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(April 11, 2007) Pension funding in Canada is at a five year high, according to analysis by global consulting firm, Watson Wyatt Worldwide.

A combination of rising stock markets and modest bond yield increases are largely responsible for the improvement. The typical pension funded ratio, the ratio of plan assets to plan liabilities, has increased to 98% at the end of first quarter of 2007, up from 86% at the beginning of 2006.

“These improving funded ratios will be welcomed by CFOs,” said Ian Markham, a senior consultant and director of pension innovation at Watson Wyatt. “Smaller deficits will mean a lesser impact on company balance sheets.” Under proposed accounting rules released last month, pension fund deficits will have to be reported directly on balance sheets by December 31, 2007, for most companies.

Only a few years ago, Watson Wyatt representatives say pension plans were facing a different situation entirely. In 2002, the stock markets and bond yields used to determine liabilities were falling, leading to a decline in funding for most pension funds.

David Burke, retirement practice director at Watson Wyatt’s Canadian offices, said the decline in funding led to changes in pension design.

“The big focus of plan sponsors in the last few years has been managing cost volatility and many have considered changes in plan design.” Burke says this will continue, but “improvement in pension funding will give plan sponsors some room to pause for reflection and consider other aspects of their retirement decisions, including the human capital risks of altering plans.”

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Canada falling behind in productivity

(April 11, 2007) The Ottawa based Centre for the Study of Living Standards (CSLS) has released a report saying Canada is well behind a number of other developed countries in economic productivity.

The centre says total economic output per hour has grown at a rate of 1.2% per year in Canada since 1973, the third lowest among OECD countries. During the same period, Canada has fallen from 5th to 18th place in terms of its level of GDP per hour.

The CSLS warns that problem is becoming more pronounced. Since 2000, business sector output per hour in Canada has advanced at 1.1% per year, one third of the U.S. rate. In manufacturing, Canadian growth of 0.65% represents just 1/8 of the pace set by manufacturers in the U.S.

The report also suggests that Canada needs to ensure its labour, products and capital markets are as competitive as possible and the government should actively invest in education and research in order to compete with other countries studied.

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Sceptre transfers funds to ROI Capital

(April 11, 2007) Sceptre Investment Counsel announced Wednesday that, pending regulatory and unitholder approval, it will transfer the management agreements for the Sceptre Income & Growth Trust and the Sceptre Income & High Growth Trust to Return On Innovation Capital (ROI Capital).

ROI Capital intends to ask unitholders to approve an expanded investment strategy, introduce a new series of units which pay tax efficient distributions, merge both funds and convert them into an open ended mutual fund with daily net asset value calculations.

Sceptre investment management teams will continue to manage the assets as sub-advisor to both funds.

“We are delighted with our current relationship with ROI Capital. This transaction is a natural extension of that relationship and a great boost to our retail growth strategy,” said Richard Knowles, CEO of Sceptre.

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(04/11/07)