Canadian private pension funds are among the worst performing funds for 2008, according to a report by the OECD.
The OECD’s Pension Markets in Focus survey of fund performance between January and October this year states that Canadian private pension funds have posted a 22% drop in nominal returns, the third-worst fund performance before Ireland and the United States, which posted a 30% and 23% drop in returns, respectively.
According to the report, the drop in investment returns were greatest among funds in countries where equities represent more than a third of total assets invested. Ireland’s returns are the result of a 66% exposure in equities.
Between January and October, private pension plans from OECD nations have posted losses of almost 20% of total assets, to the tune of US$5-trillion. Apart from exposure to equities, toxic assets and asset-backed securities exposure comprised up to 3% of assets under management for the pension funds as a whole
The crisis has hit both defined-benefit and defined-contribution plans, says the report, and as insolvency rates increase, benefits cuts may follow.
While the news was mostly bad, the report suggests that pension funds have a favourable timeline with which to deal with their problems, and that the returns of a single year do not portray a clear picture of the health of a fund.
“Although the short-term impact is evidently negative, pension funds, by their very nature, have to work with a long time horizon and their performance should also be evaluated on this basis,” says the report.
It explains that the trend over the past 15 years has been positive, with returns of 11.8% in Sweden, 10.6% in the United States and 9.2% in the United Kingdom.
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Scotia Completes Purchase of CI Stake
It is now official. Scotiabank has become CI Financial Income Fund’s largest single shareholder. The bank closed its $2.3-billion purchase of Sun Life Financial’s 37% stake in CI. The acquisition, first announced in October, has made Scotiabank a major player in the wealth management arena.
“CI is a market leader with a solid track record of superior performance,” said Rick Waugh, Scotiabank president and CEO. “This transaction demonstrates our ongoing commitment to growing the bank’s wealth management business.”
Sun Life will continue its distribution arrangement with CI.
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BCE announces share buyback program
In an effort to “return value to BCE shareholders,” BCE will buy back up to 5% of its common shares and reinstate its common share dividend program in the wake of the failed effort to sell the company to an Ontario Teachers Pension Plan-led buyers group.
The dividend program had been suspended for the past two quarters to as part of the buyout deal.
“Our enhanced operational performance in recent months confirms that Bell is competing as a cost-effective and customer-focused communications company,” said BCE in a statement.