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

2 Presentation Outline PIAC Canada’s Capital Markets Pension Assets –Growth of assets –Asset mix Regulations Investment Trends Fund Governance

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

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

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

6 Total Pension Asset Growth - Canada Total Pension Assets (US Bill) Source: Intersec

7 Total Pension Asset Growth Total Pension Assets (US Bill) Source: Intersec

8 $ Billions Source: Statistics Canada % of GDP Asset Growth

9 Top 10 Pension Plans in Canada Cdn $’s Bill Source: Benefits Canada - April 2000 Issue As of Dec 1999

10 Average PIAC Asset Mix Source: PIAC Data Base of Pension Funds

Asset Mix Change & 1999 Asset Mix Change & Source: PIAC Data Base of Pension Funds

12 TSE 300 Canadian Equity MSCI WorldGlobal Equity MSCI EAFEInternational SC UniverseCanadian Bonds S&P500 / MSCI USAUS Equity MSCI JapanJapan Equity Typical Market Indices

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

14 FOREIGN INVESTMENTS FOREIGN INVESTMENTS % of total assets Source: Statistics Canada

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

16 Risk Management –Risk Budgeting –VAR Defined Benefit to Defined Contribution Plans Social Investing / Ethical Investing Settlement Improvements –T + 1 Investment Trends

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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