Pension reform

Strengthening the System

by Blake C. Goldring, M.S.M., CFA

The growing focus on pension reform is looking at the financial health of our fellow citizens. The issue has triggered public discussion, building up to a fever pitch last fall at the first ministers’ conference and making its way into the 2010 federal government budget. The Government of Canada has continued to conduct public consultations as it looks for creative and innovative ways to help improve pensions for Canadians.

We all know the trends: the number of defined benefit plans has and continues to plummet while RSP contributions are significantly below allowable levels, leaving many Canadians out in the cold on a number of tax and savings advantages. In a nutshell, the current system can be improved upon without spending a lot of taxpayer dollars while preserving investors’ right to choose where they want to put their money — and when to do so.

But what many may not have noticed is a flourishing group of plans known as Capital Accumulation Plans (CAPs). They include

Defined Contribution Pension Plan

Deferred Profit Sharing Plans

Group RSPs

Group Tax-Free Savings Accounts.

RSP participation increased

As well, a study conducted for one of Canada’s largest insurance companies earlier this year shows that despite the economy, overall employer participation in group RSPs rose last year to 46% compared to 32% the previous year. Employees on average also contributed 4.5% of salary to their DC pension plans in 2009, up from 4.2% in 2008. These numbers are encouraging but a lot more can be done to encourage further creation and effectiveness of CAPs.

At AGF Management we believe that the private system is best suited to provide the kinds of choices Canadians need to build their retirement nest eggs. This is a sentiment echoed by many others, including Bill Kyle of Great-West Life Assurance Company who authored a report last year calling for collaborative reform that would lead to a stronger pension system for Canadians.

Canadians like choice and we are encouraging government to continue on that path. Individuals should be allowed and indeed encouraged to contribute to RRSPs to mitigate the risk of over-reliance on a company pension and to enhance their overall ability to save for retirement. (Continuing with more great information on Page 2)

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Kevin O’Leary – entrepreneur, straight shooter and TV personality

Opinionated eco-preneur shares his investment keys to success

“Preservation first, a sustainable yield and, lastly, capital appreciation,” is the investment philosophy of Kevin O’Leary, the self-proclaimed ‘eco-preneur’ who shares his no-holds-barred opinions with business hopefuls on CBC Dragon’s Den and ABC Shark Tank. He has put in some appearances on Discovery Channel too, appears regularly with Amanda Lang on CBC in The Lang / O’Leary Exchange, and travels the world looking for investments that make money and are environmentally friendly. This is the perfect match for his credentials: success in the Honours program in Environmental Studies at Waterloo, and a prestigious MBA from the University of Western Ontario’s Richard Ivey School of Business, where he now serves on the executive board.

Impeccably dressed, fiercely intelligent and a straight talker with rapier-like wit and a sharp sense of humour: Kevin O’Leary. Through his own mutual fund company, O’Leary Funds, he has also raised hundreds of millions of dollars from investors who share his “get paid while you wait” yield-oriented, value investing philosophy. Born in Montreal in 1954, Kevin O’Leary is phobic about the preservation of capital. “I have pretty much kept every dollar I have ever made. I live on the interest.”

Sharing his knowledge and philosophy with groups of Toronto investors regularly, he was most recently in North York in December and again in February, invited to meet many of the Toronto clients of successful investment advisor Roy Zakka Senior Vice President & Associate Director of Macquarie Private Wealth. Seminars are one way for Kevin to spread the O’Leary Funds message – a simple, unvarying philosophy of sustainable deals.

“I’m boring,” said Kevin in our recent meeting. “I buy securities that have huge cash flows and pay dividends. That’s what I invest in for myself, and therefore for my investors. If I don’t understand it, I don’t invest in it.”

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