Pension Pulse

Rick Newman, author of Rebounders: How Winners Pivot From Setback To Success , wrote an opinion piece for Yahoo Finance, The Fed is about to surprise investors : The main question this year about the Federal Reserve’s extraordinary easy-money policy has been when it will begin curtailing $85 billion in monthly purchases of bonds. If it doesn’t happen soon, at the end of the Fed’s in-progress mid-December meeting, the betting money is on a decisive move at the gathering in March . But that binary set of options — "tapering" or not, to use Wall Street’s overworked term — is a vastly oversimplified view of the Fed’s options. Many critics feel quantitative easing, as the Fed’s bond-buying policy is known, has failed to achieve its goal of jump-starting the economy and helping create jobs, even though the unemployment rate has fallen from a peak of 10% in 2010 to 7% today. Those folks would like to see the policy rolled back as quickly as possible, since it may be con...

Bill Curry and Adrian Morrow of the Globe and Mail report, With no consensus on CPP reform, Ontario pledges to go its own way : Ontario is vowing to press ahead with its own mandatory retirement pension – one that other provinces are signalling they could sign on to – after Ottawa dismissed reform of the Canada Pension Plan in the near term. The Ontario government could soon find allies among other provinces who also emerged frustrated by Ottawa’s hard line at a summit of federal and provincial finance ministers at Meech Lake, Que., on Monday. Several ministers said that all provinces were on board to support a final statement that would commit to more study around increases to CPP contributions and benefits, but Finance Minister Jim Flaherty and minister of state for finance Kevin Sorenson bluntly declared Monday that reform must wait until the economy is stronger and that “now is not a time for CPP payroll tax increases.” Charles Sousa, Ontario Finance Minister, said his p...

This is a bilingual post. Martin Vallières of La Presse reports, Investissements PSP: jongler avec croissance et rendement : Actif doublé à plus de 85 milliards en quelques années à peine. Effectif montréalais approchant les 500 employés. Plus de 4 milliards par an en nouveaux capitaux à investir. Le tableau de bord de la société montréalaise Investissements PSP a de quoi susciter l'envie parmi les gestionnaires d'actif des plus grandes caisses de retraite au Canada. Mais au dire de son président et chef de la direction, Gordon Fyfe, les défis de gestion chez PSP s'apparentent encore à ceux d'une entreprise en pleine émergence: produire de bons résultats courants et futurs tout en gérant une croissance rapide de l'actif et des effectifs. «Pendant que nous développons nos équipes de placement et leur portefeuille, nous devons aussi gérer beaucoup de liquidités qui entrent et qui sortent chaque année dans notre actif», résume Gordon Fyfe en entrevue avec La...

Rhéal Séguin of the Globe and Mail reports, Quebec government aims to resolve pension deficit : The Quebec government is proposing an ambitious strategy to begin resolving the deficits of a growing number of pension plans within two years. Several of the province’s 863 private pension plans, which cover 1.2-million people – half of them retired – have a total deficit of $26-billion. The problem is nationwide, but the Quebec government’s proposal is unique and is part of an effort to break the private-sector trend of moving away from defined-benefit plans. “Defined-benefit pension plans are in danger. … These are the best pension plans available to workers, and we need to protect them,” Labour Minister Agnès Maltais said. “We have no choice. We have to settle this problem. The status quo is no longer possible.” Ms. Maltais said she will table two bills next year, one to set the conditions for workers and employers to negotiate how to resolve their companies’ pension deficit...

CBC News reports, Canada Post, OPG highlight public pensions problem : The ballooning pension liabilities at Canada Post and the scandal over rich pensions at Ontario Power Generation highlight a looming issue for Canadian politicians – the growing cost of public sector pensions. The Harper government has given Canada Post a four-year break from making special payments to its employee pension plan, which has a deficit of $6.5 billion. At OPG, Auditor General Bonnie Lysyk found OPG’s pension deficit is $555 million and its top five executives will be eligible for pensions ranging from $180,000 to $760,000 a year. OPG contributes "disproportionately more" to its pension plan than its employees, with a funding ratio of 4:1 or 5:1, significantly higher than the 1:1 ratio in the rest of the public service, she added. And those are just a fraction of the public sector pension liabilities across the country at the federal, provincial and municipal level. Bill Tufts, ...

Tommy Wilkes of Reuters reports, New hedge funds need $300 million in assets just to break even : Traders launching a hedge fund need to raise at least $300 million in assets to pay for rising regulatory costs and to offset lower fees, a survey showed, a far cry from the pre-crisis days when managers could start with tens of millions. According to the survey by Citi, hedge funds now charge annual management fees of as low as 1.58 percent of assets, down from the traditional 2 percent that larger funds still command. Added to this, compliance and regulatory costs have risen because of new rules such as the Alternative Investment Fund Managers Directive in Europe and Dodd-Frank legislation in the United States. "Fee compression continues to reshape the business of hedge funds, lowering fees even as expenses rise, all but eliminating fee-only operating margins, and raising the level of assets needed for a hedge fund business to succeed," said Alan Pace, Global Head o...