Bank goes 50bps, first sign of possible pause | Page 4 | General financial discussion | Discussion forum

savemoresaveoften said

They collect the pension dues every year just like any other pension and that is it. Government is NOT there to "back them up", so from that perspective I do not agree its backed by taxpayers.

As for taking a "lot of risk", they are positioned for the future. At their size, its NOT prudent for them to simply "match" cashflow. Look at the OTPP's active vs retire teacher's ratio change over the past 30 years, the pension fund has to "actively grow" their assets as the aging population changes the balance. Same goes with CPP and other pension plans.

Smaller pension plans simply do not have the resources to hire top guns to run their pension for them. Hence they choose to do it simple, which is to invest in bonds cuz thats the easy explanation to all, as in "we match asset to liabilities..."

I imagine each pension plan has its own investment governing statement, that outlines the "allowed" asset mix. Not sure if mandatory fixed income holding is required by law.  

Well, insurance companies are not small and when they sell annuities they ARE backed up by bonds. There is no conceptual difference between DB pensions and annuities, except in detail. And insurance companies have the top guns. “Top guns” at Ontario Teachers bought cryptocurrency, so there is that.

Looks like CPP holds 10% credit, 22% marketable & non-marketable bonds. That’s a fair amount in FI.

Yes, that was the line Teachers fund tried to push to the gullible. Back in the real world there is a difference between “high risk, high return” investments and wasting $100M of other peoples’ money on a scam because you didn’t bother with proper due diligence.

There is obvious difference between commenting on blatant mismanagement of a particular pension plan and “being predisposed to complain about DB pensions”. DB pension plans are awesome for recipients, particularly when all the risk is with the taxpayer.

Due diligence when managing other peoples’ pensions ought to involve not flushing money down the toilet. While mismanagement can happen, $100M is a lot and comments along the lines of “nothing to see there” are concerning.

@Mordko:
Your negative views on DB pensions are not limited to one investment that went bad at Teachers. Your references to "taxpayers" are confusing at best, misleading or wrong at worst.

I'm sure that whoever approved the decision to make this investment wished they hadn't, but I don't think anyone has to lose any sleep over your criticism. It's one of the most successful pension plans anywhere. That's why it can afford to take a few risks that you might not approve of and I would never consider. They still have billions to invest, much of it from previous successes.

I am certain that CPP has been investing in all kinds of things I wouldn't approve of and would consider far too risky. Occasionally I look at their list, and sometimes turn up my nose. But I recognize that, overall, they are doing a great job and that I am not in a position to second guess them. I am happy to receive my indexed deposit every month.
One of the reasons we don't invest in the stock market etc is because pension plan managers do that for us, leaving us free to invest very conservatively in income sources that we do understand.
.

Totally agree with Mordko. Fine, trivialize the "small" amount of $100M. But to suggest that rolling the dice with any amount of its members' retirement funds on a crazy, unregulated Ponzi scheme is anything but mismanagement is ludicrous.

savemoresaveoften said

Neither u nor Mordko knew its shady or going to blow up.
Hindsight always 20/20, keep that in mind be it investing or criticizing others.  

Don't tell me what I knew or didn't know. I've known since inception that crypto is a scam -- it's not like I've decided that since the FTX debacle, which was entirely predictable. As for criticizing others, I did nothing of the sort. I agreed with Mordko. Seems like you're the one criticizing. So get off the high horse.

cgouimet said
I take it you guys don't want to get together for a pint of cheer for the Holidays?  

You'd be right about that...

This was an investment in the exchange rather than crypto-currency itself. It is like investing in a pipeline rather than the oil companies that produce oil and gas. The exchange is supposed to be purely transactional making money off fees and would normally be a far safer investment than the product itself.

What happened here was a failure to do complete due diligence. OTPP was never given access to all the financial data including audit data and that should have been a red flag. Anyone with a solid business should have no issue disclosing all the details. Me thinks a few individuals at OTPP won't be getting bonuses this year.

I agree with others this is not material to the pension plan. Daily swings in capital markets would cause more swings than that. What is material is the reputational effect of poor decision making processes.