Favourable market conditions from mid-2010 to roughly the same point in 2011 helped increase the value of assets managed by Canadian pension funds, endowments and foundations by approximately 10%, reports Greenwich Associates.
The latest Pension Index from Towers Watson shows that, despite improved asset returns in the fourth quarter of 2011, pension funding levels in major global markets dropped over the year due to declining discount rates and disappointing asset returns.
Funding volatility is the top concern for pension plan sponsors, according to SEI’s most recent Quick Poll.
At first glance, it might be hard to see how an ancillary benefit like a pension can drive a company into bankruptcy; however, it can be a major risk in today’s business environment.
American Airlines has announced it will seek bankruptcy court approval to terminate its DB pension plans and switch to a 401(k) plan. The airline will also seek to discontinue subsidizing future retiree medical coverage for current employees, but will offer access to these plans if employees choose to pay for them.
Pensions and saving for retirement seem to be everywhere in the news today. Yet many Canadians don’t place a high priority on employer-sponsored pension plans.
Global institutional pension fund assets in the 13 major markets grew by 4% during 2011, reaching a new high of US$28 trillion, according to Towers Watson’s Global Pension Assets Study.
Speaking at the annual Mercer Pension Outlook and Fearless Forecast on Tuesday, Malcolm Hamilton commented that the 1990s represented “the last happy time for pension plans in Canada,” because real interest rates stayed above 4% for the decade.
More voices are speaking out against the “platinum-plated pensions” provided to Canada’s members of parliament.
Fixing rich, underfunded MP pensions is a key step in pension reform, according to a report released today by the C.D. Howe Institute.