January 17 Benefits and Pensions Monitor Daily News Alerts

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Sticking To Strategy Best Advice

Stick with the strategy and don’t be tempted by forecasts, says Duncan Burrill, managing director and CFO of the CBC Pension Plan. He told the CPBI Ontario ‘Pension Investment Forecast’ this was one of lessons his fund learned as its moved to a liability driven investment strategy in 2005. As a very mature plan for a business, it was paying out $2.85 in benefits for every dollar contributed. As well, the business is declining so the plan was getting more mature. Currently, it has 38 per cent of its members active and 52 per cent are pensioners with 10 per cent deferred. During its journey since 2005, it ran into several issues. First was the belief that interest rates would rise. When it was planning the shift to LDI, it thought interest rates would rebound from the four per cent level. As it learned, he said, it is hard to predict interest rates and it has learned this lesson over and over. He said the current situation defies economic sense. The other challenge was the 2008 financial crisis. It took 10 years to dig out from that, said Burrill. While there may be other opportunities and forecasts that seem very appealing, he advised funds to stick to their strategy. If a plan is going to adjust to take advantage of these opportunities, it should keep these changes small. And while the plan did follow this, it would have been further ahead if it had just stuck to its strategy, he said.

Never Too Late To Plan For Retirement

"Perhaps the biggest myth of all is the fear that you've missed the chance to plan for your retirement," says Rick Lowes, vice-president, retirement strategy, at RBC. "That's just not the case. Canadians are redefining retirement and there is a wide range of financial options to explore right up until the day you stop working." Retired Canadians advise those approaching retirement not to expect it to be as advertised, says the ‘RBC Retirement Myths & Realities’ poll. Retired Canadians called out three key misconceptions about retirement. While more than half (55 per cent) of pre-retirees aged 50+ expect to know their retirement date more than one year in advance, this was true for only 39 per cent of retirees aged 50+ and 16 per cent had no advance notice at all. Close to one-third (29 per cent) of pre-retirees expect to be snowbirds, but only 18 per cent of retirees are actually flocking south in the winter. And while half (50 per cent) of pre-retirees plan to work in retirement, only 11 per cent of retirees responded they actually had returned to full-time or part-time work. The main reasons why pre-retirees say they plan to go back to work are to stay active mentally (64 per cent) and physically (48 per cent); to stave off boredom (44 per cent); and to generate income (43 per cent).

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