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(October 18, 2006) Less than half of defined benefit pension sponsors are “committed” to maintaining their DB plans and many companies are making significant changes to the way these plans are managed, according to a survey by SEI.

In a poll of 302 executives in charge of pensions, the survey found 42% were committed to their DB plans, while 29% expected to close, freeze or terminate theirs by the end of 2007. Should these sponsors follow through, 52% of North America’s pension plans will be frozen, closed or terminated.

Many sponsors are considering outsourcing the management of their plans (81%), while 65% of those with closed or frozen plans have already done so for at least one management function.

“While many companies in Canada and the U.S. want to continue offering defined benefit plans to employees, they are facing many obstacles,” said Andy Kitchen, SEI managing director, strategies and solutions in Canada. “In light of a challenging regulatory environment, rising costs and investment volatility, pension plan sponsors are evaluating the impact that both internal plan management and plan design have on their overall business, and how they can modify these elements to benefit all.”

Among Canadian respondents, 73% said decisions on long-term strategy are being made regardless of proposed changes. Only 4% said funding relief will drive the organization’s long-term strategy.

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Interaction drives bank satisfaction

(October 18, 2006) Despite the increasing popularity of online banking, quality face-to-face transactions win customer satisfaction, according to a survey by J.D. Power and Associates.

“Online banking is convenient, but an excellent online offering cannot replace a positive in-branch experience,” said Charles Schade, senior director of research at J.D. Power. “Customers continue to rely on face-to-face contact to build a trusting relationship. That personal interaction cannot be duplicated online or anywhere else but at the bank branch.”

In the nationwide survey, 12,053 bank customers were asked to rate their satisfaction on six factors: transaction methods; account set-up and product offerings; facility; account statements; fees; and problem resolution.

Among the “Big 5” banks, TD Canada Trust ranked the highest in customer satisfaction, followed by Scotiabank and RBC.

Despite its important role in customer satisfaction, in-branch banking accounted for just 13% of transactions. Online transactions were the preferred method of banking for 60% of Canadians, even though online banking contributed far less to overall satisfaction.

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Real estate markets seen cooling

(October 18, 2006) A nationwide increase in real estate listings should slow the growth of house prices in 2007, according to a report from RE/MAX. But the realtor is not calling for a collapse in the market, as demand remains strong in several major centres.

“Strong economic fundamentals continue to fuel healthy residential real estate activity in markets across the country, despite what is happening south of the border,” says Michael Polzler, executive vice-president and regional director, RE/MAX Ontario-Atlantic Canada.

Of the 17 major markets surveyed by RE/MAX, the only ones not expecting higher prices are Kitchener-Waterloo, Ont., St. John’s, and Charlottetown. In the west, Calgary and Edmonton, Alta., are expected to show the largest percentage increases in home values, with predictions of 40% and 25%, respectively.

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CGAs call for tax cuts, less regulation

(October 18, 2006) The federal government should reduce business taxes and reform regulatory structures to foster greater productivity, according to Canada’s Certified General Accountants. The recommendation comes in response to Ottawa’s call for submissions on the 2007 budget.

“Canadian businesses are burdened by the cost, complexity and sheer volume of regulations that hamper productivity,” said CGA-Canada president and CEO Anthony Ariganello. “The government should streamline the regulatory regime in an effort to reduce the compliance burden on businesses.”

Ariganello also called on the feds to accelerate the implementation of previously announced corporate tax cuts, lower the small business rate from 12% to 11%, and realign capital cost allowance rates to reflect “the true life of the relevant asset.”

(10/18/06)