Skip to main content
top business stories

These are stories Report on Business is following Monday, April 2, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.

Follow Michael Babad and Globe top business news on Twitter

What OAS change means to companies There's a lot for Canadian companies to consider - starting now - given the pending changes to the Old Age Security benefit.

As Aon Hewitt notes in a look at last week's federal budget, the changes unveiled by Finance Minister Jim Flaherty plays into work force and pension planning.

Canada plans to effectively reset the age of retirement by boosting the eligibility age for OAS to 67 from 65. The change to the benefit, worth more than $6,000 a year, will be phased in beginning in 2023.

According to a recent survey conducted for Bank of Montreal, 32 per cent of Canadians between the ages of 25 and 54 will be relying on OAS and Canadian Pension Plan and Quebec Pension Plan benefits for the major source of income in retirement, so the change will have a marked impact.

"Pension plan sponsors may wish to consider these changes in OAS benefits for several reasons," said Jerry Loterman, an associate partner at Aon Hewitt.

"Financial/retirement planning services to members should be even more important than in the past, to enable employees to properly prepare for retirement at or beyond age 65, with less public pension benefits from ages 65-67, particularly for plan sponsors with defined contribution or other money-purchase plans," Mr. Loterman said in a report released by the human resources consulting firm.

"Employers must consider their work force planning now, as there will be a disincentive for employees to retire at or near age 65, with many opting to work longer, perhaps with age 67 becoming the new 'normal retirement age.'"

That means different things to different companies, of course, and will no doubt force some to change their approach.

"On the one hand, this could be beneficial where employers wish to retain older experienced workers; however, in other cases, where it is necessary to make room for younger staff, employers may need to re-evaluate their severance and retirement benefits designs to encourage employees to retire in dignity," Mr. Loterman said.

Coty bids for Avon Shares of Avon Products Inc. climbed today after a U.S. rival launched an unsolicited bid for the door-to-door company that has been ailing of late.

Coty Inc. is bidding $23.25 (U.S.) a share, which values Avon at about $10-billion, but the target company said the offer's too low.

It's not the first time Coty has gone after Avon. Today's announcement also disclosed that it proposed a lower offer last month.

Pressure builds on CP The activist shareholder pushing for change at Canadian Pacific Railway Ltd. continues to ramp up the pressure on the company in its heated proxy battle.

Bill Ackman's Pershing Square Capital Management, now the railway's biggest shareholder, has brought in another big name from the industry to its slate of proposed alternative directors, The Globe and Mail's Jacquie McNish and Brent Jang report.

The addition of Stephen Tobias, a former executive at Norfolk Southern Corp., brings the number of alternative directors to six in advance of CP's May 17 annual meeting.

Chalco strikes SouthGobi deal Robert Friedland's Ivanhoe Mines Ltd. is selling its majority control of to a Chinese aluminum company that's looking to diversify into coal.

Aluminum Corp. of China, known as Chalco, is launching an $8.48-a-share bid for up to 60 per cent of SouthGobi, whose main asset is a coal mine in Mongolia.

Ivanhoe owns 57.6 per cent of SouthGobi, and has agreed to sell to Chalco for up to almost $900-million. Selling just 60 per cent of the stake would net $533-million.

"Ivanhoe's board, in conjunction with our financial and legal advisors, has determined that the value offered by this transaction is an excellent opportunity for our shareholders to realize significant value through our creation of what has become one of the fastest growing coal producers on China's doorstep," said Ivanhoe chairman David Huberman.

Euro zone jobless rate climbs Life is getting progressively worse in many of the euro zone's troubled countries, notably Spain.

Unemployment in the 17-member monetary union inched up in February to 10.8 per cent as more than 17 million people search for work.

Today's numbers from Eurostat highlight again the extreme differences among the countries of the euro zone. The highest rates are in Spain, at almost 24 per cent, and Greece, at 21 per cent, while the lowest are in Austria, at 4.2 per cent, and the Netherlands, at 4.9 per cent.

Jobless levels among young people, at almost 22 per cent, are crippling. In Spain and Greece, more than half the youth are without work.

Separately today, a fresh reading of the region's manufacturing sector showed industry continuing to contract.

Teachers' eyes soccer It hasn't taken the Ontario Teachers' Pension Plan long to go after soccer after giving up on hockey.

The pension fund manager, which sold its controlling stake in Maple Leaf Sports and Entertainment to BCE Inc. and Rogers Communications Inc. last year, is closing in on a deal for Britain's Goals Soccer Centres PLC, which operates dozens of pitches in the country.

Goals Soccer Centres said in a statement today it has received a "preliminary approach" from the Canadian pension fund, though it cautioned that may not lead to an actual deal.

The British company is behind what's known as five-a-side soccer, which it describes as one of the fastest growing sports in the country. One of its centres, it says, typically holds between nine and 14 pitches on at least 2.5 acres.

Shares of the company, whose market value tops $100-million, soared on its announcement today.

(It's like owning the ice rink instead of the team but still ... Just wait until the Leafs make the playoffs.)

Business ticker

Report an error

Editorial code of conduct

Tickers mentioned in this story