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(March 15, 2007) Canadians are retiring and cashing in on their pensions. While this shouldn’t be any surprise, it’s interesting to note that, to the end of the third quarter in 2006, benefit payments have increased 6% to $7.5 billion. Since 2004, pension benefits payouts have risen 7.5%.

Between July and September 2006, pension plans recovered after recording a 2.2% decline in the previous quarter, the first drop in nearly two years. The market value of pension-held assets improved 4.4% over the second quarter to $854.9 billion.

In the third quarter, more than 40% of the value of fund assets were in stocks and equity funds, while bonds and bond funds made up an additional third of the holdings. Foreign holdings have increased 5% in the past two years, pushing pension investments in foreign holdings to 29% of assets.

There are an estimated 4.6 million Canadians with pension plans.

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Scotiabank expects Canada’s economy to continue slowing

(March 15, 2007) The resource-rich western provinces will continue to outpace the rest of the country, but overall, says a report by Scotia Economics, there will be slower economic growth for Canada in 2007.

Scotia’s latest provincial trends report predicts that Canada’s energy and mining sectors will again tilt growth performance westward in 2007, even as non-residential construction and services-based activity remain relatively buoyant across the nation.

Scotia said that tight labour markets are putting pressure on virtually all provinces. British Columbia and Alberta are drawing workers in search of higher-paying jobs westward, while the Atlantic region, Manitoba and Saskatchewan are continuing to be affected by interprovincial out-migration, which has been impeding growth.

From a regional perspective, however, Scotia expects growth in Western Canada and the Atlantic provinces to outpace the national average in 2007, while Central Canada lags behind. Newfoundland & Labrador is expected to best the other provinces as its mining sector recovers. A slowdown in non-residential construction will moderate growth in Alberta and B.C., although the two provinces should remain at the top of the pack.

Ontario and Quebec will likely continue to face weakness in manufacturing amid industry restructuring.

“For the third year in a row, Canada is expected to post slower output growth,” says Scotiabank economist David Hamilton. “Despite the continuing solid gains in the country’s resource-rich regions, manufacturing activity remains under pressure from non-stop foreign competition, rising input costs and a strong Canadian dollar. Meanwhile, deteriorating affordability, largely due to higher prices, is expected to put a chill into the housing market.”

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IDA fines advisor for off-book selling

(March 15, 2007) A hearing panel of the Investment Dealers Association of Canada has fined a former Dundee Securities employee in Victoria, B.C., David Michael Michaels, $45,000 for selling securities he was not licensed to sell.

The IDA said that between April and October of 2000 Michaels helped clients purchase shares of a public company despite being authorized to sell only mutual funds. Michaels was also found to have traded securities without the consent or knowledge of his dealer.

In addition to the $45,000 fine, Michaels must pay $15,000 in costs and is prohibited from re-approval by the IDA for a period of two months. As a condition of re-approval, Michaels must successfully rewrite and pass the Conduct and Practices Handbook Course after which he will be subject to six months of close supervision.

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Housing affordability on the rise: RBC

(March 15, 2007) On a national scale, housing affordability in Canada improved in the fourth quarter of 2006, according to the latest housing affordability report by RBC Economics.

Factors such as a weaker pace in resale activity, an increase of homes on the market and more moderate price growth have helped slow the rising cost of owning a home. The study points out, however, that there were significant variations in the pace of the current housing market slowdown across the country.

“The improvement was driven by faster income growth, slowing house price increases, a small decline in mortgage rates and lower utility bills,” said Derek Holt, assistant chief economist, RBC. “Overall, there is the potential for better housing affordability conditions in 2007, especially in Western Canada, as the market moves into more balanced territory.”

The RBC affordability report derives its results by capturing the proportion of pre-tax household income needed to service the costs of owning a home. The most affordable housing class remains the standard condo, requiring 27.5% of income. A standard townhouse is next at 31.7%, followed by a detached bungalow at 39.4%. A standard two-storey home, while improving, remains the least affordable housing type at 44.9%.

Regionally, RBC reports that the western provinces continue to show signs of slowing price growth, with British Columbia, Alberta and Saskatchewan having likely reached the peak of price appreciation.

RBC points out that affordability was more pronounced in Central and Eastern Canada, as housing markets continued to soften alongside their weaker economic growth.

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(03/15/07)