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Pension Fund Investment in Canada Pension Fund Investment in Canada Trends, Regulation and Pension Governance March 15, 2001 Santiago, Chile Rudy R. Dabideen, CFA Chairman - PIAC
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2 Presentation Outline PIAC Canada’s Capital Markets Pension Assets –Growth of assets –Asset mix Regulations Investment Trends Fund Governance
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3 PIAC 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 Pension Investment Association of Canada
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4 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 Capital Markets Overview Capitalization in US $$’s
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5 Population –Canada 31 M UK 60 M –USA 276 M Japan 127 M GDP –Canada 700 B UK 1.3 B –USA 10.1 T Japan 4.7 T Capital Markets Overview Capitalization in US $$’s
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6 Total Pension Asset Growth - Canada Total Pension Assets (US Bill) Source: Intersec
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7 Total Pension Asset Growth Total Pension Assets (US Bill) Source: Intersec
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8 $ Billions Source: Statistics Canada % of GDP Asset Growth 1985 - 1999
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9 Top 10 Pension Plans in Canada Cdn $’s Bill Source: Benefits Canada - April 2000 Issue As of Dec 1999
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10 Average PIAC Asset Mix - 1999 Source: PIAC Data Base of Pension Funds
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11 1999 Asset Mix Change - 1990 & 1999 Asset Mix Change - 1990 & 1999 1990 Source: PIAC Data Base of Pension Funds
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12 TSE 300 Canadian Equity MSCI WorldGlobal Equity MSCI EAFEInternational SC UniverseCanadian Bonds S&P500 / MSCI USAUS Equity MSCI JapanJapan Equity Typical Market Indices
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13 Limit on global investments –30% outside of Canada (2001) Statement of Investment Policies & Procedures (SIP&P) Harmonization of regulators Pension Benefit Act –Prudent Person Rule Actuarial Valuations Financial Statements Regulation
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14 FOREIGN INVESTMENTS FOREIGN INVESTMENTS 1990 - 1999 % of total assets Source: Statistics Canada
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15 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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16 Risk Management –Risk Budgeting –VAR Defined Benefit to Defined Contribution Plans Social Investing / Ethical Investing Settlement Improvements –T + 1 Investment Trends
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17 Governance Pension Plan Governance Model –PIAC / ACPM / OSFI Structure of Pension Plans –Trustee’s Role –Management’s Role –Monitoring –Feedback
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18 END
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