Students from the University of Calgary walked away with a C$25,000 ($18,828) cash prize as the winning team of the second annual McGill International Portfolio Challenge, finding a comprehensive solution to a pension funding problem.
The students proposed using leverage to increase a theoretical plan's investments in private markets and infrastructure, slightly reducing benefits, implementing a hybrid defined benefit-defined contribution structure and adding performance incentives to employee compensation, a university spokeswoman said.
The University of Calgary team's plan "recognizes that just changing the fund's asset allocation alone is not sufficient to solve the crisis. Fundamental changes must be made to the fund's underlying structure," according to the judges.
Also, they said, "It is simple and easy to implement."
Finalist judges in the Nov. 9-10 challenge in Montreal included representatives of the C$368.3 billion Canada Pension Plan Investment Board, Toronto; C$308.3 billion Caisse de Depot et Placement du Quebec, Montreal; BlackRock (BLK) Inc. (BLK) and Mercer (Canada).
In second place, students from Laval University, Quebec City, won C$10,000, while a team from the University of Connecticut, Storrs, came in third, winning C$7,500.