Pension Pulse

Over the weekend, Michael Santoli of Barron's wrote an article, The Storm that Wasn't : Last Monday was the slowest trading session of the year, as measured by turnover in the stocks that make up the S&P 500, which in turn captures most of the give-and-take involving the stocks that matter to most investors. The good folks at Bespoke Investment Group, at Barron's request, point out that Columbus Day is not, routinely, the sleepiest day of the year's first 10 months. By their lights, Columbus Day has, since 1993, often been an uneventful day, but never has it been the quietest day of the year to this point on the calendar. At the risk of extrapolating too terribly much from this modest sampling of market history, the most logical explanation for the extreme "uneventfulness" of the equity market last Monday is that the bond market was closed, as it typically is on official holidays. Stocks are now a neglected asset class, slave to the bond and c...

SmartCompany editor James Thomson reports, Private equity returns : Yesterday’s US-based private equity firm KKR shocked the market by unveiling a $1.75 billion bid for Perpetual, one of Australia’s oldest and most respected financial services companies. For many, the offer is a signal that private equity is officially back as one of the big forces in the Australian market. While private equity deals have been slowly firing up again after the GFC, this is one of the first really big, dramatic plays. But it does appear that private equity isn’t just looking at the big end of town. Last week, franchise expert Stephen Giles of Norton Rose revealed that private equity firms are looking closely at Australia’s franchise sector, which has proven over the last few years that it can deliver above-market returns and keep growing through difficult economic conditions. Indeed, this morning we have a report on the acquisition of Perth-based franchise chain Chooks Fresh & Tasty b...

FinAlternatives reports, Hedge Funds Pass High-Water Mark : Hedge funds have finally recovered from losses they suffered during the financial crisis, according to the Barclay Hedge Fund Index . The average hedge fund’s 3.63% gain in September at long last returns the average industry player to its high-water mark, BarclayHedge’s Sol Waksman said. “September’s gain puts the index into new high ground. The prior peak was established at the end of October 2007 when the index gained 2.87%.” “It’s taken three years for hedge funds to recover from the financial meltdown and break their previous high,” he said. The BarclayHedge index is now up 5.26% on the year, buoyed by positive returns in 17 of its 18 strategy indices and “propelled by a robust rally in global equities, a boom in mergers and declining credit spreads,” Waksman explained. Some 90% of the hedge funds reporting to the BarclayHedge index were up in September. Healthcare and biotechnology funds led the way last month, adding 6.3...

Bernard Dussault, former Chief Actuary of Canada, now Senior Researcher and Communications Officer at the National Association of Federal Retirees , sent me the latest from CUPE, Canadians support increase in Canada Pension Plan benefits : More than three-quarters of Canadians support increasing Canada Pension Plan benefits , according to a new national survey released today. Eighty percent of Canadians also support increasing federal payments to senior citizens and half of the survey respondents believe the government is moving too slow in reforming Canada’s pension system. Environics Research Group completed the Future of Pensions poll in late August for CUPE and the Public Service Alliance of Canada (PSAC). It surveyed 2,020 Canadians and has a margin of error of +/-2.2 per cent 19 times out of 20. “From coast to coast, Canadians support higher CPP benefits," said CUPE National president Paul Moist . “They're sending a clear message to federal and provincial po...

Earlier this week, Benefits Canada reported that Mercer quits public U.S. DB investment consulting (HT: Johnny and Dave): Just as plan sponsors are moving away from defined benefit (DB) pensions, so too is global consultant Mercer. Mercer told its 24 public U.S. DB clients that it will no longer be offering investment consulting services. Charles Salmans, partner and director of global public relations with Mercer said the company is working on transition plans for these organizations. “We want the transition as smooth as possible.” A statement released by the company said, “We will be working with our defined benefit clients to help ensure a transition period so that they can identify another investment consulting firm that can perform defined benefit investment consulting advisory services." The statement also said that this decision was made "after a comprehensive review of our business and in light of changes in the public fund marketplace.” Salman indicated that the dec...

The Economist reports, A gold-plated burden : Chuck Reed is the Democratic mayor of San Jose, California. You might expect him to be an ally of public-sector workers, a powerful lobby in the Golden State. But last month, at a hearing on pension reform held by the Little Hoover Commission, which monitors the state’s government, Mr Reed lamented his crippling public-pensions bill. “City payments for retirement benefits have tripled over the last ten years even though our workforce has declined dramatically, and we have billions of dollars in unfunded liabilities that the taxpayers must pay,” he said. Mr Reed estimated that the average cost to his city of employing a police officer or firefighter was $180,000 a year. Not only can such workers retire at 50, but some enjoy annual pension payments greater than their salaries. They are also entitled to cost-of-living increases of 3% a year, health and dental insurance for life and lump-sum payments for unused sick leave that could reach hundr...

The Guardian reports, French strikes over Sarkozy's pension reform bill roll into second day : French unions extended a rail strike into a second day and blockaded oil refineries in protest at pension reforms today, but there were signs the stoppages could be losing steam as broad participation wavered. With the pensions bill due to be approved within days by the senate, President Nicolas Sarkozy's conservative government stood firm on its flagship reform, despite a national strike yesterday that brought more than a million marchers on to the streets. Union leaders said local meetings throughout France had voted almost unanimously in favour of extending the stoppage in the state railway sector, the bedrock of the protests. But they acknowledged turnout had fallen. Strong support for an extended strike would raise the pressure on Sarkozy, whose government would be significantly weakened by a climb-down ahead of elections in early 2012. "The stoppage has been ext...

Ezra Klein of the Washington Post asks, How much can we blame on state pensions? : Wondering why New Jersey isn't finishing its much-needed commuter tunnel to New York? Easy, says David Brooks. Blame public employees, their pensions and their pay. "States across the nation will be paralyzed for the rest of our lives because they face unfunded pension obligations," he writes. State pension systems are a problem. But they're not the problem right now . And they're certainly not what's standing between New Jersey and its tunnel. After all, Christie didn't fund the pension system this year. He simply skipped the $3.1 billion payment, saying he wouldn’t add money to a "broken" system. If I didn't buy lunch today, you can hardly blame the cost of my lunch for the fact that I don't have bus fare. Brooks's column doesn't do much to put the pension obligations of the states in context, so we'll do it here. Just today,...

It's Thanksgiving here in Canada and Columbus Day in the US so I thought of taking a step back and write on another subject that's close to my heart, health. Not pension health, but a far more important health. I was telling a friend of mine how healthy I felt in Greece - sun, swimming, siestas, eating healthy and just enjoying life's simple pleasures. But when you get back to the routine, the constraints of office life take their toll. It doesn't help that the weather in Canada was pretty lousy over the last month, but hopefully that will change and we can finally get sunny, crisp Fall weather. While in Greece, I reflected a lot on life. Something about being in Greece that makes you reflect on the past and the future. The landscape is soaked in history, and one can really lose themselves gazing at the mountains and swimming in the Mediterranean ocean. It's a perfect environment for self-reflection. So what did I think about? First and foremost, I'm thankful...

Kate Holton of the Globe & Mail reports, Teachers, Singapore sovereign fund talk Potash : Canada's Ontario Teachers' Pension Plan is plotting a bid to spoil BHP Billiton's $39-billion (U.S.) hostile offer for Potash Corp , British newspaper The Sunday Times said. The newspaper said the pension fund was talking to Temasek, Singapore's sovereign wealth fund, about launching a rival offer. The report said the two also had an industrial partner, thought to be Teck Resources , a Canadian mining group. The discussions are at an early stage but the two funds are considering an outright takeover or buying a minority stake at a higher price than that offered by BHP. Potash Corp, the worlds top fertilizer maker, has flatly rejected BHP's $130-a-share bid. Sinochem , the state-owned Chinese chemical group, is also viewed as likely to lead a competing group. British papers The Times and The Sunday Telegraph also said Potash was considering defensive moves, which...