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(May 7, 2008) Canadians relying on defined contribution (DC) pension plans may be in for a shock when they retire, according to the Association of Canadian Pension Management (ACPM). The group says member-directed pensions will “not contribute meaningfully to an adequate retirement income.”

In a report entitled Delivering the Potential of DC Retirement Savings Plans, ACPM calls for a re-examination of DC plans, and recommends key steps to take to improve the system.

Among the recommendations, ACPM calls for an increase in contribution limits and for better financial education among pension plan members. Since DC plans shift much of the responsibility off of the employer and onto the plan member, investment advice should also be provided.

“The mission of the ACPM is to advocate for a healthy and sustainable Canadian retirement income system,” says Becky West, chair of the ACPM DC issues sub-committee. “It is hoped, therefore, that this document will become the starting point for such a discussion among retirement system stakeholders that will end with fair and practical recommendations for improvements to retirement savings plans in Canada.”

The report says that too many Canadians lack coverage, even if their employer offers a retirement plan. The report suggests that the onus should be placed on the employee to opt out of the pension plan rather than opting in. Under Canadian employment law, employers are prohibited from deducting pension contributions without consent.

Employers are also not allowed to transfer the assets of former employees out of the plan into an individual retirement savings plan without the consent of the plan member. As a result, the plan and current employees must shoulder the costs associated with managing the assets. The report recommends that plan sponsors be allowed to transfer terminated employees’ assets out, upon “appropriate notice.”

“Many of the recommendations in this report can be implemented under the current legislative regime,” commented Scott Perkin, president of ACPM. “However, other recommendations will require changes to the regulatory scheme. We are therefore urging governments to consider the recommendations in this report and to make the appropriate changes.”

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Credential tops discount broker rating

(May 7, 2008) Credential Direct has been named the top overall discount brokerage in Canada by Surviscor, for the fifth consecutive year.

“Credential Direct continues to demonstrate to Canadians that it is a premier online discount brokerage provider,” said Glenn LaCoste, president, Surviscor. “Credential Direct’s advantage is that it offers mainstream investors sophisticated features and functionality that border on trader platforms without the costs associated with those programs.”

Surviscor’s Winter 2008 Canadian Online Discount Brokerage Rankings reviewed all Canadian online brokerages, including offerings from bank-owned and independent firms, and evaluated them for their online features and functionality.

Credential Direct took top honours in design and help features, market intelligence, trading, and tools & education.

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Excel names Levi Folk emerging market economist

(May 6, 2008) Excel Funds Management, a manager of mutual funds specializing in emerging markets, today announced the appointment of Levi Folk as emerging market economist.

Folk is a relatively well-known financial commentator in Canada who writes a weekly column in The National Post on global investing and mutual funds. An economist by training, Folk will provide research on emerging markets on behalf of Excel Funds.

“We are very excited that Levi is bringing his expertise to Excel Funds. Emerging markets are growing faster than developed markets and over the next decade that is where the returns will come from,” says Bhim D. Asdhir, president of Excel Funds.

Folk says he is excited about the opportunity.

“Excel Funds is known for its expertise in the emerging markets and is destined to grow into a powerhouse in the financial services industry over the next few years,” he says. “They are already established in India, China and Emerging Europe, and the opportunity to cover these and other emerging markets on behalf of Excel Funds is very appealing to me.”

(05/07/08)