During late 2008 and early 2009, the Actuarial Standards Board promulgated several changes to the Standards of Practice for Pension Plans (SPPP) applicable for any pension commuted value (CV) calculation with an effective date after April 1, 2009. However, two elements of the targeted changes were not implemented at that date, primarily to allow plan […]
During the life of a pension plan (irrespective of type and size), there are bound to be times when the plan administrator considers delegating some or all of its administrative responsibilities to an employee or a pension committee, or to an external third-party service provider. An outsourcing arrangement can typically be divided into three components: […]
The actuarial standards applicable to virtually all defined benefit (DB) pension plans in Canada are undergoing two distinct changes in 2011. These updates will affect how actuaries determine the assumptions, apply actuarial methods and prepare their reports for all funding actuarial valuations effective Dec. 31, 2010. Changes to actuarial valuation standards The new Standards of […]
In the wake of the financial crisis, few would debate that defined benefit (DB) pension plans have become a major financial management issue for plan sponsors. With long-term interest rates at their lowest levels in more than 50 years and equity markets 25% below their previous highs, sponsors are again facing their “perfect financial storm.” […]
The Canada Revenue Agency has announced that the maximum pensionable earnings under the Canada Pension Plan (CPP) for 2011 will be $48,300, an increase of $1,100 from 2010. Contributors who earn more than $48,300 in 2011 are not required or permitted to make additional contributions to the CPP. The basic exemption amount for 2011 […]
In the current market environment, no asset class has as bright a future as alternative investments. Once regarded as hedging tools, alternatives—including hedge funds, private equity, real estate, infrastructure and commodities—are commanding an ever-growing market share and proving themselves useful in many ways. So it is not surprising to learn that pension funds are embracing […]
Diversification is the best reason to include lifecycle funds in DC plans, said Peter Walsh, an institutional portfolio manager with Pyramis Global Advisors, at the third annual DC Investment Forum, Wednesday in Toronto. When it comes down to it, he said, plan members on a whole don’t truly understand diversification. “If they are in […]
There are many firms with exposure to long bond yields. Pension funds are known to have long bond exposure, with liabilities typically stretching out longer than 50 years and assets, which are invested in both fixed income and equities. Insurance companies certainly have exposure as their liabilities also extend longer than 50 years, although these […]
The considerable traction gained by liability driven investing (LDI) both in Canada and abroad is well documented. Ongoing challenges to pension plan funded status stemming from weak equity markets and declining interest rates during the past decade have surprised some and, almost certainly, disappointed most. The growth and maturity of pension plan liabilities and the […]
Strong investment returns of 13% in 2009 were not enough to bolster the fortunes of Ontario Teachers’ Pension Plan (Teachers’), which is now facing unfunded liabilities of $17.1 billion. The year saw the fund’s assets rise to $96.4 billion, more than four percentage points over its benchmarked return. However, its traditional allocation stalwarts—private equity, infrastructure […]