Pension Pulse

Kelly Cryderman of the Globe and Mail reports, Alberta pushes ahead with plan to cut pension costs : The province of Alberta remains poised to make a series of reforms to its public sector pension plans this spring, despite the improving outlook for many pension plans across Canada. “They’re looking healthier, but I bet you in 2007 they were looking good too,” Alberta Finance Minister Doug Horner said in an interview. But while pushing ahead with his plan, which is designed to sharply reduce pension costs over the long term, the Alberta minister insists he has listened to union concerns and will consider small changes before introducing the controversial legislation in the months ahead. Alberta’s pension problems are the same ones that many governments and large corporations face. Increased life expectancies, low interest rates and uncertain investment returns make it hard to keep up with the rising costs of defined benefit plans. And those dark clouds are still on the hor...

Anne-Sylvaine Chassany, private equity correspondent at the Financial Times reports, Cressida Hogg quits private equity group 3i : 3i investment veteran Cressida Hogg has left the UK-based private equity group, in the latest sign of instability following a strategic overhaul led by chief executive Simon Borrows. Mrs Hogg, 44, helped set up 3i’s infrastructure unit in 2005 and will leave at the end of March to pursue a senior role outside the group, 3i said on Wednesday. She will be replaced by insiders Phil White and Ben Loomes. Mrs Hogg is joining Canada Pension Plan Investment Board to lead its infrastructure investments in the UK, according to people with knowledge of the move. The move to CPPIB, a pensions plan that manages C$192bn of assets, also highlights how Canadian pension funds and sovereign wealth funds are becoming an appealing destination for private equity executives, who don’t have to worry about fundraising or quarterly earnings there. “I am sorry to see Cre...

Mark Decambre of Quartz reports, George Soros’s fund killed it in 2013, but most hedge funds didn’t : A handful of hedge funds are boasting their best-ever returns in dollar terms in 2013 according to a recent report by LCH Investments (paywall). Stephen Mandel of Lone Pine Capital generated $5.2 billion in returns for his investors last year; with the fund currently worth some $22.7 billion, that’s a roughly 30% return. George Soros’s hedge fund-cum-family-office Quantum Endowment returned $5.5 billion, its second highest dollar figure in 40 years, about a 24% return. But on average, hedge funds returned only 9.3% in 2013, according to data compiled by Hedge Fund Research . (Though there are several hedge fund indexes that offer slightly different reads on how well the industry did last year.) That means they trailed the S&P 500, which returned roughly 30% last year, by the widest margins since 2005, according to Bloomberg . Bloomberg reported a 7.4% return for the hedg...

John Greenwood of the Guardian reports, Poorer state pensions for the millions advised to stay contracted in : The state pension is changing, and both pensions minister Steve Webb and David Cameron are winners – but millions who didn't contract out of the state system look likely to lose. It is estimated Webb's state pension entitlement will increase by £37 a week when the complicated assortment of state pensions and top-ups are replaced in two years' time by a supposedly simpler benefit, the "single-tier pension". That £37 a week income would cost around £50,000 to buy via an annuity, but the pensions minister will pay only an extra £6,720 in national insurance (NI) contributions for it, according to figures from actuaries Hymans Robertson. Prime minister David Cameron is also expected to be better off, although because he is a year younger than 48-year-old Webb, he will have to pay slightly more: an estimated £7,200. The single-tier pension, descri...

Floyd Norris of the New York Times reports, Ideas to make Retirement Possible (h/t, Suzanne Bishopric): Who killed pensions? Can they be resurrected? A few decades ago, pensions were almost taken for granted by both public and private employees. They promised that people who worked a specified number of years for one employer would receive a certain amount each month, for life, after they retired. That amount was usually based on their income in the years before retirement. Today, pensions are almost dead in corporate America — at least for new employees. They live on in government jobs, sometimes protected by state constitutions. But Detroit’s bankruptcy has put its benefits in doubt after a judge said federal law could override the state Constitution. And given that some states and municipalities appear to have promised more than they can conceivably afford, it seems likely that some of those promises will be broken and that courts will find ways to allow that. Who kille...

Meena Krishnamsetty of MarketWatch reports, 2013's best hedge fund manager still picking winners : We recently published our list of 2013’s best hedge fund managers . Michael Castor was at the top of the list because he picked eight stocks for us during four different interviews and five of those stocks returned more than 100% in under six months. We track a lot of hedge funds and we have never seen anything like this . Yesterday, his last pick in 2013, Furiex Pharma ( FURX ), surged 130%. On January 25th we published the January issue of our monthly newsletter and shared Castor’s latest assessment about Furiex: FURX remains a good pick. There is a change—they earn a royalty on a diabetes drug sold by Takeda. The launch has been slower than I expected. I had initially thought that royalty stream to be worth $30 or so. I now think it is worth about $22. I continue to think the chance of success of eluxadoline is about 65% and that the value of the company with good clinical...

Reuters Canada recently reported, Canada's Caisse buys part of Dong's stake in massive UK windfarm : Denmark's Dong Energy DOENRY.UL has sold half of its 50 percent stake in the world's largest offshore wind farm located in Britain to Canada's La Caisse de depot et placement du Quebec for 644 million pounds ($1.1 billion), the two sides said on Friday. The deal reduces Dong's stake to 25 percent and leaves Germany's E.ON as the project's largest shareholder with 30 percent. The 630-megawatt London Array offshore windfarm is located 20 kilometres off the coast of Kent and was officially opened in July 2013. "This is an opportunity for us to invest, alongside established partners, in a quality asset in a growth-driven sector," said Macky Tall, senior vice-president of infrastructure at La Caisse. La Caisse is one of Canada's largest institutional fund managers. It looks after public and private pension and insurance funds from Qu...

Martin Regg Cohn of the Toronto Star reports, Kathleen Wynne hedges her bets on Ontario pension : Kathleen Wynne is at a turning point on pensions. For much of her first year in power, the premier campaigned to boost the Canada Pension Plan. Rebuffed by Ottawa, Wynne is now planning an Ontario pension plan of her own for the spring budget. It will be a bold political rollout. She’d best not drop the ball. To fully grasp the risk of a pension flip and political flop, it’s worth retracing the premier’s steps. At two summits convened by Ontario, Wynne rallied her fellow premiers on pensions. Her treasurer, Charles Sousa, also forged an unprecedented consensus among the provinces late last year — until the federal Conservatives nixed it. In the aftermath, Wynne — you know, the premier who jogs in those TV ads, talking breathlessly about solving tough challenges — restated her vow to carry the baton forward: Ontario would pursue its own public pension plan to supplement the C...