Pension Pulse

Geordon Omand of the Canadian Press reports, Finance ministers reach agreement on expanding CPP : Most of Canada's finance ministers reached an agreement in principle Monday to revamp the Canada Pension Plan, although Quebec and Manitoba have not signed on to the deal. Under the agreement, which would go into effect in 2019, an average Canadian worker earning about $55,000 will pay an additional $7 a month in 2019. That would increase to $34 a month by 2023. Once the plan is fully implemented, the maximum annual benefits will increase by about one-third to $17,478 . Finance Minister Bill Morneau said the deal will improve the CPP in a way that will make a difference to working Canadians. "We have come to a conclusion that we are going to improve the retirement security of Canadians, we're going to improve the Canada Pension Plan that will make a real difference in future Canadians' situations," he said. Morneau said Quebec, which has its own pens...

Geordan Omand of the Canadian Press reports, Revamp of Canada Pension Plan centre stage at finance ministers' meeting : The federal finance minister says revamping the Canada Pension Plan is critical to ensuring that future generations of Canadians can retire in dignity, no matter the state of their finances. Bill Morneau joined his provincial and territorial counterparts in Vancouver on Monday to discuss reforming the national pension program over concerns that some Canadians will struggle financially come retirement. “We’ve heard from Canadians (about) the importance of retirement security,” Morneau said before the meeting. “I’m looking forward to working together with my colleagues across the country to improve the long-term future for Canadians.” The pressure is on to reach a deal as Ontario’s plans to develop its own pension program are well on their way, though the province’s finance minister said his preference would be for a national strategy . “We want con...

Andy Blatchford of The Canadian Press reports, Bill Morneau's briefing book raises red flags on public pension investment : A briefing book prepared last fall for incoming Finance Minister Bill Morneau warns that Canada's spending on public pensions is dramatically lower than many other rich countries — even though private-sector pension coverage has deteriorated. The document, obtained by The Canadian Press, said that between 1991 and 2013, private-sector pension coverage fell from 31 per cent to 24 per cent . But at the same time, the document suggests the federal government is not picking up the slack. Canada spends "significantly" less on publicly funded pension support — through programs such as the CPP/Quebec Pension Plan, Old Age Security and the Guaranteed Income Supplement — than other OECD countries, the briefing states . A chart in the briefing binder projected Canada to rank No. 17 out of 20 countries in 2015 for public pension spending as a p...

Chikako Mogi of Bloomberg reports, Japan Bond Yields Tumble to New Lows as Yen Soars on Brexit, Fed : Japan’s government bonds surged, driving down yields from five to 40 years to record lows as the yen surged after the central bank kept policy unchanged, while the Federal Reserve cited Brexit risk as a reason for standing pat. Government debt worldwide has rallied to its best start to any year in two decades as Brexit concerns intensify pessimism that the global economy will struggle to regain momentum. Germany’s 10-year sovereign yield fell below zero this week for the first time.  The U.K.’s June 23 referendum on whether to leave the European Union was factored into the Fed’s decision to leave rates steady, Chair Janet Yellen said on Wednesday in Washington. The Fed also eased back on interest-rate increase expectations . Yields on all benchmark sovereign securities in the world’s second-largest bond market fell to records Wednesday, extending a rally fue...

The Canada News Wire reports, International Pension Conference of Montréal Experts Call for an Adaptation to the New Normal : Low interest rates and weak growth are here to stay at least in the near-term, and the world must adapt, according to a group of leading economists at the kick-off session of today's International Pension Conference of Montréal ( IPCM ). During the session, entitled Macroeconomic Outlook on Interest Rates: How Do We Adjust our Expectations in the "New Normal?" panelists addressed the impact of central banks' monetary policies and interest rate cycle. Session moderator Clément Gignac, Senior Vice President and Chief Economist at Industrial Alliance began the session by explaining that, "The world has changed. Central banks have used traditional monetary policy tools close to their limit. As of now, nearly $8 trillion of government debt carries negative interest rates, which is a real challenge for asset managers and pension funds ....

Robin Respaut of Reuters reports, Public pension funds seek infrastructure as market heats up : The California Public Employees’ Retirement System recently bought a stake in a private Indiana toll road with a troubled history, one sign of how popular infrastructure investments have become among U.S. pension funds. In May, CalPERS bought a 10 percent stake of the road's concession, representing the first U.S. transportation investment for the nation’s largest public pension fund. The Indiana Toll Road had been acquired out of bankruptcy in 2015 for about 50 percent more than its original 2006 price by a fund made up of more than 70 U.S. pension plans . Infrastructure - such as roads, bridges, rail, airports, water storage, utilities, and pipelines - has long been favored by pension funds in Canada, Australia, and the United Kingdom. Now, as an era of strong returns in stocks and bonds is believed to be winding down, more U.S. public pension funds are looking to buy real ass...