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News Archives - September / October 2011

Monday, October 31, 2011

Poor Governance Causes Bad Outcomes

Poor corporate governance and over reliance on optimization tools has led to bad investment outcomes for Canadian pension fund sponsors recently, says Bruce Curwood, director investment strategy, Canada, for Russell Investments. He said change is necessary since pension trustees often don't have sufficient information. Also, humans suffer from behavioural bias and added to the problem is the fact that markets don't behave in a rational way. He cited a 2005 Oxford University Study on pension trustees that concluded the short evaluation times for long-term strategies has led to bad investment outcomes. Plan sponsors need to pay more attention to both the governance of the plan and the risk management process.

Retirement Planning Major Issue

Retirement planning will remain a major issue for workers of Québec SMEs that don't offer pension plans, says the SME Confidence Index ‒ Fonds de solidarité FTQ. It found 54 per cent of SMEs do not offer pension plans or other forms of contribution to employees' pension plans. What is especially striking is that of this number, 93 per cent do not intend to do so in the next three years.

Pension Funds Behind Uptick

The third quarter saw an uptick in Canadian M&A volumes and values by eight per cent and one per cent compared to the same quarter last year, says PwC’s ‘Capital Markets Flash.’ However, if not for large financial institution and pension fund buying, the last three months would have been rather bleak. Excluding a small number of large Canadian pension fund deals, the value of third quarter M&A was 25 per cent lower than the second quarter, also excluding pension fund activity. In what PwC characterized as a Bay Street versus Main Street dynamic, less than one per cent of third quarter transaction volumes contributed 59 per cent to aggregate deal values. Overall, there were 756 Canadian M&A announcements worth close to $51 billion during the quarter.

Simple Hedging Techniques Explained

Simple hedging techniques available to both retail and institutional portfolios will be the focus of an AIMA Canada session. It will look at hedging equity exposure, hedging fixed income in a rising rate environment, and the use of ETFs to hedge market risk. It takes place November 7 in Montreal, QC. For more information, contact Jovine Chan at 416-453-0111 or jchan@aima-canada.org
 

Evolving Coverage Roles Examined

Chris Bonnett, president of H3 Consulting; and Mark Rolnick, product director, pharmaceutical benefits, at Sun Life Financial; will examine the ‘Evolving Roles of Provincial and Private Coverage’ at the next Benefits Breakfast Club session. It takes place November 24 in Mississauga, ON. For more information, visit www.connexhc.com

Session Looks At Travel Insurance

‘Leaving on a Jet Plane: The Ins and Outs of Travel Insurance’ will be the topic at a Manitoba CPBI Council breakfast seminar. Angela Jorowski, of Sigurdson McFadden, will provide attendees with a better understanding of travel insurance benefits, cost drivers, plan features, and various carrier options available in the marketplace. It takes place November 17 in Winnipeg, MB. For more information, visit http://www.cpbi-icra.ca/

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 2011 are now available at www.an-actual-actuary.com. An Excel spreadsheet on the website contains seven worksheets:
• Commuted Values February 2011 CIA
• Marital Breakdown ‒ CSOP 4300, May 2009
• Annuity Proxy for Solvency Calculations for Non-Indexed & Fully-Indexed Pensions
• Minimum Interest on Employee Required Contributions
• HISTORICAL ‒ Commuted Values 2009 Basis (Now Frozen)
• HISTORICAL ‒ Commuted Values 2005 Basis (Now Frozen)
• HISTORICAL ‒ Commuted Values 1993 Basis (Now Frozen)

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Friday, October 28, 2011

Break Coming With Benefit Plans

After two years of increasing inflation in health benefit plan costs, Canadian employers can now expect a break, says a survey by Buck Consultants, A Xerox Company. Insurers have lowered their expected inflation costs for health benefit premiums (including prescription drugs, medical expenses, hospital coverage, and dental care) from 15 per cent in 2010 to 14.4 per cent in 2011. The 2011 ‘Canadian Health Care Trend Survey’ says insurers have dropped their inflation factors for prescription drugs ‒  the fastest-increasing expense paid by group insurance plans ‒ from 15.8 per cent in 2010 to 14.2 per cent in 2011, a 10 per cent drop. “This is due to two important factors,” says Michele Bossi, leader of its Canadian health and productivity consulting practice. “In 2010, several provinces implemented generic drug pricing reforms that reduce their cost. Also, the patents expired for several blockbuster pharmaceuticals (such as the top-selling cholesterol drug Lipitor) in 2010, opening the door for lower-cost generic substitutes.” The survey also shows a downward trend in dental cost inflation across the country (from 8.7 per cent last year to 8.2 per cent in 2011). The report is at http://bit.ly/qrUzUZ

Tax Rules Prevent Retirement Saving

Federal tax rules are preventing many Canadians – especially in the private sector – from saving enough for retirement, says a report by the C.D. Howe Institute. Workers relying on RRSPs cannot accumulate even half the retirement wealth of career members of Defined Benefit pension plans, says ‘Legal for Life: Why Canadians Need a Lifetime Retirement Saving Limit,’ by James Pierlot, of Pierlot Pension Law, with Faisal Siddiqi, a pension consultant and actuary at Buck Consultants. The authors demonstrate that tax rules prevent these workers from saving enough, even as career members of DB plans accumulate retirement savings worth as much as 60 per cent of their total career incomes. This indicates a serious problem of inequity, the prospect of low living standards for future retirees, and an increasing burden on income-support programs funded from general tax revenue, it says.

Fraud Can Cause Premium Increases

The failure to deal with fraud in employer healthcare benefit plans will result in premium increases and a decrease in quality of coverage, says Joel Alleyne, executive director of the Canadian HealthCare Anti-Fraud Association. Speaking at the ISCEBS Toronto Area Chapter program ‘Private Healthcare Benefits Fraud,’ he said there is no accurate estimate on the cost of benefits fraud to the system because only the cases that are discovered can be reported. However, he estimates that fraud accounts for two to 10 per cent of the $180 billion healthcare spend in Canada. With the private sector’s share 30 per cent, this means it costs benefit plans from $2.4 billion to $5.6 billion. Examples of fraud include billing for services not provided, doctoring receipts, and over-utilization or over-treatment. He said as an industry they need to make sure people are aware of the problem, see the importance of it, and know that there are solutions.

Economic Uncertainty Undermines Retirement Expectations

More than 54 per cent of respondents age 45-plus have concerns about the economic uncertainty and how it may affect their retirement savings, says a poll by Sun Life Financial with its new partner CARP, a 350,000-member organization supporting a new vision of aging for Canada. When it comes to retirement planning, the survey also found more than 33 per cent worried about losing money due to market downturns and more than 30 per cent fear unexpected events that create extra expenses. “These poll results reflect some concerns that we are hearing from our clients in the 45-plus age bracket about the economic challenges,” says Kevin Dougherty, president of Sun Life Financial Canada. “Now more than ever, it is critical to ensure you have the right plan to save enough for your retirement.” Both CARP and Sun Life Financial have initiatives underway to help Canadians start planning sooner for their retirement.

Williamson With Imagine’s Caring

The Williamson Group has become a member of Imagine Canada’s Caring Company program. “As Canada’s leading corporate citizenship initiative, being a member of Imagine’s Caring Company program formalizes our commitment to community investment, innovation, and leadership,” says Don Williamson, its president. “Our culture of caring for clients, colleagues, and communities began with our founder and CEO, Paul Williamson, 35 years ago. We are pleased to honour his contributions and recognize the efforts of all TWG employees through this association with Imagine Canada.” To become an Imagine Canada Caring Company, members are required to contribute one per cent of pre-tax profit to the community, develop a community project supported by senior leadership, and publish a brief report on annual community activities. The Williamson Group’s community contributions have exceeded 10 per cent annually for the last five years.

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Thursday, October 27, 2011

DC Plans Impact Staffing Needs

“Given the continuing economic pressures, many employees who rely heavily on Defined Contribution pension savings are delaying retirement, making it more difficult for organizations to determine if, when, and how many older workers will retire and how to manage their staffing needs,” says Ian Markham, Canadian retirement innovation leader at Towers Watson. And this has profound implications for employee engagement at all ages as older workers stay put, taking career opportunities away from younger workers. The Towers Watson ‘DC Retirement Age Index’ shows the 2008/2009 recession hit the savings and annuity purchase prices of later generations hard, delaying their pension freedom well beyond age 60. For  a plan member who reached age 60 at the end of 2009, poor market returns while they were in their late 50s pushed their  pension freedom back to age 62¾ if they wanted to have the same level of income replacement in retirement as the 60-year-old who retired just two years earlier in 2007. The trend did not subsequently improve as future generations were also hit by higher annuity purchase pricing caused by declining interest rates. Reaching age 60 at the end of 2010 would have meant pension freedom arrived closer to age 64.

Engagement At All Time Low

Employee engagement is at an all-time low with one in three thinking about leaving their job and one in five disengaged in their present employment, says Brian Lindenberg, senior partner, health and benefits business, at Mercer. Speaking on 'Employee Engagement and Insurer Technology' at the 'Conference Board of Canada's Benefits Summit 2011,' he said the situation could create attraction and retention problems as the economy improves and in the face of looming labour shortages. However, employers have an opportunity to use their benefit and pension plans to address this. To do so, they need to make these plans more relevant. As well, they should expect more and demand more from their insurers and leverage their technology to enhance the employee's benefits experience.

Air Canada Withdraws Appeal

Air Canada is withdrawing its appeal of an arbitrator's ruling on pensions for new hires after the union representing its check-in and call-centre staff threatened job action. In September, an arbitration panel headed by Kevin Burkett selected the union's proposal for a hybrid Defined Benefit and Defined Contribution pension for new hires. Air Canada appealed that decision, a move the union called a violation of the collective agreement. The airline says "while there may be valid legal arguments in a judicial review of the Burkett decision, it is more important that our employees, unions, and other stakeholders have clarity with respect to the direction of pension reform at Air Canada."

Canadians Will Work Longer

A 50-year-old worker in 2008 could expect to stay in the labour force 3.5 years longer than in the mid-1990s, says Statistics Canada. Using ‘Labour Force Survey’ data which tracks the retirement behaviour of Canadians, it estimates older workers have been increasingly delaying their retirement since the mid-1990s. This is consistent with the increase in the employment rate of older Canadians that began about the same time. In 2008, an employed 50-year-old had an expected additional 16 years at work. This is roughly 3.5 years longer than workers of the same age in the mid-1990s, who could expect to work 12.5 more years. The 3.5-year increase was the same for both men and women.

ROI On Wellness Unmeasured

Less than one per cent of Canadian employers rigorously measure the return on investment from their wellness programs, says Karla Thorpe, director, leadership and human resources research, for the Conference Board of Canada. She told the 'Wellness Programs ‒ Is This Really Money Well Spent?' session at the 'Conference Board of Canada's Benefits Summit 2011' that the vast majority of employers do not measure their programs, believing  that wellness programs have an impact without being concerned about why. Part of the problem is the barriers to measurement. They may lack the staff and time to measure the ROI or be unclear of how to measure the impact of their programs. As well, they may think they lack data. She said, however, there are tangible categories which can be measured. These include disability claims, absenteeism rates, employee assistance plan usage, and drug expenditure. The key benefit of measuring return on investment is that it allows employers to target the most beneficial opportunities for wellness investment.

Report Says Beef Up CPP

The Canada Pension Plan should be beefed up with higher premiums and benefits to protect against a trend by employers to stop offering Defined Benefit pension plans, says a report for the Institute for Research on Public Policy. Authored by Keith Horner, a retired federal finance department worker, it says the number of employers offering guaranteed retirement incomes to their employees is shrinking, leaving people to deal with the uncertainty through their own savings. It calls for increased contributions by employees and employers on the first $48,000 of income by 3.6 per cent between employee and employer, which would up the benefit received from 25 per cent of earnings to 40 per cent of earnings. Further, the ceiling for pensionable earnings would be raised to $96,000, which would need six per-cent contributions to fully fund. The proposal targets people in $40,000 to $100,000 income range.

Only Two Levels Used

While there are five levels of leadership, says Doug Keeley, CEO and chief storyteller of The Mark of a Leader, most organizations only work on two levels. Speaking at the Williamson Group's ‘35th Anniversary Celebration,’ he said real leadership requires spirit, imagination, intellect, heart, and hands. In most organizations, only the intellect and hands are used as employees are told here is the project, now get it done. He defines leadership as helping others to do their best work which means everyone in an organization can be a leader. He cited Wayne Gretzky as an example of a leader who made everyone around him better.

OMERS Opens In Big Apple

OMERS is expanding its global reach through the opening of an office in New York City. The office has been established under the OMERS Worldwide brand and will have a 30-member team of investment professionals specializing in real estate, infrastructure, private equity, and capital markets. It marks a significant expansion of both its New York office space and its investment team, which started with seven employees in 2009. The OMERS board believes an expanded presence in New York is essential to access key private market investments in the U.S.

Teachers’ Plans Invest In NXT

Teachers' Private Capital, a unit of the Ontario Teachers' Pension Plan, and the Teachers' Retirement System of the State of Illinois have made equity investments to finance company NXT Capital. The U.S.-based firm provides financing solutions to middle-market and emerging growth companies and targets deals of up to $150 million with a hold size up to $30 million. Other new investors include Credit Suisse's Customized Fund Investment Group, Oak Hill Investment Management, and four other institutional investors.

Workplace Health Strategies Needed

Canadian employers need a comprehensive set of strategies to promote healthy workplaces, says Emmanuelle A. Gaudette, manager, prevention and health promotion, at Standard Life. In the ‘Key Factors for Effective Workplace Prevention and Health Promotion’ session at the Conference Board of Canada's ‘Benefits Summit 2011,’ she said healthy workplaces are necessary because the disability costs in Canada are huge. The cost for workers dealing with stress is 50 per cent higher and, for example, employees with diabetes miss an average of eight more days of work each year than those without. Since the cost of disability and healthcare are directly related to employee health risk factors, a strategy to change employee behaviours and management practices to create healthier workplaces can pay off for employers and employees, she said.

Minns Moves To Addenda

Brian Minns is sustainable investment specialist at Addenda Capital. He will be involved in the development and implementation of an environmental, social, and governance (ESG) analysis process to be gradually integrated into its decision-making process for its various investment strategies. Most recently, he was with the responsible investing team at the Canada Pension Plan Investment Board.

Winch At T. Rowe

Bruce Winch is director of business development for T. Rowe Price Canada. He will be responsible for sales and related new business development activities in Canada, working out of the firm's Toronto, ON, office. He has more than two decades of industry experience, most recently with Invesco Ltd. where he served as senior vice-president, institutional investments, with oversight responsibility for institutional sales and client service activities in Canada.

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Wednesday, October 26, 2011

Importance Of Wellness Understood

While Canadians and Canadian employers understand the importance of workplace wellness, it has been a struggle to create the comprehensive workplace wellness infrastructure needed to improve employee health and the bottom line, says Lori Casselman, assistant vice-president, health and wellness, group benefits, Sun Life Financial. Speaking at an event to reveal the results of ‘The 2011 Buffett National Wellness Survey,’ she said “We are pleased that the majority of employers surveyed recognize that their employees' health affects productivity and performance.” However, while many organizations offer wellness initiatives, most are not creating a strategic plan to improve employee well-being and ensure sustainable outcomes.” Health issues continue to be a dominant concern among Canadian employers with work-related stress followed by smoking, mental health issues, and high blood pressure rated as the most important risks facing employees. And despite economic conditions, organizations continue to embrace workplace wellness with many (43 per cent) looking to increase health and wellness activities in the next six months. However, 64 per cent of surveyed organizations that offer wellness initiatives do not evaluate results and 69 per cent do not calculate return-on-investment.

Policy, Design Combination Most Effective

A combination of reduced-risk/better-matched investment policy and reduced-duration plan design is most effective at reducing volatility, says a Towers Watson analysis on how different pension financial management strategies affect funding volatility. The analysis found that reducing the equity allocation from 60 per cent to 40 per cent and pushing the duration on the fixed income component to more effectively match the duration of plan liabilities cuts year-to-year volatility almost in half. Another option for suppressing financial volatility is to reduce the sensitivity of plan liabilities to interest rate changes. Plan sponsors can do this by moving to account-based plan designs and by increasing their program’s utilization of (non-interest-rate-sensitive) lump sum payments.

Administrative Advantage Comes With Registration

There may be an administrative advantage for a pension entity to register for GST/HST purposes even without having filed such elections, says a Blakes ‘Bulletin.’ It says there is currently no statutory requirement for a selected listed financial institution (SLFI) to register for GST/HST purposes unless it has filed particular elections with the Canada Revenue Agency (CRA). However, the CRA has published its interpretation of the filing requirements for SLFIs and they are potentially onerous, especially for SLFIs that are notregistered for GST/HST. This may come as a surprise to many who think that non-GST/HST registrants are generally exempt from filing GST/HST returns with the CRA. In particular, a non-registered SLFI is required to file monthly GST/HST returns and a final annual return – 13 returns in all each year. Even if these monthly returns report that no GST/HST has been collected and no input tax credits claimed, a failure to file penalty may result if the return is not filed.

Canadians Plan To Keep Working

A CIBC poll shows 69 per cent of Canadians plan to continue working in retirement, including starting their own business, consulting, or taking on part-time hours. It found 45 per cent believe they will work part-time, 24 per cent believe they will do occasional consulting in retirement, nine per cent say they will start a new business in retirement, and eight per cent will continue working full time in retirement. Only one per cent plan to spend their retirement travelling. The poll shows that “Canadians don't view retirement as the end of their working lives," says Christina Kramer, executive vice-president, retail distribution and channel strategy, CIBC.

Air Canada Action Concerns Union

The union for Air Canada's flight attendants is concerned the airline is changing its view on pension restructuring agreements. The concerns arose after it was learned the airline is challenging an arbitrator's ruling on pensions arising from contract negotiations with customer service representatives.  The Canadian Union of Public Employees, which represents the flight attendants, says any change in position on this issue will cause grave concern for its 6,800 flight attendants. In both cases, the unions had reached prior agreements with the airline on setting up hybrid pension plans for new hires.

Investor Confidence Rises In October

The ‘State Street Investor Confidence Index for October 2011’ increased to 96.7 in October, up from September’s revised reading of 90. The gains in the index originated in North America and Europe where investor confidence increased from 85.1 in September to 91.7 in October in North America and to 99.3 from 95.9 in Europe. It attributes the rise in confidence to the constructive elements that institutional investors were focusing on in September, including solid corporate balance sheets and the prospects for a resolution of the European debt crisis. However, it remains to be seen whether the outcome of European negotiations will convince investors that a line has been drawn under the sovereign credit issue.”

Benefits Breakfast Club Hits The Road

Connex Health’s ‘Benefits Breakfast Club’ series will make stops in Montreal, QC, and Halifax, NS, in November. Suzanne LePage, a private health plan strategist, will speak at both sessions on the developments of biologics and how they differ from traditional drug therapies as well as how the market for biologics and subsequent entry biologics is likely to develop. The Montreal session will include a discussion of plan design and cost containment. In Halifax, the event will include sessions on the role of the insurer in the reimbursement process and the shortage of rheumatologists and a local innovative care model that has been created. It takes place November 9 in Montreal and November 10 in Halifax. For more information, visit www.connexhc.com

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Tuesday, October 25, 2011

Canadian Workforce Confident

"Canadian employers are obviously doing a good job creating a confident and satisfied workforce, although there is room for improvement, especially in providing employees with clearly defined career paths and honouring commitments made during performance reviews," says John Cardella, executive vice-president, human resources, Ceridian Canada. Its ‘The Pulse of Talent’ survey found that 80 per cent of the respondents felt secure in their jobs and 75 per cent of respondents agreed that their employer helps them develop their skills by providing professional development training and, among those who feel valued by their employer, 82 per cent are being provided with professional development through their place of employment. As a result of training/mentoring programs, 76 per cent of workers have a clear understanding of what they need to deliver in order to be promoted.


Eagle Releases White Papers

Eagle Investment Systems LLC, a provider of financial services technology and a subsidiary of BNY Mellon, has released two white papers on areas affecting the investment management industry. ‘Investment Portfolio Data Management’ was authored by D. Terry Jenkins, principal analyst at Eagle. It discusses how the investment management industry faces unique and complex data management challenges with the management of investment portfolios. ‘OTC Clearing,’ by Kishore Saokar, a partner at Vega Investment Technologies, in conjunction with Eagle's product management team, illustrates how the current progress of implementing OTC derivatives regulations varies widely from country to country. It offers readers a framework to analyze their readiness to process OTC cleared swaps.


Watters Passes Away

Graydon Watters, founder and president of the Financial Education Institute of Canada, passed away on October 21. Founded in 1984 as Financial Knowledge Inc. (FKI), it initially served the educational needs of advisors in the investment industry. Over the years, it evolved into a diversified educational services organization focused on the needs of employers. He was passionately involved in the institute's mission until two weeks ago when he was admitted to hospital.

Allen Joins TD

Jonathan Allen is an analyst at TD Asset Management. Based in Toronto, ON, he will work with its credit research group. Previously, he was head of credit research at RBC Capital Markets.

Assistance Programs Examined  

‘Maximizing Return-on-Investment for your Employee & Family Assistance Program' will be offered by the CPBI Pacific Region. Paul Singh, of Family Services Employee Assistance Programs, and Tom Adair, of the BC Council of Film Unions, will discuss how to design, structure, and promote an employee family assistance program that helps employees resolve personal and family problems and maximizes its financial return on investment. It takes place November 29 in Vancouver, BC. For more information, visit: http://www.cpbi-icra.ca/    

Marriage Breakdown Entitlement Explained

‘Pension and Benefit Entitlements Upon Marriage Breakdown: The Legal Guide’ will be the focus of an Osgoode Professional Development program. Sessions will look at issues such as the new forms released by the Financial Services Commission if Ontario, how to get pension division right the first time, and spousal entitlements to extended health benefits, disability, and life insurance. It takes place January 18 in Toronto, ON. For more information, visit www.osgoodepd.ca

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Monday, October 24, 2011

Longevity Risk Not Accounted For

Many Canadian pension plans are not taking into account longevity risk and, as a result, are not accumulating enough, says a report from Swiss Re. In a report in the Globe and Mail, it says longevity is becoming more of an issue as baby boomers switch from buying life insurance to annuities. It estimates more than $1 trillion of Canadian pension assets and annuity reserves face longevity risk with most of these assets in corporate and public pension plans. Canada’s longevity risk is relatively high because of the quantity of Defined Benefit pensions in the country.

Air Canada Appeals Ruling

Air Canada has appealed an arbitrator’s decision that created a new pension system for new sales and service agents, says the Canadian Auto Workers union. In a letter, the union calls the airline’s current legal action “unprecedented in character” and said it should be withdrawn. The arbitrator, appointed after both sides agreed to have an arbitrator rule on a pension dispute during contract negotiations, sided with a CAW proposal to offer a hybrid system for new hires that blends the company’s traditional Defined Benefit pension with a Defined Contribution plan. The airline wanted to place new hires into a DC plan. The union contends both sides had agreed in advance that the arbitrator’s decision would be binding. However, Air Canada said the arbitration process was flawed and did not address the long-term sustainability of its pension system. The CAW represents 3,800 airport counter and call-in centre employees. Air Canada faces a $2.1 billion pension solvency deficit.

U.S. Faces ‘Lost Decade’

The U.S. may be facing a “lost decade,’ says Glen Hodgson, senior vice-president and chief economist at the Conference Board of Canada. Speaking on ‘The Economic Environment and What it Means to You’ at the ‘2011 CPBI Ontario Regional Conference,’ he said the U.S. is stuck because it can’t cut spending to reduce its deficit because that would have an adverse impact on the recovery of its economy. It needs to cut $1.5 trillion over the next 10 years and that will involve a little bit of everything ‒ adding sales taxes, economic reform, spending cuts, and a smaller military, for example. In any event, he said the U.S., like most countries, faces a long period of “mediocre growth” while imbalances are addressed and confidence is re-built.

Cost Recovery Could Prompt Fee Hike

The Office of the Superintendent of Financial Institutions (OSFI) efforts to recover costs from the pension industry for the administration of the Pension Benefits Standards Act, 1985 (PBSA) may be an attempt to increase fees, says a Heenan Blaikie ‘Pension Pulse.’ The federal government has announced changes to the regulations that govern how OSFI recovers costs. The proposed changes are designed to better align annual assessments with OSFI’s costs of supervising and regulating pension plans, says the government. While there will be no change to the total amount collected to cover OSFI’s costs for a year, the manner in which fees are calculated will be adjusted. As a result, a pension plan may see either an increase or a decrease in its annual assessment. The ‘Pension Pulse’ says there is a natural and well-grounded suspicion whenever governments re-jig their assessment methodology that there is an underlying motive to gradually increase fees and time will tell whether total fees will increase under this revised formula. However, it also says it is not particularly fair that larger pension plans should bear an even greater proportion of the total cost than what they are currently responsible for. Pension plans of all sizes can demand OSFI’s resources; it depends upon the issues unique to any particular pension plan at a point in time. Since part of the mandate of OSFI is to encourage the establishment and maintenance of registered pension plans, the imposition of onerous annual fees of this nature can be said to be at odds with that mandate.

Doubling Limit Fairness Issue

Doubling the retirement saving limit likely wouldn’t cost the government anything, says Malcolm Hamilton, a partner at Mercer. However, he told the ‘A Lifetime Retirement Savings Limit: Why you need it and how it will completely change you retirement saving in Canada’ session at the ‘2011 CPBI Ontario Regional Conference’ that it is unlikely to happen since the civil servants who understand it probably won’t do anything on the grounds that Canadians don’t take advantage of the retirement savings limit in place now. Hamilton said that it is an issue of fairness. It should happen, whether Canadians use it or not, because it would allow those in Defined Contribution pension plans at least the opportunity to get access to the same kind of retirement benefits as members of Defined Benefit pension plans.

Turbulent Markets Impact Pension Plans

Turbulent world equity markets severely impacted pension plans in the third quarter, says a survey by RBC Dexia Investor Services. Within its $340 billion universe, Canadian pension assets fell 5.5 per cent in the three months ending September 30, sinking year-to-date performance into negative territory at -3.2 per cent. "Ongoing uncertainty over Europe's sovereign debt crisis, a U.S. downgrade, and mounting fears of slower global economic growth drove pensions to their lowest quarterly result since the 2008 financial crisis," says Don McDougall, director of advisory services. Canadian equity was the worst performing asset class for Canadian plans as the S&P TSX Composite lost 12 per cent in the quarter and 11.9 per cent year-to-date. The pull-back actually started in April followed by six consecutive months of negative returns on Canadian stocks. Pensions trailed the S&P TSX Composite by 1.6 per cent for both the quarter and nine months. Bonds thrived as investors sought refuge, advancing 5.1 per cent in the quarter and 7.6 per cent year-to-date.

Funding Policies Unnecessary

With no legal requirement for pension funds to have funding policies, they would be well-advised not to have one as they could provide a road map to being sued, says Randy Bauslaugh, national practice leader of pensions and benefits at McCarthy Tetrault. In the ‘Funding, Prudence, and Investment Policies: The Pros and Cons from the Legal Perspective’ session at the ‘2011 CPBI Ontario Regional Conference,’ he said the minimum standards in pension legislation are enough. The only reason they are being considered is that actuaries are promoting them as a way to give them an idea of the direction of the business. However, the danger is that since CAPSA has set out pension plan funding policies guidelines, these take on the characteristics of regulations and law and pension fund feel obligated to follow the guidelines.

Corporate Earnings Could Decline

A growing portion of institutional investment managers expect corporate earnings to decline and United States economic growth to slow and a large majority anticipate the European debt crisis will spill over to other areas of the market, says a survey by Northern Trust. Along with the negative macro outlook, institutional managers believe U.S. equities are undervalued and see investment opportunities in U.S. large cap and emerging markets equities as well as in the technology, energy, and healthcare sectors.

OMERS Purchases Dental Firm

OMERS Private Equity, the private equity arm of the OMERS Worldwide group of companies, has partnered with existing management to purchase GEDC Super Holdings Inc. ‒ including its affiliate Great Expressions ‒ from affiliates of private equity firm Audax Group. Founded in 1982, Great Expressions is a leading dental practice management company with 152 affiliated dental offices in seven states across the Midwest, South, and Northeast. It provides all facets of dental services including general and preventative care focused on the highest quality patient care, affordable prices, and convenient locations.

Pension Administration Examined

‘Best Practices in Pension Administration’ will be examined at a half-day session presented by the CPBI Pacific region's continuing education committee. Aaron Walker-Duncan and Colin Hanson, both of the BC Pension Corporation, will review best practices in pension plan administration that help to avoid making pension administration mistakes. The session will focus on aspects of plan administration which are commonly misunderstood and/or overlooked, and which potentially expose the plan sponsor to unintended risk if not handled according to sound business practices. It takes place November 17 in Victoria, BC. For more information, visit http://www.cpbi-icra.ca/                            

AIMA Offers Fourth Session

‘Operational and Compliance Considerations,’ the fourth session in AIMA Canada’s ‘New and Emerging Managers Series’ will discuss key operational and compliance issues in running an investment management business and ensuring that it is onside with the regulators. It takes place October 27 in Toronto, ON. For more information, visit http://aima-canada.org/

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Friday, October 21, 2011

CLHIA Has PRPP Provisions

The Canadian Life and Health Insurance Association is recommending two provisions for Pooled Registered Pension Plans. Frank Swedlove, CLHIA’s president, told the House of Commons Standing Committee on Finance that when an employer offers a plan, employees would be told about it and, unless they choose to opt out, would be enrolled 60 days later, and payroll deductions would begin. The second provision would require all employers to at least offer some form of workplace retirement plan. This would not require employer contributions, recognizing that might present a hardship for some employers, but would simply require that they facilitate a plan in the workplace. It estimates that without these provisions 175,000 Canadian workers would be enrolled in a PRPP. With auto-enrolment only, that number would rise to 745,000. With auto-enrolment and a requirement that employers offer a plan, almost three million additional Canadians would be enrolled and saving for retirement. It also suggests changing the Income Tax Actto remove the requirement for an employment relationship between pension plan members and the plan sponsor. This would allow for pooled plans where there isn't a common employer and allow for plans administered by a financial institution. As well, it wants a hybrid administrative regime for PRPPs that provides pension protection for spouses and common-law partners on death or marital breakdown and is locked-in to provide retirement income, but also uses the Income Tax Act'ssimpler RRSP contribution rules to reduce the administration burden.

Impenetrable Fiduciary Disclosure Needed

A rise in lawsuits in the U.S. is prompting lawyers to advise their DC pension sponsors that they need fiduciary disclosure which is impenetrable, says Steven Friedman, chair of the employee benefits and executive compensation practice group at Littler Mendelson. Speaking on ‘Defined Contribution Pension Plan Issues ‒ Lessons From The U.S. Experience’ at the ‘2011 CPBI Ontario Regional Conference,’ he said the fact that investment returns are below expectations and that U.S. sponsors can offload most of the fees associated with plans onto the members is prompting many of these legal actions. To protect themselves, sponsors need to fully disclose all fees as well as the comparative performance of their plan's fund and compare this performance to indexed funds. Regulations are also requiring sponsors to take these actions. They also require sponsors to justify the funds they have selected.

HST Bulletin Published

The Canada Revenue Agency has just published Technical Information Bulletin B-107 ‘Investment Plans (Including Segregated Funds of an Insurer) and the HST,’ says Greg Hurst, of Greg Hurst & Associates. It contains information that will be helpful to trustees and administrators of such plans in determining GST/HST compliance requirements and preparing various required and elective tax filings, including tax returns and reporting entity and related elections. Topics include discussion of rules to determine whether a plan is a ‘selected listed financial institution,’ technical details for ‘special attribution method’ calculations, elections, and reporting and remittance of tax. It only makes a small non-substantive reference to pension entity rebates and makes no reference to pension plan deemed supply rules, says Hurst.

Total Rewards Critical Element

Total rewards are a critical element of the employee value proposition, says Ofelia Isabel, divisional lead for rewards, talent, and communications at Towers Watson. She told ‘The Shifting Landscape Of Demographics and Its Effects On Total Rewards’ session at the ‘2011 CPBI Ontario Regional Conference’ that effective total rewards strategies drive the right employee behaviour which has a positive impact on business outcomes. However, employers need to understand how the whole package compares to the marketplace. With impending shortages of skilled employees, employers who do not have, for example, Defined Benefit pension plans will need to be creative in developing strategies which attract and retain employees. However, contrary to popular belief, a recent Towers Watson survey shows employees across all age groups are content with the idea of staying with one employer for their working careers.

OMERS Top Employer

A focus on employee development and engagement has earned OMERS recognition as a ‘Best Employer in Canadafor the fourth consecutive year. The list of 50 winning workplaces was compiled by Aon Hewitt after reviewing employee engagement levels at more than 260 organizations. Warren Bell, chief human resources officer, says the result is important because “OMERS is growing across the entire enterprise and it is critical to our ongoing success that we continue to attract and retain talent at all levels of the organization.”

Target Date Needs Income Stream

While employers don’t want to be involved in securing an income stream in retirement, if they offer target date plans they should be looking for solutions which offer this, says Matthew O’Hara, director and head of research and product development for Blackrock’s U.S. and Canadian Defined Contribution Group. In a session entitled ‘Innovation In Target Date Funds’ at the ‘2011 CPBI Ontario Regional Conference,’ he said that it is not enough to help employees during the accumulation phase. They need to enter a “new frontier” with a shift from saving to saving and spending. Employees want more support and guidance, he said, so target date funds with embedded income through the purchase of annuities is an attractive solution for sponsors.

Fund Management Subsidiary On Market

Dexia SA will sell its fund management subsidiary Dexia Asset Management and its 50 per cent ownership stake in asset servicing firm RBC Dexia Investor Services. The sales are part of an ongoing restructuring of the company driven by underfunding problems. It says the sale of Dexia Asset Management will be done “in the framework of an open and competitive procedure.” The strategy for the sale of its stake in RBC Dexia will be determined by its CEO, Pierre Mariani.

Alberta Opts Out Of Tobacco

Alberta is the first province to end its investments in the tobacco industry. A Crown corporation has sold $17.5 million in directly managed stock held by public sector pension funds and the Alberta Heritage Savings Trust Fund. The action is part of the province’s move to file a lawsuit against the tobacco industry to recover healthcare costs for smoking-related illnesses. The province passed a bill in 2009 to pave the way for its tobacco lawsuit, but the legislation has not yet been proclaimed and a statement of claim has not been filed.

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Thursday, October 20, 2011

CPPIB Part Of Bid For Yahoo

The Canada Pension Plan Investment Board (CPPIB) is reportedly making a bid for Yahoo Inc. The Wall Street Journal reports it is partnering with Microsoft Corp. and Silver Lake Partners, a private equity firm in the bid the Internet portal. Microsoft would be the largest contributor of funds. However, the proposal could still fall through if the parties can’t get the money together. The CPP Investment Board invested in Skype, which was purchased this year by Microsoft, in a partnership with Silver Lake and Microsoft.

Teachers’ Back Murdoch Re-election

The Ontario Teachers’ Pension Plan will support the re-election of K. Rupert Murdoch, chairman and CEO of News Corp., and Lachlan K. Murdoch to the board of directors of the company, but vote against the re-election as director of James R. Murdoch, deputy chief operating officer, according to a statement by the plan. It also plans to vote against the re-election of David F. DeVoe, chief financial officer and senior executive vice-president; Andrew S.B. Knight, chairman of the board’s compensation committee and as a member of the board’s audit committee; Arthur M. Siskind, senior adviser to Rupert Murdoch; and Natalie Bancroft. The plan will vote in favour of the re-election of the other eight directors. In addition, it will vote against the company’s executive compensation program and vote in favour of having a non-binding shareholder vote on executive pay every three years. News Corp. recommended that shareholders support having the say-on-pay vote every year.

Climate Change Solutions Urged

Institutional investors with more than $20 trillion in assets are urging global policy makers to create policies that encourage private sector investment in climate change solutions. The initiative is led by three investor groups ‒ the Investor Network on Climate Risk, the European Institutional Investors Group on Climate Change, and the Investors Group on Climate Change in Australia and New Zealand. Their statement will be delivered to the G20 and other governments ahead of the United Nations Framework Convention on Climate Change conference. Global investment in renewable power and fuels reached $211 billion in 2010, up 32 per cent from 2009. However, investments in low-carbon technology are still lower than the $500 billion needed per year to maintain the global average temperatures below two degrees Celsius.

SEI Announces Target Date Funds

SEI has announced a series of target date funds designed to help Defined Contributions plan members in Canada meet their needs throughout their retirement years. It will leverage its Defined Benefit heritage to create target date funds that recognize participant retirement income needs as liabilities. These liabilities are then separated into various groups based on time horizon. The methodology in building the funds considers high probability outcomes for investment markets and longevity. It then uses well diversified investment strategies and blends them to best meet the liability profile of members within that fund.

Green Bond Fund Launched

State Street Global Advisors has launched a High Quality Green Bond strategy which offers investors a way to direct fixed income investments to climate solutions. Issued primarily by the World Bank, European Investment Bank, and other supranational and multilateral development banks, green bonds allocate the proceeds of the bond offering to fund environmentally beneficial development projects. In the past two years, the nascent green bond market from these issuers has grown from $1 billion to $5 billion outstanding.

Travel Insurance Goes Mobile

Desjardins Financial Security has launched a mobile travel assistance application. No matter where they are in the world, its travel insurance customers have secure access using their Apple mobile device to receive guidance and support from the beginning of their trip to the end. In the case of an emergency, with just a few clicks they have access to the emergency travel assistance number and important information for a variety of unplanned events. Customers can also extend their insurance as well.


Retirement Saving Confidence Shaken

The plunge in stock markets since June has shaken Canadians' confidence regarding their retirement, says a National Bank of Canada survey. Sixty per cent of respondents said yes when asked ‘Would you say that the recent market conditions have affected your level of confidence towards retirement?’ Moreover, 64 per cent of Canadians age 50 to 64 said they were worried, as did 69 per cent of 18- to 34-year-old respondents. The survey also reveals that more than one Canadian in five aged 50 to 64 plan to delay their scheduled retirement.

Pike Joins Kensington

Jeffrey Pike is senior vice-president responsible for leading the sales, marketing and distribution development efforts at Kensington Capital Partners Limited. He has been involved in the financial services industry for more than 25 years, with extensive senior experience in the mutual fund and brokerage sectors.

Reda Heads Triasima Board

Sam Reda is chairman of the board of Triasima Portfolio Management. Prior to recently starting his own consultancy, Maralex Capital Inc., he was vice-chairman and executive vice-president at Fiera Sceptre Inc., president and COO at Natcan Investment Management, and first vice-president and principal at TAL Global Asset Management.

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Wednesday, October 19, 2011

Healthcare Costs Pressure Benefits Budget

Rapidly rising healthcare costs are putting pressure on corporate benefits budgets including money for Defined Contribution and Defined Benefits plans, says a survey by Diversified. Aside from healthcare benefits, the only corporate benefits budget item that grew between 2009 ‒ when the survey was last conducted ‒ and 2011 was corporate 401(k) plans, which increased two percentage points to 15 per cent. The percentage of corporate budgets devoted to Defined Benefit plans, non-qualified deferred compensation plans, 401(a) plans, life insurance, and disability insurance all declined. It also found 48 per cent of respondents have implemented automatic enrolment, 32 per cent now use automatic escalation, and 29 per cent use automatic rebalancing. Among plans offering automatic enrolment, 54 per cent offer it only to new employees.

Critic Wants Pensions Protected

New Democrat Pension Critic Wayne Marston (Hamilton East-Stoney Creek) has reintroduced legislation to put pensioners first when their former employers go bankrupt. He says pensions are earned and should be recognized as deferred wages and these deferred wages should be there in their entirety when a person retires. Currently, in bankruptcy proceedings pensions are considered unsecured debt and only paid out from the company’s remaining assets.

Spectrum, HBI Merge

Spectrum HR Law LLP and HBI Business Immigration Law are joining forces under the Spectrum banner. It becomes Western Canada’s first and only boutique providing integrated human resources legal solutions. The merger also means it now has an office in Lethbridge, AB.

Environment Most Important Factor

Canadians place having a good environment as the most important factor when searching for a new employer, says a survey conducted by ICMA International and sponsored by Randstad Canada. It says for 60 per cent of jobseekers the most important factor they are looking for in a potential employer is a pleasant working atmosphere. High salary (56 per cent), job security (53 per cent), and good work-life balance (48 per cent) also top the list as the most important factors.

Powers Joins State Street

Catherine Powers is managing director and head of fixed income alpha strategies for North America at State Street Global Advisors. She joins it from Standish Investment Management where she most recently led the insurance client strategies group with a focus on customized fixed income solutions.

Carmichael Speaks At Session

Dianne Carmichael, president of Best Doctors Canada, will take part in the Economic Club of Canada’s ‘Canada Healthcare Outlook 2012’ session. Other panellists are Dr. Robert Bell, president and CEO, the University Health Network; and Dr. John Haggie, president of the Canadian Medical Association. It takes place November 29 in Toronto, ON. For more information, visit www.economicclub.ca

Substance Abuse Discussed

Barb Butler who will lead an interactive session on the need for a responsible approach to address workplace substance use and abuse at the Employee Assistance Program Association of
Toronto’s ‘Duty to Accommodate: Alcohol and Drug Issues’ seminar. Barb Butler is president of Barbara Butler & Associates Inc. She has been advising companies throughout North America since 1989 on the development and implementation of workplace alcohol and drug policies and programs. It takes place October 27 in Toronto, ON. For more information, visit www.eapat.org

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Tuesday, October 18, 2011

Stress Management Program Launched

Morneau Shepell Ltd., through the Shepell•fgi brand, has launched an online stress management program to manage stress in the work, health, and lives of employees. Focused on the user experience, the program features techniques presented in an interactive real-time online environment to help people more easily cope with stress and make meaningful changes in their lives. Interactive features added to the program include tools such as action eMail reminders, a three-month goal overview calendar, an area to record thoughts and evaluate one's thinking patterns, stress-busting games and activities, and real-time status indicators showing goal progress. The online program provides users with anytime, anywhere access via the Internet so individuals can work at their own pace and convenience with ensured confidentiality.

OMERS In Wave Venture

Wave Accounting Inc. has closed its Series A financing round, led by Charles River Ventures (CRV) with the participation of OMERS Ventures. The financing allows Wave to continue developing its free online accounting software for small businesses and marketing it internationally. Its online accounting application for small businesses eliminates manual data entry by importing transactions automatically from a user's bank account or electronic statement, and then applies smart technology to make accounting fast and easy. It has signed up almost 75,000 small businesses in 198 countries around the world since its launch less than 11 months ago.

Williamson Marks 35th Anniversary

The Williamson Group will mark its 35th anniversary in business in the Brantford, ON, area with a celebration with clients, community members, and students from local high schools and post-secondary institutions at an event in late October. "We are very pleased to be celebrating 35 years in business," says Paul Williamson, CEO and founder. "Our success depends on many things, including an exceptional leadership team, dedicated and talented employees, strong client relationships, and our ability to give back to our community." The celebratory event will feature Doug Keeley, an expert on creating cultures of leadership at every level of an organization.

Caisse Invests In CADRI

The Caisse de dépôt et placement du Québec has concluded an investment in CAD Railway Industries Ltd. (CADRI), a Quebec company specializing in rail car and locomotive repair. The Caisse is acquiring share capital and granting a loan as part of this transaction, carried out in connection with the purchase of CADRI by a company controlled by its president and chief executive officer, Fausto C. Levy. As part of its senior management's plan to buy out the company, CADRI's operations have been grouped together with those of Rail Action, a Québec company specialized in the distribution of locomotive parts, owned by Levy.

Keohane To Lead HOOPP

Jim Keohane will become president and CEO of the Healthcare of Ontario Pension Plan (HOOPP) at the beginning of 2012, following current CEO John Crocker’s planned retirement which takes place at the end of December. Keohane, currently its CIO and senior vice-president, investments, has led the transition of its adoption of a liability driven investment strategy enabling it to maintain its fully funded status. Crocker has been HOOPP’s CEO for the last decade. Among his many accomplishments are the modernization of its investment and administrative systems and the development of a client-focused culture that in 2010 won the prestigious Canada’s 10 Most Admired Corporate Cultures award.

Lévesque Provides Reality Check

Paul Lévesque, president of Pfizer Canada Inc., will provide a ‘Reality Check The Top 10 Myths about the Pharmaceutical Industry’ at an Economic Club of Canada session. It takes place November 1 in Toronto, ON. For more information, visit www.economicclub.ca


CVCA Looks at Financial Crisis Impact

‘Fasten Your Seatbelts: Investing and Exiting in Turbulent Times’ will be the focus of a CVCA ‒ Canada's Venture Capital & Private Equity Association event. It will examine how the global financial crisis affected private equity and venture capital. Speakers include Jim Fasano, vice-president and head of principal investing at the Canada Pension Plan Investment Board; and John Ruffolo, CEO of OMERS Ventures and Head of Knowledge Investing, OMERS Strategic Investments. It takes place November 23 in Toronto, ON. For more information, visit www.cvca.ca

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Monday, October 17, 2011

PRPP Framework Coming By End Of Year

The federal government hopes to present legislation to allow the establishment of Pooled Registered Pension Plans by the end of this year, says Ted Menzies, minister of finance. He told the Investment Fund Institute of Canada's annual conference the government hopes to present the legislation to the House of Commons before the end of the year. After that, each province would need to pass its own legislation related to the plan. Finance ministers from across the country agreed to the PRPP concept in December 2010 in a bid to improve pension coverage in Canada. Currently, more than 60 per cent of employees do not have an employer-sponsored pension plan. As currently proposed, PRPPs will be administered by private sector financial institutions.

Accounting Standards Effect Sponsors

International Accounting Standards Board (IASB) changes to the International Accounting Standard (IAS) 19, employee benefits, will reduce profits for most companies and increase balance sheet volatility in Canada, says a Sibson Canada ‘Spotlight.’ For plan sponsors, this may mean a brighter line may shine on pension risk as investor awareness of pension costs and risks has been slowly increasing in recent years, a trend that is expected to continue. The ‘Spotlight’ says it will be interesting to see how markets react to the increased pension disclosure in company accounts. As well, pension fund investment strategies may become more conservative since under the amended IAS19, investment strategy will no longer directly affect reported profits. This makes a high risk/reward investment strategy less attractive from an accounting perspective. Plan sponsors reporting under IFRS will have to comply with the accounting years commencing on or after January 1, 2013.

Court Rules Against Nortel

The UK Court of Appeal has ruled in favour of The Pensions Regulator in the Nortel/Lehman Brothers legal challenge. The judgment upheld the original high court decision that the liabilities are an expense of the administration and the trustees retain their super priority status as creditors above other unsecured claims. The ruling, which is expected to go on to the Supreme Court, means contribution notice liabilities may be recovered as an expense in an insolvency. In the Nortel case, the judgment will improve the position of the pensioners who are currently negotiating with U.S. bond holders over the split of $7.5 billion of cash realized from the sale of global assets.


Funds Team Up For RBC Headquarters

The Canada Pension Plan Investment Board and Oxford Properties Group, the real estate arm of OMERS, are teaming up to build the new national headquarters for the Royal Bank of Canada. The 30-storey office tower in downtown Toronto, ON, will be called ‘RBC WaterPark Place.’ RBC will occupy more than half of the 930,000 square-foot property when it opens in the third quarter of 2014. It will also house more than 50,000 square feet of retail services and amenities on the lower floors.

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Friday, October 14, 2011

Division Of Pension Clearer

Division of pension entitlements on marriage or spousal relationship breakdown will be clearer for Ontario plan members for agreements entered into and court orders issued after 2011, says Patricia Healy, of Fogler, Rubinoff. Writing in its ‘Pension Alert,’ she says basically pensions will be divided based on the length of the spousal relationship. As well, no more than 50 per cent of the value of the amount accrued during the period of spousal relationship may be transferred or paid to the non-member spouse. “Of course all this is not as easy as it sounds,” she says. There will be issues relating to Ontario members of plans registered elsewhere than Ontario. Further, it is not clear what happens if one spouse or the other wishes to challenge the administrator's numbers. Also, the common law is developing as to the division of family assets in non-married spousal relationship breakdowns.  Nonetheless, says Healy, it will assist in the finalization of settlements in most spousal breakdown situations.

Turnover Expected To Increase

Employee turnover is expected to increase worldwide during the next five years, says a global survey by Right Management. Half the survey respondents globally expect higher turnover, says Kevin Noronha, market vice-president. About a third foresees no change and a minority a decrease, “all of which points to greater turnover than organizations have been used to dealing with in the past decade,” he says. It found there’s no such thing as typical or average turnover and it varies widely from industry to industry. “Unless current expectations are wrong, most employers are soon going to have to cope with more loss of talent and know-how, greater recruitment and training costs, and all the turmoil entailed with people leaving and waiting for their replacement,” says Noronha.

Investors Look To Asia

The increasingly challenging environment in Europe is prompting traders for institutional investors to look more and more to Asia for better opportunities, says a survey by Liquidnet. Only 14 per cent of European traders surveyed by Liquidnet see European markets as attractive, while more than half (58 per cent) believe China offers the most potential. Survey respondents also expressed concerns over the scarcity of liquidity for block trades. Eighty per cent of traders believe the biggest hurdle to achieving the best price in equity trades is finding liquidity for executing transactions of large blocks of stock.

Fiscal Centralization Unlikely

Fiscal centralization in the Europe’s Economic and Monetary Union is unlikely, says a report in the Pyramis Global Advisors ‘leadership series | MARKET PERSPECTIVES.’ ‘Eurozone Debt: Policy Scenarios and Investment Strategies for Uncertain Times’ cites the constraints of its current constitution and the dangers that could arise from the possible need to re-open the Treaty of Maastricht ratification process among national electorates at such a delicate time. However, fiscal transfers from stronger to weaker neighbouring countries will almost certainly increase in the months ahead, with the latter sacrificing policy sovereignty (as is already the case) in return for financial concessions. Eventually, this could well lead to the issuance of a common debt, but there are clear implications for what remains of euro interest rate benchmarks, such as German bunds. However, a confluence of still-uncertain factors, particularly given the delays between problem identification and co-ordinated response, suggest the scope for policy error remains significant.

Sun Life Adds Regional Directors

Benoit Lavigne is regional director, business development, Eastern Canada, for group retirement services at Sun Life Financial. His 15 years of business development experience include key positions in sales and sales management with industry-leading, large market corporations. Chris Walker is regional director, business development, Ontario, for group retirement services. With more than 18 years of pension and investment industry experience, he brings diverse expertise to his role.

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Thursday, October 13, 2011

Starting CPP Needs Consideration

Recent changes to the Canadian Pension Plan (CPP) make it tougher to decide when it’s best to start taking advantage of CPP benefits, says David Ablett, director of tax and retirement planning at Investors Group. Greater incentives for Canadians willing to work past the traditional age of retirement and significant deductions for those taking CPP benefits before age 65, mean that the accepted wisdom of taking benefits as soon as possible may no longer apply. He says that the “cross-over” point, where  larger cumulative CPP benefits collected later become equal to the smaller cumulative benefits collected earlier, will now arrive earlier for most Canadians. The earlier the cross-over date, the better it is to delay receiving the CPP benefits, and, conversely, the later the cross-over date, the better it is to start receiving the CPP benefits as soon as possible. However, there are a number of additional factors involved in determining the best course of action for each individual. Canadians need to consider the rate of indexation of the CPP benefits and whether or not the individual is in a position to save rather than spend the after-tax CPP payments. Health and life expectancy should also play a role in the decision. 

UK Employers Nesting

More than 100 employers around the UK have agreed to enrol some of their staff in the new national top-up pension scheme known as Nest ‒ the National Employment Savings Trust, says the BBC. Employers will not be obliged to begin the phased enrolment of staff in Nest until October 2012. And if an employer already runs a decent pension scheme, staff can be automatically enrolled in that program instead. NEST is a trust-based Defined Contribution occupational pension scheme. Designed to provide employees with access to a simple low-cost pension scheme, while workers will be enrolled automatically, they can opt-out. Anyone who stays in the plan will continue to save in it even after they leave the workplace or move to an employer that does not use NEST.

Alternatives Can Be Effective

Alternative investments can be a very effective way to invest in order to obtain the returns that you need to meet your liabilities, says Darren Spencer, director of alternative investment consulting for Russell Investments’ Americas institutional business. In an ‘Exclusive Online Interview’ with ‘Benefits and Pensions Monitor,’ he says alternatives are really about returns and volatility. From a return standpoint, the issue is that pension funds have to continuously shore up funding gaps. This is particularly the case with a lot of pension funds in the United States. They are underfunded, and they need to take action to fund their liabilities so that they can meet their actuarial targets. “Volatility is also important. What we have seen over time is that the long-only equity markets tend to be pretty volatile and there is somewhat less of an appetite now to handle this long-only equity volatility,” he says. Alternatives can be much less risky relative to the volatility of long-only equities. The interview is at: http://www.bpmmagazine.com/monitor_online_exclusive/
02_print/SpencerInterview_BPMSept11.pdf

Healthcare Challenges Examined

Bryan Ferguson, vice-president with Applied Management Consultants, will explore the challenges to our public and private healthcare systems, why he believes there will be more collaboration in the future, and how that might look at the next BBC session. Focus of the event is ‘The Evolving Roles of Provincial and Private Coverage.’ It takes place October 27 in Kitchener, ON. For more information, visit www.connexhc.com

Session Looks At Pension Reform

Lynda Ellise, senior manager, pension policy, pension division, Financial Services Commission of Ontario; and Sylvia Bartlett, manager, operational policy, private pension plans division, Office of the Superintendent of Financial Institutions; will examine ‘Pension Reform A Year Later – A Regulatory Perspective’ at the ‘2011 CPBI Ontario Regional Conference.’ It takes place October 19 to 21 in Ottawa, ON. For more information, visit www.cpbi-icra.ca

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Wednesday, October 12, 2011

Canada Stays In Top Five

Canada has held onto its top five position in a global comparison of pension systems, but continues to require significant reform to help Canadians secure sufficient retirement savings and to financially support an aging population based on the '2011 Melbourne Mercer Global Pension Index.'  It says many of the world’s retirement systems are under significant stress and even the world’s most advanced retirement income systems require ongoing reform to ensure they’re robust enough to support a rapidly aging population. The Canadian index value fell slightly from 69.9 in 2010 to 69.1 in 2011 due to a small decline in each of the adequacy, sustainability, and integrity sub-indices, but generally demonstrated no significant change from previous years. Netherlands held its position as number one on the index. Australia regained its ranking as second in the world, with Switzerland again making up the top three.

Current Theory May Fail Investors

Current investment theory and practice runs the risk of failing investors at their time of greatest need, says the 300 Club, a group of investment professionals from around the world. The club was started to respond to what it describes as an urgent need to raise "uncomfortable and fundamental questions" about the very foundations of the investment industry and investing. It says current economic and investment trends would change the investing landscape over the next two decades. Over the past 50 years, there had been three main trends which have contributed to the growing impact of the financial industry on the economies of most developed countries and which culminated in the 2008 financial crisis. These were an increased complexity of instruments and models creating a feeling that return without risk was possible; an increased focus on products as opposed to investor needs; and benign market conditions which had encouraged the view that, in the medium/long term, markets will always rise. A consequence of these which is already visible for the investment markets is the herding of investors into increasingly overpriced assets while continuing to count on de-correlated return or lower risk.

CPPIB Acquires Deep-discounter

The Canada Pension Plan Investment Board and affiliates of Ares Management LLC have acquired 99¢ Only Stores. Founded in 1982, it is a deep-discount retailer of primarily name-brand consumable general merchandise. It has 281 stores with about 75 per cent in California and the rest in Texas, Arizona, and Nevada.

Bentall Kennedy Sets Out Sustainability

The Bentall Kennedy group of companies has released its annual corporate sustainability report, ‘Leading Through Action.’ The report publishes details on the company's environmental and social performance as well as governance practices. In addition to disclosures on company profile and management approach, the report includes disclosures on 20 performance indicators addressing topics such as environmental performance, health and safety, labour practices, and workforce diversity.

Asian Institutions Focused On Risk

While institutional investors in Asia are focused on managing the risks associated with above average market volatility and a low return environment, many also are looking for ways to better take advantage of market opportunities, says research by Pyramis Global Advisors, a Fidelity Investments company. The ‘2011 Pyramis Asian Pulse Poll’ reveals that the top three concerns regarding their investment portfolios are risk management, volatility, and a low return environment. Interestingly, institutions in Japan are more than twice as concerned about volatility as other Asian institutional investors, and nearly four times as concerned as those in Europe.

Seminar Examines GST/HST Compliance

A compliance update on GST/HST requirements for pension and other employee benefit plans and a discussion of GST/HST rebates and refunds with case studies illustrating strategies for achieving significant savings and simplified administration will be featured at the Ducharme, McMillen & Associates Canada Ltd. ‘GST/HST Pension Plan Rules’ seminar October 23 in Vaughan, ON. Greg Hurst, of Greg Hurst & Associates, will be the special guest speaker at the event. Registration deadline for the limited seating available is October 14.  Seminar details and registration information are available at http://www.greghurst.ca/documents/GST-HST_Invitation_to_Seminar_Oct_25_2011.pdf

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Tuesday, October 11, 2011

Pension Division Draft Forms Released

In response to Ontario’s new regime for dividing pensions on marriage breakdown, the Financial Services Commission of Ontario (FSCO) has released draft versions of the prescribed forms that must be used in the pension division process, says Osler Hoskin & Harcourt’s ‘Pension & Benefits Law.’ The new regime permits the former spouse of a plan member to receive an immediate payment of his or her share of the member's pension and requires plan administrators to calculate the value of the pension. These forms are to be used by plan members, their spouses/former spouses, and plan administrators during most of the steps in the process. However, the release says one form that appears to be missing is a form for the plan administrator to advise the member and the former spouse of the completion of a pension transfer or division, which could include information such as the amount transferred to the former spouse and the amount of the member’s adjusted pension going forward.

Contribution Demands Increasing

Corporate Defined Benefit pension plans should see dramatically higher minimum contribution demands for the next five years, but the challenges are manageable, says a Society of Actuaries study. The amount of required corporate plan contributions is expected to jump to a combined $90 billion per year between 2010 and 2020, with a peak of $140 billion in 2016, says ‘The Rising Tide of Pension Contributions Post-2008: How Much and When?’ In 2008, corporate plan contributions were five times higher than required levels and, in 2009, were four times higher. From 2004 to 2009, employers collectively contributed an average of $70 billion per year. Despite the increased stresses caused by low interest rates and volatile equity investments in a sluggish economy, the study found that employers on average have been contributing well above the minimum for the last several years, which has kept the private pension system stable.


App Looks At ‘Can U Retire’

The ‘Can U Retire’ Apple app gives any baby-boomer in Canada or the U.S. a quick and easy answer to the question ‘is retirement feasible for me right now?’ Its developer, Enrico De Dominicis, says it provides a clear percentage result to the following question: ‘Today I make the following gross monthly dollar amount; what would I receive from my pension plans, government pension plans, and other retirement savings if I retired now?’ The app uses information the user already has such as gross monthly salary and private pension plan amounts from annual statements.


Target Date Fund Use To Quadruple

Growth Target Date Funds will account for 48 per cent of all U.S. Defined Contribution assets by 2020, well above the 12.5 per cent they represented last year, says a forecast from Casey Quirk & Associates. They will account for an estimated $3.7 trillion of the projected $7.7 trillion in DC assets by 2020, compared to about $550 billion of the $4.4 trillion in DC assets last year. The second-biggest source of DC assets in 2020 will be target-risk/balanced funds with $1.2 trillion, or triple the amount in 2010. The asset class with the biggest decline will be U.S. equity, down to $1.1 trillion in 2020 from $1.4 trillion last year.


Pension Law Certificate Offered

Key issues of pension issues and their implications will be the focus of the ‘Osgoode Certificate in Pension Law’ program. Comprised of six one-day modules spread over six weeks, it is taught by acknowledged experts in the pension field and was devised to provide a comprehensive review and analysis of the major areas of pension law and practice. For more information, visit http://www.osgoodepd.ca/cle/2011-2012Fiscal/2011_pension_cert/index.html

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Friday, October 7, 2011

‘Lifestyling’ Approach Inadequate

The 'lifestyling' approach adopted by many Defined Contribution pension plan is now inadequate given the fall in equity markets and annuity rates, says a report from the Cass Business School in London, UK, and sponsored by BNY Mellon. The 'lifestyling' approach sees investors' retirement savings automatically switched out of equities into government bonds in the 10 years preceding retirement. However, the research shows the equity bear market and the decline in annuity rates over the last 10 to 15 years has had a devastating effect on the final pensions of DC savers who have relied upon the approach. The 'Outcome orientated investing for retirement' report suggests that DC plans should adopt a ‘dynamic’ investment strategy that enables investors to receive a tailored investment solution and, therefore, a greater chance of achieving pension targets.

Plans Experience Significant Losses

Amidst concerns of a global economic slowdown, Canadian pension plans experienced significant losses on both sides of the balance sheet in the third quarter of 2011. The ‘Mercer Pension Health Index’ stood at 60 per cent on September 30, down from 71 per cent at June 30. “Long-term federal bond yields dropped about 80 basis points in the quarter, continuing the decline started in the previous quarter,” says Scott Clausen, retirement, risk, and finance professional leader for Canada. “This decrease in bond yields dropped the index by about eight per cent. The remaining three per cent decline in the index is due to investment returns.” Bonds was the only asset class that posted a positive return compared to equities during the third quarter of 2011. Canadian bond markets, as measured by the DEX Universe Bond index, returned 5.1 per cent in the last quarter, led by long-term bonds which gained 9.8 per cent, followed by mid-term bonds (5.9 per cent), and short-term bonds (2.3 per cent).

Divide Exists Among DC Investors

Defined Contribution plan executives must be alert to a “great investor divide,” says a report from AllianceBernstein LP. It describes this divide as two distinct investing approaches by participants that require a different sponsor response ‒ active investors and accidental investors. The ‘actives’ invest earlier in life, are more confident about their current financial condition, and actively manage their investments. The ‘accidentals’ usually don't invest early in life, are unhappy with their financial circumstances, and lack confidence in their investment ability. The two groups also have different retirement savings goals. The ‘actives’ are most interested in living comfortably and in financing retirement, while the two top goals for ‘accidentals’ are being debt-free and having emergency money.

OMERS Hikes Contribution Rate

The OMERS Sponsors Corporation has set contribution rates for 2012. For normal retirement at age 65 members, the rates will increase from 7.4 per cent to 8.3 per cent. For those retiring at age 60, the rates will go from 8.9 per cent to 9.4 per cent. The rate increases are intended to be temporary. When the plan reaches full funding and the deficit is eliminated, rates will be adjusted. The strategy was announced in 2010, with total contribution rate increases of 2.9 per cent per side (members and employers) over three years, starting with a flat one per cent increase per side that was implemented in 2011. The sponsors corporation will set contribution rates for 2013, following further review and it will continue to review the principles for allocating and determining contribution rates for all members. It has also enhanced the funding flexibility of the RCA, a separate fund that pays benefits over and above the maximum that can be paid from the OMERS plan under the Income Tax Act. Effective January 1, 2012, the earnings level at which an OMERS member makes contributions to and ultimately receives benefits from the OMERS primary plan versus the RCA will vary within a certain range each year, based on the actuary’s projections. The RCA will be reviewed annually to ensure it maintains a viable funding level.

Canadians Eye Retirement At 63

Canadians anticipate saving enough to retire at age 63 and most see themselves entering retirement without debt, says a CIBC poll. However, it also shows that as they draw closer to retirement, they become less optimistic about reaching their savings goals and see it as more likely they'll carry at least some debt into retirement. Boomers on the verge of retirement in the 55- to 64-year-old age group were less likely to believe they would be able to choose to retire based on their savings and more likely to believe they would carry debt into retirement. A key finding of the poll is that as Canadians near retirement, their optimism in reaching their savings goals for retirement drops.

ETFs Need Transparency

As the market for exchange traded funds becomes larger and more complex, there’s a need for more transparency of product structures, fund holdings, and fees, along with various other market reforms, says a report from BlackRock Inc. and its ETF provider, iShares. The report addresses growing concerns that investors don’t fully understand ETFs or appreciate the risks and costs associated with them. At first, they were straightforward, tracking relatively broad benchmarks such as the S&P 500. Today, the sector has become more complex and confusing. The report makes a number of recommendations including a call for clear labeling of product structure and investment objectives, frequent and timely disclosure of all holdings and exposures, and clear standards for diversifying counterparties and quality of collateral.


Lack Of Due Care Can Be Costly

Lack of due care in managing the investments of a pension plan can have consequences beyond simply creating increased funding requirements, says Priscilla H. Healy, of Fogler, Rubinoff LLP. In a ‘Pension Alert,’ she notes the OSFI Superintendent directed an employer to pay $263,000 plus interest into the company's pension plan when it was found on wind up to be underfunded. The basis for the direction was that the company had not exercised due diligence and care with respect to the investing of the plan's assets. When the Attorney-General brought forward an application for enforcement of the direction, the company contested the application on the basis of the invalidity of the direction. The Federal Court held that contesting the application for enforcement on this ground was a collateral attack on the validity of the Superintendent's direction and that the company should have objected to the direction directly by way of an application for judicial review. This decision gives rise to the spectre of possible claims against not only the corporate employer, but also against directors and officers, and not only in the context of a wound up Defined Benefit plans, but also in Defined Contribution plans where fund selection and monitoring has not been carefully carried out. As noted above, attention must be paid to plan investments.

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Thursday, October 6, 2011

Inquiry Clears OMERS

The Mississauga Judicial Inquiry Report has confirmed that OMERS officials acted in the best interests of the plan’s members. The inquiry has found, however, that Mississauga Mayor Hazel McCallion was in a conflict of interest when she promoted a hotel and convention centre land deal involving a company partly owned by her son. OMERS ‒ through its real estate division, Oxford Properties ‒ was entangled in the affair because it was a part-owner of the 8.5 acres of land in the city centre. OMERS is studying the report in greater detail to determine whether the recommendations can improve its commercial relationships with Ontario’s municipalities.

New Development Opportunities To Grow

Shifting output and job growth to western Canadian markets will continue and real estate investment opportunities, particularly for new development, are likewise shifting west, says LaSalle Investment Management. In addition, it contends that forecast rises in the value of the Canadian dollar will boost import volumes, which will maintain warehouse demand in Canada’s largest warehousing markets of Toronto, ON, and Montreal, QC. Chris Langstaff , Canadian head of research and strategy, says, “Although Canada’s economy ‒ and by extension its real estate market ‒ survived the Great Recession of 2008/2009 remarkably well compared to many other nations, the recession was less benign for Canada’s trade sector.”  Export volumes dropped significantly enough to push Canada into a trade deficit in 2009 for the first time since 1976. Though the trade deficit has continued into 2011, a trade surplus is forecast to emerge later this year and successively strengthen over the next four years, hitting $45 billion by 2014, thus returning Canada’s trade surplus to pre-recession levels of 2008. Import volumes are also forecast to grow over the next five years, particularly for machinery and equipment and consumer goods. Most importantly, an expected shift to energy and natural resources as a greater proportion of Canada exports relative to manufacturing will have implications for the attractiveness of major real estate markets in the country.  Specifically, growing demand for commodities and energy from Asian economies will positively impact the real estate fundamentals and investment prospects for industrial and office properties in the western markets of Vancouver, BC; and Calgary and Edmonton, AB. 

Equity Funds Suffer In Third Quarter

Equity funds in Canada suffered a fifth consecutive month of overwhelmingly negative returns in September amid high volatility and bleak economic news, says Morningstar Canada. As a result, for the third quarter of 2011 all of its Canada Fund Indices fell, with 16 of them losing more than 10 per cent. The worst performing fund index was the one that measures the Greater China equity category. It lost 20.5 per cent during the quarter, with the bulk of the losses coming in September. The flight from risk has been a recurring theme during the past several months, and the biggest losers among investment funds were those that target riskier asset classes. Even gold funds, which had been one of the few categories to post positive returns so far this year, suffered significant losses in September. The precious metals equity fund index lost 12.1 per cent in September, wiping out its gains from the previous two months and resulting in a 3.7 per cent loss for the index during the quarter.


Pension Assets At $30 Trillion

Pension fund assets accounted for almost $30 trillion of investment manager assets worldwide in 2010, says research by TheCityUK. Overall, investment management conventional assets increased by 10 per cent to hit a record $79.3 trillion last year, with pension fund assets making up the largest portion. This was followed by $24.7 trillion in mutual funds and $24.6 trillion in insurance funds. Together with alternative funds and private wealth funds, assets in the global fund management industry reached $117 trillion. The UK had the highest ratio of funds as a percentage of GDP (257 per cent in 2010), followed by the U.S. (224 per cent), Switzerland (211 per cent), and the Netherlands (203 per cent). The global average was 115 per cent.

Employers Can Monitor Absences

Employers have the ability to monitor employee absences, however they have to avoid the risk of overly invasive requests, says Maureen Quinlan, of Heenan Blaikie. Speaking at its ‘Managing in the Workplace Seminars’ session on ‘Stop Stressing About Disability Claims: Understanding Employers' Rights and Responsibilities in Managing Disability Claims,’ she said employees do have an obligation to attend work and, if they don’t, provide a legitimate reason for the absence. In most cases, a doctor’s note will suffice provided it does not go into specific details about the illness. For employers, this means they have to be able to determine “objective reasonableness.” This means based on the circumstances and information provided, they must decide it the claim seems reasonable. If it is, they can no longer seek additional information. If they decide it is not reasonable, they can then assess the work-related goals and ask for more detail.

Funding Levels Hit World War II Low

Funding levels for pension plans sponsored by S&P 1500 companies sank in September to a post-World War II low, says an analysis by Mercer. The deficit for pension plans sponsored by S&P 1500 companies stood at $512 billion as of September 30. That's a 35 per cent increase from $378 billion at the close of August and it's about 72 per cent of the money the funds would need to meet all their obligations. Driving the decline in funding was a seven per cent drop in equities and a fall in yields on high quality corporate bonds during the month. The analysis indicates S&P 1500 pensions' funding peaked most recently at 88 per cent of their liabilities at the end of April. It has since fallen 16 per cent.

Macleod Dixon Merges With Norton Rose

Macleod Dixon and Norton Rose OR will be joining forces as of January 1, 2012. Together the enlarged practice will become Norton Rose Canada, creating a global law practice. The enlarged group will be one of the five largest international legal practices by number of lawyers, with more than 2,900 lawyers in 43 offices worldwide. Macleod Dixon's Caracas and Bogotá offices will be the first in the region for Norton Rose Group.


Lifetime Limit Examined


A featured session at the ‘2011 CPBI Ontario Regional Conference’ will be ‘A Lifetime Retirement Savings Limit: Why you need it and how it will completely change retirement saving in Canada.’ It features James Pierlot, of Pierlot Pension Law; Malcolm Hamilton, of Mercer; and William B.P. Robson, president and chief executive officer, C.D. Howe Institute. The conference takes place October 19 and 21 in Ottawa, ON. For more information, visit: http://www.cpbi-icra.ca/

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Wednesday, October 5, 2011

‘Politics Of False Prosperity’ Behind Crises

Pressure on politicians to deliver more growth is behind the financial crises that have taken place over the past 30 years, says Stephen S. Roach, non-executive chairman, Morgan Stanley Asia, and author of ‘The Next Asia.’ Speaking at the ‘Toronto CFA Society’s 54th Annual Forecast Dinner,’ he said the “politics of false prosperity” was not sustainable. He noted in the past 30 years, starting with the Latin debt crisis, there have been 11 crises in all, or one every three years. This desire for growth has been handled in a reckless way which, at its core, created imbalances. The whole idea that the world can grow forever is “an unsustainable growth path,” he said. While there is no one single cure, he suggested that in the U.S. its “zombie consumers” need ways to reduce their debt and increase their savings. This could be done by, for example, debt forgiveness and measures that encourage saving. These are the “seed corn of future economic growth,” he said.

Mental Health Tool Available

Canadian employers have gained access to an online tool designed to help employers improve mental health in the workplace with the launch of ‘Managing Emotions.’ Commissioned by the Great-West Life Centre for Mental Health in the Workplace Developed, it is an evidence-based assessment tool of emotional intelligence in the workplace. Emotional intelligence in the workplace is the ability to deal with other people's emotions and reactions in the workplace, to understand and manage your own reactions, and to communicate effectively. The tool includes an assessment that takes about 15 minutes to complete.

Acknowledge Losses And Move On

European banks need to acknowledge their losses and move on, says Abby Joseph Cohen, president of the Global Markets Institute at Goldman Sachs. She told the ‘Toronto CFA Society’s 54th Annual Forecast Dinner’ that a failure to do so could create another situation like Japan. There, the banks were put under regulatory pressure to maintain the book value of the assets they held instead of the market value. As a result, the system froze and remains frozen to this day. Until the situation in Europe is resolved, there is increased likelihood of recession which puts a dark cloud over the rest of the world. The fear is if Europe weakens, the U.S. will follow suit as exports are now the second most important part of its economy and Europe is its second biggest trading partner. She noted that currently conditions in the U.S. are not as bad as they seem as jobs are being created and GDP is rising.

Kensington Acquires Manna

Kensington Capital Partners Limited has acquired MANNA Asset Management Inc. The acquisition combines MANNA's hedge fund investment program with Kensington's offerings of private equity and infrastructure funds. The MANNA strategy is designed to provide investors with exposure to Canada's most exciting, emerging hedge fund managers with excellent return potential through a relatively lower risk approach. Kensington is best known for its private equity investment programs and is also an active investor in infrastructure assets.

Foundation Honours Koskie

The International Foundation of Employee Benefit Plans has presented Raymond G. Koskie with the ‘2011 Canadian Lifetime Volunteer Award.’ For the past 30 years, he has been actively involved with the foundation. He is a past member of its attorneys committee, educational program committee, Canadian government/industry relations committee, and the Canadian education committee. He was the first chairman of the Canadian CEBS committee and was co-chairman of the European committee. He is a founding partner of the law firm Koskie Minsky. The award recognizes outstanding contributions to the educational enrichment of foundation members.

Ferguson Looks At Challenges

Bryan Ferguson, vice-president with Applied Management Consultants, will explore the challenges to our public and private healthcare systems, why he believes there will be more collaboration in the future, and how that might look at the next BBC session. Focus of the event is ‘The Evolving Roles of Provincial and Private Coverage.’ It takes place October 27 in Kitchener, ON. For more information, visit www.connexhc.com

ETF Risk Assessed

Assessing risks with Exchange Traded Products and are ETFs at risk for a blow up will be among the topics covered at the second annual ‘Exchange Traded Forum.’ The Radius Financial event brings together professionals from every segment of this group of investment products. It takes place October 24 in Montreal, QC. For more information, visit http://www.exchangetradedforum.com/

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Tuesday, October 4, 2011

Employees Confident About Pensions

Employees with traditional workplace pension plans have a high level of confidence in the strength of the plans to pay out as promised, says a survey by RBC Dexia Investor Services and Grant Thornton. A report in the Globe and Mail says it found 83 per cent of those with traditional Defined Benefit pension plans in their workplace are confident the plans will have sufficient funds to pay them in retirement. Only five per cent recall hearing about underfunding problems affecting pension plans in Canada with four per cent saying they have heard that some pension plans are being phased out by employers.

OMERS Launches Venture Capital Arm

OMERS is officially launching its new venture capital arm. OMERS Ventures is one of the country’s largest venture capital investors, providing financing for promising companies throughout the investment lifecycle. An initiative of OMERS Strategic Investments, an investment entity with a mandate to build long-term strategic relationships with like-minded partners, OMERS Ventures is focused on adding value at the early stages of investment and partnering with entrepreneurs to build great companies. It will have a unique role in its industry, as both an institutional angel investor and a later-stage investor. With its ability to fund companies at any stage of development, it will have a great deal of flexibility when making investments.

Teachers’ Completes Flexera Acquisition

Ontario Teachers' Pension Plan (Teachers'), through its private investment department, has completed the acquisition of a majority stake in Flexera Software, a provider of strategic application usage management solutions. The transaction, originally announced in July, sees Teachers' acquiring its stake in Flexera Software from Thoma Bravo, LLC, a private equity firm that is retaining a minority interest in the company. Flexera Software develops solutions that play a role in managing application usage for application producers and their enterprise customers.

InView Solution Expanded

Ceridian and Dayforce are expanding the InView solution that will bring payroll, HR, self-service, benefits, and workforce management onto a single platform. The integrated solution will build upon the workforce management solution that the companies brought to market this year. InView HR and Self-Service will begin to be released in the fourth quarter of 2011, with the payroll functionality to follow in the first quarter of 2012.  


Healthy Workplace Month Begins

The ‘Eleventh AnnualCanada's Healthy Workplace Month (CHWM),’ a month-long celebration designed to introduce workplace health to organizations and support those that are already promoting healthy workplaces, is now underway. Organizations that submit their initiatives to Excellence Canada will be showcased on the Canada's Healthy Workplace Month website. CHWM is presented by Great-West Life and managed by Excellence Canada (formerly National Quality Institute) in collaboration with the Canadian Centre for Occupational Health and Safety. The theme for October 2011 is ‘Healthy Mind, Healthy Body, Healthy Work … Simple Goals for Everyone!’ Organizations can register at www.healthyworkplacemonth.ca. Those initiatives showcased on the website will be eligible to earn a certificate as a Best Practice Organization from Excellence Canada.

European Funds Adopt SRI Policies

Fifty-six per cent of European Union corporate pension funds have a socially responsible investment policy, integrating environmental, social, and governance factors into their investment decision-making, says Eurosif’s ‘2011 Corporate Pensions Funds and Sustainable Investment Study.’ Of those without SRI policies, 24 per cent plan to adopt a policy in the next 12 months. It noted that 60 per cent of all respondents believe ESG factors affect long-term pension fund performance, while 66 per cent believe having an SRI policy is part of their fiduciary duty. The survey was sponsored in part by Deutsche Bank Group and its DB Advisors and HSBC Global Asset Management units.


Larose Named CIO

Denis Larose is chief investment officer of Guardian Capital LP. He most recently served as the chief investment officer (Americas) for Mercer Investment Management and was, in a prior period, a principal, national partner for the investment consulting practice. He has also served as the chief investment officer for the Colleges of Applied Arts and Technology. 

Invesco Adds Two

Anik Paquet is vice-president, institutional investments, Eastern Canada, and Cinnamon Russell is vice-president, institutional investments, Western Canada, for Invesco Canada. Most recently, Paquet was a principal at Mercer Investment Consulting. Russell is returning to the west coast after heading up the national accounts team of Invesco in Toronto, ON.

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Monday, October 3, 2011

Morneau Shepell Acquires Quebec Provider

Morneau Shepell Inc. has acquired one of the largest EAP services providers in Quebec ‒ Jacques Lamarre & Associates and Parcours d'enfant. Through this acquisition, Morneau Shepell will serve more than 900 clients and 1.4 million employees and their families in Quebec. The EAP solution portfolio provided by Jacques Lamarre & Associates includes a full range of support services to address the health, well-being, and productivity needs of individuals and organizations. Parcours d'enfant offers a unique, multi-disciplinary approach to identifying, assessing, and assisting children and adolescents as they grow and develop.

HOOPP Buys Czech Malls

The Healthcare of Ontario Pension Plan (HOOPP) and Meyer Bergman, a European real estate investment firm, have purchased two shopping malls in the Czech Republic. The New Karolina mall, located in Ostrava, has 58,000 square metres of leasable shopping area, while the Forum Usti, with 27,000 square metres of shopping space, is located in the city of Usti. Created in 1960, HOOPP has more than 370 participating employers and more than 260,000 plan members and retirees. It has $35.7 billion in assets under management.

DB Plans Strongly Preferred

Defined Benefit pensions are strongly preferred over 401(k)-type Defined Contribution individual accounts in the U.S. public sector, says ‘Decisions, Decisions: Retirement Plan Choices for Public Employees and Employers,’ a study for the National Institute on Retirement Security (NIRS) and Milliman. It found when offered a choice between DB and DC plans, the DB uptake rate ranges from 75 per cent to 98 per cent. The percentage of new employees choosing DC plans ranges from two per cent to 25 per cent. It also found that DB pensions are more cost efficient than DC accounts due to higher investment returns and longevity risk pooling and DC accounts lack supplemental benefits such as death and disability protection. These can still be provided, but require extra contributions outside the DC plan which are, therefore, not deposited into the members’ accounts. It says when states look at shifting from a DB pension to DC accounts, such a shift does not close funding shortfalls and can increase retirement costs.
 

Judges’ Panel Featured

A unique view from the bench via a judges’ panel will be one of the features of the ‘HR Law Update Changing Laws Conference.’ Presenters include Justice Todd Archibald and Justice Susan Himel, both of the Ontario Superior Court. It also features discussions of issues around executive employment, immigration and hiring foreign workers, disability, privacy, and the use of social media. It takes place October 27 in Toronto, ON. For more information, visit www.hrpa.ca/lawconf

Plan Conversion Discussed

‘DB/DC Pension Plan Conversions’ is the focus of a Manitoba CPBI Council breakfast seminar. Karen J. Hall, vice-president, Aon Hewitt; and Shannon Ferguson, director of compensation, pension, and benefits at the North West Company Inc.; will examine the redesign of a pension plan from decision factors and plan design considerations through to process and implementation. It will also look at the North West Company Inc.’s conversion in 2010. It takes place October 20 in Winnipeg, MB. For more information, visit http://www.cpbi-icra.ca/

October Interest Rate Assumptions

The interest assumptions required to calculate commuted values for an event which occurs in any month up to and including October 2011 are now available at www.an-actual-actuary.com. An Excel spreadsheet on the website contains seven worksheets:
• Commuted Values February 2011 CIA
• Marital Breakdown ‒ CSOP 4300, May 2009
• Annuity Proxy for Solvency Calculations for Non-Indexed & Fully-Indexed Pensions
• Minimum Interest on Employee Required Contributions
• HISTORICAL ‒ Commuted Values 2009 Basis (Now Frozen)
• HISTORICAL ‒ Commuted Values 2005 Basis (Now Frozen)
• HISTORICAL ‒ Commuted Values 1993 Basis (Now Frozen)

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Friday, September 30, 2011

Greece Holds Europe Hostage

Greece is holding the rest of Europe hostage, says Timothy Schuler, senior vice-president, investment strategist, and portfolio manager with Permal Asset Management Inc. He told the Legg Mason Global Asset Management ‘Global Investment Forum: Absolute Return Strategies for Uncertain Markets’ that the reality is Greece doesn’t have to do anything as it is the debtor. As well, the need to bail out Greece has more to do with the large European banks. Some hold large amounts of Greek debt and would suffer serious loses if it does go into default. The hope is to keep Greece alive long enough for inflation to rise which would allow it to pay back its debt, he said. The real problem in Europe is that there is no single fiscal policy as each country sets its own. As a result, they are trying to use currency to solve debt issues in countries such as Greece.

Sun Life Buys McLean Budden Minority Shares

Sun Life Financial Inc. will purchase the minority shares in its McLean Budden investment management subsidiary and transfer the business to its MFS Investment Management (MFS) unit. McLean Budden will become a wholly-owned subsidiary of MFS and continue to be based in Toronto, ON. The transaction will broaden the scope of investment solutions available to McLean Budden's clients by enabling the new company to offer MFS investment strategies. Martin E. Beaulieu, vice-chairman and head of global distribution at MFS, will become chairman and chief executive officer of the new subsidiary. Roger J. Beauchemin, currently president and CEO of McLean Budden, will continue in his role until closing and work with Beaulieu on the integration. The transfer is expected to occur in April 2012, subject to regulatory approvals.

CDS Manages Credit Risk Exposure

Credit default swaps (CDS) are an effective tool for managing exposure to credit risk, says Nuria Ribas Lequerica, investment director ‒ product specialist with Legg Mason Investments (Europe) Limited. Speaking at Legg Mason Global Asset Management’s ‘Global Investment Forum: Absolute Return Strategies for Uncertain Markets,’ she said they allow investors to separate the interest rate risk from the credit risk in corporate bonds as well as create maturity and credit exposures which are unavailable in the traditional cash market. She called them “dynamic market sensitive instruments” whose performance closely mirrors that of the cash market. However, they are more liquid than cash. Quite often, she said, they are the only way to hedge or short a given credit.

Allard Named President

Jacqui Allard is president of Manulife Asset Management’s Canadian business. She will also continue as global chief operating officer. She joined the company in 2008 after a number of years at State Street Corp.

Health Strategy Drivers Examined

Martin Chung, assistant vice-president, strategic health management, Equitable Life Insurance Company of Canada, will discuss what’s driving health management strategies in Canada at the ‘30th Annual ISCEBS Employee Benefits Symposium.’ His session will focus on health management trends, employee wellness, and best practices for employers. It takes place October 2 to 5 in San Antonio, TX. For more information, visit www.iscebs.org/symposium

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Thursday, September 29, 2011

GM, Union Want Risk Reduced

General Motors Co. has won an agreement from the United Auto Workers to consider ways to reduce the risk of its underfunded plan. A letter between the automaker and the union, which is part of a proposed four-year labour contract with GM workers, does not detail specific steps that may be taken to address the pension problem. However, it suggests both sides would consider a plan allowing union-represented retirees to voluntarily take lump-sum cash payments in exchange for giving up their pension claims. GM exited bankruptcy in 2009 after a restructuring to reduce its debt. While it now has total liquidity of almost $40 billion, its pension shortfall may rival its market value by year-end. Globally, its pension obligations topped $128 billion at the end of 2010. The plans are underfunded by more than $22 billion.

Pension Litigation Costly

One of the first things that should be addressed with plan members asking for legal assistance in pension plan matters is a realistic discussion of the legal fees, says Priscilla H. Healy, of Fogler, Rubinoff LLP. Writing in its ‘Pension Alert,’ she says the Federal Court of Appeal recently handed down its decision in the latest installment of the 15-year Buschau v. Rogers Communications Inc. saga. The court was asked for a judicial review of the OSFI superintendent's refusal to address a number of questions as to the use of surplus, disclosure by the company as to certain information relevant to the use of surplus; and the use of plan funds to pay members' reasonable legal costs. It found that the questions on surplus had been addressed in previous proceedings and that neither the terms of the plan nor the PBSA provided for the payment of the members' legal costs out of the plan. “The financial burden upon members in holding the employer to account, particularly if they do not have the regulator on side, well may be a defect in our system,” she says, as pension litigation is costly and funding of litigation initiated by members will be permitted by the court only in limited circumstances. “Courts will generally be unlikely to approve the use of monies in the plan for the benefit of particular litigants that is not in the interests of the membership as a whole and/or that adversely impact the solvency of the pension fund,” she says.

Sentiment Towards U.S. Cools

Investment manager sentiment towards U.S. and global markets cooled this quarter, while sentiment towards the Canadian market rose sharply, with managers warming to traditionally defensive sectors, says the ‘Russell Investment Manager Outlook.’ It found that bullishness towards broad market Canadian equities rose sharply from 43 per cent to 57 per cent of managers in the third quarter, while bearish managers held steady at 20 per cent. Sentiment towards EAFE stocks also fell this quarter with just one-in-three managers now bullish and 43 per cent bearish. And, despite the rocky nature of equity markets, they are still the place most investment managers want to be. Bullishness towards cash is at just 23 per cent, while bearishness is at 40 per cent. Canadian bonds are even further out of favour, with 20 per cent of managers bullish and 67 per cent bearish. High yield bonds didn’t fare much better with bulls at 28 per cent and bears at 45 per cent.

SRI Choice Added To DC Plans

The number of Defined Contribution retirement plans in the U.S. offering a sustainable and responsible investing (SRI) choice could double in the next two to three years, says a report by Mercer and the US SIF Foundation. ‘Opportunities for Sustainable and Responsible Investing in U.S. Defined Contribution Plans’ found 14 per cent of DC plan sponsors responding to the survey already offer one or more SRI options, while an additional 13 per cent are either discussing adding an SRI option or intend to do so in the next two to three years. More than four out of five plan sponsor respondents (84 per cent) predict that demand for SRI options in retirement plans will increase or remain steady over the next five years.

Latin American Standards Improve

Institutional investors in North America and Europe believe that investor relations and corporate governance standards in Latin America have improved. However, companies there need to further bolster their efforts as they continue to compete for global capital, says a survey by J.P Morgan’s Depositary Receipts business. ‘North America and European Investor Opinions of Latin American Companies’ also reveals that investors in North America and Europe are optimistic about the investment opportunities that exist in Latin America over the next three years. The primary reason for the optimism is the region’s expected economic growth due to compelling demographic trends that should boost demand for goods and services. Investors are also encouraged by improving corporate governance standards, the prevalence of natural resources, low levels of consumer debt, and the continued development of capital markets and infrastructure across Latin America.

IPO Index Expanded

FTSE Group and Renaissance Capital LLC are expanding the FTSE Renaissance IPO Index Series. The series, which is being renamed the FTSE Renaissance Global IPO Index Series to reflect its new global nature, will now provide investors with the ability to capture the performance of IPOs listed in 53 new country and regional indices within developed and emerging EMEA, Asian, and American markets. The expansion provides investors with comprehensive exposure to the global IPO market.

Tessier Joins Manulife

Jean-Francois Tessier is managing director, institutional sales, at Manulife Asset Management. He will be responsible for institutional sales and relationship management in Quebec and Eastern Canada. He will be based in its Montreal, QC, office. Previously, he was at Natcan Investment Management where he was vice-president for institutional services for the past six years.


De-Risking Landscape Focus Of Seminar

‘The De-Risking Landscape’ will be examined at the CPBI London Chapter's fall seminar. Heather Wolfe, assistant vice-president, Defined Benefit solutions, group retirement services, at Sun Life Financial; will provide an overview of the de-risking landscape in Canada including insights from the UK and an insider’s guide to the Canadian annuity market. Gary Walters, senior vice-president, pricing and group reinsurance, RGA Canada; will discuss catastrophic drug claims and whether sponsors and members are protected. It takes place October 11 in London, ON. For more information, visit www.cpbi-icra.ca

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Wednesday, September 28, 2011

Responsive Policy More Consistent

A volatility-responsive asset allocation policy – which needs to be as systematic and disciplined as any other strategic policy – can lead to a more consistent outcome and a better trade-off between risk and return for institutional investors, says research from Russell Investments.’ Volatility-Responsive Asset Allocation’ says the underlying principle of volatility-responsive asset allocation is to reduce exposure to risky assets when volatility is high and to increase that exposure when volatility is low. This means a strategic asset allocation policy is no longer necessarily a set of fixed weights that are held constant until the next review because the associated risk can be highly variable over time. Rather, a strategic asset allocation policy can be designed to respond to changes in the investor’s experience or to changes in market valuations. Volatility is an appealing foundation for a dynamic strategy because, unlike the outlook for returns which are notoriously difficult to forecast, investors can be relatively confident in their assessment of the volatility environment. One reason for this confidence is that changes in volatility are more persistent than changes in returns.

Canadians Living Longer

Canadians are living longer than ever and the life expectancy gap between men and women continues to shrink, says Statistics Canada. Life expectancy at birth reached a new high of 80.9 years during the period from 2006 to 2008, up 0.2 years from 2005 to 2007. Life expectancy is highest in British Columbia, where it now stands at 81.4 years. Ontario and Quebec were also above the national average at 81.3 years and 81 years, respectively. The three territories combined have the lowest life expectancy at birth, at 75.2 years. The report also noted that while women continue to live longer than men, the gap between them is closing. Men’s life expectancy at birth bumped up to 78.5 years over the period from 2006 to 2008, up 0.2 years from 2005 to 2007. Life expectancy for women, meanwhile, increased 0.1 years to 83.1 years. Life expectancy for seniors is also increasing. Life expectancy at 65 reached 20 years in the period from 2006 to 2008, up 0.2 years over the three years prior.

Investor Confidence Rises In September

State Street Global Markets’ ‘Investor Confidence Index’ shows global confidence increased slightly to 89.9 in September, up from August’s revised reading of 88.1. The gains originated in Europe and Asia. The European investor confidence index gained 5.6 points to reach 95.7, up from August’s revised reading of 90.1, while the Asian index behaved in a similar fashion, rising 5.5 points to reach 100.7. In North America, sentiment declined slightly to 85.1, down 1.1 points from August's revised level of 86.2. “On the face of it, it may seem surprising to measure an increase in global investor confidence in a month in which equity volatility has increased substantially,” says Kenneth Froot, Harvard University professor who helped develop the index. “There are two points that should be kept in mind about the increase. First, confidence remains in the 80s, a relatively low level, albeit better than the low 80s observed in late 2008. Second, despite all of the concern surrounding sovereign balance sheets, corporate balance sheets remain in relatively good shape at present and this is an attractive feature of equities for institutional investors.”

Erlichman Heads CCGG

Stephen Erlichman, one of Canada’s leading securities lawyers, has been appointed executive director of the Canadian Coalition for Good Governance (CCGG). He has practiced corporate and securities law for more than 30 years in Canada and the United States. He is currently a senior partner at Fasken Martineau and heads the firm’s investment products and wealth management group as well as its private equity group. The CCGG represents Canadian institutional shareholders in the promotion of corporate governance practices that best align the interests of boards and management with those of the shareholder. Its 47 members manage approximately $2 trillion of assets on behalf of Canadian investors.


Capelle Added As Vice-president

Philippe Capelle is vice-president, equities, at Standard Life Investments Inc. He has more than 20 years of experience in the financial services industry, including 15 years of investment experience as an equity portfolio manager.

Pension Reform Examined

Lynda Ellise, senior manager, pension policy, pension division, Financial Services Commission of Ontario; and Sylvia Bartlett, manager, operational policy, private pension plans division, Office of the Superintendent of Financial Institutions; will examine ‘Pension Reform A Year Later – A Regulatory Perspective’ at the ‘2011 CPBI Ontario Regional Conference.’ It takes place October 19 to 21 in Ottawa, ON. For more information, visit www.cpbi-icra.ca

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Tuesday, September 27, 2011

Diversified Pension System Would Work Best

Increased longevity will continue to put pressure on the financing of pension plans, says Jean-Claude Ménard, OSFI’s chief actuary. Speaking at the Pension, Benefits and Social Security Colloquium’ on ‘Getting the balance of state and private provisions right,’ he said the current uncertain times are forcing countries to re-examine existing pension systems and to search for new solutions. Pension reviews, debates, and reforms are occurring around the world. However, he said “very often proposed solutions are not politically easy to implement.” He suggested “taking the long view, a diversifiedpension system – mixing public and private provision, and pay-as-you-go and pre-funding as sources of finances – is not only the most realistic prospect, but the best policy.”

SSQ Buys Life Insurance Business

SSQ Financial Group is buying the Canadian AXA Life Insurance’s business from Intact Financial Corp. Based in Montreal, QC, Canadian AXA Life offers a range of individual and group insurance products and has offices in Toronto, ON; Vancouver, BC; Calgary AB; and Dartmouth, NS. Its name will be changed to SSQ Insurance Inc. and it will operate as a unit of SSQ. SSQ’s majority shareholder, the Quebec Solidarity Fund QFL, has provided support for the deal. Intact is the former ING Canada, spun off from the Netherlands financial services firm ING Groep NV.

Drug Side-effects Impact Jobs

Most Canadians with osteoarthritis (OA) are unaware of their risk for NSAID-related gastrointestinal (GI) side effects and it is having an impact on the workplace. The AstraZeneca/Morneau Shepell ‘Gut Check’ survey reveals absenteeism, productivity, and relationships with co-workers are being impacted as a result of the pain associated with osteoarthritis and side effects related to the use of their pain medication. Nonsteroidal anti-inflammatory drugs are widely-used because of their ability to effectively relieve the pain and inflammation associated with osteoarthritis. Yet, up to 87 per cent of regular NSAID users are at increased risk of developing GI complications. The survey reveals 35 per cent of working Canadians with OA have taken sick days as a result of the pain associated with their condition, 19 per cent have reduced their work hours, and 14 per cent have taken a short-term disability leave from work. Eight-in-10 indicate their osteoarthritis affects their ability to perform their job and among those affected ‘a great deal’ by their condition at work, most feel they are less efficient (81 per cent), less productive (75 per cent), and unable to perform all their job functions (66 per cent). In addition, 24 per cent considered leaving their job permanently as a result of their pain.

Infrastructure Investors Outsource Due Diligence

Institutional investors' increasingly limited resources and lack of knowledge about infrastructure has left them unable to analyze potential investments in the asset class in-house, says a study by Preqin. It found institutional investors are set to increase their exposure to infrastructure in the coming 12 months as a mean of diversifying portfolios. However, most will outsource due diligence and portfolio structure to dedicated investment consultants. It predicts primary, unlisted (private equity) infrastructure funds would receive the lion's share of institutional investment, as the majority of consultants surveyed believe this sector currently offers the best investment opportunity in the market. Funds of funds were considered the least attractive method of investment, mainly due to their additional layer of fees.

European Nations Turn To Frontier Markets

While Dutch and Scandinavian pension funds have traditionally led European investment in the so-called frontier markets, schemes in Italy, Switzerland, and Germany are increasingly considering investments in those markets, says Templeton Asset Management. It says European pension funds that already had a large exposure to emerging countries were likely to look to frontier markets in the coming months as part of their strategy to diversify the risk within their portfolio and invest in markets lowly correlated to other asset classes. More and more pension funds are now looking at those markets as inflation is expected to fall or even stagnate in emerging markets over the next few years.

Bâtirente Sues Sino-Forest

Comité syndical national de retraite Bâtirente inc., a Québec-based labour sponsored retirement system, has joined with Northwest & Ethical Investments L.P. to commence a class action proceeding against Sino-Forest Corporation. The defendants in the lawsuit also include Sino-Forest's current and former auditors, 15 financial firms that brought Sino-Forest share and note offerings to market, certain forestry consulting firms, and 20 directors and senior executive officers of the company. The lawsuit alleges that the defendants fundamentally misrepresented the integrity of Sino-Forest's business operations and financial reporting and materially overstated its assets and financial results. Sino-Forest's securities suffered severe market declines after the release of an analyst's report in June which questioned the integrity of the company's asset valuations, revenues, business practices, and financial reporting. The suit has been commenced on behalf of investors who purchased Sino-Forest shares or notes from August 17, 2004, through June 2, 2011. Sino-Forest had been Canada's leading forestry company with most of its operations in southern China.

Workbench Moves To iPad

CIBC Mellon has released Workbench Mobile for the iPad, an app enabling its institutional clients to authorize instructions and securely view key reports and account information while on-the-go. Registered Workbench users can download the app through the BNY Mellon Connect Mobile portal. Available features include drill-down into account valuation changes and chart by manager, asset type, currency, country, or security. Plans are under way to add features which will be delivered automatically to all registered users through the App Store. As well, the existing app will be optimized for the iPhone and other handheld and smaller mobile devices.

Non-EU Manager Proposal Concerns AIMA

The Alternative Investment Management Association (AIMA) is concerned over how the Alternative Investment Fund Managers Directive would apply to non-EU managers and funds under proposals by a task force of the European Securities and Markets Authority. The proposed measures, if enacted, could have the practical effect of preventing EU investors from investing in non-EU hedge funds such as those managed from the U.S., Canada, Hong Kong, Singapore, Australia, and Switzerland. AIMA said that many passages of the consultation paper reintroduced the concept of “equivalence,” which was rejected during the Level 1 negotiations. Under such strict equivalence, it would be difficult for EU managers to delegate portfolio management to third-country asset managers.

Mutual Fund Trends Examined

Worldwide trends in mutual funds will be among the topics covered at the ‘2011 Investment Funds Institute of Canada Conference.’ Approximately 350 executives from every facet of the industry ‒ including investment fund CEOs, financial planners and advisors, compliance officers, and suppliers to Canada's investment funds industry ‒ are expected to attend. It takes place October 14 in Toronto, ON. For more information, visit https://www.ific.ca/Content/Content.aspx?id=6642

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Monday, September 26, 2011

Royal Shifts New Hires To DC

The Royal Bank of Canada is shifting to a Defined Contribution pension plan for new hires as of January. An enhanced plan will also be open to existing workers who want to switch. It will include investment choices that enable employees to have a diversified portfolio in keeping with their risk tolerance. New options include ‘Target Date Funds’ that automatically adjust their asset mix to reflect their changing investment horizon. The move is an attempt to ensure predictable long-term pension costs.


Flight Attendants Get Hybrid Scheme

The union representing Air Canada’s flight attendants has agreed to move new hires into a hybrid pension plan. In a tentative agreement, the Air Canada Component of CUPE, which represents 6,800 flight attendants at the airline, agreed to let new hires be put into the hybrid plan set out by an arbitrator for members of the Canadian Auto Workers, which represents 3,800 sales and service agents at the carrier. The hybrid Defined Benefit/Defined Contribution plan would guarantee part of the employees’ benefits upon retirement. Air Canada had been attempting to put all new hires into a DC plan.

LDI ‘Fundamentally Misconceived’

Liability-driven investment is “fundamentally misconceived” because it hedges low interest rates which, in fact, increase corporate profitability, says a report from Brighton Rock. The UK firm’s ‘Don't stop believing: The state and future of UK occupational pensions’ argues while falling interest rates hurt pension schemes because they raise the present value of liabilities, they also increase corporate profitability and the ability to support a scheme. It advocates an unfunded occupational Defined Benefit model which is much cheaper as the affordability of pensions rests directly upon their performance, aligning it with the interests of employees and employers.

Hedge Fund Gets California Money
The California Public Employees’ Retirement System will invest $100 million in a Toronto, ON, hedge fund start-up. The deal with Breton Hill Capital, which invests in equities and currencies as well as commodity and financial futures, represents its first foray into seed funding for a money manager. Calpers has used hedge funds since 2002 and has annualized returns in the category of 5.5 per cent.

Leading-edge Ideas Presented

At the International Foundation of Employee Benefit Plans’ ‘Canadian Investment Institute,’ attendees will learn from leading-edge investment thinkers and have the opportunity to ask questions on their fund’s specific issues. It takes place November 20 to 23 in Miami Beach, FL. For more information, visit www.ifebp.org/canadainvest

Duty To Accommodate Examined

‘Duty to Accommodate: Alcohol and Drug Issues’ will be the topic at an Employee Assistance Program Association of Toronto (EAPAT) event. Barb Butler, president of Barbara Butler & Associates Inc., will lead an interactive session on the need for a responsible approach to address workplace substance use and abuse. She has been advising companies throughout North America since 1989 on the development and implementation of workplace alcohol and drug policies and programs. It takes place October 27 in Toronto, ON. For more information, visit www.eapat.org

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Friday, September 23, 2011

Concerted Action Needed To Avoid Recession

The prime ministers of Canada and the UK are warning that the world is on the verge of another recession. Stephen Harper and David Cameron said concerted action is needed to avoid a downturn. Cameron was in Canada for a special joint session of Parliament. Evidence of that concerted action did start to appear Thursday. Group of 20 finance ministers and central bank governors issued a statement pledging to ensure that banks would have access to all the money they might need to weather the storm after world stock markets, including Canada’s, dropped. As well, India’s finance minister said the BRICS group (Brazil, Russia, India, China, and South Africa) would be part of any G20 “consensus.” The fall of stock prices was attributed to the Federal Reserve’s warning that the U.S. economy faces “significant” threats, especially from financial turmoil linked to Europe’s debt crisis.

Review Presents Opportunity

The review of public sector pension plans in New Brunswick presents an opportunity to provide taxpayers some relief from paying for civil servant pension deficits, says Bill Tufts, founder of Fair Pensions for All. As well, he says it offers an opportunity to find a reasonable retirement plan for public sector employees. In a letter to the province’s premier, he says the advocacy group is asking for the pension task force to analyze a hybrid pension model that finds a middle ground between Defined Benefit and Defined Contribution pension plans. It is also calling on the provincial government to determine and disclose the annual cost of public pensions to New Brunswick taxpayers.

Canadian Firm Joins Global Alliance

Filion Wakely Thorup Angeletti LLP, a Canadian labour and employment law firms, has joined L&E Global, an international alliance of firms providing counsel to employers on employment, labour, workplace privacy, employee benefits, and immigration law. Based in Toronto, ON, Filion Wakely Thorup Angeletti joins nine employment law specialty firms from Europe, the United States, and the Asia-Pacific region that have formed an alliance to provide attentive, efficient, and cost-effective legal counsel to clients operating in what has increasingly become a multi-jurisdictional legal arena.

Natcan Partners With CIA

Natcan Investment Management Inc. and the Canadian Institute of Actuaries (CIA) have formed a partnership to develop an accounting discount curve. The Natcan’s CIA Method Accounting Discount Rate Curve will help support Canadian actuarial practice by providing a benchmark for the valuation of pension and benefit plan liabilities. The curve will be available at www.natcan.com

Caisse Increases Fluxys G Stake

The Caisse de dépôt et placement du Québec has increased its capital in Fluxys G, raising its stake from 10 per cent to 20 per cent through an additional investment of €210 million. This capital increase is intended to support Fluxys G's investment program, including the acquisition of interests of Eni, an Italian company active in the energy sector, and in the TENP (Germany) and Transitgas (Switzerland) pipelines, instrumental in supplying gas to the German, Swiss, and Italian markets. Fluxys is a gas infrastructure company that supplies and operates in the northwestern European market. Its activities include building and operating natural gas infrastructures such as pipelines, storage facilities, and liquefied natural gas terminals.

Northern Trust Expands Alternatives Reporting

Northern Trust has expanded its suite of reporting for custody clients to offer comprehensive views of investment information on private market assets held in a range of commingled and unitized fund structures. Its Alternative Funds (AF)-Fund Valuation Status Summary integrates data including cash flows and valuation information to assist clients in their management and due diligence of these specialized assets. The summary report combines alternative asset holdings information from its portfolio valuation records with data sourced from fund company statements to deliver consolidated pricing, market value, valuation, and statement tracking information for clients invested in alternative funds. 

Ashar Earns Wellness Award

Mike Ashar, president of Irving Oil Ltd., will receive the Canadian Workplace Wellness Pioneer Award at the ‘15th Annual Health Work and Wellness Conference.’ Since 2008, he has led the operations of the refining, commercial, and marketing businesses at Irving. He initiated health and wellness programs at the company. It takes place October 4 to 6 in Toronto, ON. For more information, visit http://healthworkandwellness.com/conference/program/roundtable


Dinner Features Economic Forecasts

Stephen S. Roach, non-executive chairman, Morgan Stanley Asia, and author of ‘The Next Asia;’ James Grant, founder and editor, ‘Grant’s Interest Rate Observer;’ and Abby Joseph Cohen, president, global markets institute, Goldman Sachs; will share their predictions for the coming year on global economies and capital markets at the Toronto CFA Society’s ‘54th Annual Forecast Dinner.’ It takes place October 4 in Toronto, ON. For more information, visit www.torontocfa.ca

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Thursday, September 22, 2011

Funds Take On More Risk

Pension funds and other institutional investors are likely to take on more risk as global interest rates stay low, despite heightened risk awareness, says an International Monetary Fund report. The semi-annual ‘IMF Global Financial Stability Report’ says pension funds and their money managers pulled away from risky, illiquid assets during the 2008/2009 global financial crisis, accepting lower returns rather than taking on more risk. However, with the likely prospects of continued low interest rates, they will be under increasing pressure to take on more investment risk. It found, for example, institutional investments in emerging markets have accelerated since the financial crisis, especially in countries with stronger prospects for domestic economic growth and lower perceived country risk.


CPPIB Acquires Share Of Malls

The Canada Pension Plan Investment Board (CPPIB) has entered a joint venture with General Growth Properties to acquire a stake in two St. Louis, MO, malls. It will partner with GGP to buy Plaza Frontenac with GGP taking a 55 per cent share and CPPIB holding the remaining 45 per cent. The pension fund will also take a 26 per cent stake in GGP's Saint Louis Galleria mall. The Plaza Frontenac is one of only nine malls worldwide anchored by both Saks Fifth Avenue and Neiman Marcus.

Opportunities Exist In Sub-Sahara

Sub-Saharan Africa's political liberalization and regulatory reform are creating invest opportunities, says Daniel Altman, a professor of economics at NYU's Stern School of Business and originator of 3D Economics. Speaking on 'What in the World: Emerging Markets + Geopolitical Impact' at the ‘World Alternative Investment Summit Canada,’ he said in the medium term there will be infrastructure opportunities. However, multi-nationals are establishing beach heads. In fact, the activities of home-grown multi-nationals can be a good indicator of where to invest in this region. While there is, of course, investment risks, investors must be aware of other challenges. These include, he said, making sure you can get your money out after you've earned it.

Health Insurance Costs Rise Less

U.S. employers next year will see their health insurance costs rise less than in more than a decade, says a survey from Mercer. It found that employer health insurance costs will rise an average of 5.4 per cent in 2012, down from 6.4 per cent this year and the smallest increase since 1997. Health insurance costs would rise about seven per cent next year if they made no changes to the plans they offer. Employers plan to reduce that increase by raising deductibles or co-payments and switching insurers.

RCM Using Northern Trust

Northern Trust will provide middle office services in Asia-Pacific, Europe, and North America for RCM, an Allianz Global Investors company. Services to be provided under the outsourcing agreement include post-trade execution support, trade processing and settlement, data management, reconciliations, portfolio accounting, client valuations, and administration. As well, members of RCM’s operations staff in Hong Kong will join Northern Trust.

Private Equity Lacks History

While private equity investing in Canada had an average return of 18 per cent last year, its third consecutive strong year, it is still difficult to put the performance of the asset class in an historical context, says Gregory Smith, managing partner, global infrastructure advisory group, at Brookfield Financial Corp. He told a session on ‘Private Equity Investing in Canada’ at the ‘World Alternative Investment Summit Canada,’ that as an asset class, it wasn’t used in Canada before the 1980s, about the 30 years after it started being used in the U.S. As a result, it was unable to weather events of the 1990s and early this decade such as the tech bubble. It has moved from being a cottage industry to a structured one. Most investment today is in areas such as clean water and agriculture tech.

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Wednesday, September 21, 2011

Coalition Calls For Global Framework

A coalition of institutional investors wants United Nations member states to develop a global policy framework requiring listed companies to integrate sustainability information within their annual report and accounts. The Corporate Sustainability Reporting Coalition believes the international policy framework should adhere to the two overriding key principles of transparency and accountability. It represents financial institutions, professional bodies, NGOs, and investors with $1.6 trillion in assets under management.

EAP Goes Face-to-face

Morneau Shepell Ltd., under its Shepell-fgi brand, is offering Employee Assistance Program (EAP) support through video counselling. Using the Internet and live video communication, employees can access the professional counselling services via live, 'face-to-face' audio-visual conversations, all from the privacy and convenience of their own home. Communication occurs between the individual and counsellor via a webcam, telephone (or microphone), and Internet connection, with both parties able to see and hear each other as if they were in the same room. Using state-of-the-art technology provided by WebEx, the service is customized to the client environment, while security of the data exchanged between the counsellor and client is preserved.

More Turning To TDFs

More and more participants in self-directed 401(k)-type retirement plans are investing in target date funds (TDFs), says an analysis by the Employee Benefit Research Institute. It found that the use of TDFs in 401(k) plans has increased rapidly in recent years. The percentage of all 401(k) plan participants using TDFs increased from 25 per cent in 2007 to 31 per cent in 2008 and to 33 per cent in 2009. A TDF is an investment that automatically resets the asset mix (stocks, bonds, cash equivalents) in its portfolio according to a predetermined (but typically refined) path over a selected time frame, typically until a year at which a participant expects to retire.

Series Looks At Motivating Employees

Mercer is launching of a special online series which will feature leading business leaders, academics, and other experts offering insights into what motivates employees at work and how to bring back a sense of meaning to the work experience. Initial contributors to Inside Employees’ Minds’ include John Mackey, CEO of Whole Foods; Dan Ariely, professor of psychology and behavioural economics at Duke University; and Roger Martin, dean of the Rotman School of Management at the University of Toronto. For more information, visit www.mercer.com/insideemployeesminds

HR Looks For Flexible Programs

HR is looking at new ways to address enduring talent management issues, says Towers Watson’s ‘2011 HR Service Delivery Survey.’ This results from more HR Professionals looking for flexible, easy-to-implement programs to increase efficiencies and streamline HR processes across borders.  In fact, the survey found that 20 per cent of companies had implemented a new Human Resources Management System (HRMS) within the last 18 months. It also found a third of companies have significantly increased spending on HR technologies in the past 12 months; implementation of Cloud based programs are taking a higher priority over operational programs as a means of improving efficiencies, while driving down costs; and more than half of Canadian companies surveyed have self-service systems in place now and another quarter have plans to implement self-service by the end of 2012.

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Tuesday, September 20, 2011

Air Canada New Hires Get Hybrid Scheme

A hybrid pension scheme consisting of both Defined Contribution and Defined Benefit will apply to new hires at Air Canada. That is the decision of a federal arbitrator asked to rule on a dispute arising out of contact negotiations between the airline and its customer service staff. During the negotiations, the airline had demanded that new hires go on a DC plan instead of a DB plan. The two sides reached a deal after the federal government indicated it would bring in back-to-work legislation. However, the pension issue remained unresolved and the parties referred it to an arbitrator for a decision. New hires will receive part of their benefit from the existing DB plan under a reduced formula and part from a DC plan, contributed to by both workers and the employer.

Investment Advisor Rules Delayed

The U.S. Department of Labor will delay until next year its plan to implement new rules regulating investment advice for 401(k) plans and individual retirement accounts. The delay comes after heavy lobbying by the financial services industry, which complained the new regulations were too broad. The proposed new regulations would expand the number of consultants and advisers it could hold legally responsible for the advice given to retirement plan providers and investors. As well, they would impose stricter regulations and serve as a way to hold the financial professionals accountable for their conduct.

Industrial Alliance Improves ATTITUDE

Industrial Alliance is giving group pension plan members access to an enhanced turnkey option with its improved ATTITUDE portfolios, an investment solution that combines life cycle and investor profile. Improvements to the portfolios include a wider choice of portfolios with more precise target retirement years, quarterly evolution and rebalancing (to the target) of asset allocation, the integration of the portfolio concept after retirement has begun, and reviews of underlying funds and target composition by asset class. The portfolios are designed to optimize the investment strategy, aim to maximize the growth potential of investments when a member is in the labour market, and automatically reduce the risk gradually as the member approaches retirement, in order to preserve capital.

Sun Life Joins Conversation

Sun Life Financial has joined the conversation about finances, health, and family with the launch of BrighterLife.ca, a website that provides tips and tools to help consumers share ideas. The site includes articles, blogs, videos, and discussions about topics that range from returning to work after maternity leave to elder care and getting your kids ready for university. Users can add to the conversation by commenting on articles, answering poll questions, posing questions to columnists, and sharing insights and personal experiences. They can also share articles with others through social media sites such as Facebook and Twitter.

PBMs Save Trillions Over Next Decade

Pharmacy benefit managers (PBMs) will save U.S. consumers and payers almost $2 trillion in prescription drug costs – a 35 per cent savings – over the next decade, says research from Visante. Available savings for individual plan sponsors can range from 20 per cent for those that make limited use of PBM tools to 50 per cent for those that adopt best practices recommended by PBMs. The tools focus on negotiating rebates from manufacturers of brand drugs that compete with therapeutically similar brands and generics, negotiating with retail pharmacies to provide discounts to be included in a plan's pharmacy network, offering more affordable pharmacy channels, and encouraging the use of generics and affordable brands.

DC Plan Assets Hit Five Year High

U.S. corporate retirement plans had combined assets of $6.346 trillion as of June 30, up just 0.08 per cent from the first quarter, says the Federal Reserve's ‘Flow of Funds’ report. The second quarter increase in assets followed consecutive quarterly increases that began in the third quarter of 2010. Corporate Defined Benefit plan assets totalled $2.312 trillion as of June 30, a drop of 0.3 per cent from the previous quarter. Total assets in corporate Defined Contribution plans were $4.034 trillion, up 0.27 per cent, to the highest level in the last five years. Among public plans, total assets in state and local government retirement funds as of June 30 were $3.009 trillion, down 0.8 per cent from the previous quarter, while the federal government's retirement fund assets totalled $1.341 trillion, a drop of 5.8 per cent from the previous quarter.

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Monday, September 19, 2011

CPP Increase Dead Issue

While most provinces think Pooled Registered Pension Plans can’t hurt efforts to increase retirement savings by Canadians, most believe increasing the Canada Pension Plan is still the way to go, says Graham Steele, finance minister of Nova Scotia. Speaking on ‘What is the Best Solution for Canada’s Pension System’ at the '2011 CPBI Atlantic Regional Conference,’ he said, however, PRPPs are currently the only solution on the table as increasing the CPP is a dead issue as far as the federal government is concerned. While he said the federal government’s argument against increasing CPP is that the economy is too weak to impose any additional payroll taxes, the provinces have never called for the immediate implementation of this. In fact, he said the provincial position is for a modest, fully funded, phased in approach. In this scenario, it could take up to eight years to reach the full increase in CPP contributions to fund a modest increase. He said legislation on PRPPs could be introduced this fall as things are moving very rapidly on this front. And while the provinces believe it will help, they don’t believe PRPPs are sufficient to solve the retirement savings issue.

Pension Funds Forced Into Short-termism

Pension funds are being forced to adopt the mindset of short-term investors by solvency regulation and accounting standards, says the outgoing chairman of the UK's National Association of Pension Funds. Lindsay Tomlinson says while institutional investors ideally invest over a longer time horizon, in practice, this stance has been made problematic by the regulatory burden placed upon them. As well, the investment system has rewarded those who sought only short-term gains, making institutional investors "as short-term as everyone else," even if this ideally should not be the case.

Birth Rate Created Labour Shortages

The current recession would need to last 31 years before it would offset the labour market shortages caused by Canada’s declining birth rate since 1969, says Dr. Linda Duxbury of Carlton University. Speaking at a ‘2011 CPBI Atlantic Regional Conference’ forum on ‘Managing the Tsunami of Demographic Change,’ she said, as a result, employers need to start working on attraction and retention of skilled employees now. She emphasized the retention part as losing a skilled employee after two or three years is an expensive proposition for employees. As well, the real labour shortage concern is a shortage of skilled workers, she said, as we are moving into a period where 60 per cent of all new jobs will require job skills that only 20 per cent of the labour force have. And she dismissed immigration as a solution to labour shortage problems because most of the developed world is also facing labour shortages and in countries where there is lots of labour, most of the population has an average education level of about grade three.

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Friday, September 16, 2011

Public Sector Plan Review Ordered

New Brunswick’s finance minister is ordering a review of public sector pensions with the mandate to examine whether they are sustainable for employees and how they compare with private sector retirement plans. Blaine Higgs appointed the three-person task force that is already studying private sector pensions for the provincial government to look at the civil service plan. The review will study whether the public sector plan is managed efficiently and transparently. It will examine issues such as the differences between public service pension benefits and pensions offered by private sector employers, the importance of maintaining the public service's ability to recruit and retain employees, the importance that future pension benefits are reasonable throughout the civil service, and how financial risk should be shared between the provincial government and its employees. The task force includes Susan Rowland, a pension law expert; Paul McCrossan, a consultant and an actuary; and Pierre-Marcel Desjardins, an economist.

Teachers’ Signs PRI

The Ontario Teachers' Pension Plan (Teachers') is a signatory to the United Nations-backed Principles for Responsible Investment Initiative (PRI). PRI is a set of six principles that reflect the view that environmental, social, and corporate governance issues need to be appropriately considered in the investment process as they can affect portfolio performance. The principles provide a voluntary framework by which investors can incorporate ESG issues into their decision-making and ownership practices. Approximately 900 investment institutions and service providers, with assets under management of approximately US$25 trillion, have become signatories.

DB Plans Mixed Blessing

As organizations alter their pension plans to entice employees to stay longer in their roles or return to work part-time after retirement, they must think of the retention risks that could prevail. At the ‘Emerging Opportunities and Challenges of DB Plans – Beyond the Financials’ session at the ‘ACPM National Conference,’ Steve Ashton, of Nova Scotia’s IWK Health Centre, explained how DB plans could be a mixed blessing when retaining company talent. Risks include presenteeism for workers who are no longer engaged in the job, but only working to meet their financial needs; workplace health issues what could arise as aging workers may no longer be able to meet the physical demands of the job; and succession boundaries that can block new hires and the promotion of emerging talent within the organization.

Central Dispensing Offers Benefits

Central dispensing pharmacies offer a number of benefits to both plan members and sponsors, says Jerry Organ, CEO of ArcisRx. He told a session on new ideas for dispensing at the '2011 CPBI Atlantic Regional Conference’ that the pharmacy dispensing process is a significant part of drug costs. Central dispensing pharmacies put the focus on the dispensing of prescriptions, de-coupled from the retail environment. Their operational efficiencies generate savings from the fact they deal in volumes which results in lower costs for the drugs. These savings are passed on to the sponsor. It also improves the ability of sponsors to implement plan changes such as adding the use of therapeutic alternatives. For members, lower dispensing fees can reduce their co-pay and they have access to the same pharmacy across the country.

Don’t Get Left Without Social Media Strategy

With 67 per cent of the population logging onto social media sites such as Facebook, Twitter, and LinkedIn each day, companies can no longer afford to assume that social media marketing will disappear, says Professor Lyle Wetsch, of Memorial University.  In his remarks in the ‘Social Media & Golf: What do they have in common and what do they mean for your business?’ seminar at the ‘ACPM National Conference,’ he spoke about the importance for companies to find opportunities to be involved in digital conversations with current and potential customers. Just like choosing the right golf club on the green, companies need to find the right social media tools to help them build brand awareness, increase traffic and sales, and leverage their connections to build credibility and relationships.

Case For Emerging Markets Solid

The case for emerging markets is solid in the long term, however, stock selection is increasingly important, says Bill Adams, of the Boston Company. Speaking at the 'How important is Foreign Content to the Investment Portfolio in Today's Investment Market?' session at the '2011 CPBI Atlantic Regional Conference,' he said the potential there has a long way to go before running out. There are a number of reasons for this, he said, including government debt to GDP ratios that are much better than they were in the late '90s and far better than those of much of the developed world. As well, while these countries now account for almost half of global GDP (46 per cent), their share of the world's market is only 13 per cent.

Manulife Awarded Mandate

Manulife Asset Management was awarded a US$371 million mandate for its global multi-sector fixed income strategy from the Teachers' Retirement System of the State of Illinois, a $37.1 billion pension fund. This core plus fixed income mandate will be managed by Manulife Asset Management's Strategic Fixed Income team. In April, as previously announced, the Public Employees Retirement Association of New Mexico awarded it a $250 million mandate, also for Strategic Fixed Income.

RBC Offers Corporate Bond ETFs

RBC Global Asset Management Inc. has launched eight Target Maturity Corporate Bond Exchange-Traded Funds (ETFs). "Clients and advisors have been enquiring about an ETF offering of this kind for some time and we are very pleased to be able to bring this innovative structure to market," says John Montalbano, chief executive officer. The ETFs are designed to act like an individual bond, yet provide the diversification and professional oversight of a mutual fund, with the transparency and intra-day liquidity of an ETF. Each provides investors with exposure to the Canadian investment grade corporate bond market by seeking to replicate the performance of the corresponding DEX Maturity Canadian Corporate Bond Index that matures in the same year as the RBC ETF.

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Thursday, September 15, 2011

Changes Needed In Canadian Social Contract

Without addressing youth underemployment and the long-term care needs of the aging population, the next generation of Canadians will be less better off than their parents’ for the first time, says Doug Andrews. The professor at Southampton University was speaking at the ‘Global Problems: A Local Perspective’ seminar at the ACPM National Conference. Andrews compared the next generation of Canadians to Britain’s “jilted generation” having to bear the burden of low unemployment and unaffordable housing costs while dealing with tax increases to pay for state pensions and healthcare for the aging population. Although the situation is not as bleak in Canada, he said our social contract will need to change to face the challenges of an unsustainable pension system, including raising the retirement age and increasing taxes for Baby Boomers in order to cover the costs of the burden on the next generation.

Global Macro Environment Overlooked

The volatility experienced in the U.S. equity markets in August 2011 attracted widespread media and investor attention. Much of the media commentary focused on perceived causes for the volatility ‒ such as the growth of hedge funds, high-frequency trading, quantitative investment programs, and vehicles such as leveraged and inverse exchange-traded funds (ETFs). However, a ‘Vanguard Group Research Note’ says little focus was placed on the global macro environment, which faced a resurgence of the Eurozone debt crisis, the prospect of a slowing global economy, political brinksmanship in the U.S., and a Standard & Poor’s downgrade of U.S. Treasury bonds from their AAA status. Whether one considers the recent period of market volatility extraordinary or simply ordinary, it says the bottom line is that investors with balanced, diversified portfolios have faced much less aggregate volatility than the headlines would suggest.

ACPM Honours Gilbert

Rosalind Gilbert, of Aon Hewitt, is recipient of the Association of Canadian Pension Management (ACPM) ‘Award for Exceptional Volunteerism.’ She is a director on the ACPM board, is a long-serving member of the ACPM national policy committee, and was the first chair of the ACPM B.C. regional council. “I am extremely honoured that you chose me for this award.  All ACPM initiatives are such huge team efforts and I love being part of such a highly knowledgeable and experienced group of committed volunteers,” says Gilbert.

Auto Enrolment Will Bring PRPP Success

If auto enrolment is deemed mandatory for Pooled Registered Pension Plans (PRPPs), up to three million Canadians could participate, says Frank Swedlove, of the Canadian Life & Health Insurance Association. At the ‘Pooled Registered Pension Plans (PRPPs): A Future Solution?’ session at the ACPM National Conference, he said the concept is now at a watershed moment where government co-operation would make a huge difference. A simple framework and administration, auto-enrolment with the right to option out of the plan, and participation nudges from the government can help to make the program a successful way to save for retirement in the workplace.

ABCP Weathers Credit Crisis

Traditional asset-backed commercial paper programs have seemingly weathered the credit crisis, but evolving regulatory landscape may challenge the sector’s future growth, says Fitch Ratings. In a report, it says that after reaching a high of nearly US$1.2 trillion in outstandings in the summer of 2007, the ABCP market nearly ground to a halt once the credit crisis began to take hold. The ensuing liquidity and credit crisis sparked government interventions to ensure market stability. While innovative ABCP structures have since fallen by the way side, traditional ABCP proved resilient and performed very well from a ratings perspective. However, the rating agency also suggests that annual ABCP issuance is unlikely to increase beyond current levels ($300 billion to $400 billion) for the foreseeable future as the sector faces a host of regulatory reforms. In Canada, for example, securities regulators are proposing a series of reforms for securitized products, including ABCP, to improve transparency and insulate retail investors from complex products.


Opportunities Drive Interest In Infrastructure

The growth of pension funds' interest in infrastructure has been driven by the large pipeline of opportunities, the maturity and size of the pension fund market, and pension fund regulations, says a report from the OECD. 'Pension fund investment in infrastructure' says the first factor has been the availability of investment opportunities for private finance capital and, therefore, for pension funds. The second factor has been the maturity and size of the pension fund market. It also found that regulations at country level have evolved in recent years following different public policy decisions to protect people's retirement savings but also to require a high domestic weighting for investment or to fund government debt. In particular, local investment rules have traditionally favoured highly rated and liquid debt instruments.

Employers Offering Advice Almost Doubles

The number of employers who now make 401(k) advice available to plan participants has almost doubled since 2005, says a Charles Schwab report. The percentage of employers now offering advice is 81 per cent, compared to just 42 per cent in 2005. It also found 70 per cent of employers currently include target date funds in their fund line-ups, compared to 57 per cent in 2005. As well, 41 per cent of employers automatically enroll participants, up dramatically from just five per cent in 2005. These figures are even greater among larger companies. At companies with more than 2,500 participants, 57 per cent use automatic enrolment. However, more than two-thirds (68 per cent) of employers provide a 401(k) matching contribution, down from a peak of 76 per cent in 2006.

Newfoundland Economic Growth And Jobs Booming

As Newfoundland and Labrador continues to experience economic opportunities from its resources in oil, mining, and fishing, the province will need to look for ways to sustain its prosperity for the long term, says Dr. Wade Locke, a professor at Memorial University. Speaking at ‘The New Newfoundland and Labrador: Its Transformation from Austerity to Prosperity to Sustainability’ at the ACPM National Conference, he said a bright, but challenging, future lays ahead for the province. Currently, it is competing directly with Alberta, British Columbia, and Saskatchewan for the same labour pools, and will have to continue importing labour to fill job growth for the next five to 10 years.

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Wednesday, September 14, 2011

Market Value Of Pension Funds Increased

The market value of Canadian employer pension funds increased for a third consecutive quarter, rising 2.8 per cent from the previous quarter to $1.08 trillion in the first quarter of 2011, says Statistics Canada. The value of pension fund investments in stocks rose 5.6 per cent to $374.6 billion, while the value of bond investments increased 1.1 per cent to $376.5 billion. Investments in Canadian assets grew 1.5 per cent. The value of foreign holdings, which accounted for 30.3 per cent of total pension fund assets, increased 6.1 per cent. Pension revenues, which had climbed to a two-year high of $35 billion in the fourth quarter of 2010, fell 14.4 per cent to $29.9 billion in the first quarter. Revenues typically peak in the fourth quarter of each year when many pension funds receive annual dividend payments and employers make special payments to cover pension liabilities.

EAPs Used For Debt Help

Almost two out of every three times that people accessed their employer's EAP (Employee Assistance Program) for financial assistance last year, it was for personal debt and/or credit reasons, says a Morneau Shepell Research Group report. ‘Impact of the Financial Crisis on EAP Usage from 2009-2010’ shows EAP access for debt and credit counselling went up in 2010. Karen Seward, executive vice-president, business development and marketing, says "This indicates that the fallout of the financial crisis was continuing as employees tried to work their way out of debt.” There was also a significant decrease in EAP access for investment planning, real estate, mortgages, and taxes. It shows that 63.2 per cent of all financial-related accesses last year were for debt/credit issues. That was followed by divorce/finances at 8.7 per cent, bankruptcy at 7.4 per cent, retirement at 5.7 per cent, and taxes at 4.6 per cent.

McGraw-Hill Agrees To Division Plan

McGraw-Hill, owner of ratings agency Standard & Poor’s, has agreed to demands from shareholders including the Ontario Teachers’ Pension Plan to divide into two separate entities. Its board of directors approved a ‘Growth and Value Plan’ which will result in the creation of two new companies ‒ McGraw-Hill Markets and McGraw-Hill Education. The move comes less than a month after shareholders led by Teachers’ and Jana Partners submitted a Securities and Exchange Commission filing which argued the regulatory and public scrutiny over the S&P's decision to downgrade the U.S. credit rating had "infected" the valuation of the rest of McGraw-Hill. Teachers’ and Jana had originally suggested slicing the company into four separate businesses.

Work-Life Imbalance Growing

A global survey reveals a growing imbalance between what employers say about work-life balance and what they actually do. The WorldatWork’s Alliance for Work-Life Progress survey shows while 80 per cent of employers around the globe avow support for family-friendly workplaces, they are simultaneously penalizing those who actively strive to integrate work with their lives. Employee respondents reported repercussions that included overt or subtle discouragement from using flexible work and other work-life programs, unfavourable job assignments, and negative performance reviews.
The study found the prevailing leadership attitudes in developed countries (United States, United Kingdom, and Germany) show more than half of the surveyed managers think the ideal employee is one that is available to meet business needs regardless of business hours and nearly one in three thinks that employees who use flexible work arrangements will not advance very far in their organization. The survey is at www.worldatwork.org/waw/adimLink?id=51556

23-103 Examined

Proposed national instrument 23-103, ‘Electronic Trading and Direct Electronic Access to Marketplace,’ will be the focus of an FPL session. Industry experts will address questions such as how FIX can help firms become compliant with this ruling, how firms can more effectively address risk, and how the regulatory developments affect trading practices. ‘NI 23-103 and You’ takes place September 22 in Toronto, ON. For more information, visit www.fixprotocol.org/members

Atkinson Speaks At Morningstar

Howard J. Atkinson, of Horizons Exchange Traded Funds Inc.; James Norris, of Vanguard International; and Jurrien Timmer, of Fidelity Investments; will be among the featured speakers at the ‘2011 Morningstar Investment Conference.’ This year's conference also features a hands-on ETF workshop. It takes place October 4 and 5 in Toronto, ON. For more information, visit http://corporate.morningstar.com/ca/MIC

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Tuesday, September 13, 2011

HFT Concerns Asset Managers

More than two-thirds of traders at leading asset management firms around the world are concerned about the impact of high frequency trading (HFT) on the equities market, says a survey by Liquidnet, the global institutional marketplace. Its ‘Institutional Voice Survey’ reveals that there is strong conviction among the vast majority of long-only traders that HFT is a negative for institutional investors trading in large size. This adds “some hard facts to what’s previously been speculation about institutional attitudes,” says Robert Young, president, Liquidnet Canada. “Investors are clearly concerned that their long-term investment styles are at odds with the speculative, nano-second profit taking approach utilized by high frequency traders.” Broadly, global traders are significantly more concerned with HFT compared to those who only trade in their regions. At the top five global institutions, 73 per cent of the traders regard high frequency trading as a high-priority market-structure issue. Traders concerns around HFT ran the highest among those based in North America with two-thirds identifying themselves as concerned about HFT. Nearly 60 per cent of European respondents and more than half in Asia Pacific expressed concern regarding HFT’s impact on trading performance. 

Caisse Acquires Industrial Alliance Shares

The Caisse de dépôt et placement du Québec has acquired of a block of six million common shares of Industrial Alliance, Insurance and Financial Services Inc. Based in Québec City, QC, since 1892, Industrial Alliance is a life and health insurance company active in the North American market. The company manages and administers more than $70 billion in assets.

U.S. Office Opened

Fiera Sceptre Inc. has opened an office in Boston, MA. Its first office on American soil ties in with its growth strategy which is tailored to focus on a larger and more diversified client base, specifically in institutional and private wealth markets. It has about $30 billion of assets under management.


Funds Flow Into Canadian Equity ETFs

Canadian equity funds had the lion’s share of new assets in the exchange-traded fund business in August, says a report from BlackRock Asset Management Canada Ltd. It says Canadian equity ETFs generated almost $1.2 billion in new assets in August. Overall, the industry saw net inflows of $1.6 billion in August. Commodity ETFs ranked a distant second to the Canadian equity category with $400 million in new assets and fixed income funds were third with $91 million worth. In the year-to-date, overall industry net inflows are now at $3.7 billion.


CIBC Serves TRIO

CIBC Mellon will provide asset servicing solutions to TRIO. It will deliver a product suite that includes custody, pension accounting, benefit payments, and its real-time online information delivery platform ‒ Workbench. TRIO offers healthcare benefits and pension plan services to employees and elected officials in more than 100 municipalities across Newfoundland and Labrador. It has more than $50 million in assets under administration.

Two Join Guardian

Rocco Vessio and Spyro Carayannis are vice-presidents on the institutional sales and marketing team at Guardian Capital LP. Vessio was with RBC Dexia Investor Services where he served as a senior consultant within its risk and investment analytics group. Carayannis was with Mercer’s investment consulting practice where he served as principal and head of its Canadian analytics, research, and tools. 

Session Looks At Benefits De-risking

‘The De-risking Landscape’ is the focus of the CPBI London, ON, chapter's fall seminar. Heather Wolfe, assistant vice-president, Defined Benefits solutions, group retirement services, at Sun Life Financial; will discuss the Canadian annuity market and other de-risking solutions. Gary Walters, senior vice-president, pricing and group reinsurance, RGA Canada; will discuss being prepared for catastrophic drug claims. It takes place October 11 in London, ON. For more information, visit www.cpbi-icra.ca

Healthcare Fraud Examined

Private healthcare benefits fraud is the focus of an ISCEBS Toronto Area Chapter Program. Daniel Tourangeau, chair of the Canadian HealthCare Anti-Fraud Association, will discuss the direct and significant impact of healthcare fraud on employees and employers. It takes place October 27 in Toronto, ON. For more information, visit http://www.iscebs.org/Local/Locations/Documents
/PDF/chapters/2011/111027_tor.pdf

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Monday, September 12, 2011

Bigger Funds Perform Better

Although research has shown large mutual funds have a tendency to underperform smaller funds, which can operate on a lower cost basis, the same does not hold true for pension funds, says a research from the University of Toronto’s Joseph L. Rotman School of Management. As a result, the findings of ‘Is Bigger Better? Size and Performance in Pension Plan Management’ support arguments that major public sector pension funds such as the Ontario Teachers' Pension Plan and the Ontario Municipal Employees Retirement System should take over management of money for smaller pension funds who want to contract out the work. It found the largest pension funds ‒ averaging $37 billion in assets ‒ outperformed smaller plans ‒ averaging $1 billion in assets ‒ by 43 to 50 basis points annually. Bigger plans may be doing better because they are more likely to be internally managed. The study says between one-third and one-half of the gains come from cost savings related to internal management, where costs are at least three times lower than under external management. Another factor is that big funds have bigger allocations to alternative investments such as private equity and real estate.

Desjardins Buys Into Ivanhoé Cambridge

The Desjardins Group pension plan is increasing its stake in real estate company Ivanhoé Cambridge,  becoming the main co-shareholder with the Caisse de dépôt et placement du Québec. As a result, the Caisse de dépôt and the Desjardins Group pension plan are strengthening their long-term business relationship and are allowing Ivanhoé Cambridge to simplify its shareholder structure following the integration of its subsidiaries earlier this year.

Hedge Funds Down For Year

Hedge funds are now down 1.2 per cent for this year after a 2.3 per cent loss in August's turbulent markets, says data from Hedge Fund Research. August's figure was the industry's sharpest fall since May 2010, at the early height of the eurozone's debt crisis. It was driven by drops in value of 4.1 per cent and 3.7 per cent by equity hedge and event-driven strategies, marking the fourth month running each strategy lost value, as well as their longest drawdown since the 2008 crisis.

GM Wants To De-risk Pension Fund

General Motors is looking to completely de-risk its U.S. pension fund, says Steve Girsky, its vice-chairman, corporate strategy, business development, global product planning, and global purchasing and supply chain. Speaking at the Credit Suisse 2011 Automotive and Transportation Conference, he said it wants to take pension risk off the table as it sees it as a risk to the company. Its deficit is currently $10.8 billion. It is not required to make any funding deficit contribution until 2015.

Financial Effects Of Divorce Examined

‘All in the Family: When Retirement Plans Go Awry’ is the theme of the Institute of Advanced Financial Planners ninth annual symposium. The symposium will feature a case study on divorce and its financial effects on a couple married for more than 20 years, a not infrequent occurrence with Canada’s divorce rate at more than 40 per cent and an ever-increasing number of later life divorces. It takes place October 13 to 15 in Toronto, ON. For more information, visit http://www.iafp.ca/content.php?SectionID=0&ContentID=261

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Friday, September 9, 2011

Focus Needed On Income

Pension models should be focused on ensuring tomorrow’s seniors have adequate income in retirement, says John Crocker, president and chief executive officer of HOOPP. At a ceremony to ring the closing bell at the Nasdaq exchange, he outlined the factors that have made HOOPP – a Defined Benefit pension plan serving Ontario healthcare workers – a success story. HOOPP’s focus is on ensuring its members have a comfortable, independent retirement with adequate income and that should be the focus for pension reform discussions as well, says Crocker. “Rather than focusing on shifting responsibility for retirement security from employers to individuals, we need to think of ways to sustain the workplace pension system,” says Crocker. “Tomorrow’s seniors are today’s employees who are increasingly unable to access pensions in the workplace. Without pensions that offer a decent replacement income target, we face the threat of poverty for seniors. Governments should be alarmed that tomorrow’s seniors will be fully dependent upon future taxpayers. And when we talk of tomorrow’s seniors, we are really talking about ourselves, our children, and our children’s children.”

Active Managers Perform Better

Active managers have tended to perform better in low correlation market environments in terms of real alpha generation and manager success rate, says FundQuest. In its ‘Correlation Retreats: Active vs. Passive Investment Strategies’ white paper, it says there has been debate recently regarding the challenges for active managers in market environments with consistently high correlations. Some argue that high correlations can greatly impair an active manager’s ability to generate alpha through security selection. Conversely, others contest that correlation environment may affect the risk a manager is willing to take. “While we are committed to determining which investment approach is better in different categories, we found that a new perspective, such as the frequently debated correlation factor, can add value, especially in today’s dynamic market environment,” says Tim Clift, chief investment officer. “We believe our study’s findings are actionable and may help guide advisors and their clients in optimizing portfolios through a blend of both active and passive investments.” The white paper is at http://www.fundquest.com/press-resea.htm

Transparent Orders Need Priority

The message coming from Canadian regulators is clear: the use of dark pools and dark orders should be limited, with priority given to transparent orders. In the wider interests of market integrity, this is a welcome step in the right direction, says Rhodri Preece. In a blog for the CFA Institute’s Capital Markets Policy Group, Preece says Canadian authorities have taken “a bold but welcome step to protect transparent orders and halt the trend towards greater use of dark liquidity by engendering more consistent rules across similar marketplaces.” It cites a joint Canadian Securities Administrators (CSA) and Investment Industry Regulatory Organization of Canada (IIROC) position statement which sets out four main recommendations. It says an exemption from pre-trade transparency requirements should only be available to orders that meet or exceed a minimum size threshold. The Canadian authorities also propose that two dark orders meeting the dark order size threshold should be able to execute at the National Best Bid and Offer (NBBO), but, in all other circumstances, dark orders would have to provide ‘meaningful’ price improvement. Thirdly, meaningful price improvement should be one trading increment and, finally, displayed orders should receive execution priority over same-priced dark orders on any given marketplace. 


Chateram Joins Pyramis

Gary Chateram is vice-president, institutional sales, at Pyramis Global Advisors. Located in Montreal, QC, he will focus on the Defined Benefit, foundation, and endowment marketplace in Eastern Canada.

Doing Business Outside Canada Examined

The third session in AIMA Canada's ‘New and Emerging Managers’ series will focus on doing business outside Canada. Designed for managers thinking about establishing funds or distribution outside of Canada, it features legal, tax, and accounting professionals from Canada, the United States, and the Cayman Islands. It takes place September 15 in Toronto, ON. For more information, call Jovine Chan at 416-453-0111 or eMail jchan@aima-canada.org

Innovative Cost Reduction Discussed

How plan sponsors can take advantage of the innovations in services and technology to improve health outcomes and reduce overall costs will be the focus of Connex Health’s first meeting of the season. Allan Smofsky, a health strategist; Steve Semelman, president of Gemini Pharmaceutical Consultants; and Peter Zawadzki, pharmacist and professional affairs executive at Pharmasave; will explore the current environment and whether plan sponsors are likely to adopt new opportunities and innovations. It takes place September 22 in Burlington, ON. For more information, visit www.connexhc.com

Lakonishok Discusses Long Run Strategies

Josef Lakonishok, founding partner and chief executive officer and chief investment officer at LSV Asset Management, will discuss long run investment strategies at a Toronto CFA Society event. His presentation will focus on prudent long-term investment strategies through discussions on value and growth strategies. It takes place November 21 in Toronto. ON. For more information, visit http://www.torontocfa.ca/imis15/Content/Site_Navigation/ Events___Courses/
Event_Detail.aspx?title=12LONGRUN

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Thursday, September 8, 2011

More Than Transparency Needed

Regulators considering reforms to the asset-backed securities (ABS) market should look beyond transparency requirements in their efforts to improve investor comfort in the ABS market, says a report from the C.D. Howe Institute. ‘Better Braking for ABS’ says reforms should require, as a condition for allowing a potential ABS issue to be sold on the public market, participation by third-party investors who have the expertise and incentive to assess ABS’ viability. The market for asset-backed securities – financial instruments backed by underlying assets such as mortgages – collapsed in 2007 as a cascade of downgrades and defaults brought turmoil to credit markets and the world economy. Authorities in the United States have since proposed sweeping changes to the ABS market. The Canadian Securities Administrators, representing provincial securities commissions, recently released a discussion paper proposing similar reforms which would require sharply enhanced transparency in ABS structures, CEO certification of the adequacy of such structures, and disclosure of previous asset repurchases by the securities’ sponsor. For the study, click here

Sun Adds iPhone, Blackberry Apps

Sun Life Financial has launched a mobile application for iPhone mobile digital devices and BlackBerry smartphones. ‘my Sun Life Canada’ provides existing group benefits and group retirement and savings plan members across Canada the ability to submit benefit claims, check plan balances, and find ways to save for the future in a single mobile app. It also allows group benefits plan members to submit medical and dental claims from their smartphones for instant processing and submit claims anywhere, anytime – even at point of sale – with the majority of claims being deposited into their bank accounts within 24 to 48 hours.

Shareholders Vote For Pay

Canadian shareholders have backed every company proposal on executive compensation plans ‒ ‘say on pay’ ‒ this year. A report by Hugessen Consulting Inc., an executive compensation advisory firm, found ‘say-on-pay’ votes this year passed at all 71 major public companies that offered shareholders the opportunity to vote on executive compensation schemes. An average 94 per cent of shareholders supported the pay policies with only 11 companies reporting votes below the 90-per-cent support level. While many companies promised to hold ‘say on pay’ votes last year, most held their first votes this spring.

Buligan Moves To CI

Paul Buligan is vice-president responsible for institutional business development within the pension, endowment, and foundation markets in Ontario and western Canada for CI Institutional Asset Management. Most recently, he was an investment consultant at an independently owned actuarial consulting firm working primarily with corporate and multi-employer pension plan sponsors. Prior to that, he worked at Invesco Canada Ltd in a business development role .

Three Join Teachers’

Carol Gordon is vice-president, audit services, at the Ontario Teachers’ Pension Plan (Teachers’). She joins Teachers’ from ING Direct, where she was head of internal audit. Doug Gerhart is vice-president, investment information technology architecture. He was previously a vice-president at Sapient Canada where he provided technical oversight for projects across various business lines. Maryam Ghiai is vice-president, information technology service delivery. Previously she was director and technology relationship manager, private client group, at the Bank of Montreal.

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Wednesday, September 7, 2011

Pension Plan Membership Decreased

The Office of the Chief Actuary has released a fact sheet on Registered Pension Plans (RPPs) and Retirement Savings Coverage. It says the number of plan members covered by an RPP has increased over the last 10 years, with the number of women increasing faster than for men. However, the number of members as a percentage of the labour force has decreased slightly in the last 10 years. As well, the proportion of members in DB plans is decreasing at a faster pace in the private sector than in the public sector. The public sector has been stable at 94 per cent. In the private sector, coverage has fallen from 76 per cent to 56 per cent. Overall, the proportion of paid workers in DB plans has declined from 85 per cent to 75 per cent over the last 10 years.


Deficiency Combination Concerns Superintendent


The combination of a substantial solvency deficiency and going concern deficiency is of greater concern to the superintendent than just a solvency deficiency, says FICOM's updated Guidelines for Requests for Solvency Extensions for Defined Benefit Pension Plans. An Aon Hewitt ‘Radar’ says the guidelines require applications to demonstrate that plan costs are manageable, benefits are affordable, the extension is in the best interests of plan members, and the plan sponsor's funding strategy is realistic. As well, they must include information such as a current actuarial valuation, copies of the plan's funding policy, if any, and the plan sponsor's financial statements for the last three years. However, it notes applications that result in a solvency amortization period longer than 15 years are unlikely to be approved.

Corporate Funding Gap Back

The funding hole in U.S. corporate pension plans is now larger than at the height of the financial crisis, says an analysis by Credit Suisse. A $388 billion gap has opened due to a combination of weak equity markets and falling interest rates, eliminating improvements in the funding of Defined Benefit pension plans at S&P 500 companies since the end of 2008. The gap leaves pension schemes with assets worth only 77 per cent of their liabilities.

Management Acquires Lincluden

Lincluden Management Limited’s existing management team has signed an agreement with its parent company, Old Mutual (US) Holdings Inc., to acquire the business of Lincluden. The transaction is expected to close later this fall. When the transaction closes, the existing management team at Lincluden will continue to run the business in the same manner as it is currently conducted, through Lincluden Investment Management Limited.

V.Group Acquisition Closes

The Ontario Municipal Employees Retirement System (OMERS) has closed its previously announced acquisition of V.Group. The shipping firm was acquired through the private equity arm of the OMERS Worldwide group of companies, OMERS Private Equity. V.Group provides outsourced ship management, crew provision, and other marine services. The company manages the running and maintenance of more than 700 vessels on behalf of its customers, operating across 34 countries around the world.

Horne Joins Mawer

Michele Horne will handle institutional and private client portfolio management from the Calgary, AB, office of Mawer Investment Management. She was formerly president of Bissett Investment Management.

Teachers’ Adds Two

Calum McNeil is vice-president, financial and management reporting, at the Ontario Teachers’ Pension Plan (Teachers’). He was previously with the Abu Dhabi Investment Authority, where he had held the role of financial controller since 2006. George Wong is vice-president, compliance, analytics, performance, and data management. He joins Teachers’ from CIBC Mellon, where he was vice-president of finance.

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Tuesday, September 6, 2011

Canadians Call In Stressed

About 52 per cent of Canadians have called their boss and faked being sick to get out of their jobs. However, this puts Canadians behind China (71 per cent), India (62 per cent), and Australia (58 per cent), says data for Kronos Incorporated. Americans recorded the same percentage as Canada, followed by the United Kingdom at 43 per cent and Mexico at 38 per cent. France was at the bottom at only 16 per cent. The most popular reason for calling in ill was feeling stress and needing a day off, used by 71 per cent of Canadians. Employees in all countries except France said their employers should offer flexible hours to cut down on them skipping shifts. The French want to be able to take Fridays off in the summer and make the hours up during the week. Other countries, including Canada at 38 per cent, said getting more paid leave would also make a difference.

Pension Funds Sue Sino-Forest

Two pension funds have filed a class action lawsuit against China-based timber company Sino-Forest and its auditor Ernst & Young. The Labourers' Pension Fund of Central and Eastern Canada and the trustees of the International Union of Operating Engineers Local 793 Pension Plan for Operating Engineers in Ontario claim the company misrepresented financial statements, backdated stock options and overstated forest holdings. Both bought shares in Sino-Forest between March 2007 and June 2011, when the company raised more than $2.7 billion in the capital markets.

Measures Help Venture Capital

Just-announced measures which complement the Ontario government’s earlier decisions to establish the Ontario Venture Capital Fund and the Ontario Emerging Technologies Fund constitute an important step forward in addressing the critical issue of access to venture capital in Ontario for the high growth, high value-add small, and medium-sized businesses needed for the province’s future prosperity, says CVCA ‒ Canada’s Venture Capital and Private Equity Association. Ontario will encourage domestic and international corporations to invest in venture capital funds which will increase the supply of venture capital available to deserving entrepreneurs, thereby increasing the chances that these entrepreneurs will stay in Ontario and Canada, and not be forced to move abroad. As well, the angel tax credit measure will further increase the supply of risk capital to early-stage firms. A strong angel presence is an important component of the risk capital ecosystem and angels and venture capitalists often work hand in hand to grow the most promising companies. The CVCA says there is a shortage of venture capital in Ontario and in Canada and this shortage is constraining the growth prospects of promising companies that receive less than half the capital of their U.S. counterparts.

Union Challenging Contribution Increases

The Nova Scotia Government and General Employees Union will challenge two school boards over their measures to restore the solvency of their pension plans. The union claims the measures violate the collective agreement and the pension act. The Tri-County Regional School Board wants to increase support staff employee contribution five per cent to 7.65 per cent of pay. The South Shore Regional School Board also intends to increase contributions in 2012 for NSGEU and members of other unions.

Pension Spend Decreasing

A third of larger employers are looking to decrease their spend on workplace pensions, says the Association of Consulting Actuaries ‘2011 Pensions Trends Survey.’ Just a quarter of UK employers have budgeted for the cost of auto-enrolment, with larger employers basing their budgets on expectations of between 12 to 17 per cent of employees opting out of workplace pensions after being auto-enrolled. Smaller employers are budgeting on between 33 to 39 per cent of employees deciding to opt-out. Reflecting presumably the pressure on employee incomes over the last three years, 21 per cent of employers report member opt-outs from pension schemes have increased.

Ciampi Leads Communication

Vincenzo Ciampi is a vice-president and the new national lead for communication, part of the Canadian talent, rewards, and communication practice at Aon Hewitt. Previously, he worked at a large national insurance company where he held various positions in corporate strategy, external communications/branding and national relationships.

September Interest Rate Assumptions

The interest assumptions required to calculate commuted values for an event which occurs in any month up to and including September 2011 are now available at www.an-actual-actuary.com. An Excel spreadsheet on the website contains seven worksheets:
• Commuted Values February 2011 CIA
• Marital Breakdown ‒ CSOP 4300, May 2009
• Annuity Proxy for Solvency Calculations for Non-Indexed & Fully-Indexed Pensions
• Minimum Interest on Employee Required Contributions
• HISTORICAL ‒ Commuted Values 2009 Basis (Now Frozen)
• HISTORICAL ‒ Commuted Values 2005 Basis (Now Frozen)
• HISTORICAL ‒ Commuted Values 1993 Basis (Now Frozen)

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Friday, September 2, 2011

Life Expectancy Underestimated

The substantial increases in life expectancy in recent decades have been consistently underestimated, says a Swiss Re research report. While people are living longer has brought with it a massive pension shortfall, this has been exacerbated by traditional methods of forecasting longevity which do not take certain emerging trends into account. "The failure to consider future drivers of mortality in historical predictions contributed to employer pension funds under-reserving for longevity risk and other bodies, including governments, not budgeting effectively for funding an aging population," says Daniel Ryan, head of life and health research and development. ‘A window into the future: Understanding and predicting longevity’ recommends that pension plans assess their exposure to longevity risk and decide whether to pass it on to a third party that is better equipped to take on the risk. It also suggests that insurers can work in partnership with reinsurers to develop robust approaches to mitigating longevity risk.

Environmental Data To Be Disclosed

A global consortium of pension asset managers has convinced the world’s largest property managers to disclose, for the first time, detailed data on the environmental performance of their funds. More than 340 property funds and companies responded to the call for action by the GRESB Foundation, which includes USS, APG, and PGGM and is backed by $1.7 trillion in institutional capital. Reporting on environmental metrics has improved substantially, with frontrunners in the commercial property sector reducing their energy consumption by three per cent in 2010. Respondents used energy worth $5 billion in 2010, or the equivalent of about 34 million tonnes in estimated carbon emissions. On average, the funds consumed one per cent less energy in 2010 compared to the year before, with Europe trailing Australia and the U.S.

GAO Issues Investment Advisory

Given ongoing market challenges, it is important that plan fiduciaries apply best practices and choose wisely when investing in assets such as hedge funds and private equity funds plan, says the U.S. Government Accountability Office (GAO). A survey of large plans shows the share of plans with investments in hedge funds grew from 11 per cent in 2001 to 60 per cent in 2010. Over the same time period, investments in private equity were more prevalent but grew more slowly ‒ an increase from 71 per cent of large plans in 2001 to 92 per cent in 2010. Still, the average allocation of plan assets to hedge funds was a little over five per cent and the average allocation to private equity was a little over nine per cent. However, the GAO says these investments pose a number of risks and challenges beyond those posed by traditional investments. For example, investors in hedge funds and private equity face uncertainty about the precise valuation of their investment. The GAO recommended in 2008 that the Department of Labor provide guidance on the challenges of investing in hedge funds and private equity and the steps plans should take to address these challenges.

CPPIB Enters Japan

The investment arm of the Canada Pension Plan will spend $250 million over three years to make its first direct real estate investments in Japan. The Canada Pension Plan Investment Board and its partner, Global Logistic Properties Ltd., will each own half of a joint venture fund that will focus on facilities used to improve the flow of goods between manufacturers, retailers, and carriers. The Japan Development Fund will focus on building multi-tenant and build-to-suit facilities mainly in the greater Tokyo and Osaka areas in Japan. Graeme Eadie, CPPIB’s senior vice-president of real estate, says it provides “an entry into Japan’s logistics facilities market and represents our first direct real estate investment in this country.” Global Logistic currently owns, manages, and leases out 337 properties in 27 major cities in China and Japan.


Lowest Earners Benefit From DB

Baby Boomer and Generation X households that have a Defined Benefit pension plan accrual at retirement age are overall almost 12 percentage points less likely to be “at risk” of running short of money for basic needs and uninsured health costs in retirement, says a report by the Employee Benefit Research Institute. It finds that having a DB pension plan is particularly valuable for those with the lowest income in both age groups, but also has a “strong impact” on reducing at-risk rates for those in the middle class. Among those in the second- and third-income groups combined (covering middle-income workers), the combined relative at-risk reduction is almost 20 per cent. However, the percentage of private sector workers participating in an employment-based DB plan has decreased from 38 per cent in 1979 to 15 per cent in 2008.

UK Expert Speaks At Conference

An internationally-acclaimed workplace health expert will share her thoughts on the UK’s best practices on preventing workplace disability at the ‘29th Annual Occupational and Environmental Medical Association of Canada conference.’ Dame Carol Black is author of ‘Working for a Healthier Tomorrow’ and the UK national director for Health and Work. It takes place October 2 to 4 in Niagara-on-the-Lake, ON. For more information, visit http://www.oemac.org/doc/OEMAC_Conference_081511.pdf

Views On Target Date Plans Wanted

The fifth of six mini-surveys being provided through an exclusive partnership between ACPM and Benefits and Pensions Monitor is looking for feedback on 'Target Benefit Pension Plans.’ By taking just a few minutes to answer the brief questions, your name will be entered into a draw for a chance to win a registration to attend Canada's premier pension event, the ACPM National Conference, this September in St. John's NL. Click on the link that follows to access the ‘Pensions and Politics’ survey ‒ http://www.surveymonkey.com/s/386LJ67ACPMBPMSurveyTBP

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Thursday, September 1, 2011

CIBC Acquires American Century Interest

CIBC has completed the acquisition of a 41 per cent equity interest in American Century Investments, a U.S.-based asset management company. American Century manages approximately $111 billion in assets for a diversified mix of institutional, intermediary, and retail investor clients. "Our investment in American Century complements our strong Canadian asset management franchise and provides a platform for CIBC's growth internationally," says Gerry McCaughey, CIBC president and chief executive officer. "It also underlines our confidence in the long-term potential of the asset management business, which has attractive demographic and risk characteristics."

Williamson Celebrates 35 Years

The Williamson Group will celebrate 35 years in business this October.  The family-owned financial services firm based in Brantford, ON, was founded in 1976 by Paul Williamson, father of its current president Don Williamson. It provides group benefits and pension consulting for more than 300 corporate clients across Canada and almost half (140) have been with the company for more than 10 years. To mark the event, it will hold various employee and client events including a guest speaker on leadership in late October. Clients and members of the community will be invited to attend the event, including students from local high schools and post-secondary institutions.

Caisse Involved In SPIE Deal

Clayton, Dubilier & Rice and its partners AXA Private Equity and the Caisse de depot et placement du Quebec have closed the acquisition of French based multi-technical services company SPIE from PAI partners. SPIE is a European leader in multi-technical services. It specializes in electrical, mechanical, and HVAC contracting services, as well as oil and gas, nuclear, and communications network services. It has nearly 400 locations in 31 countries.

Conditions Hurt UK Plan Members

Higher annuity rates and volatile market conditions have dented retirement prospects for UK workers over the last few months, says research from Aon Hewitt. It says younger people have been hit particularly hard from the combination of higher annuity rates and tough economic conditions. Its index tracker shows the projected retirement income for a 30-year-old with a Defined Contribution pension plan has dropped by four per cent ($1,300) over the past three months. Expected retirement income for a 60-year-old has dipped by two per cent. This quarter's index recorded the highest annuity price since its inception in September 2007.

Dickson Speaks At Economic Club

Julie Dickson, superintendent of the Office of the Superintendent of Financial Institutions (OSFI), will discuss ‘Canada’s Contributions to the Global Financial System’ at an Economic Club of Canada session. It takes place September 26 in Toronto, ON. For more information, visit www.economicclub.ca

Financial Literacy In Workplace Examined

‘Financial Literacy and the Workplace ‒ How They Go Hand in Hand’ will be examined at the Association of Canadian Pension Management National Conference. Judith Plotkin, of Homewood Human Solutions, will provide an overview on the ripple effect financial troubles can have on a person's personal and work life and the implications to employers. Casey Cosgrove, of the Canadian Centre for Financial Literacy, will highlight financial literacy strategies that can be applied in the workplace. This year’s conference theme is ‘It Begins Here – From Reform to Action.’ It takes place September 13 to 16 in St. John’s, NL. For more information, visit: http://www.acpm-acarr.com/national.aspx

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