Showing posts from April, 2013

Caisse's 2012 Annual Report

The Caisse de dépôt et placement du Québec released its 2012 annual report in English late last week. Among other things, this report includes analyses of performance, risk management, and changes in assets. It also discusses the Caisse’s contribution to the economic development of Québec and its responsible investment activities.

Readers can click here to learn more about the following:
2012 at a Glance (PDF 54 kB)Messages from the Chairman and from the President and Chief Executive Officer (PDF 74 kB)Our Clients, the Depositors (PDF 77 kB)Management Report (PDF 923 kB)Contribution to Québec's Economic Development (PDF 360 kB)Responsible Investment Report (PDF 106 kB)Reports of the Board of Directors and Board Committees (PDF 201 kB)Board of Directors and Executive Committee (PDF 91 kB)Financial Report (PDF 165 kB)Combined financial statements (PDF 375 kB) I've already covered the Caisse's 2012 results but the annual report provides a lot more details. It is excellent,…

Squeezing Retirees Into Pension Poverty?

Jessica Silver-Greenberg of the NYT reports, Loans Borrowed Against Pensions Squeeze Retirees (h/t, Suzanne Bishopric):
To retirees, the offers can sound like the answer to every money worry: convert tomorrow’s pension checks into today’s hard cash.

But these offers, known as pension advances, are having devastating financial consequences for a growing number of older Americans, threatening their retirement savings and plunging them further into debt. The advances, federal and state authorities say, are not advances at all, but carefully disguised loans that require borrowers to sign over all or part of their monthly pension checks. They carry interest rates that are often many times higher than those on credit cards.

In lean economic times, people with public pensions — military veterans, teachers, firefighters, police officers and others — are being courted particularly aggressively by pension-advance companies, which operate largely outside of state and federal banking regulations…

Teachers Put Hedge Funds in Detention?

Chris Tobe, founder of Stable Value Consultants, wrote an article for MarketWatch, Teachers put hedge funds in detention:
The Wall Street Journal reported last week that “the American Federation of Teachers listed 34 executives at hedge funds and other investment firms that help lead or make contributions to organizations with a hostile stance toward traditional defined-benefit plans.”

This is just the tip of the iceberg.

Many public pensions hold these hedge funds, such as the much maligned SAC Capital via a Hedge Fund of Funds. This is the case with the Kentucky Retirement System who owns SAC via the Blackstone Hedge Fund of Funds.

Rolling Stone's Matt Taibbi had highlighted Daniel Loeb of Third Point LLC (also listed by the AFT) in his blog article last week which caused an uproar and forced Loeb to withdraw from a scheduled speaking engagement at a Council of Institutional Investors conference.

The WSJ quoted Jay Rehak, president of the Chicago Teachers' Pension Fund. &qu…

How Australia Fixed a Retirement Crisis?

Dan Kadlec of Time Magazine reports, Mandatory Savings: How Australia Fixed a Retirement Crisis:
We can learn a lot about staying on top of our long-term financial security by studying the land down under.

Australia was among the earliest to get serious about financial education, establishing a financial-literacy foundation in 2005 — before the financial crisis. It also has a retirement system that is regarded as among the best in the world.

The U.S. is struggling on both fronts. We were early to formally embrace financial education, having established a Financial Literacy and Education Commission in 2003. But Australia has steamed ahead, requiring a personal-finance class for graduation throughout its school system. In the U.S., just 14 states require that such a course even be offered as an elective.

Increasingly, financial education is becoming a global initiative. The hope is that by raising the financial IQ of individuals around the world, the economy won’t fall victim to another…

Caisse Betting on Multi-Family Real Estate?

Arleen Jacobius of Pensions & Investments reports, Quebec pension fund invests in U.S. multifamily real estate:
Ivanhoe Cambridge — the real estate arm of the C$176 billion Caisse de Depot et Placement du Quebec — is snapping up multifamily real estate at a fast clip, and it's not done yet.

This month, Ivanhoe Cambridge bought into the $1.5 billion Equity Residential portfolio recently taken private by Goldman, Sachs & Co. and real estate manager Greystar Real Estate Partners.

Executives of Montreal-based Ivanhoe Cambridge believe the time is right to increase multifamily investments in the United States and the United Kingdom.

“Ivanhoe Cambridge believes in increasing its investment in the multiresidential segment in key markets and the U.S. is one in which we want to register growth this year,” said Sebastien Theberge, senior director, public affairs and communications at Ivanhoe Cambridge in an e-mail. “The economy is picking up and social-demographic trends are favora…

Leo de Bever on Imagining a Better Future

Had a chance to speak with Leo de Bever yesterday morning. Leo is the President, CEO and CIO of the Alberta Investment Management Corporation (AIMCo) and one of the smartest people in the investment management industry.

Below, some bullet points from our conversation:
 AIMCo delivered 11.5% on their balanced fund for fiscal year 2013 which ended on March 31st. This represents 200 basis points value added above the policy (benchmark) portfolio which is excellent. The annual report will be made available in June.Unlike Ontario Teachers' or HOOPP, AIMCo cannot leverage its portfolio using derivatives and repos. It's forbidden by Alberta's provincial law.  It's important to keep this in mind because looking at headline figures doesn't explain risks. Leo thinks intelligent use of leverage is fine but they can't do this at AIMCo and he jokingly told me: "this could change but by then the timing will be wrong."We talked a lot about the global economy, monet…

New Brunswick's Pensioners Declare War?

The CBC reports, 'There will be war' over pension changes, retirees warn:
Opposition to proposed pension reforms continued to gather strength on Thursday afternoon as Finance Minister Blaine Higgs met with hundreds of angry retired civil servants in Moncton.

About 600 people attended the public information session about switching to the shared-risk model, including Betty Smith, a retired teacher and member of the Pension Coalition of New Brunswick.

"What they are doing is unacceptable, we will not accept it," said Smith. "There will be war in the province before this is over."

Under the provincial government’s reforms, the future pension risk would be shared by both sides.

Guaranteed cost-of-living increases will also be eliminated for pensioners and instead be dependent upon market performance.

'All we want is what we paid for — nothing more, nothing less.'—Betty Smith, retired teacher

Smith, who spent 12 years teaching and 33 years in the classroom,…

Should Quebec Adopt a Longevity Plan?

Rhéal Séguin of the Globe and Mail reports, Panel proposes pension plan for elderly retirees in Quebec:
A new universal supplemental pension plan is one of the key proposals by a blue-ribbon panel to provide financial security for elderly retirees in Quebec.

A committee of experts examining the province’s underfunded retirement system recommended Wednesday that Quebec take the bold and innovative step of creating what it calls a “longevity pension” where, at age 75, retirees would receive an additional income.

As workers live longer and retire earlier, enormous pressure is being placed on existing private and public pension plans. Those managed by the Quebec Pension Plan alone are underfunded by $41-billion, the committee reported. The committee recommended that, to improve their solvency, the workers and employers need to restructure the plans over a five-year period.

The experts also called for the implementation of a voluntary retirement savings plan.

The Quebec government said it wi…

IMF Warns of Pension Fund Risk?

Ian Talley of the WSJ reports, IMF Sees Risk in U.S. Pension-Fund Strategies:
U.S. public pension funds and life-insurance companies are building up potentially dangerous levels of risky investments that could threaten their solvency, the International Monetary Fund warned Wednesday.

It is a gamble that could harm not only on pensioners and insurance customers, but also on the financial system, the IMF said in its Global Financial Stability Report.

Returns from traditional investments and contributions have dwindled during the recession. And as the Federal Reserve lowered interest rates to try to revive growth, those firms have been unable to match their funding levels with future liabilities.

For example, the IMF says public defined-benefit pension plans won't be able to fund nearly a third of their future obligations based on their current portfolios.

That funding shortfall has encouraged pension funds and insurance companies to bet on higher risk, and potentially higher-return, i…