP, employers help their employees take care of all aspects of their own health.

AGF Picked As Sub-advisor

Touchstone Investments has selected AGF Investments America Inc. to act in a sub-advisory capacity for one its 10 new funds for retail and institutional investors. AGF will sub-advise its Emerging Markets equity fund.

Healthcare Rate Holds Steady

U.S. healthcare rate increases are projected to remain stable for the third consecutive year, says an analysis by Hewitt Associates. In 2009, average healthcare premiums increased six per cent, consistent with 2008, and it projects a six per cent average premium increase for employers again in 2010. The average total healthcare premium per employee for large companies will increase from $8,607 in 2009 to $9,120 in 2010. The amount employees will be asked to contribute toward this cost is $2,085, or 23 per cent of the total healthcare premium, which is up 10 per cent from 2009.

Fortin Earns Award

Sophie Fortin, senior vice-president, human resources and corporate services, with The Standard Life Assurance Company of Canada, has won the ‘Ordre des conseillers en ressources humaines agrees du Quebec’ Professionnel émérite’ award. She was honoured for her 20 years in the industry where she has become known for her ability to influence decision-makers and her contribution to the development of the profession. A genuine ambassador for the crucial role human resources plays, she has changed the perception of the HR function everywhere she has worked. Her far-sighted vision has also enhanced the credibility of the CHRP designation, enabling the profession to play a key role at the management table.

November Interest Rate Assumptions

The interest assumptions required to calculate commuted values for an event which occurs in any month up to and including November 2009 are now available at An Excel spreadsheet on the website contains seven worksheets:


Thursday, October 1, 2009

Managers Bullish On Canada

It looks as if more bearish managers are hibernating, even as the Canadian equity market continues to forge ahead in the third quarter of 2009, says the quarterly Russell ‘Investment Manager Outlook.’ The Canadian market has risen fastest among the world’s developed economies this year, but that hasn’t dimmed the optimism of most investment managers. A solid 65 per cent remain bullish towards broad market Canadian equities, and bears have dropped from 26 per cent in the second quarter to just 18 per cent in the third quarter of 2009. Meanwhile, Canadian bonds are finding very few takers as 63 per cent of managers are bearish on fixed income. High yield bonds, with their higher risk/return profile, fared better, with 38 per cent still bullish, down from 54 per cent last quarter. More than two-thirds of investment managers expect inflation in Canada to remain below two per cent by the end of 2010. That means one-third do expect inflation to rise and, in the longer-term, higher inflation seems to be a likely risk.

Companies Offering Wellness

Canadian organizations understand wellness initiatives are a good business decision and are making their employee's health a priority, says Buffett & Company Worksite Wellness Inc.’s ‘The 2009 National Wellness Survey.’ Ninety-one per cent of organizations surveyed are offering at least one wellness initiative. This represents a 47 per cent increase in the number of organizations implementing wellness initiatives since the inaugural survey was conducted in 1997. "Wellness programs are even more important during difficult economic times like the one Canada is currently experiencing," says Ed Buffett, president and CEO of Buffett & Company. "Research indicates that even employees who keep their jobs are under increased stress, which has a significant impact on their health and the health of the organization."

Consultation Starts On Dark Pools

Canadian securities regulators have issued a consultation paper on the development of dark pools in Canada. The Canadian Securities Administrators and the Investment Industry Regulatory Organization of Canada have published a joint consultation paper outlining some of the recent developments in Canadian market structure such as the introduction of dark pools, dark orders, the interaction of visible and dark orders on the same trading platform, and the introduction of smart order routers. The paper discusses the evolution of the Canadian market and proposes a variety of specific issues for consultation such as transparency, liquidity, fairness, and information leakage. Dark pools are marketplaces that offer no pre-trade transparency, while orders that have limited or no transparency are known as dark orders. Traders largely use dark pools to ensure anonymity and to minimize market impact costs. Public comment on the paper is invited until December 29.

Structural Issues Will Create Potholes

Structural issues will create potholes in the road to U.S. economic recovery that investors must look out for, says George Bicher, senior vice-president, director of research, and portfolio manager at GE Asset Management. Speaking at its ‘View on U.S. Markets,’ he said the recovery was backed, in part, by central banks boosting liquidity. However, the resulting fiscal deficits are unsustainable and eventually the U.S. will need to implement fiscal and monetary tightening. This could put a vice around the U.S. economy which will be “difficult to escape.”

CIBC Mellon Using EquiLend

CIBC Mellon Global Securities Services Company will implement EquiLend's suite of services to encourage greater efficiency in securities borrowing and lending, and to increase revenue potential for its clients. By introducing EquiLend's AutoBorrow and Trade2O capabilities to its desk, it says securities borrowers can expect to enjoy more efficient lending through a familiar interface. It expects this will drive higher lending volumes for its clients. CIBC Mellon has relied on EquiLend's back-office solutions since 2007.

Investor Confidence Rises

Global investor confidence fell by 4.7 points to 118.1 from the August level of 122.8, says the State Street ‘Investor Confidence Index.’ Regionally, there was some divergence in risk appetite. The confidence of North American institutional investors declined slightly by 4.6 points from 118.3 to 113.7. Elsewhere, however, the tone was more upbeat. European Investor Confidence rose from a revised 109.3 to 110.9, while Asian Investor Confidence increased from a revised 91.9 to 93.1. “After eight consecutive increases in global investor confidence, which took the index from an all-time low of 82.1 during the financial crisis to a five-year high of 122.8, institutional investors took a breather this month and consolidated their holdings of risky assets,” says Ken Froot, a Harvard University professor and developer of the index with State Street.

Crawford Moves To IPP

Mark Crawford is a vice-president at IPP INC., an actuarial consulting firm that specializes in the design and implementation of individual pension plans. Throughout his career, he has assumed senior roles for several large actuarial and benefit consulting firms. Most recently, he was manager of pension benefits for a large private employer.

Subscribe to Daily News Alerts

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

Interactive issue now onlineSubscribe to our magazinePrivate Wealth Online