Although many organizations are moving away from defined benefit (DB) pension plans or closing them to new employees, according to a study by Watson Wyatt, the majority of Fortune 100 companies still offer them.
The analysis of retirement plans among Fortune 100 companies found that 54 firms still offered DB plans to new employees in 2007. Of those plans, 28 were traditional while 26 were hybrid plans.
Most companies that sponsor a DB plan also offer their new employees a defined contribution (DC) plan, and 46 firms have moved to a DC-only approach.
“Thanks in large part to the pension reform legislation, the peak rate of replacing DB plans with defined contribution-only plans appears to be behind us,” says Alan Glickstein, a senior retirement consultant at Watson Wyatt. “In fact, as companies evaluate what the new rules mean for them, we could very well see a renewed commitment to hybrid and other DB plans.”
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CPP Fund Value Rises Despite Market Turmoil
The Canada Pension Plan (CPP) Fund ended the fiscal 2008 year at $122.7 billion, a $6.1 billion increase from last year.
The growth was, in part, due to $6.5 billion in CPP contributions that weren’t needed to pay beneficiaries and partially offset by a 0.29% negative return on investment.
“While a negative rate of return is never encouraging, our fiscal 2008 result was well within our long-term risk and return parameters,” says David Denison, president and CEO, CPP Investment Board. “In the context of our multi-generational mandate, the CPP Fund remains on course to help ensure the sustainability of the CPP.”
Although the rate of return was negative, the fund’s investment team outperformed the market-based benchmark, and was able to avoid the problems related to the credit crisis that drastically affected other institutions.
The CPP Investment Board four-year annualized investment rate of return through March 31, 2008 was 9%, which has added a cumulative $32.2 billion of assets to the CPP Fund and was well above the return required to sustain the Canada Pension Plan at its current contribution rate.
The CPP Fund earned 12.9% in fiscal 2007, 15.5% in fiscal 2006 and 8.5% in 2005.
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CPPIB, MTS Allstream End Partnership
The Canada Pension Plan Investment Board (CPPIB), Blackstone Capital Partners and MTS Allstream have decided to end their joint venture partnership.
The trio will no longer enter the upcoming advanced wireless services spectrum auction as a group; MTS will go it alone.
According to Pierre Blouin, chief executive officer with MTS Allstream, “MTS, the CPPIB and Blackstone continue to believe the business case for a new entrant in Canada’s national wireless market is sound, but at the end of the day we could not reach agreement on a handful of key issues.”
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