1 / 14

Teck Cominco Limited

Teck Cominco Limited. Canadian – Head Office in Vancouver and globally focused on: Exploration Mining Refining. Gerry Wahl, Assistant Treasurer Teck Cominco Limited. CADC2005. Teck Cominco Pension Environment. 9 DB plans 12 DC plans 12 Group RRSP’s

mikkel
Télécharger la présentation

Teck Cominco Limited

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Teck Cominco Limited Canadian – Head Office in Vancouver and globally focused on: • Exploration • Mining • Refining Gerry Wahl, Assistant Treasurer Teck Cominco Limited CADC2005

  2. Teck Cominco Pension Environment • 9DBplans • 12 DC plans • 12 Group RRSP’s • 20 Supplemental plans (some funded) • Joint Venturesand partnerships • Canada & the US • C$1.6 billion in assets CADC2005

  3. Subject of my presentation today … Why small plans don’t invest in “alternate assets” CADC2005

  4. “Understand the Problem” … Kepner-Tregoe First step in solving a problem: identify it as completely as possible Break a situation down into its smallest and simplest pieces CADC2005

  5. A key underlying concept “ The essence of investment management is the management of risk, not the management of returns”Benjamin Graham CADC2005

  6. The underlying “problem” … Administrators and committees of smaller plans are not familiar or comfortable with the concept of risk: • It’s not a simple concept – takes time & effort to understand • Definition(s) of risk - focus is usually on “loss” vs. “volatility” • Statistical nature of the risk measures is intimidating • Linkage between returns and volatility is not clear • Linkage between risk and plan objective is not clear • Jargon is confusing Committees and administrators are more comfortable with the concept of annual returns CADC2005

  7. As a result … • The “primary objective” of a plan may be overlooked • Dependence on style “boxes” and asset liability studies • Input to asset liability studies is minimal • Asset liability studies are expected to address all situations • Asset Liability studies are a source of frustration CADC2005

  8. A critical problem ….. from both a governance and financial service providers perspective a critical problem is ….. Overcoming the resistance or lack of comfort in dealing with risk. An approach? ..keep it simple…make it comfortable …at least initially CADC2005

  9. Key issue for a corporate plan Solvency deficits must be eliminated within 5 years of filing a valuation This is a critical requirement …….from a financial perspective CADC2005

  10. How about simple model - focused on Short term (5 year) funding and volatility Underlying Objective increase the awareness and comfort level with “RISK” CADC2005

  11. Mitigate fluctuations in: cash contributions funded ratios Which however are the result of : Asset liability mismatches Short term volatility of certain asset classes Correlations Legislation Reasonable objective for smaller plans CADC2005

  12. Focus on Basics – On understanding • the nature/duration of the pension liability • the financial risk related to contributions • the role and implications of asset mix • the limitations of asset liability studies • the importance of benchmarks • the major source of “contribution” risk CADC2005

  13. Marketing approaches • Assess client “readiness” levels and focus efforts accordingly • Sponsor or provide risk conferences, seminars or training sessions • Understand each client plan’s primary objective and benchmark(s) • Understand the client’s current portfolio asset mix • Deal in “knowns” such as annualized 4-5 year returns which reflect volatility • Frame the product in terms of a risk management approach rather than as a source of alpha • Demonstrate how the product would (have) impact on the current portfolio’s longer term i.e. 4-5 year return performance CADC2005

  14. What’s a good result ? Once comfortable with the concepts and problems relating to risk, there will likely be more willingness to entertain “alternate” solutions A small plan doesn’t have to target the optimal level of active risk to gain benefits from a better awareness and management of risk CADC2005

More Related