Currently, Mercer is open for business in the U.S. on the investment side for the defined benefit(DB)and endowment market, notes McInerney. “We obviously want to provide our investment funds to all markets and we’re going to start with institutional in all countries, and that means DB and defined contribution (DC).”
So far, says McInerney, Mercer Global Investments has about US$6 billion under management, with the bulk of that being in Australia. Several hundred million of that, he adds, is in the U.S. “We expect that to grow nicely,” he says.
In Canada, he adds, Mercer will likely roll out its funds in order to gain a part of the DC market but will have to piggyback onto other distribution and administrative channels. He says “a good array of funds” will be launched and will grow over time. But in the meantime, a lot of those decisions are still under review.
Despite the elimination of the Foreign Property Rule, Mercer plans on balancing foreign and domestic offerings. “Given the global platform and research, it will be even more compelling when we are able to provide that reach for our Canadian clients. But, we still want ensure that we have very strong domestic products.”
As far as markets go, McInerney says the “sweet spot” will likely be in the smaller or mid-size plan market, even though some of the larger plans still look for outsourcing as well.
JUST THE FACTS
STUDY REPORTS SIDE EFFECTS
A new study by U.S. researchers finds that AstraZeneca’s cholesterol drug Crestor had double the side effects of its competitors. AstraZeneca strongly refutes this claim.
The review led by Richard Karas, director of the preventive cardiology at Tufts-New England Medical Center in Boston, showed a rate of 28 adverse events per million patients prescribed Crestor. In fact, that is 2.2 times more adverse events seen with Merck and Co.’s Zocor and 6.8 times more than Pfizer Inc.’s Lipitor.
GREEK PENSIONS COSTLY
The governor of the Greek central bank has warned the country is set to pay 25% of its gross domestic product(GDP)in pensions by 2050. Nicholas Garganas said this is due to the low retirement age, high unemployment and falling birth rates.
The governor pointed out that Greeks work on average until they are 59.5 years old. Also, according to the Bank of Greece, pensions will cost an extra 10% of GDP by 2050—increasing the total social security bill to a quarter of the country’s GDP. Greece’s unemployment rate is estimated at about 10%.
UNITED THEY STAND?
United Airlines has won permission from U.S. Federal Bankruptcy Court to terminate its four defined benefit plans which hold about US$3.2 billion in obligation over the next five years.
In Chicago, Judge Eugene Wedoff said the agreement does not violate federal law and the employees could have ended up in worse shape had the airline ceased operations altogether. The Washington-based Pension Benefit Guaranty Corporation will assume responsibility for the plans, which cover about 134,000 people.
For a PDF version of this article, click here.