Briefly: | Advisor.ca

(May 28, 2004) The annual offering of Ontario savings bonds begins today, the province’s finance minister announced. The province is selling three types of bonds until June 18: Step Up Bonds, Fixed Rate Bonds and Variable Rate Bonds.

The five year Step Up Bond interest rates are 1.7% this year, 3% next year, 3.5% in the third year, 4.5% in the fourth year and 6% in the final year.

The three year Fixed Rate Bond interest rate is 3.3% and the seven year Variable Rate Bond rate is 1.8% for the first six months.

Ontario savings bonds are available online at www.ontariosavingsbonds.com and at banks, trust companies, credit unions, caisses populaires and through investment dealers.

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Regulators release harmonized pension plan guidelines

(May 28, 2004) The Joint Forum of Financial Market Regulators — a coalition of pension, insurance and securities regulators — today released guidelines for the operation of capital accumulation plans, such as defined contribution pension plans and group RRSPs.

The guidelines are an attempt to ensure that pension plan members have the information and assistance they need to make informed investment decisions, the regulator said in a release.

“The guideline approach allows for a high degree of harmonization across sectors and across the country,” says Joint Forum chair David Wild, who also leads the Saskatchewan Financial Services Commission.

Plan sponsors will be granted a 19-month transition period to comply with the guidelines, expected to be in force by the end of 2005.

It’s estimated that more than three million Canadians have $60 billion invested across the country in 40,000 capital accumulation plans, which also include deferred profit sharing plans and group RESPs.

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Western Financial deals for Federated Life

(May 27, 2004) Alberta-based Western Financial Group today announced plans to purchase Federated Life Insurance Company in a friendly takeover valued at nearly $57 million.

Federated Life, based in Winnipeg, is a subsidiary of Northbridge Financial. The purchase price includes $20 million in Federated Life common shares and $36.9 million in assumed assets and liabilities.

The deal will be funded through Western Financial’s cash reserves and a $5 million private placement of common shares, the company says. The agreement is expected to close in the third quarter, pending regulatory approval.

The acquisition gives Western access to the group life and health insurance market, says company president Scott Tannas. “We have been looking for a group life and health insurance acquisition, and Federated Life is definitely the best fit for us,” he says.

Western says it plans no staffing changes at Federated Life, which will remain headquartered in Winnipeg. Property and casualty firm Federated Insurance is not part of today’s deal and will remain a subsidiary of Northbridge.

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Towers Perrin releases white paper on pension reform

(May 27, 2004) Canada’s private pension system needs to be rejuvenated, says pension consultant Towers Perrin, today releasing a white paper with 27 specific recommendations for change.

The system is outdated, the paper suggests, since it is based on the needs of employees who spent their entire career with a single employer.

“This is not today’s reality,” Towers Perrin says. “The current system implicitly discriminates against today’s more mobile employees.”

The second major issue surrounds ownership of any surplus in a pension plan, the consultant says, noting that today’s legislative environment provides no guidance on whether the assets are owned by plan members or plan sponsors.

Towers Perrin’s recommendations include giving control of pension surpluses to plan sponsors in an effort to combat underfunding and the creation of a single national regulator that would develop a common set of pension rules.

“The bottom line is that we need to stop tinkering with today’s system, and start building the system for tomorrow,” says Towers Perrin’s Steve Bonnar. “We’re putting some concrete ideas forward and we hope to stimulate real discussion and debate over the next few months.”

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Profit parade continues for Canada’s banks

(May 27, 2004) Two more of Canada’s big banks came out with healthy earnings reports today, with both RBC and TD posting strong profits in the second quarter.

RBC, Canada’s largest bank, earned $774 million in the three months ended April 30, a 12% increase from last year. “We delivered solid results in the second quarter, reflecting much stronger performance in our investments, capital markets and Canadian banking and insurance operations,” said RBC CEO Gordon Nixon.

The story was much the same at TD, which earned $511 million in the second quarter, compared with a loss of $295 million in 2003. At the same time, TD announced it was setting aside $195 million to deal with any financial fallout from the Enron scandal.

Also today, National Bank today reported a Q2 profit of $180 million, up from $138 million last year, while Laurentian Bank earned $13 million, a modest increase from 2003.

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Manulife launches new tool for DC plan members

(May 26, 2004) Described as an industry first, Manulife Financial today launched a new tool that gives defined contribution pension plan members an estimate of their retirement income.

The estimate is based on information provided by plan members, including expected contributions, current savings and investing strategies.

The “Steps Retirement Program” informs plan members if they are on track to achieving their retirement income and “if they are not, they receive suggestions to help them meet their personal retirement income goal,” Manulife says.

“The program was created to address the needs of plan members and the concerns of plan sponsors. It is all about engaging plan members — making it easy for them to better understand the retirement income they are saving towards,” says Manulife vice president Mike Collins.

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Novinsoft announces online partnership with PlanPlus

(May 26, 2004) Insurance advisors using the PlanPlus Web Advisor financial planning system can now access Novinsoft’s insurance portal, the two companies announced today.

The partnership will enable PlanPlus users to access Novinsoft’s life insurance illustration systems, Universal Life sales concepts and needs analyses.

“Integration between financial planning tools and specific insurance illustrations has felt like the quest for the holy grail — it sounds great but it’s hard to put your hands on,” says PlanPlus president Shawn Brayman. “The Internet, along with new insurance standards on the Web, has finally opened the door on this obvious level of connectivity.”

“With so many advisors offering both investment and insurance products as part of a complete financial plan, integrating our insurance portal with the PlanPlus Web Advisor made a lot of sense,” added Novinsoft president Neil Menear.

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National median income flat

(May 25, 2004) Median employment income in 2002 scarcely changed on a year-over-year basis, at $24,300, according to a report from Statistics Canada released this morning. The figure is 4.1% higher than in 1997, after adjusting for inflation.

At $33,600 residents of the Northwest Territories had the highest median employment earnings, up 12.9% over five years. The Yukon, Ontario and Alberta had the next highest median incomes.

The median marks the halfway point between Canadians with employment income, with 50% earning more and 50% earning less. StatsCan only includes those with employment income, dropping the unemployed from the calculation.

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CI Funds completes fund mergers

(May 25, 2004) CI Funds has completed seven fund mergers, following unitholder approval last week.

“The mergers have created larger, more efficient funds, which will benefit their investors,” said Peter W. Anderson, president and CEO of CI. “We have also continued to streamline and simplify our lineup, while maintaining an industry-leading selection of funds.”

The affected funds are: