2020 | Issue 3
OBS
A CURATED SELECTION OF INFORMATION AND DOCUMENTS FOR THE RETIREMENT INCOME INDUSTRY.

INDUSTRY INSIDER

ACPM releases a new white paper on Financial Literacy. Click on the image to access the paper.
 
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Articles of Interest

 

Looking beyond the funded status: assessing pension plan sustainability

By Uros Karadzic, Partner, People Advisory Services, EY Canada
 


The funded status of a pension plan is not the only, or even the best, indicator of that plan’s sustainability. How the pension plan sponsor deals with a broader range of strategic considerations will be more determinative of the plan’s ultimate sustainability. The Canadian pension plan experience of the last decades confirms this to be true. This article looks into some of those strategic considerations beyond the funded status, and outlines an approach for conducting a sustainability review of a pension plan.

 
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How OPTrust is Continuing to Pay Pensions in a Low Interest Rate Environment

By James Davis, Chief Investment Officer, OPTrust

Perpetually low/negative interest rates will have long-term implications on asset valuations and investors’ perception of, and appetite for, risk. As long-term investors and stewards of our members’ retirement savings, we must also strive to understand the repercussions of policy uncertainty and persistently low/negative interest rates on future investment returns. As we continue to navigate this new normal, and design portfolios to weather the storm, we are confident we will be able to meet tomorrow’s challenges head on, regardless of the direction interest rates take.

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Flexibility

By Thomas S. Caldwell, C.M., Founder and Chairman, Caldwell Securities Ltd. 


"The future ain't what it used to be." ~ Yogi Berra.  

Shocks are changing our world at an unforeseen pace. "Experts"  are losing credibility and so called news items are simply packaged opinions supporting agendas.  So where are investors to look? The best starting point is ourselves.   Use  your brain, keep things simple and question - everything.
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Investing in a post-COVID world

By Kyle Weeden, Principal, Eckler

 
Following the longest bull in developed market history, 2020 quickly turned sour for investors as the COVID-19 pandemic spread across the globe and sent stock markets spiraling. With the dust seemingly starting to settle into the latter of the year we explore potential investment opportunities for investors into 2021 and beyond with a focus on public and private markets.
 

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Negative Interest Rates as a Policy Tool in the U.S. and Canada: Pros and Cons

By Kevin Minas, CFA, CAIA, Client Portfolio Manager,
CIBC Asset Management
Michael Sager, Ph.D., Vice-President, Multi-Asset and Currency Institutional Asset Management, 
CIBC Asset Management


Discussion of whether negative interest rates should form part of the monetary policy response to the current economic downturn has intensified.  We do not currently assign a significant probability of negative policy interest rates being adopted in Canada or the U.S. The main catalyst that would cause us to adjust our view is evidence of persistent, significant structural damage to the Canadian and U.S. economies that results from the economic shutdowns implemented in response to COVID-19. Such evidence would be contrary to our current base case forecast.

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Private investments like real estate and private equity provide great opportunities for ESG investments

By Tania Caceres, Principal, Risk Nexus 
Catherine Ann Marshall, CFA, M.A., Principal Consultant, RealAlts
 
Is infrastructure emerging as the new darling of responsible investment? For firms with ESG aligned investment strategies that seems to be case. In a rapidly changing world, with much talk of a “new normal” and an “accelerated transition” to a post-COVID green economy, this article provides insights on how two Canadian investment managers are leading the way and seeking alpha with ESG aligned infrastructure investments. The business case supporting sustainable infrastructure investment is gaining traction with a new reporting framework through GRESB Infrastructure, and proven performance of investments in renewable energy and net zero strategies. 
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The Power of Precision - Better Outcomes with Factors

By Michael Hunstad, PhD, Head of Quantitative StrategiesNorthern Trust Asset Management
Jordan Dekhayser, CFA Senior Quantitative Equity StrategistNorthern Trust Asset Management
 
In investing, where managing uncertainty is the name of the game, what exactly does it mean to be more precise and how can investors get there? Factor investing offers significant promise to investors looking for precision. In this article, we identified two ways that factor investors can be more precise – controlling for sector and region exposures and using diversified factor definitions – two steps that have historically improved risk-adjusted returns. When it comes to factors, simplicity is not always a virtue and taking steps that lead to being more intentional about where return and risk come from can better align investor objectives with outcomes.

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A Proposal to Protect Pensioners of Insolvent Companies 

By Michael Powell, President, Canadian Federation of Pensioners
 


The COVID-19 pandemic has resulted in a struggling global economy. Integrated global supply chains that were integral to lower cost, higher quality products are now an economic Achilles Heel; break one link and the chain collapses. An increase in insolvencies is virtually certain. Protection for pensions has not appreciably improved since Nortel, Atlantic Co-op, White Birch, Sears, etc. In fact, pensioners face greater risks now due to industry supported regulatory changes. The Canadian Federation of Pensioners has offered several novel approaches to improve pension protection and the latest is to establish a national regulatory framework to preserve pensions abandoned due to insolvency.

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Navigating a post-pandemic investment world

By Chris Horwood, MBA, CFA, Head of Institutional Business, Orbis Investments
 
It remains unclear how long the COVID-19 pandemic will persist, but investors must still make decisions in the face of extreme uncertainty. In this article, we offer a simple framework to help asset owners think about the likely winners and losers in a post-pandemic world and to engage more effectively with their investment managers on this topic. Above all—amid the daily noise and market volatility—it is critical to stay focused on the relationship between market prices and long-term fundamentals.

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Managing through social, economic and environmental volatility  

By Jim Harris, Managing Partner, Soterium Inc. 
Sudha Datta, Managing Partner, Soterium Inc. 
 
The retirement income system is complex but there are simple, high impact, public policy changes that should, according to a recently retired "pension wonk", be made to enhance equity, coverage, flexibility, and greater income security. For the first time in living memory, businesses and the way they are operated are being managed by external factors, resulting in a loss of control. The situation both short and long term remains uncertain and the volatility we once embraced as profitable is now seen as threatening some businesses survival. Despite that uncertainty, we have examined the current social, economic and environmental impacts and see some cause for optimism.
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Can Canada's Retirement System Be Fixed?

By Ron Sanderson, Founder/Principal, URSA MAJOR Advisory
 
The retirement income system is complex, and we often get bogged down in regulatory and administrative issues. But there are simple, high impact, public policy changes that should, according to a recently retired "pension wonk",  be made to enhance equity, coverage, flexibility, and greater income security. Do we have the courage to take up that challenge?

 

ACPM COVID-19 Advocacy and Information

 
Below are links to ACPM Advocacy submissions and Government resources. Additional legislative and regulatory information is in the “Laws & Regulations” section of this issue. As we progress through the COVID-19 situation and more developments continue to occur, we will update the legislative and regulatory information in this section and “Laws & Regulations”. 
 

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ACPM Online Events and Sponsorship
 
ACPM will be conducting numerous online video events featuring a wide variety of topics in 2021 and there are individual or bundled Sponsorship opportunities. These events will provide your organization with a high degree of corporate profile to senior management professionals in the retirement income industry. Please contact Judy Lei, Manager, Operations and Programs, at judy.lei@acpm.com if you have any questions.


For the list of ACPM events, please click HERE.
 
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2022 Ontario Regional Council Golf Tournament
 
 Angus Glen Golf Club: 7:15 am to 3:00 pm
June 6, 2022
Markham, Ontario



For Golf Sponsors and more information, please click HERE.

 


LAWS & REGULATIONS

FEDERAL

A collection of postings from the federal government, CAPSA, OSFI and the CRA over the last several months.

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PROVINCIAL

Numerous postings from provincial governments and their respective agencies across the country.

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