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April 25, 2022

RETIREMENT AGE CHANGE CONFIRMED

A British Columbia court has rejected an effort to prevent a pension plan from raising its normal retirement age to address funding concerns. Members of the B.C. Credit Union Employers’ Pension Plan tried to oppose the pension trustees’ decision to increase the plan’s normal retirement age to 65 from 62 years. They alleged that the trustees failed to warn the plan’s members about the solvency deficit that motivated that decision. The plan’s trustees decided to raise the normal retirement age, effective January 1, 2017, in response to concerns about the plan’s funding status. The plaintiffs alleged that in doing so, the trustees breached their fiduciary and other duties to the plan’s members. Among other things, they argued the decision to raise the retirement age was based on “outdated and inaccurate financial projections” and that it favoured the interests of the credit unions that participate in the plan over the plan members. However, the court found the plaintiffs failed to establish grounds for the court to interfere with that decision, saying that trustees considered actuarial and legal advice when weighing options for addressing the plan’s solvency concerns.

April 25, 2022

INVESTMENT RETURNS PULLBACK

Canadian pension plans experienced a pullback in investment returns during the first quarter of 2022 as markets entered a heightened period of uncertainty, says the ‘Northern Trust Canada Universe.’ The median Canadian pension plan returned -6.4 per cent for the quarter. The quarter witnessed a resurgence of volatility across financial markets triggered primarily by the Russian invasion of Ukraine. A high inflation trend was largely the focus entering 2022, and the escalating conflict ignited soaring energy and commodity prices and supply constraints that further fueled inflationary concerns. Lockdowns initiated in China to combat coronavirus cases also contributed to fears surrounding supply chains. As a number of central banks responded with a monetary tightening tone during the quarter, the Canadian equity market held up well with the S&P/TSX composite generating a positive return in contrast to negative results posted by global peer indices for the quarter. The Canadian bond market felt the wave of rising yields and a recent inversion of the U.S. yield curve, as bonds posted negative returns for the period. Katie Pries, president and CEO of Northern Trust Canada, says, “These mounting tensions cast a new level of uncertainty across global markets, which rippled across Canadian pension plan returns as witnessed by the sharp decline in the median return for the period. At the same time, rising interest rates have provided some reprieve to pension plan funding ratios.

April 25, 2022

EMPLOYEES LOOK FOR HIGHER PAY

Almost half (43 per cent) of employees around the world are likely to quit in the next 12 months – driven mostly by a desire for higher total pay, better care