Pension Pulse

Kenneth Barry of Reuters reports, Assets of public pension funds up 6.2 percent in Q3 : The value of assets held by the 100 largest U.S. public pension funds rose 6.2 percent in the third quarter from the prior quarter, reaching their highest level in two years, a report by the U.S. Census Bureau said on Wednesday. The value of the assets held by the state and local pension funds also rose 5.2 percent from the same period a year earlier, marking their fourth consecutive year-over- year quarterly increase, the report said. The report said the value of the investments, whose returns help pay for the pension benefits of millions of retired public-sector workers, was more than $2.5 trillion last quarter. Public-sector retirement systems across the nation have been clawing their way out of deep financial holes created by the recession and turbulent financial markets, and at the same time have been facing increased scrutiny about their current and future costs. The Californi...

Bruce Johnstone of the Regina Leader-Post reports, Pension Pioneers : The province that introduced medicare and public auto insurance to Canada -- could soon be leading the way in pension reform as well. The Saskatchewan Pension Plan, which has been around since 1986, may well be the model for the pooled pension plans that the country's finance ministers proposed last week in Kananaskis, Alta. The federal and provincial finance ministers agreed to introduce legislation to allow the creation of pooled registered pension plans (PRPPs), targeted to employees of small-and medium-sized businesses. The PRPPs would be 'low-cost' private pension plans that would be available to employees without a company pension plan or even an employer, in the case of self-employed people. Employee participation would be mandatory, unless the employee opted out of the plan. The closest thing we have to a PRPP in Canada today is the Saskatchewan Pension Plan (SPP), a volun...

Christmas is a time for family and friends. It's also a time to reflect on how fortunate and blessed we are and to give to those who are less fortunate. Last year, I wrote about Katie Piper's Christmas message . This year, I was touched by the kindness of a man called Dan Wallrath, one of the CNN heroes who builds free homes for wounded vets : Alexander Reyes' boyhood dream of a military career ended when he was hit by an improvised explosive device during a patrol two years ago in Baghdad. "Laying in that hospital bed ... sometimes I felt I'd rather [have] died," Reyes said. "My life came to a complete halt." Reyes sustained severe blast injuries that led to his medical discharge; he's on 100 percent medical disability. Like many soldiers wounded in Iraq and Afghanistan, Reyes, now 24, found the transition to civilian life difficult. But he and a handful of other injured veterans are getting help from what may seem an unlikely source: a...

Lisa Fleisher of the WSJ reports, New Jersey Pension Gap Grows : New Jersey's pension gap grew to $53.9 billion in the last fiscal year, up from $45.8 billion, thanks to market losses and a lack of state funding, according to figures released Thursday by the state. The looming pension burden, largely ignored by the state for the past decade, has ballooned into a nearly unmanageable problem that will push state and local finances into a corner in coming years, dropping large bills in the laps of already strained taxpayers. Gov. Chris Christie's administration said the gap, which reflected the state's investment positions as of June 30, highlighted the need for proposed cuts to current public workers' pensions. The new calculations mean the state has 62% of the money it needs to pay retirement benefits promised to roughly 720,000 state and local workers over the next decade, down from 66% a year earlier. But the state is using an annual 8.25% rate of return, ...

Bob Baldwin, an Ottawa-based pension consultant and author of Pension Reform in Canada: A Guide to Fixing our Futures Again , writes in CTV, Let’s take the CPP – and be creative : The outcome of this week’s Kananaskis meeting of finance ministers was not as clear as the Rocky Mountain air but more like a fog one might associate with the Prince Edward Island venue of the previous gathering. While a modest enhancement to Canada Pension Plan benefits is still on the table, it’s less clear now than in June what direction it will take. There are two dimensions to the problem plaguing Canada’s retirement-income system: inadequate incomes of the future elderly relative to their working-life earnings, and inefficiency of the available means to save individually for retirement. Of the two, income inadequacy is the bigger issue, and research undertaken since the Whitehorse meeting of finance ministers in December of 2009 has improved our understanding of it. A study released last week found that...

The BBC reports, Public pension schemes 'should be career average' : Lord Hutton's review of public sector pension schemes has been urged to recommend they be changed to career average schemes. The National Association of Pension Funds (NAPF) says such a switch would be the best way to keep the schemes going in the face of rising costs. It would also protect the interests of lower-paid workers, the NAPF said. Most public servants are in better final-salary schemes, whose costs are rising due to increasing longevity. Review Lord Hutton indicated he would recommend this policy when, in October, he published his initial findings on the future of the pension schemes. His independent commission, set up by the coalition government, covers staff in the civil service, NHS, local government, education, police, armed forces and fire service. Lord Hutton's first recommendation was that members of most of these schemes s...

Jonathan Chevreau of the National Post reports, Flaherty leans toward pooling : Finance Minister Jim Flaherty has surprised pension reformers by dashing hopes for an expanded CPP in favour of Pooled Registered Pension Plans. While modest expansions to the almost universal CPP may yet be in the cards, PRPPs are aimed squarely at the 3.5 million middle-income private-sector workers and self-employed who lack employer-provided pensions. In principle, the idea of “pooling” pensions among multiple small employers makes sense. PRPPs are in essence group RRSPs or Defined Contribution RPPs but relieve employers of the administrative burden, says Fred Vettese, chief actuary at Morneau Sobeco. The burden shifts to a third-party administrator. One reason only a third of private sector workers now have employer pensions is the complexity of set-up and administration. Classic Defined Benefit (DB) plans are notoriously complex because providers must deal with solvency issues, surpluses ...

The Globe and Mail reports, Provinces call for CPP expansion ahead of finance ministers' meeting : Federal Finance Minister Jim Flaherty is expected to face resistance over pension reform when he meets with his provincial and territorial counterparts Monday, with a group of six provinces calling on Ottawa to reverse course and expand the Canada Pension Plan. Mr. Flaherty said last week he won't be proposing any expansion to the CPP because not all provinces were on board. Instead, he'll be pushing a new private-sector plan allowing small firms, employees and even the self-employed to pool resources on new, low-cost pensions. But the finance ministers of B.C., P.E.I., Nova Scotia, New Brunswick, Manitoba and Ontario issued a joint statement Sunday asking Flaherty to keep CPP expansion on the table. “Making progress on a moderate expansion of CPP is important for the long-term adequacy of Canada's retirement-income system,” B.C.’s finance minister, Colin Ha...

Following up on my last comment on the showdown in Kananaskis , Richard J. Brennan and Les Whittington of the Toronto Star report, Backlash grows against Flaherty’s pension proposal : Two dozen protestors barged into Finance Minister Jim Flaherty’s office in Whitby on Friday as a backlash against his latest pension proposal gathered force. “We’ve been betrayed,” Ontario Federation of Labour President Sid Ryan said as labour and community figures occupied Flaherty’s constituency office. Ryan said the labour movement was angered by the Harper government’s surprise decision to opt for a private sector solution to the country’s pension problems rather than enhancing the Canada Pension Plan, as Flaherty had previously proposed. Unlike the CPP, the new Pooled Registered Pension Plan, or PRPP, would be...

Bill Curry of the Globe and Mail reports, Provinces to push Ottawa on CPP improvements : Provinces are planning to fight for enhancements to the Canada Pension Plan at a key meeting on Monday, setting up a showdown with the Harper government over how Canadians will fund their retirements. Just days before federal and provincial finance ministers meet in Kananaskis, Ottawa made a surprise move to reject CPP enhancements for now in favour of a new privately run savings vehicle. The shift in federal priorities on pension reform comes as the Bank of Canada heightens its warnings that Canadians are borrowing too much and saving too little, putting some households at risk when interest rates inevitably climb back from near-record lows. Ottawa’s critics insist long-term pension problems must be tackled now and premium increases can be phased in, but the Harper government is aligning itself with Alberta in arguing the economy cannot absorb a new hit on the take-home pay of Canadian...