Britain’s pension regulator is looking to get its hands on a portion of Nortel Networks Corp.’s assets in an attempt to shore up a massive shortfall caused by the Canadian tech company’s collapse.
The Pensions Regulator has filed a C$3.4 billion claim against Nortel’s Canadian parent in an Ontario court, arguing that the underfunded British pension plan—which was severely stressed by Nortel’s bankruptcy—should be topped up with the proceeds of the auction of Nortel’s global assets.
It is not clear if the move falls within British law, and Nortel is reportedly preparing a motion that will seek to have the regulator’s claims proceed through the existing court-approved claims process.
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Financial literacy task force begins consultations
The federal government’s financial literacy task force is embarking on a cross-country consultation as part of its effort to build a national strategy that will teach Canadians how to manage their finances.
The task force will also release its “Leveraging Excellence” consultation document on Monday, which discusses issues such as managing debt, investing and retirement planning.
The consultation process will spread to each province and territory and make use of online forums, public hearings, requests for formal submissions and round-table discussions.
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Mercer launches pension buyout index
In anticipation of increased demand for de-risking solutions, Mercer has introduced a pension buyout index that provides plan sponsors with a monthly snapshot of the affordability of purchasing a bulk annuity.
The index is based primarily on pricing data from three of the leading U.K. life insurers active in pension de-risking: Aviva, Legal & General and Pensions Insurance Corp.
According to Mercer, a company with a mature pension plan with accounting liabilities and assets of £100 million could obtain a bulk annuity deal with an insurer with additional costs of roughly £44 million. The cost reflects the difference in valuation methodologies between corporate accounting standards and insurance company requirements.
“Purchasing a bulk annuity from a life insurer is a key way to manage or remove a pension plan’s obligations and the associated risks,” says David Ellis, head of longevity risk management at Mercer. “It is a significant transaction, however, and knowing when to trade can be difficult as most existing reviews of the U.K. bulk annuity market either are not available frequently enough or are based on the bulk annuity prices offered by only one insurer. Mercer’s index gives sponsors much more clarity when considering this tactic.”
Mercer believes that interest in insurance-based products for managing pension risk is likely to increase in 2010 due to widespread interest in companies seeking to divest themselves of their legacy pension obligations.
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OMERS named Canadian pension fund of the year
OMERS has been chosen by World Finance Magazine as Pension Fund of the Year 2010, Canada.
The World Finance Pensions Awards judging panel looked for a company that provided a genuinely valuable service with a focus on the financial stability of the company, enhancements to its core services, approach to risk and corporate governance, and the development of its staff.
“We are thrilled to be honoured with this prestigious award and are grateful to the team at World Finance for their recognition,” says Michael Nobrega, president and CEO of OMERS. “To be recognized internationally for our commitment to rigorous risk management, client service, transparency, best practices in corporate governance as well as the innovations we offer as an employer is a significant achievement.”