The National Pension Hub is awarding funding to three research projects, focusing on themes like portfolio construction and plan design.
The hub, which the Global Risk Institute in Financial Services created in October 2017, is a Canadian centre for pension knowledge and research. One research project, which will be led by Stephen Bonnar, a post-doctoral fellow, and Douglas Andrews, an adjunct professor, both from the University of Waterloo, will look at portfolio construction, plan adequacy and plan design.
“This project will show the importance of considering the impact of changing population structures in setting the asset allocation for defined benefit pension plans, and of tailoring communications to plan members of defined contribution arrangements,” the group stated in a news release.
The second project, which is focused on private market risk assessment, will be led by Mikhail Simutin and Redouane Elkamhi, both associate professors of finance at the University of Toronto’s Rotman School of Management.
“The goal of this project is to develop a set of indices to serve as benchmarks for assessing private market investments by pension funds,” the release noted. “Using these indices, we plan to assess risks of such investments, their fit in the overall portfolios of the funds, and propose ways these investments can be used to improve funds’ risk-return trade-offs.”
The hub is also reviewing proposals from its recent call for submissions and will award funding to a study around designing pension plans for fairness, sustainability and transparency. Also based out of the University of Waterloo, its lead researchers are David Saunders, an associate professor and director of the master of quantitative finance program, professor Mary Hardy and doctoral graduate student Xiaobai Zhu.
The project will look at optimal risk-sharing pension plan designs based on the transparency of plan structure, sustainability, welfare improvement effects and intergenerational fairness. It will also assess how optimal existing pension plan designs are.
The hub will announce additional funding decisions, based on its consideration of proposals from a recent call for submissions, in the coming months.
Timelines for the projects vary from one to two years, according to Dr. Alex LaPlante, managing director of research for the National Pension Hub and the Global Risk Institute, in an email to Benefits Canada. The first two projects started in June, while the third is set to begin by the end of the summer, he said.
The National Pension Hub’s member organizations are the Alberta Investment Management Corp., the British Columbia Investment Management Corp., the Caisse de dépôt et placement du Québec, the Canada Pension Plan Investment Board, the Investment Management Corp. of Ontario, Mercer, the Ontario Municipal Employees Retirement System, the Ontario Teachers’ Pension Plan, the Public Sector Pension Investment Board, PricewaterhouseCoopers LLP and the Global Risk Institute.