Monday, September 27, 2010

Canada's Pension System Gets High Praises

BIV Business today reports, Canada’s pension system remains among world’s strongest:
Canada’s public pension system helps make its financial system one of the strongest in the world.

The World Economic Forum has called Canada’s financial system the strongest in the world for the past three years. Part of the credit for that is reflected by the Canada Pension Plan, said David Denison, president and CEO of the Canada Pension Plan Investment Board (CPPIB).

At an event held at the Sheraton Wall Centre last week, Denison noted that reforms made 15 years ago are putting Canada in the enviable position of having one of the most secure national pension systems in the world.

“One of the primary reasons for the fiscal instability in Greece is that their national pension system is not sustainable. We’ve had strikes in France over the last two weeks because of changes to their retirement system. The same situation is in Spain, Italy. So many countries around the world are just getting to this issue because they’re being forced to.”

Denison noted the financial crisis did impact the CPPIB’s growing pool of investment capital dedicated to paying future benefits, however, the crisis also created many investment opportunities that will benefit future CPP beneficiaries. The key for the fund’s management is to stay focused on long-term investing.

“The vast majority of market investors, because of who their clients are and how they get chosen and how they’re compensated, have relatively short-term investment horizons. We’ve got to go against the grain and utilize our competitive advantages. Those are things at the forefront of my mind.”

More insights into the CPP fund from Denison are in this week’s print edition of Business in Vancouver newspaper.

Having just returned from Greece, I can vouch that Canada's pension system is among the world's strongest, but that doesn't mean that we can't improve it. Mr. Denison is right, pensions have to adopt a long-term focus, but they also need to implement more transparency and accountability. I'm too tired to go over my thoughts, but those of you who regularly read my blog know that there is no such thing as a perfect pension system.

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