Pension Fund Investment in Canada Trends, Regulation and Pension Governance

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Pension Fund Investment in CanadaTrends,
Regulation and Pension Governance
Rudy R. Dabideen, CFA Chairman - PIAC

• March 15, 2001
• Santiago, Chile

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Presentation Outline

• PIAC
• Canadas Capital Markets
• Pension Assets
• Growth of assets
• Asset mix
• Regulations
• Investment Trends
• Fund Governance

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PIAC
Pension Investment Association of Canada

• 200 Members
• Total Assets of PIAC members 550 Bill
• Asset Focus
• 4 Committees
• Investment
• Member Services
• Government Relations
• Corporate Governance
• Web Site WWW/PIACWEB.ORG

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Capital Markets Overview
Capitalization in US s

• Equity Markets
• Canada 520 B UK 2.4 T
• USA 13.0 T Japan 3.0 T
• Bond Market
• Canada 540 B UK 940 B
• USA 14.6 T Japan 5.7 T

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Capital Markets Overview
Capitalization in US s

• Population
• Canada 31 M UK 60 M
  
• USA 276 M Japan 127 M
• GDP
• Canada 700 B UK 1.3 B
  
• USA 10.1 T Japan 4.7 T

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Total Pension Asset Growth - Canada
Total Pension Assets (US Bill)
Source Intersec
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Total Pension Asset Growth
Total Pension Assets (US Bill)
Source Intersec
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Asset Growth 1985 - 1999
of GDP
Billions
Source Statistics Canada
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Top 10 Pension Plans in Canada
Cdn s Bill
As of Dec 1999
Source Benefits Canada - April 2000 Issue
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Average PIAC Asset Mix - 1999
Source PIAC Data Base of Pension Funds
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Asset Mix Change - 1990 1999
1999
1990
Source PIAC Data Base of Pension Funds
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Typical Market Indices

• TSE 300 Canadian Equity
• MSCI World Global Equity
• MSCI EAFE International
• SC Universe Canadian Bonds
• SP500 / MSCI USA US Equity
• MSCI Japan Japan Equity

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Regulation

• Limit on global investments
• 30 outside of Canada (2001)
• Statement of Investment Policies Procedures
  (SIPP)
• Harmonization of regulators
• Pension Benefit Act
• Prudent Person Rule
• Actuarial Valuations
• Financial Statements

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FOREIGN INVESTMENTS1990 - 1999
of total assets
Source Statistics Canada
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Investment Trends

• Increase in Foreign Investments
• Derivatives to go beyond the legal limit
• Alternative Investments
• Private Equity
• Hedge Funds
• Reduced Bond Market
• Government Surplus
• Increase credit analysis

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Investment Trends

• Risk Management
• Risk Budgeting
• VAR
• Defined Benefit to Defined Contribution Plans
• Social Investing / Ethical Investing
• Settlement Improvements
• T 1

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Governance

• Pension Plan Governance Model
• PIAC / ACPM / OSFI
• Structure of Pension Plans
• Trustees Role
• Managements Role
• Monitoring
• Feedback

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END