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Financial health of Canada's 25 largest corporate pension plans continues to improve as plan sponsors take steps to "de-risk" portfolios, according to Russell Investments Canada, Ltd.

June 11, 2014

Double-digit returns and an increase in discount rates put the largest Canadian corporate defined benefit plans on solid financial footing and open the door to asset allocation changes, according to a new report from Russell Investments Canada.

TORONTO, June 11, 2014 /CNW/ - The largest Canadian corporate pension plans are now nearly fully funded and some plans are beginning to take steps to de-risk, according to recent analysis conducted by Russell Investments Canada.

For its recently released report – Enterprise Risk in Canada - Russell reviewed financial data for what it refers to as the $2 Billion Club, consisting of the 25 Canadian listed corporations with pension obligations in excess of $2 billion.

"By analyzing these corporations, which represent 50% of all corporate pension liabilities in Canada, we gain critical insight into how Canadian corporations are managing their plans, including hard data on changes in funding status as well as changes corporations are making to their investment strategies to take advantage of their improved funded status," said Kendra Kaake, a senior investment strategist with Russell Investments and co-author of the report with institutional investment strategist Adam Hornung.

Key findings from the study included:

•Overall financial health for the $2 Billion Club improved, as aggregate funded status increased from 86% in 2012 to 97% in 2013.* •The surplus position for the $2 Billion Club went from a $21 billion deficit to a $5 billion deficit in 2013, representing a nearly 80% decrease in combined shortfall. •After adjusting for cash flows, on average the group experienced double-digit returns in 2013.

"Canadian pension plans have benefitted from a favorable market environment in recent years as reflected in the general health of the $2 Billion Club," added Kaake. "And some of the largest plans in Canada are taking this opportunity to find ways to de-risk their plan or adjusting their multi-asset allocation mix or funding strategies to take some future liability risk off the table. We see the trend toward de-risking, which has been quite prevalent in the U.S. in recent years, continuing to gain traction  in Canada."

For more information or to download a copy of the report, visit the Russell Investments Canada institutional website.

About Russell Investments

Russell Investments (Russell) is a global asset manager and one of only a few firms that offers actively managed multi-asset portfolios and services that include advice, investments and implementation. Russell stands with institutional investors, financial advisors and individuals working with their advisors – using the firm's core capabilities that extend across capital market insights, manager research, portfolio construction, portfolio implementation and indexes to help each achieve their desired outcomes.

Russell has more than $286.7 billion CAD  in assets under management (as of 3/31/2014) and works with over 2,500 institutional clients, independent distribution partners and individual investors globally. As a consultant to some of the largest pools of capital in the world, Russell has US$2.4 trillion in assets under advisement (as of 6/30/2013). It has four decades of experience researching and selecting investment managers and meets annually with more than 2,200 managers around the world. Russell traded more than US$1.6 trillion in 2013 through its implementation services business. Russell also calculates approximately 700,000 benchmarks daily covering 98% of the investable market globally, including more than 80 countries and more than 10,000 securities. Approximately US$5.2 trillion in assets are benchmarked (as of 12/31/2013) to the Russell Indexes, which have provided investors with 30 years of smarter beta.

With Canadian headquarters in Toronto, Russell operates globally, including through its global headquarters in Seattle, Washington and offices in New York, London, Paris, Amsterdam, Sydney, Melbourne, Auckland, Singapore, Seoul, Tokyo, Beijing, Toronto, Chicago, San Diego, Milwaukee, Edinburgh and Vancouver. For more information about how Russell helps to improve financial security for people, visit www.russell.com or follow @Russell_News.

*Note that in 2013 pension contributions exceeded the total incremental pension expense (service cost plus net interest cost) by $1B for the group in aggregate. Without those additional contributions the aggregate funded status of the club would have increased to approximately 96%. Based on IAS19 GAAP as of January 1, 2013.

Important Information

Nothing in this publication is intended to constitute legal, tax securities or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. This is a publication of Russell Investments Canada Limited and has been prepared solely for information purposes. It is made available on an "as is" basis. Russell Investments Canada Limited does not make any warranty or representation regarding the information.

Russell Investments and the Russell Investments logo are registered trademarks of Frank Russell Company, used under license by Russell Investments Canada Limited.

Russell Investments Canada Limited is a wholly owned subsidiary of Frank Russell Company and was established in 1985. Russell Investments Canada Limited and its affiliates, including Frank Russell Company, are collectively known as Russell Investments.

Copyright © Russell Investments Canada Limited 2014. All rights reserved. This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell

SOURCE Russell Investments Canada Limited


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