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Pension Fund Investment in Canada Trends, Regulation and Pension Governance

Pension Fund Investment in Canada Trends, Regulation and Pension Governance. March 15, 2001 Santiago, Chile. Rudy R. Dabideen, CFA Chairman - PIAC. Presentation Outline. PIAC Canada’s Capital Markets Pension Assets Growth of assets Asset mix Regulations Investment Trends

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Pension Fund Investment in Canada Trends, Regulation and Pension Governance

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  1. Pension Fund Investment in CanadaTrends, 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 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

  4. 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

  5. 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

  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. Asset Growth 1985 - 1999 % of GDP $ Billions Source: Statistics Canada

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

  10. Average PIAC Asset Mix - 1999 Source: PIAC Data Base of Pension Funds

  11. Asset Mix Change - 1990 & 1999 1990 1999 Source: PIAC Data Base of Pension Funds

  12. Typical Market Indices • TSE 300 Canadian Equity • MSCI World Global Equity • MSCI EAFE International • SC Universe Canadian Bonds • S&P500 / MSCI USA US Equity • MSCI Japan Japan Equity

  13. Regulation • 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

  14. FOREIGN INVESTMENTS1990 - 1999 % 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. Investment Trends • Risk Management • Risk Budgeting • VAR • Defined Benefit to Defined Contribution Plans • Social Investing / Ethical Investing • Settlement Improvements • T + 1

  17. Governance • Pension Plan Governance Model • PIAC / ACPM / OSFI • Structure of Pension Plans • Trustee’s Role • Management’s Role • Monitoring • Feedback

  18. END

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