Pension Pulse

Peter Lattman of the New York Times reports, Former Calpers Chief Indicted Over Fraud : As head of the country’s largest pension fund, Federico R. Buenrostro wielded vast influence in the money management world. From 2002 to 2008, Mr. Buenrostro served as chief executive of the California Public Employees’ Retirement System, or Calpers, which allocates more than $200 billion to investment firms across the globe. Federal prosecutors say that Mr. Buenrostro abused that position. In an indictment filed in Federal District Court in San Francisco on Monday, the United States attorney charged Mr. Buenrostro and his friend, Alfred J. Villalobos, with defrauding the private equity firm Apollo Global Management. The corruption charges against Mr. Buenrostro and Mr. Villalobos are connected to a nationwide pay-to-play scandal that erupted several years ago. Regulators from numerous states, including California and New Mexico, have cracked down on widespread influence peddling in how...

Janet McFarland of the Globe and Mail reports, HOOPP sees best return in more than a decade : The Healthcare of Ontario Pension Plan posted a 17-per-cent return on its investments last year and is running a significant surplus, far outstripping most Canadian pension plans in its financial performance. The $47-billion pension fund, which represents 274,000 Ontarians working in the healthcare sector, said it was 104 per cent funded at the end of 2012, which means it has assets significantly greater than required on a solvency basis. By comparison, the average Canadian pension plan was just 69 per cent funded at the end of 2012 after years of low interest rates and growing funding obligations, according to a report by consulting firm Aon Hewitt. HOOPP chief executive officer Jim Keohane said HOOPP’s 17.1-per-cent return on investments was its best result in more than a decade. “This was a year when all of our investment strategies worked,” he said. “We were firing on all cylin...

Kelly Greene and Vipal Monta of the WSJ report, Workers Saving Too Little to Retire : Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement. New data show that powerful financial and demographic forces are combining to squeeze individuals and companies that are trying to save for the future and make their money last. Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes, according to a report to be released Tuesday by the Employee Benefit Research Institute. Only 49% reported having so little money saved in 2008. The survey also found that 28% of Americans have no confidence they will have enough money to retire comfortably—the highest level in the study's 23-year history. The same forces are weighing on corporate balance sheets. Based on another recent report, the Society of Actuaries sa...

Guy Dixon of the Globe and Mail reports, Bonuses for Air Canada executives tied to pension deficit payments : The federal government is offering a carrot to Air Canada to pay down the company’s pension deficit, even as it wields a heavy stick in imposing detailed restrictions on how the company’s executives are paid over the next seven years. In an unusual move of government intervention in Air Canada’s program of executive performance incentives, Ottawa will allow the Montreal-based airline’s top executives to receive performance bonuses that grow as the company contributes money to its pension deficit. Those bonuses, based on the company's financial performance, would be paid in full once the airline pays up to $200-million a year toward its pension deficit, according to union leaders who were briefed by Finance Minister James Flaherty about the conditions to be imposed on Air Canada executives. As part of the deal announced Tuesday between Air Canada and the governme...

Eric Reguly of the Globe and Mail reports, World markets roiled as radical Cyprus bailout deal stall : A small bailout in a small state has roiled the global financial markets and triggered a political backlash as far away as Russia. The bailout of Cyprus, one of the smallest members of the euro zone, was stalled Monday morning over reports that the minority Cypriot government lacked the support to pass the proposed €10-billion ($13-billion U.S.) bailout package, which is to impose a “haircut” on bank depositors. None of the euro zone’s sovereign and bank bailouts, from Ireland to Greece, has insisted that bank depositors finance part of the bailout bill. The prospect of rich and poor bank customers losing up to 9.9 per cent of their deposits triggered near panic in Cyprus. Bank customers, some of who called the bank raid “daylight robbery,” were lining up to withdraw cash from cash machines, many of which had run out of euros, and the Cyprus state broadcaster CYBC reported ...

Dan McCrum and Sam Jones of the Financial Times report, Hedge fund closures keep rising : The number of hedge funds going out of business rose for the third year in a row in 2012, according to HFR, a data provider. Last year, 873 funds failed or closed their doors out of the estimated 9,800 total, against 775 in 2011 and 743 in 2010. Those closures were offset by 1,108 new hedge fund launches, slightly down on the 2011 total. The pace of launches has recovered from the low of 659 funds in 2008, but the rate still lags behind the boom years of 2004 to 2007. “The environment for launches remains very difficult,” said Anne-Gaelle Pouille, a director for Paamco, a fund of funds group that specialises in small hedge funds with less than $1bn in assets at launch. Ken Heinz, HFR president, said that for the average hedge fund, “the last two years have been a wash. If you look at the whole HFR Index, you are barely up over a two-year period”. The average hedge fund gained 6.4 per ...