At the 2016 Annual Spring Pension Conference in March, thought leaders in the Canadian pension industry addressed the current economic environment and provided insights on best practices and tools for managing today’s investment portfolios. Conference attendees also had the opportunity to exchange thoughts and ideas during roundtable discussions, which focused on factor investing and pension plan management. Following are a few highlights.

Where Do We Stand?

The conference began with an audience survey covering a number of topics relevant to the day’s presentations and discussions. At the end of the conference, the audience was presented with the same set of questions, and the results revealed some interesting changes of opinions as the day progressed. A comparison of the morning and afternoon results is shown at right.

Inflation, Deflation, and Economic Growth

Woody Brock, president of Strategic Economic Decisions, Inc., discussed strategies for rekindling inflation and economic growth. The outward shift of the demand curve is driven by fiscal policy, he said, not monetary policy. There is a need for co-ordinated fiscal and monetary policy to stimulate household demand, and a need for infrastructure spending to stimulate investment demand, he added. Brock also discussed the idea of inflation with large debt levels as catastrophic, and the notion that an increase in living standards must be driven by an increase in productivity.

Canada: How Long for Low Rates?

Avery Shenfeld, managing director and chief economist for CIBC World Markets Inc., discussed the global and North American economies and implications for interest rates, foreign exchange rates, and equity and commodity markets. He focused on the outlook for the Canadian economy. Although certain bond buyers believe Canada is “turning Japanese,” Shenfeld said this isn’t the case. The Japanese government took too long to intervene and didn’t use fiscal policy to get the economy going again; this isn’t happening in Canada as we’re seeing fiscal stimulus in Ottawa, he said.

Systemic Risk in the U.S. and Canada

Charles Calomiris, Henry Kaufman Professor of Financial Institutions at Columbia Business School, discussed causes of banking crises, which include big shocks and the fragility of banks. However, these alone don’t fully explain banking crises, he explained, because, at some times and in some places, crises have been absent despite these factors. A comparison of banking in the U.S. and Canada shows that the U.S. has had a history of disruptive financial crises (12 systemic banking crises since 1840) while Canada has not had one. Difference in political systems and the resulting difference in regulation are the main drivers behind this, he said.

Provincial Pension Plans Past and Future

Former P.E.I. finance minister Wesley Sheridan discussed his fight for pension reform and the decisions made to achieve pension sustainability in the province during his time at the helm. Establishing clear objectives and definitions of sustainability at the beginning was important, he said, because otherwise, you won’t know when you’ve found the answer. Key takeaways from Sheridan’s experience included the importance of educating and communicating openly, and spending less time on predicting the future and more time planning for it.