Saturday, January 16, 2010

Canadian Pension Trust Fund may not have increased in 2009.

At a meeting of the Quebec NRPC on Jan 14th 2010, a committee member asked the following question: "with the stock market surge, surely the wind up value of the pension plan must have improved ?".

Bernard Neuschwander replied that the wind up ratio has remained unchanged over the past year, primarily due to the following reasons:

Firstly because the strength of the CDN $ has offset some of the market increase as the fund is in US$ which has decreased comparatively to the CDN$.

Secondly, to protect the plan Nortel changed the plan asset mix from 60% equity & 40% long term to 30% equity & 70% long term, which offset some of the market growth.

Thirdly Nortel continue to fund the plan at the 2006 levels thus resulting in little change to the wind up ratio.

If this is the case then the funding ratio of 69% (or less) may still apply even after the market surge last year.

What a bummer!!!

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