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(August 1, 2008) The mood amongst the defined benefit (DB) plan sector is decidedly pessimistic, and many plan sponsors are looking to make changes over the next 12 months in an effort to improve their financial situation, according to a new survey from Morneau Sobeco.

Seventy-five per cent of respondents said they were either somewhat concerned or very concerned about the financial status of their plans.

Thirty-nine per cent of those concerned identified poor stock market performance as the cause of their woes, while 27% said they expected future fund returns to be lower. Low solvency discount rates and pending changes to accounting rules were also named as significant factors.

More than half of respondents indicated they were ready to take remedial action over the next 12 months, with 27% looking at switching to alternative investments and 24% considering liability-driven investing.

Of these plans, half are considering structural changes to some extent. Twelve percent are looking at moving from DB to defined contribution plans, while another 12% say they may increase employee contribution levels. A further 22% are considering changes to reduce cost or volatility, but will remain within the DB structure.

“We note there has been a growing interest in DB plan designs that reduce the employer’s overall exposure to cost uncertainty,” Morneau Sobeco said in a statement.

The survey was based on data from 130 respondents consisting of both closed and continuing DB plans.

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Signs point to recession: BMO

(August 1, 2008) Is the U.S. in a recession or not? That’s the big question plaguing economists these days, and now the Bank of Montreal is chiming in, saying that signs keep pointing to a recession.

The bank points out that U.S. non-farm payrolls have dropped for the seventh consecutive month, while private sector jobs have fallen for eight months in a row. “This degree of private job losses has occurred only amid the 11 recessions since WWII,” writes Sherry Cooper, chief economist at BMO in a report.

America’s unemployment rose to 5.7%, which was weaker than expected, she says. In the past eight months the jobless rate has increased by 1% — numbers like these have only happened during recessions.

In addition to these figures, aggregate hours worked fell by 0.4% in July, pushing down the three-month annualized change to -2.1%. This is “signalling the economy is now registering virtually no growth,” Cooper writes.

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Norman Halldorson appointed to CRA board of management

(August 1, 2008) On Friday, Canada’s Minister of National Revenue appointed Norman Halldorson, a partner at KPMG Enterprise, to the Canada Revenue Agency’s board of management.

“Mr. Halldorson’s wealth of experience as a chartered accountant, particularly his years as a partner in the areas of taxation and client service with KPMG Enterprise, will contribute to the Board’s role within the Canada Revenue Agency,” says Minister Gordon O’Connor. “I am confident that Mr. Halldorson’s membership will be beneficial to the contributions of the Board to the CRA in the years to come.”

Halldorson was nominated by the province of Saskatchewan.

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Fidelity names new lead portfolio managers

(August 1, 2008) Fidelity Investments Canada has appointed Kevin Elliott to portfolio management responsibilities on the Fidelity Canadian Growth Company Fund. Elliott, a 28-year investment industry veteran, succeeds Maxime Lemieux, who is taking a sabbatical in September.

“Consistent with Fidelity’s proven investment approach, Elliott uses bottom up, fundamental analysis to drive strong returns for investors. He is a great complement to our already impressive investment management team,” said Bob Haber, chief investment officer of Fidelity Investments Canada.

Team Canada member and co-portfolio manager Hugo Lavallée will assume lead portfolio management duties on Fidelity Canadian Opportunities Fund during Lemieux’s sabbatical.

(08/01/08)