Changes are afoot in the DB world in Canada. Private sector pension liabilities are increasing relative to the size of corporations. As a result, large swings in funded positions can have a significant impact on corporate balance sheets and cash flows. For many plan sponsors, this means that financial issues have become far more important […]
Current stock market instability and falling bond yields underscore the risk DB plan sponsors are assuming if they don’t have measures in place to minimize that risk, according to HR consulting firm Aon Hewitt. The “perfect storm” of declining equity markets combined with diminishing bond yields increases plans’ funding deficits, which may well require additional […]
The 2008 financial crisis jeopardized the funding ratio (i.e., the ratio of assets to liabilities) of most DB pension plans, forcing plan sponsors to inject money or cut benefit provisions—or both. Plan sponsors now want greater certainty about their funded status. That’s where liability driven investing (LDI) makes sense and why it will become a […]
What does it mean for sovereign wealth funds?
We are in the midst of historic times, as sovereigns hang on the edge of default, the inflation/deflation debate remains unresolved and gold trades at a historic high. As a manager or director of a pension fund, this is a critical juncture to understand what can go wrong for your fund in particular scenarios. To […]
Sponsors of DB pension plans continue to face the same old struggle: managing risk. That was the main theme of the DB track at Benefits Canada’s 2011 Benefits & Pension Summit. DB experts examined risk in detail and also provided attendees with perspectives on investment strategies relating to currency management and emerging and frontier markets. […]
You won't want to hang this one on your fridge...
Innovation in the ETF space going too far?
The level and direction of interest rates has become a frequent topic of conversation among investors of all types. While low interest rates are attractive to those who need to borrow money, they are less attractive and even troublesome for those who are doing the lending. Pension plans have a very special relationship with interest […]
DB pension plans carry many types of risk including investment risk, asset-liability mismatch, longevity risk, demographic risk and inflation risk, and this puts smaller plans at a disadvantage. Because of their smaller asset base, it’s difficult to diversify the investment risk among many different asset classes like larger plans can do. At the same time, […]