Glide path – Benefits Canada.com

Focusing on TDF glide paths as migration from DB to DC plans continue

mdunne — Fri, 15 Oct 2021 12:55:43 +0000

The selection of a target-date fund glide path is more crucial than ever as the migration from DB to DC pension plans continues. Since its formation in the mid-1990s as an optional alternative to the company’s longstanding defined benefit offerings, the DC plan has amassed more than $1.5 billion in total assets as members gradually […]

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Sounding Board: Tips for evaluating a target-date fund

Jennifer Paterson — Thu, 05 Aug 2021 13:00:54 +0000

Since target-date funds were introduced to the Canadian market in the early 2000s, they’ve become the dominant investment choice for defined contribution pension plan members. The funds, which are balanced with dynamic asset mixes that adjust as members approach retirement, are offered in a series — typically, one fund for each five-year target retirement band — with each fund […]

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Coronavirus prompting CAP sponsors to review TDF suites

mschmit — Tue, 29 Sep 2020 04:45:09 +0000

My last column, in April, talked about how Canadian target-date fund suites behaved differently during the first quarter of this year, where markets were reacting to the coronavirus crisis. The disparity of year-to-date returns continued in the following months. For some capital accumulation plan sponsors, the behaviour of their plans’ TDFs over recent volatile market […]

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Plan Sponsor Week: How DC pension investments handled the pandemic crash

mschmit — Fri, 04 Sep 2020 04:40:52 +0000

Defined contribution plan members are contending with volatile equity markets, ultra-low interest rates and the threat of inflation as the country’s economy begins its tentative recovery. In the first half of 2020, equities took an almost round trip, dropping significantly in the first quarter and recovering to the point that most markets are in neutral or positive […]

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What’s next for variable benefits?

mschmit — Thu, 30 Apr 2020 04:32:53 +0000

While the Canadian retirement industry has spent a lot of time focusing on the accumulation stage, the decumulation conversation is much further behind. For defined contribution pension plans, almost all jurisdictions across the country have now passed variable benefits legislation, including Ontario, which began allowing the option on Jan. 1, 2020. However, despite receiving legal […]

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Fundamental reasons for adding alternatives to DC pension portfolios

mschmit — Fri, 01 Nov 2019 04:46:41 +0000

There are two fundamental reasons for including alternatives in a defined contribution pension portfolio, according to Ed Studd, solutions manager for U.S. portfolio solutions at Schroders, during a session at Benefits Canada’s 2019 Defined Contribution Investment Forum in Toronto on Sept. 27. First, alternatives can help the portfolio achieve better diversification by accessing different types […]

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What options are available for de-risking DB pension plans?

mschmit — Fri, 13 Sep 2019 04:55:49 +0000

The 2008 financial crisis is an event that defined benefit plan sponsors won’t soon forget. Roller-coaster markets exposed gaps in their investment strategies, while de-risking appeared on pension committee agendas as they assessed the damage and focused on the road to fully funded statuses. Back in 2008, few tools were available to de-risk pension plans. […]

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Building better target-date fund glide paths

mschmit — Wed, 14 Aug 2019 06:35:30 +0000

While many glide paths are based on age, is there a case for adjusting these based on account balance fluctuations or on a plan member’s risk aversion? When it comes to optimal outcomes for members, considering risk aversion may be the most important factor, according to a new paper out of the Australian National University […]

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Why language matters in DC plan, investment communications: study

mschmit — Fri, 18 Jan 2019 06:33:50 +0000

There are major differences between what defined contribution plan sponsors are trying to communicate to members and what members hear, according to a new study by Invesco. “We believe a disconnect remains between what plan sponsors say and what participants hear,” said John Galateria, managing director and head of North America institutionals at Invesco, in a press […]

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Constructing the glide path to tackle any market environment

mschmit — Fri, 19 Oct 2018 03:52:14 +0000

Ensuring a glide path’s asset allocation is correct is really important since it’s going to be managing the bulk of positions for so many defined contribution plan members, according to Ruthann Pritchard, speaking at the 2018 Defined Contribution Investment Forum in Toronto in September. While the level of equity within the glide path at any given moment […]

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