News Archives - April 2008

Wednesday, April 30, 2008

'Too Little, Too Late’ Says Van Riesen

While we have the focus and the ability to take measures to revive Defined Benefit pension plans in Canada, we need the will, says Gretchen Van Riesen, former vice-president, global pensions and benefits, at CIBC. Speaking at the Conference Board of Canada’s 2008 Pensions Summit as part of a panel discussing pension reform, she said only now when there is a crisis facing DB plans are we getting down to looking at the changes that need to be made. Unfortunately, it may be a case of “too little, too late.” She said many corporations have come to the conclusion that they are not in the business of providing pension plans and that they can provide Defined Contribution plans with no financial risk.

Alberta Eliminates Health Premium

Alberta has eliminated the premiums under Alberta’s publicly-funded healthcare program, the Alberta Health Care Insurance Plan (AHCIP), says a Mercer Communiqué. The elimination of health premiums brings Alberta in line with the majority of provinces, which do not levy provincial healthcare premiums. Employers may wish to review current cost arrangements in light of the proposed changes. If employers are currently paying some or all of the AHCIP premiums, savings will accrue to the employer as a result of the change. Employers will need to decide whether or not to pass on any savings to employees through enhancements or increased employer cost-sharing in other benefit plans. In some cases, collective bargaining agreements may provide direction.

RBC Denies Writedown Report

The Royal Bank of Canada is refuting an analyst who said it could be facing a $5 billion writedown. A note issued by a Citigroup analyst downgraded the bank's stock based on a belief it could be facing $5 billion in writedowns due to risky exposures. However, RBC officials said it contained factual errors and its exposures to risky areas remain within its tolerance levels. It says the report overestimates the risks and writedowns the bank could be facing. As well, the diversification of its businesses means it doesn't have the outsized exposure to certain risky areas that some of its competitors do.

 Judge Wants To Know Who Will Sue

Non-disclosure Has Potential For Liability

Non-disclosure of revenue-sharing arrangements involving self-dealing for Defined Contribution pension plans has a real potential for liability under Canadian law, says Markus Kremer, of Borden Ladner Gervais LLP. Speaking at the firm’s ‘Pension Group Seminar,’ he also said it won’t be just the sponsor who is sued, it could be the providers. Under the Pension Benefits Act, administrators and agents must exercise the same care, diligence, and skill that a person of ordinary prudence would exercise in dealing with another person’s property. Agents could include lawyers, consultants, custodians, and other providers. He noted that in the U.S., there have been more than a dozen cases in recent years based on breaches in fiduciary duty relating to fees and expenses. He expects similar types of actions could be coming to Canada.

Definitions For Critical Illnesses Set

A series of benchmark definitions for critical illness (CI) may help change the attitudes of advisors toward selling CI insurance, said reinsurer Munich Re Canada at the World CI Conference in Toronto. The vast majority of advisors do not have critical illness insurance on their product radar at the moment and the fact that illness is defined differently within the policies is often blamed. The goal was to hash out a set of definitions for everything from the thickness of a malignant melanoma to a definition of blindness. The process began in March 2007 and in February of this year a document was distributed for companies to consider. Currently only about 20 per cent of advisors are selling the CI insurance in Canada and only six per cent of the market has been tapped.

Americans To Be Worse Off In Retirement

Middle-class Americans will be far worse off in retirement than they expect, says a study from BGI. It found a significant number of American employees face cuts in their expected retirement income once adjustments for healthcare and the value of home equity are made. The study assumes that Medicare will become means-tested. For the top half of households based on wealth, that would result in a $7,000-a-year cost for buying private health insurance, based on current prices. In addition, only 40 per cent to 50 per cent of home equity will be available for non-housing consumption in retirement.

 Sponsors Focus On Investment Decision-making

U.S. plan sponsors are putting a heightened focus by on investment decision-making and monitoring, says a survey by Grant Thornton International Ltd. It says plan sponsors have determined an Investment Policy Statement (IPS) is critical to decision-making by retirement plan investment committees. Eighty-two per cent of sponsors surveyed have an IPS in place with 45 per cent reporting that their IPS was created by a third-party consultant or adviser. Forty per cent said they consistently review their IPS to ensure investment strategy and guidelines accurately represent the decision-making process. The survey found a clear majority of retirement plan participants report that plan sponsors are doing a good job of clearly documenting how decisions to choose or remove plan investment options have been made.

 Price Helps Drive Pharmacy Spend

Two of the primary drivers that impact total pharmacy spend are prescription price and prescription utilization, says PMSI’s ‘2008 Annual Drug Trends Report for Workers' Compensation.’ Current estimates indicate pharmacy spend represents 12 per cent of total medical costs in workers' compensation. As a result, there is more focus than ever before on controlling these rising costs. Other key cost drivers include drug usage trends, brand versus generic utilization, price and utilization per drug class, and PBM influences. PMSI is a U.S. provider of pharmacy and specialty products and services centric to workers' compensation.

Klinck Moves To Hicks Morley

Terra Klinck is a partner in the pension and benefits practice group at Hicks Morley Hamilton Stewart Storie LLP.  She was formerly a partner in the pension and benefits department of a national full service firm. Her practice focuses on all legal issues relating to pension and employee benefit plans including fiduciary duties, pension plan redesign proposals, plan mergers and wind-ups, ongoing pension plan administration, governance and compliance issues, and issues relating to corporate transactions. 

 Communications Strategies Examined

Integrating online and print communications will be the focus of a Federated Press event September 8 and 9 in Toronto, ON. Topics covered will include developing a communications strategy, distinguishing between content that belongs in print or online and measuring the effectiveness of a communications strategy. For more information, visit  http://www.federatedpress.com

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Tuesday, April 29, 2008

Concerns Diminish On Pension Risk 

Changing views of Canadian chief financial officers (CFOs) about the nature of the pension funding crisis are expected to give human resources executives more latitude to use plan design for employee attraction and retention in the future, says the Watson Wyatt/Conference Board of Canada ‘2008 Survey on Pension Risk.’ Twenty-six per cent of CFOs responding to the fifth annual survey indicated that they felt the crisis was long-lasting, down from highs of 61 per cent in 2006 and 48 per cent in 2007. Meanwhile, 31 per cent of CFOs view the crisis as cyclical. “The extent to which respondents believe that CFOs must be heavily involved in making plan design decisions seems to be on the decline, allowing greater involvement of vice-presidents HR in the future,” said Ian Markham, director, pension innovation, Watson Wyatt Worldwide. “The role that HR plays in making plan design decisions is expected to increase in five years.”

 Retirement Funding Costs Rising

Canada will face cost increases, but will fare better than the U.S. when it comes to ensuring retirement incomes, says Sylvester J. Schieber, chairman of the U.S. Social Security Advisory Board. Speaking at the ‘2008 Pensions Summit,’ he said the cost of financing retirement incomes has increased over the last 40-plus years in the U.S. In 1960, it was nine per cent of payroll and reached 25 per cent by 2005. However, with the growing number of baby boomers getting set to retire, this could increase to 30 per cent by 2030. By prefunding retirement through the Canada Pension Plan, financing Canadian workers’ retirement income security will cost between 16 and 25 per cent of payroll by 2030.

Teachers’ Gets More Time

The Ontario Teachers’ Pension Plan has been given a two-week extension to file documents related to the proposed privatization of BCE by the Canadian Radio-television and Telecommunications Commission. Deadline to file the documents is now May 12. The CRTC approved the deal last month subject to certain conditions.

OSFI Won’t Allow Early IFRS Adoption

The Office of the Superintendent of Financial Institutions (OSFI) says that firms won’t be allowed to adopt the International Financial Reporting Standards (IFRS) early. As well, it will demand more disclosure on the issue. The Canadian Accounting Standards Board has confirmed the mandatory transition date to IFRS for publicly accountable enterprises for fiscal years beginning on or after January 1, 2011. OSFI says that all federally regulated financial institutions (FRFIs) are considered publicly accountable enterprises and must adopt IFRS. However, it says it could not allow any FRFIs to adopt IFRS before January 1, 2011, because of significant impacts to various areas of its organization.

Organizations Offer Retirement Planning Education

A survey by the International Foundation of Employee Benefit Plans shows 70 per cent of organizations offer some type of retirement or financial planning initiative, education, or program for employees or participants. ‘Retirement and Financial Planning Programs’ shows the most popular offering is retirement planning, which is provided by 77 per cent of the respondents. In addition, 60 per cent offer investment education, 39 per cent financial planning, and 28 per cent investment advice. The most common type of initiative offered is a group meeting with a plan provider, such as a 401(k) vendor, indicated by 67 per cent of respondents.

 DC Consulting Business Changes

The Defined Contribution pension plan consulting business is changing to adjust to new plan trends by, among other things, offering custom target date funds, says a survey by PIMCO. Its ‘2008 Defined Contribution Consulting Support and Trends Survey’ found 79 per cent of consultants believe target date strategies will be the most prevalent default investment in DC plans within the next several years. Most consultants (90 per cent) believe plan sponsors should consider creating their own custom strategies once plan assets exceed $1 billion. Volatility of returns and fees were considered the most important factors for plan sponsors considering creating their own or selecting a packaged target date product.

Mavroudis Named CEO

George Mavroudis is chief executive officer of Guardian Capital LP. His institutional background is extensive with several years as a senior executive at JPMorgan Asset Management (and predecessor companies) working in their Toronto, New York, London, and Moscow offices. J.J. Woolverton is chairman. He will assist Mavroudis in the orderly transition of the current management responsibilities and, going forward, provide assistance and guidance to the CEO in executing strategic initiatives.

 Scobie Becomes General Manager

Scott Scobie is general manager of CWT. He joined the CWB Group in August 2005 as managing director, sales and marketing, CWT.

 Session Examines Default Options

‘Building a Better Default Solution’ will be one of the sessions at the 2008 CPBI Forum, May 12 to 14 in Toronto, ON. Karen Welch, vice-president, global compensation and benefits, Four Seasons Hotels & Resorts; and Zaheed Jiwani, senior investment consultant, Hewitt Associates; will examine best practices for selecting a default fund, as well as how to engage plan members in retirement planning, with practical solutions from a successful plan sponsor. For more information, visit http://www.cpbi-irca.ca/

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Monday, April 28, 2008

Couples Retired Independently

Rather than retiring together, men and women in dual-earner couples appeared to have approached retirement in a more independent fashion during the 1990s, says a Statistics Canada study. The study found that among dual-earner couples in which at least one spouse retired in 2001, 29 per cent of the spouses retired within two years of each other. This was a slight decline from about 32 per cent during the late 1980s and 1990s. There was also a decreasing tendency among couples to retire within two to four years of each other. In 1986, in cases where the husband retired first, 19 per cent of wives retired within two to four years. For husbands retiring in 2001, only 15 per cent of wives retired within two to four years. This suggests that dual-earner couples in Canada took a more independent approach towards retirement during this 15-year period.

 BC Introduces Phased Retirement Options

British Columbia has introduced amendments to its pensions act which would allow pension plans registered in the province to provide phased retirement benefits, says the ‘Hewitt Monitor.’ Individuals aged 60 or over, or 55 and over and eligible for an unreduced pension, will be able to work and contribute to their pension plan while simultaneously collecting a portion of their pension benefits. Currently, older workers must choose between collecting a pension or contributing to their pension plan.

Executives Evaluating IFRS Impact

About half of all senior finance executives have started to evaluate the impact of IFRS on their business, says a research report called ‘IFRS Readiness in Canada.’ Co-conducted by the Canadian Financial Executives Research Foundation (CFERF), the research arm of Financial Executives International (FEI) Canada, and Ernst & Young Canada, it also shows that 72.9 per cent don’t have a dedicated team in place to facilitate the changes. “The majority are nowhere near prepared for conversion at this point in time, haven’t calculated the conversion costs, and don’t know if their systems can handle the job,” says the report. In spite of this, the executives said they did not want the 2011 conversion deadline to be extended.

Noteholders Approve ABCP Plan

Noteholders of third-party structured asset backed commercial paper have voted overwhelmingly in favour of the restructuring plan proposed by the Pan-Canadian Investors Committee for Third-Party Structured ABCP. The plan would restructure $32 billion in frozen non-bank asset backed commercial paper (ABCP). Under the plan, the original shorter-term notes will be replaced with newly structured notes with maturation dates in the nine-year range. The next step is a hearing in which an Ontario Supreme Court must sanction the plan.

Overcoming Harmful Online Conduct At Work

Web 2.0 social networking sites – such as Facebook, MySpace, Wikipedia, and blogs –are not only weakening productivity levels among businesses, but are damaging company reputations and exposing confidential information. As younger individuals in tune with technology enter the workforce, employers need to start taking proper action, said Michael Horvat, at an Ogilvy Renault Labour Law Group seminar. Employers can legally control harmful on-duty and off-duty conduct and have legal rights to discipline employees that impact business interests in negative ways. Companies can take action through electronic surveillance, software blockers, or by applying specific Internet policies to all employees.

TFSAs May Offer Alternative

Capital accumulation plan sponsors may wish to examine their current plan design and educational materials to determine if Tax-Free Savings Accounts (TFSAs) offer an alternative to non-registered components of any CAP, says an ‘Avalon Newsletter.’ TFSAs may also have a place in executive savings arrangements. It says plan members will be faced with new issues to consider and decisions to make. The February 2008 federal budget proposed TFSAs which are intended to provide Canadians with tax favoured savings opportunities not necessarily related to retirement. They are expected to be available in early 2009. 

Ripsman At PH&N

Colin Ripsman has joined the institutional portfolio manager team at Phillips, Hager & North Investment Management Ltd. as a vice-president. He will have responsibilities in the areas of Defined Contribution thought leadership and product development and will also have relationship management responsibilities. 

Enforcement Of Securities Law Discussed

How to get to a more effective, efficient, fair, and balanced approach to the enforcement of securities laws in Canadian capital markets will be one area examined at the ‘Advancing an Enforcement Agenda’ symposium led by the Capital Markets Institute at Rotman. It brings together leaders and influencers in business, government, and academia to discuss fresh ideas which will keep an enforcement agenda in the forefront and possibly stimulate stronger political action. It takes place May 2 in Toronto, ON. For more information, visit http://www.rotman.utoronto.ca

 Conference Looks At Group Benefits

Group benefits and retirement services will be one of the areas covered at the LOMA Canada Annual Conference. It takes place June 12 in Toronto, ON. For more information, visit http://www.liic.ca/

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Friday, April 25, 2008

Conference Looks At IFRS

A two-day conference is underway in Toronto, ON, focusing on the world-wide migration to a common financial reporting language known as International Financial Reporting Standards (IFRS). The IFRS – North America Conference is a joint presentation by The International Accounting Standards Committee (IASC) Foundation, and The Canadian Institute of Chartered Accountants (CICA). The new international standards will apply to Canadian publicly accountable enterprises. In general, these can include publicly-listed companies, certain government corporations, and enterprises with fiduciary responsibilities such as banks, insurance companies, credit unions, and securities firms. The official changeover date is beginning on or after January 1, 2011 for interim and annual financial statements relating to fiscal years. 

 Sponsors Improving DC Performance

U.S. pension plan sponsors have embarked on a campaign to improve the performance of their Defined Contribution plans, says a study by Greenwich Associates. The effort received a considerable boost last year from the implementation of several important provisions of the Pension Protection Act of 2006. Practices and structures being used include automatic enrollment. More than a third of U.S. DC plan sponsors are using automatic enrollment in their 401(k) plans, up from about a quarter of plans in 2006. DC plans have grown to account for 46 per cent of pension assets among U.S companies with more than $250 million in plan assets and 74 per cent of assets among companies with smaller pension funds.

Negative Quarter For The Pension Funds

Diversified pooled fund managers posted a median return of -1.4 per cent, before management fees, in the first quarter of 2008, says Morneau Sobeco’s ‘Performance Universe of Pension Managers’ Pooled Funds.’ The credit crunch and the slowdown of the U.S. economy have had a negative impact on equity markets around the world. Furthermore, the drop in bonds’ interest rates has resulted in a larger increase in solvency liability than expected. The negative return and the increase in solvency liability have worsened the financial situation of pension plans in the quarter.

UK Trustees Believe DB Will Last

Eight in 10 UK pension plan trustees believe their Defined Benefit programs will still be around in 10 years despite predictions of plan freezes within the next decade by half of employers. An Aon Consulting survey found more than half (52 per cent) thought their plan would last longer than 20 years. The trustee responses were in stark contrast with the expectations of employers. Of employers, 50 per cent of employers expect their DB pension to be wound up within 10 years.

Alert Issued On ‘Cat Bonds’

The Financial Industry Regulatory Authority has issued an ‘Investor Alert’ warning investors about the risks of speculating on natural disasters with event-linked securities such as catastrophe bonds or ‘cat bonds.’ These bonds offer high yields, but can quickly lose most or all of their value if a triggering event such as a hurricane, earthquake, or pandemic occurs in specified geographical regions. They are typically marketed to institutional investors.

Biovail Settles Suit

Biovail Corporation has entered into an agreement to settle the class action shareholder litigation in the claim brought by the Canadian Commercial Workers Industry Pension Plan. Under the terms of the settlement agreement, the parties have agreed that the sole source of compensation for the plaintiffs will be the settlement amount previously agreed to in the proposed settlement of the parallel U.S. securities class action. Settlement in the U.S. case was $138 million. The CCWIPP claimed it lost nearly $500,000 on its investment in Biovail between February 2003 and March 2004 because of misleading statements about the company’s financial position. The settlement is subject to final approval by the Ontario Superior Court.

Real Estate Dragged Down By UK

Unlisted European real estate funds saw a negative return on their investments of -3.9 per cent in 2007, driven by the poor performance of the UK property market as well as currency conversion pressures attached to the dollar and euro, says INREV, the European association for investors in non-listed real estate funds. Its ‘Institutional Vehicles’ index showed the European funds generated a return of 12.5 per cent when the UK sub-index is excluded. However, the downturn in the UK market had a major impact as 71 of the 257 funds are UK-centric.

Hedge Fund Investment Flat

Net investment in hedge funds is almost flat this year as poor returns and the high profile implosion of funds is scaring off investors, says data from Hedge Fund Research. Its numbers show capital managed by hedge funds in the first quarter of 2008 increased less than one per cent, the smallest gain globally since the beginning of 2004. Of the $16.5 billion invested this quarter, almost half was put into distressed strategy funds.

Pelosi Speaks At Wellness Conference

The 12th Annual Health Work & Wellness Conference 2008 will take place October 15 to 18 in Calgary, AB. This year’s theme is ‘Moving Forward ... Giving Back’ as it examines how leading companies move forward and give back. Speakers include Peggie Pelosi, author of ‘Corporate Karma: How Business Can Move Forward by Giving Back.’ She will focus her keynote address on how corporate philanthropy can unleash the potential of organizations by energizing employees, improving loyalty and retention, enhancing personal satisfaction, and establishing trust. For more information, visit  http://conferences.healthworkandwellness.com

Symposium On Workplace Health

Author Brady Wilson will uncover the five core drivers of employee engagement and demonstrate how employers can use them to create a healthier, high performing work environment at Pathways to Business Health’s spring symposium. As well, Dr. Alice Cheng, a leading endocrinologist, will talk about the growing epidemic of diabetes and the hidden impact it is having on the workplace. It takes place May 21 in Mississauga, ON. For more information, call (519) 836-0184 or eMail info@crosslinks.ca

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Thursday, April 24, 2008

BC Launches Venture Capital Fund

British Columbia has launched a $90 million venture capital fund to support growing companies in the province's technology and life sciences sector. The BC Renaissance Capital Fund will be managed by venture capital fund managers from Arch Venture Partners, VantagePoint Venture Partners, Kearny Venture Partners, Walden Capital, Ventures West, and Celtic House Venture Partners. The fund will focus on early-stage investments in clean technology, information technology, new media, and life sciences.

Access To Cancer Specialists Provided

ACE Life has added CAREpath's Navigation System to its group critical illness plan – Spectrum. The plan will now offer access to a network of cancer specialists to its clients. Its provides individuals who have been recently diagnosed with cancer with one-on-one telephone counselling, guidance, and support through the stages of treatment.

Spending On Drugs Up In 2007

Spending on drugs in Canada was up 7.1 per cent in 2007. Speaking at ESI Canada’s annual ‘Outcomes’ conference, John Herbert, director of business development, said drug spend last year increased to $665, doubling what was spent 2000. The rising cost is due to a greater number of claims per claimant, in part due to the aging population, and increasing cost per script due to inflation and therapeutic mix of drugs.

Pension Accounting Document Now In Doubt

If it is unable to fix the issue of cash-balance type-plans, the International Accounting Standards Board may limit the project scope of its document on pensions accounting. The scope may only look at a shortened list of deferral mechanisms and disclosures. It might also adopt a less ‘conceptually pure’ benefit promise definition, potentially leaving career-average plans untouched. The IASB unveiled a paper last month proposing changes to pensions accounting requirements such as a new definition of contribution-based pension plans.

Fixed Income Defensive Stance Remains

The combination of a difficult phase for North American economies and ongoing stress in credit markets has driven fixed income investors deeper into safe haven investments, says Barrantagh Investment Management Inc.’s ‘Capital Markets Review First Quarter 2008.’ As a result, the demand for government bonds is virtually insatiable, especially for issues of short-term maturity, causing yields to continually move down. Bond markets have also reacted strongly to the rapid adjustment by the U.S. Federal Reserve with deep cuts in quick succession to the Fed funds rate. The behaviour of investors and the actions of the Fed have prompted both a pronounced steeping of the yield curve and a downward shift in yields across all maturities.

Employers Offering Health Insurance Declining

The number of U.S. workers nationwide with employer-provided health insurance from their own job fell each year from 51.1 per cent in 2000 to 48.8 per cent in 2006, says a study by the Economic Policy Institute (EPI). About 6.4 million fewer workers had employer-provided health insurance in 2006 than in 2000. The study found the loss of employer-provided health insurance since 2000 was not only driven by the loss of high-quality jobs, such as those in the manufacturing sector, but was caused by the significant decline in employers providing coverage within existing jobs across the board.

 Employers Focus On Keeping Workers Healthy

Employers continue to focus on trying to keep their workers healthy and productive as a way to hold down their workplace healthcare costs, says an Aon Consulting survey. Its ‘2008 Benefits and Talent Survey’ found that 64 per cent of U.S. employers follow a benefits strategy focusing on employee health and productivity. Wellness programs are the most common, increasing three-fold from 2007 to 2008. The top five workplace wellness programs for 2008 are promotion of exercise/physical activity, disease management, health risk appraisals, biometric screening, and telephone healthcare coaching.

 Northern Looks For Pooling Business

A U.S. Department of Labor opinion April 11 to permit pooling of U.S. pension assets with funds in different countries is prompting Northern Trust to go after multinational companies with U.S. pension plans in a bid to grow its pension pooling business. Northern Trust now works with seven companies that pool assets of pension schemes in various countries for investment purposes, to achieve economies of scale and thus reduce fees and costs. Four of these have U.S. pension schemes, which are not yet included in their pools.

Successful First Phase For Schroders

Schroders has gone live with the SimCorp Dimension investment management system. The system is to act as its portfolio book of record for its UK and US operations based in London. In the first of three phases, the main IT architecture has been implemented and the first group of portfolios has been migrated to the system.

Man Offers Capital Guaranteed Product

Man Investments is now offering Man Vision Index Notes, a capital-guaranteed hedge fund product that seeks to benefit from the key developments of the future including the growth of emerging markets, the impact of new demographics, climate change, and future sources of energy. It combines the approaches of two hedge fund managers, AHL and RMF. AHL employs systematic, statistically-based investment processes to identify inefficiencies in more than 120 markets around the world. RMF applies strategic research and innovation to select specialist hedge fund managers in new fields to create multi-manager portfolios.

 Companies Oppose Single-payer Healthcare System

Most U.S. companies do not support a single-payer healthcare system or state legislation mandating coverage. Instead, they prefer to rely on private sector solutions, says research by Watson Wyatt Worldwide and the National Business Group on Health. More than three-quarters (84 per cent) of employers do not support a single-payer system such as universal healthcare coverage as they are not willing to cede influence over programs that affect their workers' health.

Session Examines Derivative Disaster Prevention

Building a currency collar and preventing derivative disasters will be among the topics covered at a TMAC ‘Financial Risk Management’ session. It takes place June 18 and 19 in Toronto, ON. For more information, visit www.tmac.ca

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Wednesday, April 23, 2008

Clarity Needed On Foreign Investment Screening

More clarity is needed in Canadian policies related to foreign direct investment screening, says a report comparing both stated policies and actual practices in six countries for the Conference Board of Canada. The report looks at the foreign investment review policies and practices of Canada, France, Germany, Italy, the United Kingdom, and the United States. Based on the findings, the UK is by far the most open to foreign direct investment followed by the United States and Canada. The UK’s so-called ‘light touch’ approach to regulation has few foreign investment limitations and a competitive model based on attracting the regional or global headquarters of multinational enterprises. At the other end of the spectrum is the ‘economic patriotism’ embraced by France, a mercantilist investment model in which national champions are encouraged to merge and acquire abroad, but are shielded from foreign takeover at home.

 Public Sector Plans Do Something About Drug Costs

While public sector plans are doing something about the rising cost of drugs in Canada, private payers must get together to do something about it, says Michael G. Biskey, president of ESI Canada. Speaking at its annual ‘Outcomes’ conference, he said the public sector has captured cost savings. However, this is coming at the expense of the private sector and the gap between private sector costs and public sectors costs is growing. As well, the public sector recognizes it can’t protect the private sector, nor is it willing to. However, he said this does signal major opportunities for savings for players who take action.

CEOs Discuss Importance Of HR

Keeping workers engaged and focused on company values have been keys to their business’ success, say three ‘Top 50’ employer CEOs at the Canadian Institute’s ‘Winning HR Practices of Canada’ conference. Geoff Smith, Ellis Don Corporation; Hank Stackhouse, of Delta Hotels; and Ronnie Miller, of Hoffmann-La Roche Ltd.; agree that with greater worker shortages on the horizon, now is the time for HR personnel to foster higher levels of engagement among employees.

OSFI Clarifies ABCP Role

The Office of the Superintendent of Financial Institutions (OSFI) has further clarified its role in the ongoing Asset-Backed Commercial Paper (ABCP) issue. Superintendent Julie Dickson says OSFI fully supports efforts to get to the bottom of what happened. However, it does not oversee the firms that created the non-bank ABCP, so these firms are not subject to OSFI capital guidelines. OSFI guidelines also do not apply to the offshore banks that negotiated the bulk of the liquidity lines to non-bank ABCP conduits. They are subject to the capital rules of their home countries.

CalPERS Amends Governance

CalPERS’ investment committee has amended the pension fund’s corporate governance policy to include a 14-point checklist that gauges companies’ commitment to the environment. It will develop a survey with the Investor Network on Climate Risk to measure public equity managers’ ability to evaluate climate risk.

Smoking Cessation Has Payback

Employer sponsored smoking cessation programs can result in a “large payback” at a small investment. Speaking at ‘Health and Safety 2008,’ the International Accident Prevention Association’s (IAPA) annual trade show and conference, Andrea Docherty, a senior co-ordinator with the Canadian Cancer Society’s Smokers’ Helpline, said employers can save more than $3,300 per employer each year in costs related to smoking. This comes from reduced absenteeism and increased productivity with former smokers.

OETC Creates New Brand

OTEC has a new brand and an increasingly wide array of innovative HR solutions, tools and resources. With the completion of the re-branding, it has also launched a new website http://www.otec.org/. The new site is designed to assist companies and organizations with the tools they need to attract and retain high performing employees and become employers of choice.

Infrastructure Examined At Conference

The Toronto CFA Society will hold its 2008 Infrastructure Conference May 13 in Toronto, ON. ‘Capitalizing on Growth’ will discuss how firms are capitalizing on the growing need for infrastructure spending. Speakers include Paul Lechem, executive director, equity research, CIBC World Markets. For more information, visit http://www.torontocfa.ca/

Derivatives To Be Demystified

‘Derivatives Demystified’ will take place June 17 in Toronto, ON. It will help financial professionals understand key financial risk management concepts and use forwards, futures, and swaps. For more information on this TMAC ‘Money in Motion’ seminar, visit www.tmac.ca

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Tuesday, April 22, 2008

Canada Ahead Of U.S.

Canada is ahead of the U.S. in its treatment and care for mental illness and addiction, says Christopher Kennedy Crawford. The first child of Peter and Pat Kennedy Lawford, the actor/author told the opening session of ‘Health & Safety Canada 2008’ that he battled a drug and alcohol addiction for much of his young life. He said Canadian corporations recognize they can’t afford the cost of failing to deal with mental illness and addiction in the workplace.  

Institutional Funds Down In Quarter

Nearly three out of every four pooled funds in the Morningstar Canada’s institutional pooled fund database lost money during the quarter, with the best returns generally coming from fixed income funds. Its summary of performance for the first quarter of 2008 showed the best-performing pooled fund category for the quarter, as measured by the median return of its constituent funds, was Canadian inflation-protected fixed income with a gain of 4.4 per cent. The second-highest median return was the 3.1 per cent gain posted by the Canadian short-term fixed income category. The worst performer was the science and technology equity category with a 16.3 per cent median loss.
 

Members Move To Fixed Income

Members of 401(k) plans moved their assets from equities to fixed income investments during 80 per cent of the trading days in March, says the ‘Hewitt 401(k) Index.’ During the first quarter of 2008, participants transferred $2.8 billion from equities to fixed income investments on a net basis, which is the largest quarterly equity outflow during the history of the index. 

Panel Recommends CPP Changes

An external peer panel review of the Canada Pension Plan (CPP) resulted in 12 recommendations dealing with various aspects of the report including data, methodology, communication of results, and other actuarial issues. The recommendations ask the chief actuary to maintain the tradition of continual improvements to actuarial methods and to work towards addressing the needs of both the broad audience and more technical readers of actuarial reports. The external panel's findings confirm that the work performed by the Office of the Chief Actuary (OCA) of Canada on the report meets all professional standards of practice and statutory requirements and states that the assumptions and methods used are reasonable. As a result, the chief actuary's conclusions on the CPP's financial sustainability are well supported.

U.S. Institutions Report Negative Results

Most U.S. institutional investment plan sponsors reported negative results for the quarter ending March 31, 2008, says the ‘Northern Trust Universe.’ "Virtually all plan types were negatively impacted to some degree by the turbulent market and economic conditions experienced in the first quarter of 2008,” says Craig Tome, product manager, Northern Trust Investment Risk & Analytical Services. “For plan sponsors, this was the worst-performing quarter since the third quarter of 2002.” Within the Universe, corporate and public funds plans posted median returns of -5.7 per cent and -5.1 per cent, respectively, for the quarter while foundations and endowment plans performed slightly better with a median return of -4.7 per cent.

DC Assets Close In On 50 Per Cent

Defined Contribution plans account for 46 per cent of pension assets among U.S companies with more than $250 million in plan assets and 74 per cent of assets among companies with less than $250 million in pension assets, says research by Greenwich Associates. As well, the percentage of large plans that offer target date retirement funds as an investment option in their 401(k) plans increased to 80 per cent in 2007 from 60 per cent a year earlier. 

Shenandoah Life Selects Global IQX

Global IQX Inc. anOttawa, ON, software provider in business automation and business process management for the North American employee benefits industry, says that Shenandoah Life Insurance Company has licensed its software platform to provide capabilities for online quoting, rating, proposal generation, underwriting, renewal management, and detailed reporting. Shenandoah Life is a mutual insurance company licensed in 31 states and the District of Columbia. It markets individual life, health, and annuity products and group vision, dental, life, and disability products. It will use Global IQX to support its straight-through processing platform for its group insurance business.

Burton Speaks At AIMA

Journalist and author Katherine Burton will conduct an interactive luncheon discussion on her book ‘Hedge Hunters, Hedge Fund Maters on the Rewards, the Risk and the Reckoning.’ The book provides an insightful look at the hedge fund world as seen through the eyes of 18 powerful hedge fund managers. The AIMA Canada and Toronto CFA Society sponsored event takes place May 1 in Toronto, ON. For more information, visit http://www.aima-canada.org/

 Session Looks At Remuneration

‘Remuneration – A Strategic Tool’ is the subject of session June 10 to 12 in Toronto, ON. It will look at setting remuneration strategies to attract qualified candidates in sufficient numbers and to retain competent employees. For more information, call 800-861-6618.

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Monday, April 21, 2008

Canadian Pensions Stumble Continues

Canadian pension plans lost ground for the third consecutive quarter, as deepening financial woes depressed equity markets worldwide, says RBC Dexia Investor Services. Canadian pension funds slipped 1.9 per cent in the quarter ended March 31, pushing losses to -2.7 per cent for the latest 12-month period. Global equity was the hardest hit asset class, although a weaker loonie softened the blow for unhedged Canadian-based investors. The Canadian stock market also retreated, down 2.8 per cent this quarter, but this was somewhat cushioned by strong commodity prices. As gold and crude oil reached record highs, materials gained 7.3 per cent and energy was up 1.2 per cent – the only two sectors with positive quarterly returns.

 Final Chapter Of Bottoming Process Entered

The equity market is now entering the final chapter of the bottoming process, says a Marquest ‘Market Comment.’ Despite all the front page news that is negative, it says the stock market is rallying because all this negative news has already been priced into the market. The defensive posturing by investors in the past few months further supports this view. Investor psychology is at record lows and investors have acted upon their concerns by buying record amounts of money market funds and high quality government bonds.  As a result, the equity market can now more rationally price risk and refocus its attention back on the fundamentals of the economy and corporate earnings. 

Court Defines ‘Accidental’

The British Columbia Court of Appeal has upheld a lower court decision holding that an employee was entitled to the benefits under a group insurance contract even when they engaged in risky behavior if the unexpected consequences of that behavior are "accidental" within the meaning of the policy. A ‘Hewitt Monitor’ says in Gibbens v. Co-Operators Life Insurance Company, an employee suffered total paralysis of the lower extremities after contracting the Herpes virus (HSV-2) during unprotected sex. A group contract of insurance between his union and the defendant insurer said the employee was to receive accidental disease and dismemberment benefits, including a $200,000 payment, if he lost use of his legs from bodily injuries occasioned through "external, violent, and accidental means."

Investment Growth To Be Divided

Manitoba has updated its pension commission website as a result of a decision from the Manitoba Court of Appeal on a marriage breakdown pension division of assets, says the ‘Buck Outlook – April  2008.’ The court in Foster v. Foster upheld a lower court decision that said investment growth earned during a marriage on contributions made under a Defined Contribution pension plan prior to the marriage is to be divided upon breakdown of the marriage. It requires plan administrators to calculate a non-member spouse's pension entitlement to include interest on all pre-marriage contributions made by the member spouse.

 Caisse Writes Down ABCP

The Caisse de dépôt et placement du Québec has given a fair value of $10.7 billion for its investment in third-party asset-backed commercial paper (ABCP). Last year, it said it had $12.6 billion of third-party ABCP. However, its annual report has stated an unrealized decrease of 15 per cent or $1.9 billion.

Companies With DB Plans To Be Avoided

The British Private Equity and Venture Capital Association (BVCA) is recommending its members not buy companies with Defined Benefit pension plans. This follows a government decision to increase the enforcement powers of The Pensions Regulator (TPR), allowing it to issue contribution notices and financial support directions.The BVCA is concerned about the "unintended impact" the proposals would have on a wide range of corporate activity, including private equity.

Sponsors May Use Multi-advisors

Large 401(k) plan sponsors are looking for advisors with expertise in a particular service and will bring on more than one if they need to, says a Spectrem Group report. Nearly nine in 10 of the large plan sponsors said they have used an outside advisor in making plan decisions. As plan size increases, sponsors find it necessary to use the services of more than one individual/firm to advise on the retirement plan. Two-third of plans relying on a single advisor use one affiliated with their plan provider. For those using non-affiliated advisors, nearly half use a fee-paid employee benefit consultant. The others use TPAs, fee-paid investment consultants, and brokers/financial planners.

Hedge Fund Assets Grow

Global hedge fund assets grew by 27 per cent in 2007 to $2.65 trillion, says Hedge Fund Intelligence. It found that the 391 hedge funds manage $1 billion or more and they account for $2.083 trillion, roughly 80 per cent of the global total. The U.S. has 255, or 65 per cent, of the billion dollar funds.

Horne President Of Bissett

Michele Horne is president of Bissett Investment Management. She joined the company in 1997. Garey Aitken is chief investment officer. He is a 15-year industry veteran and joined the firm in 1998. Horne will oversee the balanced portfolio management and fixed income teams and Aitken will oversee the equity team.

Foreign Exchange Risks Examined

Understanding implicit and explicit foreign exchange risks will be one topic covered at TMAC’s ‘Money in Motion’ seminar on foreign exchange. It will also look at developing superior hedging programs. It takes place June 4 and 5 in Toronto, ON. For more information, visit www.tmac.ca

 Child Claims Affect Costs

Health claims for our children are often overlooked and yet there are disturbing trends already affecting employer costs. ‘Our Children Today – The Workforce of Tomorrow’ will help employers better understand the health issues affecting children and the implications for their health plans. The Group Insurance Pharmaceutical Committee event takes place June 5 in Toronto, ON. For more information, visit www.gipc.ca

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Friday, April 18, 2008

New Retirement In Store

Is the face of retirement changing? That was the issue at a CPBI Ontario region session ‘The New Retirement.’ Dr. Sherry Cooper, executive vice-president and global economic strategist for BMO Financial Group, discussed her book, ‘The New Retirement – How it will change our Future.’ However, she said while boomer retirees will live longer, more attention needs to be placed on ensuring they have a healthy retirement. Far too much money is being spent in North America on keeping people alive at any cost and not on prompting wellness, she said. While Hamilton said he agreed with most of Cooper’s book, he did challenge her claims that boomers are changing the face of retirement. He said that in most cases their retirement will be the same as their parents.

‘Sensible’ Reform Necessary

Canada is not immune to the retirement and pension issues facing all facets of society, says State Street Corp.’s ‘Pension Vision Report.’ It suggests that although pension savings have doubled in the 10 years leading up to 2006, to $24 trillion, the world’s total retirement liabilities are estimated to be six times that, at approximately $163 trillion. Employer-related retirement plans have been one of the great financial success stories. However, it notes that “sensible” reform is necessary in order to increase the number of plans and maintain benefits for companies and their employees. “Governments, social partners, and the financial services industry still need to do a lot to boost private provision,” says the report.

Caisse Major Creator Of Wealth

The Caisse de dépôt et placement du Québec is one of the largest investors in Québec, with total assets of $37.8 billion, which makes it a major creator of wealth for its depositors and for Quebecers in general, says its 2007 annual report. It says the returns obtained by the Caisse remain its primary contribution to Québec's economic development. Over the last five years, the Caisse has generated net investment income of $63.1 billion, including $7.9 billion in 2007. During the same period, depositors' net assets doubled, growing from $77.7 billion to $155.4 billion. The weighted average return on depositors' funds was 5.6 per cent in 2007, which places the Caisse in the first decile within the comparative universe of Canada's major pension funds.

Worst Performance For Hedge Funds

Hedge funds had their worst performance in almost four years in the first quarter, says the Morningstar 1000 Hedge Fund Index. It shows the performance of most investments made by the 8,700 hedge funds it tracks, slipped 1.51 per cent in the first quarter as stocks and bonds suffered as a result of the credit crisis. The funds faring the worst were those focusing on stocks, especially in emerging markets and small companies in the U.S.

Contact Increases Response Rates

Contacting participants at least three times at intervals of approximately 25 days can increase response rates by an average of 60 per cent, says MassMutual's Center for Behavioral Research. Its white paper, ‘Best Practices in Employee Campaigns: Helping Them Get There,’ also shows that providing a pre-filled tear-off postcard to participants resulted in a response rate of almost 10 per cent versus 1.5 per cent for a traditional direct mailing. 

Exposure To Private Equity Increases

Australia’s superannuation funds have increased their exposure to private equity to six per cent from 4.5 per cent, says a survey by the University of New South Wales. It found that while the pension schemes are moving more to private equity, returns expectations have been scaled back from 16.5 per cent in 2005 to 11.6 per cent. The research also found that the proportion of superannuation funds using fund of hedge fund strategies for investing in private equity soared 75 per cent from 25 per cent over the last three years.

Funded Status Near 100 Per Cent

The funded status of U.S. pension programs was just below 100 per cent at the end of the first quarter, says the Milliman ‘100 Monthly Pension Funding Index.’ It called 2007 a year of reassessment and implementation of new investment policies as pension plan sponsors responded to the new pension funding reform law, new accounting standards, improved funded status, and emerging demographic trends. The research found that pension expense decreased in 2007 to $19.3 billion from $27.3 billion the year before.

 Currency Readings Extreme

Investors have signalled that they believe exchange rates have already departed from fundamentals, says Merrill Lynch’s ‘Survey of Fund Managers for April.’ April’s results show some of the most extreme currency readings in the survey’s history with 50 per cent of asset allocators regarding the U.S. dollar as ‘undervalued,’ up from 30 per cent three months ago. In contrast, 71 per cent see the euro as over-valued, up from 55 per cent in January. As well, 52 per cent of investors still believe that UK sterling is overvalued despite its recent collapse.

Cruikshanks Returns To Hewitt

August Cruikshanks is director of research for Hewitt Associates’ Canadian investment consulting practice. He worked with Hewitt from 1998 to 2003. He left in 2003 to become managing director, public market investments, at OPSEU pension trust. In his new role, he will focus on general research as well as investment manager research.

Selling Practices Examined

Some of Canada’s leading experts in the fields of practice management, transition, and succession will take part in Mindpath’s ‘Buying & Selling of Financial Advisory Practices Levels I & II.’  Speakers include Peter Wouters, director, estate planning, at Empire Life, who will present case studies of practice sales; and Rob McClelland, senior financial advisor and vice-president, Assante Wealth Management, who will speak on book building through acquisition. It takes place April 16 in Kleinburg, ON. For more information, visit http://www.mindpath.ca

Conference Theme Face Of Change

‘The Face of Change’ is this year’s theme for the Canada's Venture Capital & Private Equity Association’s Annual Conference. The conference will include presentations and panel discussions with equal emphasis on both venture capital and private equity issues. Close to 500 industry professionals and influencers from across the country and the U.S. are expected to attend. It takes place May 28 to 30 in Montreal, QC. For more information, visit www.cvca.ca

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Thursday, April 17, 2008

Market Dislocations Improved Funded Status

An increase in investment grade corporate bond yields as a result of the recent credit market dislocation has caused U.S .corporate pension liabilities to decline, and thus increased U.S. corporate funded status, say a Merrill Lynch research report. With the significant growth in Liability Driven Investment strategies (LDI) over the past few years, those plan sponsors who have implemented LDI received an additional benefit, as decreasing yields on these investments have increased the value of assets, which further increased funded status. 

Hedge Funds Expect Inflows             

Hedge funds are confident that they will see heavier capital inflows despite gloomy forecasts for the U.S. economy, says Rothstein & Kass. The CPA firm’s latest survey found that more than 90 per cent of hedge fund professionals polled believe they will enjoy a significant bump up in capital flows. About three-quarters predicted there will be more hedge fund launches this year. Only one-fourth expect more hedge fund closures.

CC&L Outlines Multi-Boutique Approach

By adopting a multi-boutique asset management business model, Connor, Clark & Lunn Financial (CC&L) says it’s well-equipped to handle any challenges ahead. At a CC&L media luncheon, the independently owned firm explained how foreign competition, changing demographics, and consolidation are affecting the asset management industry, and why adapting to these changes is necessary. The group clarified its distinctive multi-boutique structure which ensures investment management, operational management, and distribution are kept as three distinct functions, allowing each to operate effectively and without interference.

Social Index Performance Slips

The Jantzi Social Index decreased in value by 0.59 per cent during the month of March. For the same period, the S&P/TSX Composite Index and the S&P/TSX 60 Index decreased by 1.43 per cent and 1.22 per cent respectively. From its inception on January 1, 2000, through March 31, 2008, the JSI achieved an annualized return of 7.91 per cent, while the S&P/TSX Composite and the S&P/TSX 60 had annualized returns of 7.94 per cent and 7.8 per cent respectively, over the same period.

 Integrated Closes Fund

Integrated Asset Management has closed its real estate fund GPM 11, raising a total of $148 million in commitments. The largest fund to be raised in the history of the GPM series, this marks the first time Integrated conducted the fund-raising with no assistance from a third-party marketer. For five of the investors (all university pension, foundation, and endowment funds), this was their first allocation to real estate.

 Hedge Fund Managers Collect Windfall

The top 50 hedge fund managers earned a combined $29 billion in 2007, says Institutional Investor's ‘Alpha.’ Five managers earned more than $1 billion. It says one contributor to the amounts of money hedge fund managers are making is the unraveling of the traditional ‘two and 20’ method of compensation. Some of the bigger hedge funds are now charging as much as five per cent of the invested principal and 40 per cent of the profits.

 Canada Needs Single Regulator

A national securities regulator is a must-do initiative to improve the state of Canada’s securities regulatory system, says the chairman of the Ontario Securities Commission. Speaking to the Economic Club of Toronto, David Wilson said Canada needs to beef up securities regulation enforcement and a single regulator would be one way to do that. He cited a recent report from the International Monetary Fund which suggested that the Canadian financial system would be much better off with a common regulator.

Groups Back Uniform 401(k) Fee Disclosure Act

The American Society of Pension Professionals & Actuaries and the Council of Independent 401(k) Recordkeepers both support 401(k) fee disclosure legislation which will be considered by the House Education and Labor Committee. In particular, they support the uniform application of its service provider disclosure rules to all services providers, regardless of their business structures. Modified from its original language, the substitute language would require all 401(k) plan service providers to issue a fee disclosure statement to the plan administrator in advance of entering into a contract for services. 

CPBI Sets Annual Meeting Date

The CPBI’s annual general meeting for 2008 will take place May 14 in Toronto, ON. It takes place during CPBI Forum which runs May 12 to 14. Among the matters to be considered are its 2007 audited financial statement and annual report. These can be seen at http://www.cpbi-icra.ca/

 Foreign Currency Exchange Risk Examined

‘Advanced Treasury Concepts’ will take place May 29 in Toronto, ON. This TMAC ‘Money in Motion’ seminar will examine topics such as hedging foreign currency exchange risk and managing Canadian and international interest rate risk. For more information, visit http://www.tmac.ca/

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Wednesday, April 16, 2008

Limits On Funding Worsens Plan Deficits

The decline of Defined Benefit pension plans in Canada is being exacerbated by federal laws and regulations that foster employer underfunding, says a study by the C.D. Howe Institute. ‘Lifting the Lid on Pension Funding: Why Income-Tax-Act Limits on Contributions Should Rise’ says one example is the prohibition by the federal Income Tax Act of sponsor contributions to single-employer, DB plans when their assets exceed recorded liabilities by 10 per cent. Recent volatility in asset prices and interest rates, and resulting volatility in DB plan balance sheets, highlights the desirability of raising – or even removing – this restriction. Limiting employer contributions stops plan sponsors saving in fat years to cushion lean ones. It either forces sponsors to inflate the size of reported liabilities so the cap does not constrain funding, or stops companies from pursuing consistent contribution strategies as interest rates and asset markets fluctuate.

 ABCP Protection Period Extended

The bankruptcy protection period for the currently frozen $32 billion in asset-backed commercial paper (ABCP) has been extended until after noteholders vote on a proposed restructuring plan. An Ontario Superior Court extended the protection until May 30. A committee chaired by lawyer Purdy Crawford has been working since last August on a restructuring plan for the frozen notes. A proposal has been tabled and noteholders are scheduled to vote on the plan April 25.

OPTrust Set To Eliminate Deficit

The OPSEU Pension Trust (OPTrust) expects its upcoming actuarial valuation to mark the elimination of its current funding deficit. It achieved a 5.6 per cent investment return in 2007, outperforming its weighted benchmark return of 4.2 per cent. This is the eighth consecutive year in which OPTrust has topped its benchmark. Its diversified investment portfolio generated investment income of $659 million in 2007. This contributed to an increase in the OPSEU Pension Plan’s net assets to $13.6 billion at year-end, up from $13.1 billion in 2006.

 Brodkin Honoured By Ontario CPBI

Wendy Brodkin has been awarded with the CPBI Ontario region’s first Volunteer Recognition Award. The president of T. Rowe Price Canada earned the honour for her years of service to the CPBI Ontario region board including a term as chairman. As well, she was cited for her working in establishing its very successful investment forecast breakfast each January. Brodkin is a member of the editorial advisory board of Benefits and Pensions Monitor.

Older Workers Want Shorter Work Week

Companies looking to retain older workers are going to have to offer perks such as shorter work weeks and flexible hours, says a workplace survey from RBC. Canadians who are 55 years of age and older would prefer to work Tuesday through Thursday and work mainly in the morning from nine to noon. "With unemployment levels at an all time low, good employees are harder to find. Older workers are becoming an integral part of the Canadian workforce and employers need to look at ways of retaining and attracting them," says Christianne Paris, vice-president, recruitment and learning. "Employers may have to alter the work environment or their recruitment profiles to suit older workers who are looking for more flexibility in their lives as they either transition into retirement or look to come back into the workforce."

Comparisons To Japan Faulty

Observers who point to the experience of Japan during the 1990s as a blueprint for the future of the U.S. as a result of its present financial crisis are comparing apples and oranges, says the Natcan ‘Weekly Marker.’ The broad dispersion of losses from the current credit crisis is one important difference between the U.S. and the Japanese experiences. It says the circumstances in each country are similar in one single regard: large drops in asset values. Japan’s economy and society were, and still are, characterized by extensive government intervention and inflexible rules while the U.S. is all about private market solutions and very flexible markets.

Harmonization Difficult Task

The Committee of European Insurance and Occupational Pension Supervisors would face a difficult task if it decided to harmonize solvency requirements for pension funds. Its report on how countries in the European Economic Area (EEA) measure the levels at which companies must fund their Defined Benefit pension schemes. However, the report shows that funding regimes for state pension systems are far apart due to national solutions based on different historical and cultural bases that have been crafted over many years, and the social contract between workers and employers. Against this background, it says persuading countries to adopt a basis for solvency and member protection that differs from what is currently in place looks quite a challenge.

Best Practices Proposed For Hedge Funds

Sets of best practices for U.S. hedge funds attempt to increase their accountability. Two private sector committees established by the President’s Working Group on Financial Markets have released their best practices for these managers. They call on hedge funds to adopt comprehensive best practices in all aspects of their business, including the areas of disclosure, valuation, risk management, business operations, compliance, and conflicts of interest.

Smaller Plans Fall Behind

Sponsors of small U.S. corporate pension plans are falling behind their larger counterparts when it comes to preparing for new mark-to-market accounting rules and changes in global investment market, says research from Greenwich Associates. Its  ‘2007 U.S. Investment Management Research Study’ shows large corporate plan sponsors – along with many public pensions – are taking radical steps to change the way they manage pension liabilities and structure fund assets as a result of the new mark-to-market accounting rules. These rules require plan sponsors to recognize pension funding status on the corporate income statement.

Patients Forced To Pay

Health insurance companies in the U.S. are adopting a new pricing system for very expensive drugs, asking patients to pay for prescriptions for medications that may save their lives or slow the progress of serious diseases, says a New York Times article. The new pricing system sees insurers abandoning the traditional arrangement that has patients pay a fixed amount for a prescription, regardless the drug's actual cost. Instead, they are charging patients a percentage of the cost of high-priced drugs, usually 20 to 33 per cent, which can amount to thousands of dollars a month.

Walker Handles Institutional Sales

Chris Walker is vice-president of institutional sales at Invesco Trimark. He will be responsible for growing its Defined Contribution pension plan business in Canada.

Seller At Bennett Jones

Susan Seller is a partner in the Toronto office of Bennett Jones LLP. Her practice will focus on all aspects of pension and employee benefits law.

 Seminar Examines Options

‘Financial Risk Management’ will take place May 14 and 15 in Ottawa, ON. The TMAC  ‘Money in Motion’ seminar will look at topics such as understanding options and the factors effecting option pricing and using a total return swap in pension fund management. For more information, visit www.tmac.ca 

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Tuesday, April 15, 2008

Quebec Accommodates Phased Retirement

Quebec has introduced a bill which allows employees to phase themselves into retirement. Bill 68 would amend its ‘Supplemental Pension Plans Act (SPPA)’ to allow employees to receive a retireme