Managing Eighty Billion Dollars Worth of Risk

Published on
February 20th, 2020
Duration
54 minutes


Managing Eighty Billion Dollars Worth of Risk

The Interview ·
Featuring Jim Keohane

Published on: February 20th, 2020 • Duration: 54 minutes

With a record number of pension funds underfunded, the notion of having an "overfunded pension" can sound impossible. And yet that is exactly what Jim Keohane, CEO of the Healthcare of Ontario Pension Plan (HOOPP) has managed to achieve. Keohane speaks to Real Vision's Ed Harrison about the remarkable obstacles pension funds face and how they can survive and thrive in the face of these challenges. Keohane argues that defined-benefit pensions can be sustainable if the fund manages risk the right way. Keohane articulates his process in constructing HOOPP’s portfolio, which is relied upon by its over 350,000 members, and describes how he uses derivatives to manage risk for over $80 billion in assets. Filmed on February 13, 2020 in Toronto.

Comments

Transcript

  • SM
    Sean M.
    25 February 2020 @ 16:31
    How does ERISA and the PBGC in the US impact some of these ideas?
  • KT
    Kai T.
    21 February 2020 @ 02:53
    To AUSTRALIAN Real Vision viewers: who can recommend an Australian Super Fund that I can research? Just the name as a lead is fine, but if you can say why you think they are good that would be helpful. I'm in the UK and I'd like to be able to help my brother in Australia who is ignoring this issue. Thank you. 🙏
    • DH
      David H.
      22 February 2020 @ 02:39
      AustralianSuper
    • MW
      Michael W.
      25 February 2020 @ 11:02
      Hi Kai, Currently there approx 500 super funds in Australia, with around AU $2.9 trillion in assets as of 30th June 2019. These are divided into several types; Industry Super Funds, Retail Funds, Self Managed Funds, Public Sector Funds, Corporate Funds and Other Funds. Not sure if your brother is a resident or non-resident of Australia, but generally if am employer is paying $450 per calendar month or more then the employer has to pay the super guarantee (SG) currently 9.5% on top of his wages. There are cases where the SG are not paid such as "temporarily working in Australia for an overseas employer and are covered by the super provisions of a bilateral social security agreement". The SG is paid into a Superfund. So if you chose to have your Super in a Retail Fund with a Super Provider they more than likely will have several super products, and within a particular super product you will have a choice of where you would like to invest regarding risk for example low risk such as property to high risk such as shares. Also super funds charge fees. So you should only have one super fund. I would also look at the average return of the super fund during the past 15 years. Hopefully you can work out why your brother is ignoring this issue. Here is a list of super providers in Australia: https://www.canstar.com.au/providers/superannuation/ kind regards,
  • DP
    Diego P.
    23 February 2020 @ 03:51
    Sorry for posting this here, but the subtitles are not in SYNC with the audio. Could someone fix this? Thanks!
    • M.
      Milton .. | Founder
      24 February 2020 @ 06:12
      Thanks for showing this, we'll look into it. M
  • CP
    Chad P.
    24 February 2020 @ 03:02
    Living in Ontario, Canada where this plan is located, it is mainly for government union workers, similar to the teachers pension of Ontario etc. Some of the health teams may be private, but they are all paid by the government of Ontario through the government monopoly of the healthcare system. The tax payers of Ontario are the ones paying for this through their taxes year after year. There’s a big difference running a pension fund where the government promises to pay you the contributions no matter what year after year and being a profitable company/government does not matter, as the tax payers are forced to pay for this with no other options for health care. These pension set ups will not last another generation as the health care system and school system will become more privatized providing options for Canadians. The tax payers are fed up with the union government workers and there cost on the tax payers and that will force the system to change in the future.
  • OC
    O C.
    22 February 2020 @ 23:52
    For the CC: In the video, at the 10:52 mark, the CC and what Mr. Harrison says is not matching up. I think that part is cut out of the video. People using the CC can click the transcript and follow it from there onwards.
  • AC
    Andrew C.
    22 February 2020 @ 04:25
    we had about 15% of our money run externally. And so when I insourced that, that 15% cost more to run than the other 85%. And actually, the returns were not as good. This sums up the passive/indexing versus active management I understand Mike Green’s points. But until this gets addressed passive/indexing will only continue to grow. Especially now that it’s commonly known costs are the biggest inhibitor to growing and compounding your wealth. RealVision needs to hold a Cambridge style debate: Passive/indexing versus active management. Where does it end? Come on let’s just make it happen
    • RV
      Ryan V.
      22 February 2020 @ 15:00
      Active managers killed their golden goose. They had to charge exorbitant fees and become extremely wealth while taking half the retirement of the middle class. Well the middle class became wise and now the golden goose is laying eggs into VOO and SPY.
  • CB
    Chris B.
    22 February 2020 @ 04:18
    As a US Citizen it makes me sick and angry that 99% of workers here do not have access to anything close to what HOOPP has been able to offer its members. Kudos to them for their track record of excellence over a long period of time. So much opportunity to change and improve our retirement systems but we cannot muster the will to do it.
  • CB
    Clifford B.
    20 February 2020 @ 22:58
    Absolutely excellent interview. Ed as usual is on point. Mr. Keohane was spot on with all his answers. One very simple point made was that his fund is liable for to the client, something that seems to be lost everywhere else.
  • RV
    Ryan V.
    20 February 2020 @ 21:50
    Is anyone aware of a product like HOOPP that is available to non hospital staff? I am aware annuities exist, what I’m asking about is it I don’t work for a hospital and my employer gives me say 6% rrsp matching is there a product where I can send my employers 6 and my 8 to get into a pool of people to share the longevity risk? What I am ultimately after is the longevity risk pool as it will save me potentially $920,000. Anyone? Just looking to be pointed in the right direction.
  • LK
    Leo K. | Contributor
    20 February 2020 @ 15:39
    Jim Keohane is another outstanding Canadian pension CEO who is an ardent defender of defined-benefit (DB) plans. I'm very happy Real Vision got to interview him, great stuff, well worth listening to him on how HOOPP has been so successful over the years, managing assets and liabilities to achieve a fully funded status. Leo Kolivakis Publisher of Pension Pulse.