Comments
Transcript
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ooThe 'political pressure' is not there on the Boards of Canadian plans as the Boards are made up of banking and investment professionals. However, those very Board members are friends of the pension funds' managers and often turn a very blind eye on poor performance by the pension funds' managers. They allow the mark up of the private equity funds liberally to hide the underperformance by equities/bonds/FX/quants in the aggregate performance, for example.
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SHGreat interview, straight from the horses mouth. More of this!!
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LKJim Leech is an incredibly gifted communicator with tremendous experience in the pension industry. He clearly explains the thorny issues around pensions and why we need to bolster our failing retirement systems. I highly recommend you watch this entire clip and read his book, The Third Rail, which he co-authored with Jacquie McNish. Leo Kolivakis Publisher of Pension Pulse
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BTInteresting about the math of pooling longevity in favor of defined benefit plans. Up until now most content had been a blanket response in favor of defined contribution. Additionally, the comment on civil disobedience at the end reminded me of what has happened in Japan where pensioners are committing crimes with the intention of being caught so they can go to prison and be fed plus have warm housing and a bed because they can't afford retirement.
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VJreally well done. great job RV!
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FExcellent video! Great history of issue,well presented facts,unbiased summary of problem AND presented solutions that are currently being used. These types of videos are why I subscribe to RV.
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BCGood video. Nice contrast. I really like this website a great deal. Their must be a Millenial picking the intro music. Doubt that type of music is appreciated by anyone but a Millenial. I'd rather listen to a vacuum cleaner going over a heat vent, than listen to that : ) Stay neutral on the music.
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RCVery rational, informative and apolitical.....not like many of the RV interviews
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GBSome years ago I worked for a large forestry company in NZ. OTPP purchased the rights to the trees and of course the profits from the harvest would go to them. I thought it was smart, a profit in the future to pay for future pensions. I couldn't understand why the NZ government wasn't investing in our own assets. At the time I also got talking to one of the investment managers (can't remember if he worked specifically for OTPP), he specialized in forestry and travelled the world looking for big assets to buy for the pension fund he worked for. This would have been 15 years ago, his problem was that he had mega-billions to invest but there were limited investments. That could only have got worse as other pension funds piled in.
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xxFirstly, I wonder how the inflation adjustment toggle he talks about will fly in practice. Is he saying that if the fund is under funded then payouts will stop being inflation adjusted to basically stem the bleeding? From a manager perspective, yes this is a wonderful modelling element but for retirees they may not have the stomach for it if it plays out. Also, some of those pooled pension that are talked about (the 3 unis joining their pension plans), this is a nice way to pool capital but their plan members lose bargaining in terms of negotiating the terms of the pension so yes more cash to play with on the investment side for the long term at the cost of present day bargaining power. Good trade off? Time will tell. Seems like a lot of torturing of the pension model variables through time and still kicking the can down the road.
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CBOne great thing about being a Canadian is that banks up here are not allowed to invest in private equity firms, as was explained by Jim Leech. So there is no Glass-Stegall law here. But this forced the pension for Teachers' to invest in private equity themselves, and learn how to do it, saving big money for the plan along the way. Teacher's have the benefit of professional management making the correct assumptions, so that retired teachers can actually enjoy their retirement and not have to worry about it. Glad I'm Canadian!
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JCgreat insight from a practitioner... as i watch the evolving narrative about this series... it occurs to me that perhaps there are answers already around the world of how to solve this - outside North America... i know i know, who'd have thought the investing world stretches outside one continent... for example, Australia and their Super Funds ? Can we have a deepdive into that as i think it will shed much light on what will be required politically to get this done. OK Boomers?
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CMAt the 18:20 timeline he is suggesting pooling my 401k and IRA with the defined benefit group to enhance the overall returns ? Is this correct ? These are the same clowns that have blown up the State Pension plans with bad investments and unrealistic returns while lining their own pockets.
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KLThis is a really great interview. I haven't read the book, and am wondering how does this relate to pensions like the Canada Pension Plan (CPP), which is taken out of every Canadian's wages. Most citizens don't understand how CPP works, and they don't even consider that money as part of the retirement savings..rather they see it as a loss to their savings.
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NRExcellent “plumbing” interview. Love the PE disintermediation piece. Canada: for once nice guys finishing first...
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smHaving worked at an IB ... these guys investing on their own ... still dumb money. But apparently they can simply just employ their own but OK ...go for it. Enough idiots to still eat what you kill.
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smI was an RBA employee ... the discount rate is just 4.5% ... https://www.rba.gov.au/publications/annual-reports/rba/2017/financial-statements/note-14.html Most other countries are deluding themselves. As are 99% of defined contribution employees -> and this is 99% of the problem.
Chapters
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How did you get your start in the pension industry?
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What is the Ontario Teacher's Pension Plan and How Large is it?
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Do you think there is a retirement crisis and if so, why?
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Why did you write "The Third Rail: Confronting Our Pension Failures"?
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Why did you choose the title "The Third Rail"?
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Why did you choose the three jurisdictions you identified in your book?
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What do pension augmentation and defined benefit pension solutions look like?
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Defined Benefit vs. Defined Contribution
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What is the difference between Canadian Pensions and Pensions in the United States?
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Are Pensions still "Dumb Money"?
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Do you think elections are won and lost on pensions?
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What happens if the underfunded pension problem is not addressed?