Over the past few years, many plan sponsors have sought to de-risk their DB pension plans. This has manifested itself in different ways—from simply diversifying the return-seeking portfolio to purchasing more matching bonds in order to stabilize contributions and better match liabilities. The latter activity has often involved developing a journey plan—a pre-set range of actions or glide path that the plan sponsor will take when something happens. Usually, the triggers are related to an interest rate level, a funded ratio or a combination of both.
It was, literally, a big deal when the Canadian Wheat Board (CWB) off-loaded the risk of its underfunded DB pension plan to Sun Life Financial with a $150-million group annuity purchase. Steering this complex deal seemed impossible at times—no Canadian pension plan had bought an inflation-adjusted group annuity before. But the Winnipeg-based grain marketer plowed […]
With the end of 2013 in sight, I can safely say “de-risking” is this year’s hottest pension buzzword. What, though, do I mean by de-risking, and how new is it really?
While they’re increasingly interested in managing risk, DB plan sponsors in Canada still aren’t far along the de-risking continuum, experts explained in a recent Association of Canadian Pension Management webinar.
With market returns increasing, interest rates on the rise and funded status for DB plans improving, the environment may be right for de-risking
The Office of the Superintendent of Financial Institutions has issued a draft policy advisory that provides information and guidance to administrators of federally regulated pension plans considering entering into a longevity insurance or longevity swap contract.
In an effort to reduce growing pension liabilities in the United States, a top Republican senator has proposed a plan that would allow state and municipal governments to transfer pension management to insurance companies.
The financial turbulence of the last decade didn’t just damage portfolio performance; it dealt a blow to longstanding approaches about how to manage it, forcing a re-evaluation of traditional approaches to asset allocation and risk management. Institutional investors have entered a new world of higher volatility, higher correlations and rock-bottom yields, with danger looming when rates finally do rise.
Today, most Canadian single employer DB pension plans have large solvency deficits, and there continues to be significant focus on the large minimum contributions required to fund these deficits. What has received little attention in recent years is that there is also a cap, prescribed in the Income Tax Act, on contributions that can be […]
The Canadian Wheat Board has purchased a $150-million annuity policy from Sun Life Financial that transfers investment and longevity risk from its DB plan to the insurer.