Comments Sought On Discount Rate Guidance

The Public Sector Accounting Board (PSAB) task force has now published the second invitation to comment on the discount rate guidance in Section PS 3250, says a Morneau Shepell ‘News & Views.’ Section PS 3250 does not provide specific guidance on which discount rate should be used to estimate the accrued benefit obligation. It suggests the actuarial assumptions underlying the valuation of retirement benefit liability and expense should be internally consistent. In practice, the expected return on plan assets is usually used to determine the present value of the accrued benefit obligation of benefit plans that are fully or partially funded. The entity’s cost of borrowing is usually used to determine the present value of the accrued benefit obligation of benefit plans that are unfunded. PSAB needs to consider if the discount rate guidance in Section PS 3250 is sufficient and whether the two discount rates commonly used in the public sector are appropriate and provide useful information for accounting purposes because some concerns have been raised about the current practice. It is looking for comments on alternative bases to determine the discount rate assumption. These are expected return on plan assets; expected return of an effective hedge portfolio; market yields of high-quality debt instruments; market yields of risk-free debt instruments; the entity’s cost of borrowing; or the effective settlement rate. An alternative discount rate approach could be any of these, reflecting one of three possible views: a current, average, or a projected view. Stakeholders may send their comments until March 9.

PNC Adopts ‘PFaroe’

PNC Institutional Advisory Solutions, part of the asset management arm of the PNC Financial Services Group, Inc., has adopted RiskFirst’s ‘PFaroe’ to help structure better solutions, improve reporting efficiency, and deepen engagement with its defined benefit pension plan clients. This will help support its asset liability management offering, which has witnessed strong growth in assets under management since 2015. It will use PFaroe to work with clients in a more interactive way, assisting in evolving solutions over time. Its forecasting models will also be leveraged to evaluate the impact of implementing new investment strategies, as well as with the co-ordination and structuring of funded status-based and interest rate-based ’glide paths’. A major benefit of using PFaroe will be the ability to automate and improve the quality of reporting to clients, resulting in a better and more efficient solution.

ETF/ETP Assets Reach Milestone

Assets invested in ETFs and ETPs listed globally broke through the US$5 trillion milestone at the end of January, says ETFGI. This was the result of a record 6.47 per cent or $313 billion increase during January, beating the prior record of $4.84 trillion set in December of 2017. During the month, they gathered net inflows of $106 billion, beating the prior record of $68.3 billion set in February 2017. Assets in equity ETFs/ETPs increased by 7.49 per cent in January, which is significantly more than the 1.73 per cent increase in fixed income ETFs/ETPs. January also marked the 48th consecutive month of net inflows into ETFs/ETPs listed globally, with $106 billion gathered during the month; 68.6 per cent more than net inflows at this point last year.

Grenier Shares Mental Health Battle

An ‘Evening with Stéphane Grenier’ is the next session in Hansell Consulting Group’s ‘Workplace Wellness ‒ Mental Health Series.’ Grenier, author of ‘After the War,’ is a former member of the Canadian military who was undiagnosed with post-traumatic stress disorder (PTSD) and depression after many military deployments. He offers his audiences pragmatic advice designed to support workplaces in developing corporate cultures of open, non-stigmatizing approaches to mental health and well-being. It takes place February 27 in Burlington, ON. For more information visit Grenier