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Daily News Alerts

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November 30, 2022

Pension Funds Key Target For Cyber Threats

Cyber threats are typically financially motivated making pension funds a key target, says Ryan Wilson, cybersecurity partner at Ernst & Young Canada. He told the Financial Services Regulatory Authority of Ontario (FSRA) ‘Cyber Security and Pension Plans’ session that they are looking at targets where they can extort or steal information that has value for financial gain. Of cybersecurity attacks, ransomware continues to be most common and these attacks are getting more sophisticated. If fact, he said organized crime is now offering ransomware as a service and helps these criminals craft an attack. They are also attacking new technologies, looking for vulnerabilities they can take advantage of. As a result, plans need to make sure cyber protection is included in these. Part of the effort to protect against these attacks is identifying the key risks facing an organization. This includes threat modelling, identifying the critical assets that need to be protected. Understanding this means funds can put together plans that are risk based, proportionate, and focus on what matters to them. David Bartucci, head of pensions stakeholder relations and special projects at FSRA, said attacks are being made on plans of all sizes and characteristics. However, administrators need to recognize their fiduciary duty involves managing plan risk and cyber-risk is a key part of that. They need to ensure appropriate controls and training are in place.

November 30, 2022

HSBC Sells To RBC

HSBC is selling its business in Canada to Royal Bank of Canada (RBC) for $13.5 billion dollars as HSBC, which once billed itself as the world's local bank and built a global network of retail banking businesses, has in recent years been cutting those back in a bid to improve profits. It had $134 billion in assets as at September 30. Its commercial bank brings strong capabilities focused on international business clients, including in liquidity management, trade finance, global cash management, and sustainable finance.

November 30, 2022

Priority Bill Passes Third Reading

The House of Commons has passed a private member’s bill that will protect employee pensions if a company declares bankruptcy. Sponsored by Conservative MP Marily Gladu, ‘Bill C-228, an act to amend the Bankruptcy and Insolvency Act, the Companies’ Creditors Arrangement Act, and the Pension Benefits Standards Act, 1985,’ passed unanimously with a vote of 318 to zero. The bill will ensure that employee pensions are prioritized before any other financial liabilities are addressed should a corporation become insolvent or declare bankruptcy. Employees would, in effect, become preferred creditors in bankruptcy settlements. An estimated 1.2 million private sector workers with defined benefit plans will have their pensions protected with this bill. It did face opposition from a variety of groups. The Canadian Bankers Association says it would lead to higher borrowing costs for companies while the Association of Canadian Pension Management (ACPM) says the proposed means to accomplish the goal of securing retiree pensions in the event of employer insolvency “are flawed and will have serious and undesirable unintended consequences.” The bill now goes to the Senate.

November 30, 2022

Alternative Managers More Resilient

Asset managers in the alternative assets space “are likely to be more resilient given the stability of their fees, long-term closed-end fund structures, and growing perpetual capital structures,” says a Fitch analysis. It says continuing negative economic conditions are likely to result in a challenging year for asset managers in 2023, although those focused on alternatives will be most resilient, says a Fitch analysis. Asset managers in the European market, where inflation, especially energy costs, is squeezing retail investors’ budgets, will see a moderate decline in net flows next year. It says that “financial market volatility is likely to continue in 2023 as high inflation, interest rate rises, and the economic slowdown continue to unsettle investors.”

November 30, 2022

ACPM Offers Retirement Saving Course

The Association of Canadian Pension Management (ACPM) has launched a ‘Retirement Saving Course’ to empower Canadians wishing to learn the basics of retirement savings and to foster awareness of the importance of retirement income savings at any age. Citing a Canadian Institute of Actuaries (CIA) survey, it says more than half of Canadians do not have a financial plan for their retirement. Its hope is that the course will help many gain an understanding of retirement savings and encourage planning adequately for the retirement years. This has been launched during Financial Literacy Month to complement financial literacy education efforts by the federal and provincial government and replaces the retirement literacy quizzes available on the ACPM website from 2016 to 2022.

November 30, 2022

Active Outperforms Passive

T. Rowe Price research shows that over the last 20 years ended September 30, its actively managed funds consistently outperformed passive peer funds – net of fees. Looking at rolling monthly 10-year periods, the findings show its funds beat comparable passive fund averages 73 per cent of the time, more often than the aggregate of all actively managed funds in the Morningstar Direct database. This also compares favourably to the five largest active management firms by assets under management in the mutual fund space, whose funds, when aggregated together, have outperformed the same passive averages 62 per cent of the time.

November 30, 2022

OMERS Adds Calibration Services Stake

OMERS Private Equity has entered into an agreement with EQT Infrastructure V, a fund controlled by purpose-driven global investment organization EQT, which grants exclusivity to EQT to acquire a majority stake in Trescal, a global leader in calibration services. As part of the proposed transaction, OMERS Private Equity will re-invest for a 25 per cent holding in the group. Established in 2004 and headquartered in France, Trescal provides calibration services offering a comprehensive range of solutions supported by measurement, repair, qualification, validation, and asset management.

November 30, 2022

Creating Fund Lineup Examined

‘Keep it fresh – It’s time to change the way you build your fund lineup’ will be examined at a Benefits and Pensions Monitor Meetings & Events session. Canada Life’s Craig Christie, vice-president, group retirement savings and investments; Vathsala Martin, director, product development, wealth solutions product development; and Tyler Wiley, assistant vice-president, investment funds wealth solutions, investment management and research; will outline the strategies, approaches, and accountabilities that go into creating a modern, relevant, and competitive fund lineup. Topics include fundamental investment principles and product development. It takes place December 6. Information is at https://register.gotowebinar.com/register/3676941032819920910

November 29, 2022

Less Than Half Of HNWs Have Retirement Plan

While 92 per cent of high-net-worth (HNW) Canadians (defined as having $1 million or more in investable assets) have at least an idea of what retirement will look like, only 47 per cent have a detailed retirement plan, says a study by IG Private Wealth Management. It found the pandemic and its economic aftermath have had a lasting effect on their retirement planning, with many rethinking their goals and how they will accomplish them. While 85 per cent are confident that they will have enough money to support their lifestyle in retirement, 48 per cent reported changes to how much money they will actually need to retire. Further, 46 per cent have reported changes to when they will retire, what their retirement will look like (45 per cent) and how they will manage their investments in retirement (46 per cent). Of those who are considering delaying retirement, 51 per cent reported they will need to work longer because their investments are earning less and costs of living are on the rise.

November 29, 2022

Bill Could Apply To All Pension Plans In Future

Bill 36, Progress on the Plan to Build Act (Budget Measures), 2022’ which would require target benefit pension plan to set out pension plan funding and governance policies may also apply to all plans in the future, says Stephanie J. Kalinowski, a partner at Hicks Morley. The bill, which has been introduced for first reading, includes amendments to the Pension Benefits Act (PBA). These amendments to the PBA set out the circumstances under which a collective agreement is included as a document that creates and supports a pension plan and must be filed with the pension regulator. This occurs if the plan is established under the collective agreement; if the collective agreement incorporates the plan by reference in whole or in part; or the terms of the plan are set out in whole or in part in the collective agreement. It also provides for transitional measures in both cases to allow pension plan administrators to file these policies within a prescribed window of time. It also proposes to repeal certain not-yet-in-force sections of the ‘Stronger, Fairer Ontario Act (Budget Measures), 2017.’ These sections of the act are similar to Bill 36’s requirement for funding and governance policies.

November 29, 2022

Purpose Holds Distribution Levels Steady

Purpose Investments Inc.’s ‘Longevity Pension Fund’ is holding distribution levels steady for all cohorts in 2023, despite dealing with a very challenging market this year. Its annual report comprises two main sections: a recap of the fund in 2022 and an actuarial review conducted by LifeWorks. The fund “addresses one of the most significant social challenges in Canada: income security for retirees,” says Fraser Stark, president of the Longevity Retirement Platform at Purpose Investments. To provide transparency and demonstrate its ability to deliver on its objectives, Purpose developed an income policy that describes how distribution levels are managed and by how much distribution levels may be adjusted under different scenarios. By taking a holistic view of both assets and liabilities, the fund is able to optimize the level of income paid to unitholders while balancing against the risk of depleting assets. In its review, LifeWorks confirmed that the expected long-term evolution of distribution levels remains robust and broadly consistent with its previous review in February of this year. The results of both reviews further validate that Longevity could achieve the initial lifetime income rates and that those rates are expected to increase over time in the majority of cases.

November 29, 2022

Ontario Teachers’ Acquires Renewable Energy Stake

The Ontario Teachers’ Pension Plan Board (Ontario Teachers’) has acquired a 25 per cent minority stake in Scotland-based energy provider SSE plc’s electricity transmission network business, SSEN Transmission, to provide clean, affordable renewable energy to millions of homes and businesses across the UK. SSEN Transmission, which operates under its licensed entity, Scottish Hydro Electric Transmission plc, transports electricity generated from renewable resources – including onshore and offshore wind and hydro – from the north of Scotland across more than a quarter of the UK land mass. The investment by Ontario Teachers’ will help support the UK government’s net zero 2050 targets, including the delivery of 50GW of offshore wind capacity by 2030.

November 29, 2022

Cullen Taking Top Job

Mal Cullen is chief executive officer for CIBC Mellon, effective December 1. In this role, he is responsible for its strategy, client relationships, and service delivery. He replaces Steven R. Wolff, who will retire from CIBC Mellon after six years of leadership.

November 28, 2022

Access To Pensions Made Easier

Saskatchewan has introduced legislation to make it easier for employers to provide access to pensions to workers in the province. Bill 108, or The Pension Benefits Amendment Act, 2022, will give Saskatchewan employers and locals more options to fund and access retirement savings. Several of the changes introduced in act align provincial legislation with recent amendments to the federal Income Tax Act. These changes will support Saskatchewan residents who are members of defined contribution plans by giving employers the ability to offer new solutions that lessen the risk of retirees outliving their retirement income. The amended legislation also provides increased flexibility for employers, such as the ability to establish solvency reserve accounts and to use letters of credit in lieu of solvency deficiency contributions (up to a capped maximum). The new provisions also remove liability of plan administrators that enter into an annuity buyout contract with an insurance company, as long as certain conditions are met.

November 28, 2022

Slavery Remains Painful Issue

Slavery was formally abolished in the U.S. and Europe long ago. Forced labour, debt bondage, forced marriage, slavery and slavery-like practices, human trafficking, and the worst forms of child labour remain painful issues for the world, say AllianceBer