This is Part 5 in our coverage of Canadian Investment Review’s 2011 Investment Innovation Conference.
Read Part 2: Infrastructure investing
Read Part 4: What innovation means for markets
The 2011 Investment Innovation Conference concluded with a panel discussion on yet another potential risk to pension liabilities: inflation.
The panel included Canadian pension experts Josephine Marks, managing director, pension assets with Scotiabank, Bruce Grantier, managing director with Airth Inc., and Andrew Spence, global head of research for rates and foreign exchange with TD Securities. Zev Frishman, vice-president, global equity strategies with Ontario Teachers’ Pension Plan, moderated the conversation.
Watch: Panelists Josephine Marks, Bruce Grantier and Andrew Spence discuss inflation
Overall, the panel noted that inflation is a key risk for pension funds. With a “slow-burning default” under way in Europe and the U.K., Spence advised plan sponsors to take inflation very seriously in the coming months and years.
However, most plans don’t have the tools and strategies available to properly address inflation risk.
Both Marks and Grantier pointed out that the bigger plans are better equipped to manage the risks of inflation. And, while Canada’s big public plans are staffed to deal with inflation-sensitive assets (such as direct ownership of real estate), these asset classes are much harder or more expensive for moderate-sized DB plans to access.
Caroline Cakebread is the editor of Canadian Investment Review. caroline.cakebread@rogers.com
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