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Joe Hornyak
Former editor of Benefits and Pensions Monitor and founder of Joe Hornyak Communications
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ACPM Wants Bankruptcy Bill Abandoned
Given its serious issues, the Association of Canadian Pension Management (ACPM) urges that Bill C-228 in its current form be abandoned in favour of pursuing responsive, innovative policy that does not have the potential for collateral damage to the retirement system and the economy. In a?letter submitted to the House of Commons Standing Committee on Finance (FINA) , ACPM notes serious, undesirable, and unintended consequences with the bill which amends the bankruptcy and solvency act to better protect pensions when a company fails. Among the negative unintended consequences is that?ordinary course borrowing will become more difficult, expensive, or impossible for some DB plan sponsors, noting that the “priority for pension deficits created by C-228 would fundamentally alter the risk profile that is assessed by creditors.” Moreover, it says “nearly every country in the world does?not?use a super-priority approach to the insolvency issue, including the United States, and such an approach would make it even more difficult for Canada to attract business investment.” Another negative potential consequence is that?many DB pension plans will be terminated?due to increased costs and the burden of borrowing faced by plan sponsors. These actions would have broader consequences for the Canadian retirement system. Indeed, it is stated this could?“virtually eliminate DB plans for active private sector employees who still accrue a DB pension.” To avoid the negative outcomes, ACPM proposes several policy approaches to securing pensions. First, it suggests allowing pension plans to continue to operate despite the insolvency of the sponsoring employer by amending the Companies' Creditors Arrangement Act?(CCAA) and Bankruptcy and Insolvency Act?(BIA) such that an insolvency trustee could wind down the pension plan of an insolvent employer, potentially improving the plan’s funded position before benefits are settled. ACPM also suggests the use of a variable payment life annuity (VPLA) or advanced life deferred annuity (ALDA), thus maximizing retirement dollars available to the retirees. Finally, the appointment of a federal pension asset manager could enable insolvent company pension funds to deliver on the pension promise.
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AuM Tops $131 Trillion
Assets under management (AuM) at the world’s 500 largest asset managers reached a new record of over $131 trillion in 2021, says research ?from WTW’s Thinking Ahead Institute. This is an increase of over 10 per cent on the previous year, when assets had grown by 14.5 per cent to over $119 trillion. The research also shows further concentration of assets managed by the very largest organizations. The world’s top 20 asset managers are now responsible for over $59 trillion of assets, having grown at an above-average annual rate of 13 per cent. BlackRock is the world’s largest asset manager and the first to exceed $10 trillion. The dominance of U.S. managers is increasingly apparent at the top of the rankings; they now account for 15 of the 20 largest firms and around 82 per cent of assets. The research shows passively managed funds grew by 12.1 per cent during the year ? faster than actively managed assets, which grew by 9.5 per cent ? and now account for over 29 per cent of assets, hitting a record high. It also shows that equity and fixed income continued to make up the majority of assets, split by 46.5 per cent and 33.9 per cent, respectively. In addition, cash makes up 6.6 per cent, alternatives 5.9 per cent, and other strategies 7.1 per cent. These include liability-driven investment and other specialist solutions.
For details on these stories, visit www.bpmmagazine.com