©Copyright 2000 Rogers Media. The following article first appeared in the August 2001 edition of BENEFITS CANADA magazine.

Top 50 Money Purchase Pension Fund Report

By Kevin Press

Despite that strong year-over-year increase, the downturn on international capital markets at the end of 2000 and the subsequent softening of short- to mid-term market projections could provide plan sponsors their most significant communications challenge ever. That hasn't happened so far however, at least not at Queen's.

Bill Forbes, director, pensions, investments and insurance at Queen's University describes his members as "somewhat concerned."

Forbes explains that his membership is relatively young on average, and so they're not as concerned about current market volatility as those nearing retirement age might be. "While there is a bit of concern, I get the sense with a lot of people that they feel fairly comfortable with the committee and the efforts that we've made in terms of structuring the fund managers," he says.

The Queen's fund's fiscal year runs Sept. 1 to Aug. 31. Forbes says the fund was down 3.2% for the first nine months of the current year, and he expects a weak final quarter. "We think in June, although we haven't seen the final numbers, we might lose 2%," he says. "That would mean the fund is down 5% after 10 months of the plan year. If it carried on that way, that would make it one of the worst years that we've had in living memory."

That Forbes and his team have not seen the need to launch any emergency plan member communications is a good sign, at least for university MPP fund managers. His is an educated membership that understands these kinds of events are a fact of life. "I think they're quite prepared to say 'we're in good hands, and we won't worry about short-term fluctuations.'"

They're in good hands over at the Saskatchewan Public Employees Superannuation Plan in Regina too. Canada's largest MPP fund saw its assets increase 8.1% during the calendar year 2000, to $2.6 billion as of Dec. 31, 2000.

Brian Smith, chairman of the fund, has heard this from members about the market downturn: "Absolutely nothing, relative to the scale of the membership," he says. "In the third week of June, we mailed out 36,000 member statements and the rate of return for the plan year-end was negative. I would say that we've heard from less than 100 people."

Like Forbes, Smith says there are no plans for emergency communications efforts. "No, nothing special," he says. "Anybody who reads the newspaper would know that the markets are not doing well. I think our members are more knowledgeable today than they were in the past."

CANADA'S LARGEST

The Top 50 Money Purchase Pension Funds report is culled from Rogers Media Inc.'s Canadian Pension Fund Directory database. All of Canada's largest MPP funds are researched. Group registered retirement savings plans, profit sharing plans and other defined contribution- type plans are not included in this study.

The 50 largest funds are holding a total $18 billion in MPP assets. That represents a 5.8% increase over the Top 50 total in last year's report. As of Dec. 31, 1999 the country's 50 largest held $17 billion.

The full universe that this year's list comes from includes 409 pension funds. Total MPP assets in those funds is $23.3 billion. That compares to $21.2 billion in last year's universe of 419 funds.

This smaller universe of course does not indicate that the business is shrinking. Chalk it up to another year of consolidation and organizational changes in a number of industries. The MPP industry in Canada continues to grow smartly.

And there is reason to believe that will continue. The Joint Forum of Financial Market Regulators is working currently on a new regulatory framework that, should it emerge as some expect, will finally create a more supportive environment for defined contribution plan sponsors. After a period of industry consultation, which followed the Joint Forum's publication of a set of regulatory proposals, there appears to be real momentum behind the creation of clear minimum regulatory expectations for MPP plan sponsors. This kind of clarity in defined contribution plan regulation is crucial.

So Smith for one is optimistic. While he doesn't believe that MPP plans will win over the labour movement anytime soon, he does expect continued growth in the business. "I can see it growing by leaps and bounds," he says. "It's so simple to communicate, so simple to administer. Our administration costs, not including investment costs, are less than $50 per person per year . . . We're running the whole pension plan for about 22 basis points."

Numbers like that will grab the attention of both defined benefit pension plan sponsors and new employers for a long time to come. BC

The Romanow Commission has released its final report on the future of healthcare in Canada.

For Commissioner Romanow's recommendations, click here.

Click here for Senator Michael Kirby's report, "The Health of Canadians – The Federal Role: Recommendations for Reform."