Pension Pulse

Bob Tita of the Dow Jones Newswire reports in the WSJ, Pension Accounting Change Could Make Company Profits Less Predictable : Efforts to make pension accounting more transparent could cause corporate profits to become more volatile if gains and losses from pension assets are mingled with results from companies' business operations. The agency for international accounting standards is expected to take up a proposal next year that would require companies with defined-benefit pensions to report annual changes in the value of their pension assets as part in their income statements. Under current procedures, returns on pension investments and gains and losses in pension-plan assets are accounted for in small increments over several years to keep them from skewing companies' earnings. The change would provide a more immediate snapshot of companies' pension-plan performance. But U.S. companies, aside from Honeywell International Inc. (HON), have so far been ...

James Bradshaw of the Globe & Mail reports, Universities facing service cuts to climb out of ‘pension abyss’ : Canadian university pension plans have fallen into a collective $2.6-billion hole, and may have no choice but to cut services to begin climbing back out of it. Most faculty and staff have defined benefit pensions, which promise a set retirement income based on service and salary. But those funds suddenly cratered when markets crashed in 2008, most losing 15 to 30 per cent of their value. Now, provincial laws will force schools to find money to plug those holes – sometimes tens of millions of dollars a year – an untimely headache for institutions already warning of cuts to come due to static government grants, limits on tuition hikes and shaky endowment returns. A Globe and Mail survey of more than 20 Canadian universities shows a combined pension plan solvency deficit of at least $2.59-billion, and since some schools last crunched their numbers before 2008, that...

Connie Woodcock of the Toronto Sun reports, Preparing for a pension riot : My family knows me too well. They knew I wasn’t going to react well to my birthday this year — I’d been worrying about it for months. So last weekend, they threw me a big, fat, happy-last-day-of-being-59 party with lots of food and wine and presents and jokes and even a speech. And really, it helped — a little. But turning 60 is a traumatic event in your life any way you slice it. And, no, 60 is not the new 40. No matter how much you keep up with pop culture, no matter how many times a week you go to the gym, you’re not a kid any more. You may even have to abandon the term “middle-aged” soon. In my 40s, it never occurred to me 60 would be such a boulder in my path. Sixty-five, I thought, would be terrible — the day society officially kicks you to the curb. But then my best friend hit the big birthday and it turns out 65 isn’t that bad. They start sending you cheques every month, they pay for y...

Stefania Moretti of QMI Agency reports in the Toronto Star, The pension conundrum : Recent calls to boost the Canada and Quebec Pension Plans will further burden business owners and push wages down as much as 2.5%, according to a new report. The Canadian Federation of Independent Business said it has studied recent proposals from the Canadian Labour Congress and others to up CPP and QPP benefits and premiums. The CLC proposal, it found, will force pay down as much as 2.5% in the long term. With Canadians more indebted than ever, retirement funding has become a hot-button issue, with many claiming the CPP and QPP aren’t enough to sustain quality of life, especially for private sector workers. The average retired Canadian man gets $6,800 a year from the CPP, while the average woman gets just $4,700. Canada’s finance ministers have received a flurry of proposals on how to revamp the system ahead of their meeting on retirement income in December. “One way or another eve...

Stephen Collins, Harry McGee and Mary Minihan of the Irish Times report, Welfare and pensions hardest hit in €15bn package of cuts and taxes : A sharp increase in taxation, deep cuts in social welfare payments, a reduction in the minimum wage and a modest property tax are among the elements in the Government’s four-year National Recovery Plan. Tax relief on pensions will be reduced dramatically and recipients of public sector pensions will face cuts for the first time. The 140-page plan published yesterday outlines a package of measures designed to reduce public spending by €10 billion and raise an extra €5 billion in taxes by 2014. The plan will be front-loaded with a €6 billion adjustment coming in the 2011 budget, to be published on December 7th. That will involve extra tax of about €2 billion in a full year and cuts in social welfare of €760 million. The Government’s prospects of getting the budget through the Dáil eased last night when it emerged that Independent TDs Jackie Healy-...

Nathaniel Popper of the LA Times reports, Major investment firms subpoenaed in insider trading probe : A number of high-profile investment firms — including two that manage mutual funds owned by millions of Americans — have received subpoenas in a federal probe of alleged insider trading on Wall Street. Janus Capital Group Inc. , a Denver-based mutual fund family, reported in a regulatory filing Tuesday that it had "received an inquiry regarding the recently disclosed insider trading investigation on Wall Street calling for general information." Boston-based Wellington Management, which invests money for a number of pension funds and mutual funds, also received a government request for information, Bloomberg News reported. One of the biggest names in the hedge fund world, SAC Capital Advisors, wrote in a letter to clients Tuesday that it had received a government request for information, according to a person who saw the letter. Another big hedge fund operator, Chicago-based ...

The FT reports, Value of public pensions falls by quarter : Reforms to public-sector pensions have already cut their value to the typical employee by 25 per cent, according to a study by the Pensions Policy Institute . Further changes being considered by Lord Hutton, the former Labour cabinet minister, in his review of public-sector pensions could reduce the cost to the taxpayer by a third during the next 40 years. That would come at the price, however, of making the schemes appreciably less generous, the institute said in a study funded by the Nuffield Foundation, which is to be published on Tuesday. Under the most radical potential reform, the average earner would get just over 40 per cent of their pay in retirement, against a current replacement rate of 64 per cent. “Changes that Labour and the coalition government have announced will already reduce the cost of public-sector pensions from 1.2 per cent of GDP [gross domestic product] today to 1 per cent by 2050, even if t...

It's been exactly one year since I wrote about an exciting but controversial treatment for Multiple Sclerosis (MS), called the Liberation treatment . A lot has happened in a year, and I think it's important to share some of my thoughts with you. Please feel free to relay the information back to anyone you know who has MS. Let me begin with the tragedy that happened a month ago. CBC reports, Lack of follow-up deplored after MS death : Some Canadians who've left the country for a controversial multiple sclerosis treatment remain frustrated by what they consider a lack of medical support after an Ontario man died following the procedure. CBC News reported Thursday that Mahir Mostic, 35, of St. Catharines died on Oct. 19, one day after doctors in Costa Rica tried to dissolve a blood-clot complication following the vein-opening procedure. He first went to the Central American country in June to have a mesh stent inserted to prop open a vein in his neck in hopes it would ...

Diane Urquhart sent me an update on the Nortel benefits fight: Please watch this November 18th interview by Evan Solomon of Jackie Bodie, a Nortel long term disabled employee with Parkinson's Disease, and Senator Art Eggleton, sponsor of Bill S-216: Watch interview by clicking here . Jackie Bodie says: "Take a position. Do the right thing. Pass Bill C-216. It is the right thing to do. By doing nothing, by leaving us hanging, in my opinion, they are effectively giving their blessing to the court judge and lawyers we are dealing with to bury us alive. I do not know why. I do not understand what I and 400 other sick people did wrong to be treated like this." Below are the videos of the Senate Banking Trade and Commerce Committee Hearings on Bill S-216, which were held on November 17 and 18, 2010. This is a bill to amend the Federal bankruptcy laws to provide for the preferred status of long term disability wage loss replacement income and medical benefit cl...

Bloomberg reports, New York City May Cut Assumed Rate of Return on Pension Assets, Liu Says : New York City may reduce the assumed return on its $100.5 billion of pension investments from the current 8 percent rate, Comptroller John Liu said today. The move would increase the amount of money the city must contribute to its five public retirement plans even as it faces a $2.4 billion budget deficit next year, Liu said after a speech at the Union League Club in Manhattan. The city’s pension costs are expected to rise more than 15 percent next year, to $8.3 billion, budget director Mark Page said today. That’s about 20 percent of municipal tax revenue, he said. “The city has maintained an 8 percent assumed rate for a long time,” Liu said. “It’s fair to say that the assumption will be lowered at some point.” Public-pension funds from New York state to Illinois are cutting their expected returns amid market losses and in the face of a sluggish economy. New York state’s $132.8 billion ret...

The Canadian Business Journal reports, Raise retirement to 67, think tank says : A policy think tank believes increasing retirement eligibility by two years may fix an impending demographic crunch. The Mowat Centre for Policy Innovation , a think tank affiliated with the University of Toronto, published a report today calling for a raise in eligibility ages for the Canadian Pension Plan and Quebec Pension Plan from 65 to 67, and the earliest ages from 60 to 62. “By 2050, an age increase would reduce CPP expenditures by about $15 billion per year and increase contribution revenues by about $5 billion per year,” the report said. “Increasing the eligibility ages is a fair solution for financing the costs of population aging, because doing so divides these costs across younger and older generations.” The report, Is 70 the New 65? Raising the Eligibility Age in the Canada Pension Plan, was written by Martin Hering and Thomas R. Klassen, compared Canada's situation to similar...