A committee headed by Imasco’s former chairman and CEO, lawyer Purdy Crawford, has been formed to oversee the restructuring process of about $35 billion in third-party asset-backed commercial paper(ABCP)as a result of the recent disruption in the credit markets. Crawford’s no stranger to dealing with difficult debt situations, having been appointed as a special advisor by the federal government when Dome Petroleum went through the then-world’s largest corporate restructuring in the early 1980s.

“Our investor committee will be looking to implement a solution that addresses the best interests of investors generally,” says Crawford, “and at the same time allows for a successful restructuring and a return to market stability for these investments.”

The committee has three objectives: to convert the ABCP into medium-term instruments, to ensure that these instruments are more transparent so investors can evaluate them on the basis of the intrinsic value of the underlying assets, and to ensure that the restructured instrument can be traded as quickly as possible on the secondary market that will develop.

“Creating an independent body led by such a credible, experienced and wise person who understands business, the law and the art of deal-making and compromise is a good start,” says Clay Horner, a partner with Osler, Hoskin & Harcourt LLP and a colleague of Crawford’s.

The Caisse de dépôt et placement du Québec helped play a leadership role when there was a crisis in the third-party ABCP market by convening a group of financial institutions. It then made efforts with other partners to ensure all investors can benefit from the proposed solution, which led to the creation of a committee led by Crawford. They have until Oct. 15 to come up with a solution. But the Caisse will not reveal how much third-party ABCP it holds, saying that under its constituting statute it fully discloses holdings once a year, using a rigorous procedure governed by Canadian and international standards. At the end of 2006, it held $1.7 billion worth of the short-term debt instrument.

ABCP was also bought by numerous pension funds, money market funds and companies as an investment. Montreal-based Domtar was one of those investors. Its pension funds have approximately $420 million invested in ABCP, $308 million of which is held by its Canadian pension funds. The company does not expect liquidity issues to affect the pension funds since its obligations are primarily long term. If there are any losses in the pension fund investments, Domtar says it will make increased contributions.

Laurier Perreault, a worldwide partner at Mercer, says it’s good that the committee has been formed and it should help restore confidence in the system. “It’s just very unfortunate that this would happen, and hopefully, there might be lessons to be learned for the future.”

Survey Says

By: Hewitt Associates

Key Findings: The shortage of labour in Alberta has caused salary increases in Calgary to far exceed those in the rest of the country. Employers are forecasting an average 2008 increase of 5.2% for workers in Calgary. Across Canada, average base salary increases are projected to be 3.8%. Alternatives to dramatic increases in base salary include ensuring that employees appreciate the value of all the benefits they receive as part of their compensation package.

By: Mercer

Key Findings: The desire to attract and retain the most productive employees is driving employers to project a national average salary increase of 3.9% for 2008. Oil and gas and petrochemical industries, mainly located in Alberta, are projecting a 6.2% average salary increase. Without Alberta, the projected national average salary increase is closer to 3.5%.

By: Morneau Sobeco

Key Findings: Salary increases will depend mostly on an employee’s province of residence. The average salary increase budget for 2008 is 3.7%, including a provision for promotional increases. The highest salary increase expectations are reported in Alberta, with average expected increases ranging from 4.3% to 5.6% before promotional increases.


Saying No to Benefits

The next generation of employees thinks the most important factor when deciding where to work is not a good health and benefits plan or a nice starting salary, but the opportunity for advancement, says a research study conducted by assistant professor Ed Ng of Trent University and professor Ronald Burke of York University.

In the study, entitled The next generation at work—business students’ views, values and job search strategy, Canadian business students were asked to assess the importance of 14 items pertaining to their desired job and organizational attributes using a five-point scale.

“Contrary to popular belief, students did not rank compensation as the most important factor when accepting their first jobs,” says Ng. “In fact, it was ranked in sixth place.” Work-life balance ranked seventh, and a good health and benefits plan came in 10th.

The study also found that co-op students were more concerned with the people and work dimensions of a firm and less on a firm’s reputation and benefits. Students with higher grade point averages reported similar preferences to those of co-op students.

Since university students continue to be a significant source of hiring for professional and managerial jobs, the study recommends employers connect with them to understand their views, expectations and job search process as well as to participate in co-operative education, since it can highlight the realities of work in contemporary organizations.—Craig Sebastiano

New Teachers’ CEO Named

Jim Leech, the senior vice-president of Teachers’ Private Capital, will be the new president and chief executive officer(CEO)of the Ontario Teachers’ Pension Plan(Teachers’)effective Dec. 1, 2007. He will succeed Claude Lamoureux, who plans to retire later this year.

The board’s decision to appoint Leech was unanimous, says chair Eileen Mercier. “The board’s human resources and compensation committee undertook a fair, transparent and comprehensive succession process review over the previous months in anticipation of Claude’s retirement.”

Lamoureux is Teachers’ inaugural CEO . He was appointed by then-chair Gerald Bouey in 1990, when the government established the new independent corporation to replace the Ontario Teachers’ Superannuation Fund. In 1990, the fund’s $19 billion of assets were all in Ontario government bonds. Under Lamoureux’s leadership, the fund has grown to a well-diversified $106 billion at the end of 2006.

Leech joined Teachers’ in 2001 and since then, Teachers’ Private Capital has become one of the world’s largest private investors, with assets now exceeding $16 billion. He is the former president and CEO of Unicorp Canada Corp., one of Canada’s first public merchant banks, and Union Energy Inc., then one of North America’s largest integrated energy and pipeline companies. His successor has not yet been appointed. — Craig Sebastiano


Changes to Pensions

Ontario has made changes to the regulations of its Pension Benefits Act to improve flexibility in the funding requirements for a defined benefit Multi- Employer Pension Plan(MEPP). One of the key changes is the introduction of temporary solvency funding relief for a new type of plan, called a Specified Ontario Multi-Employer Pension Plan(SOMEPP). But the special treatment for SOMEPPs expires on Aug. 31, 2010, which means the changes are only temporary.

The problem is that the changes are not permanent, says Cam Hunter, an actuary and principal with Eckler Ltd. “I hope the Arthurs commission agrees with at least the thrust of these rules.” He hopes these changes become permanent following the report by the Ontario Expert Commission on Pensions.

The other change clarifies the funding requirements for MEPPs. The sufficiency of the required contributions under these plans must be determined on the basis of a going-concern valuation and a solvency valuation. —Craig Sebastiano



In “Owning Up” [August 2007], we reported that the Break for Health screening program for General Motors was developed by Shoppers Drug Mart. The screening program was developed by Buffett & Company Worksite Wellness Ltd. and modified to meet the needs of the project with input from Shoppers Drug Mart, the CAW and General Motors. Benefits Canada regrets the error.


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© Copyright 2007 Rogers Publishing Ltd. This article first appeared in the October 2007 edition of BENEFITS CANADA magazine.