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The continued rise of the Canadian dollar could prove problematic for the overseas assets of the country’s pension funds, writes Martha Porado for Benefits Canada.
“Given the low price of oil and low Canadian interest rates, I don’t think there was necessarily a perception that the loonie was headed significantly stronger in 2017, so I would imagine a significant chunk of the pension exposure was sitting unhedged,” Andrew Torres, managing partner and chief executive officer at Lawrence Park Asset Management, is quoted saying.
“There’s a twofold effect. The first is there are losses on a mark-to-market basis on your foreign holdings and the second is that those foreign holdings are producing lower equivalent income in Canadian dollars,” Torres is quoted saying.
“So if the degree of foreign holdings in the big Canadian pensions is as high as has been reported, then I think you can expect to see income levels drop by maybe seven or eight per cent.”
More: Health of foreign markets could provide a cushion.

ARIA provides a forum for an informed discussion on retirement income adequacy, and other related issues, including pension and retirement coverage, and defined benefit pension plans – ARIA pensions blog, 12 Dunlop Street, Barrie, ON, L4N 1V6 – sitemanager@ariapensions.ca

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