dental and life insurance benefits to eligible employees_ advisers by dfsdf224s


									                              dental and life insurance benefits to eligible employees, advisers and their dependents. For further information on
                              the Corporation’s pension plans and other post-retirement benefits refer to Note 23 to the Corporation’s 2009
                              Consolidated Financial Statements.

                              Accounting for pension and other post-retirement benefits requires estimates of future returns on plan assets,
                              expected increases in compensation levels, trends in health care costs, the period of time over which benefits will
                              be paid, as well as the appropriate discount rate for accrued benefit obligations. These assumptions are determined
                              by management using actuarial methods and are reviewed and approved annually. Emerging experience, different
                              from the assumptions, will be revealed in future valuations and will affect the future financial position of the plans
                              and net periodic benefit costs.

                                                                  DEFERRED SELLING COMMISSIONS
                              Commissions paid on the sale of certain mutual fund products are deferred and amortized over a maximum period
                              of seven years. IGM regularly reviews the carrying value of deferred selling commissions with respect to any
                              events or circumstances that indicate impairment. Among the tests performed by IGM to assess recoverability is
                              the comparison of the future economic benefits derived from the deferred selling commission asset in relation to its
                              carrying value. At December 31, 2009, there were no indications of impairment to deferred selling commissions.

                                                                   FUTURE ACCOUNTING CHANGES
                                                       INTERNATIONAL FINANCIAL REPORTING STANDARDS
                              In February 2008, the CICA announced that Canadian GAAP for publicly accountable enterprises will be replaced
                              by International Financial Reporting Standards (IFRS) for fiscal years beginning on or after January 1, 2011. The
                              Corporation will be required to begin reporting under IFRS for the quarter ending March 31, 2011 and will be
                              required to prepare an opening balance sheet and provide information that conforms to IFRS for the comparative
                              periods presented.

                              IFRS will require increased financial statement disclosure as compared to Canadian GAAP and it is likely that the
                              Corporation’s accounting policies will be affected by the change from Canadian GAAP to IFRS, which may
                              potentially impact the Corporation’s financial position and results of operations. On adoption of IFRS, the
                              financial position and results of operations reported in accordance with IFRS may differ as compared to Canadian
                              GAAP and these differences may be material. Implementing IFRS will have an impact on accounting, financial
                              reporting and supporting information technology systems and processes. Additionally, the International
                              Accounting Standards Board currently has projects underway that are expected to result in new pronouncements
                              and, accordingly, IFRS continues to evolve in Canada.

                              The Corporation and its subsidiaries have developed IFRS changeover plans which address key areas such as
                              accounting policies, financial reporting, disclosure controls and procedures, information systems, education and
                              training, and other business activities.

                              The Corporation and its subsidiaries are in the process of assessing and preparing to implement changes to
                              accounting policies resulting from the transition to IFRS. The following list, though not exhaustive, identifies
                              changes in key accounting policies due to the adoption of IFRS. The Corporation and its subsidiaries monitor
                              developments in standards and interpretations of standards and industry practices and may change accounting
                              policies described in the following paragraphs.
                              › Policyholder and reinsurance contract liabilities will be classified as insurance, investment or service contracts
                                as required by IFRS 4, IAS 39 and IAS 18. A review of existing contracts as at December 31, 2009 suggests
                                that a majority of contracts will be classified as insurance contracts. Reinsurance accounts will be presented on
                                the Consolidated Balance Sheet and in the Summary of Consolidated Operations on a gross basis.
                              › Certain deferred acquisition costs and deferred selling commissions may not meet the criteria for deferral and
                                will be expensed as incurred or amortized on a different time period as a result of differences between IFRS and
                                Canadian GAAP. In the case of Lifeco, the balance of deferred acquisition costs which qualifies for deferral
                                will be reclassified from policyholder contract liabilities and presented as an asset in the Consolidated Balance
                              › IFRS derecognition standards are undergoing revisions that are expected to significantly change the
                                measurement criteria used to assess derecognition of financial instruments. The International Accounting
                                Standards Board (IASB) has indicated its intention to issue a revised standard in the second half of 2010. IGM
                                  B 8                                                         P O W E R C O R P O R AT I O N O F C A N A DA
   is in the process of assessing both the current IFRS standard and the deliberations regarding the revised
   standard so that IGM is in a position to adopt either standard. Under current IFRS, it is expected that fewer
   mortgage securitization structures would meet the criteria for derecognition, resulting in certain mortgages
   being recognized on the balance sheet with an associated liability. The IASB is currently redeliberating the
   March 2009 derecognition exposure draft proposals and has published certain tentative conclusions that indicate
   the IASB is considering a model which has more similarities to Canadian GAAP. IGM is unable at this time to
   assess whether the new proposals will result in more derecognition than the current IFRS standards, as the
   deliberations are currently ongoing.
› The assets and liabilities of segregated funds of Lifeco will be included within the Corporation’s Consolidated
  Balance Sheet as a single line (in assets and in liabilities).

                                                                                                                          POWER FINANCIAL CORPORATION
› Real estate properties have been classified between owner-occupied and investment properties. The
  classification between the two categories will result in a change in measurement in the value of real estate. At
  transition, owner-occupied property will be measured at fair value as its deemed cost, while after transition the
  cost model will be used to value such properties. Investment properties will be measured at fair value at
  transition and thereafter under IFRS.
› The Corporation is monitoring developments in the IFRS standards relating to employee benefits and is
  considering its options on transition to IFRS as well as post-conversion at this time.
› The balance in the unrealized foreign exchange gains (losses) on translation of foreign operations currently
  included in accumulated other comprehensive income will be reclassified to retained earnings upon transition
  under the exemption offered by IFRS.

In addition, the Corporation is assessing its future income tax assets and liabilities in connection with any
adjustments arising from the transition to IFRS.

The Corporation notes that the above list is not exhaustive of all possible significant items that will occur upon the
transition to IFRS. The impact on the Corporation’s information technology, data systems and processes will be
dependent upon the magnitude of change resulting from these and other items. At this time, no significant impact
on information or data systems has been identified.

In November 2009, the IASB issued IFRS 9 to amend how financial instruments are classified and measured. The
standard will be effective for annual periods beginning on or after January 1, 2013. The Corporation is analyzing
the impact the new standard will have on its financial assets and liabilities.

The Corporation has not finalized quantifying the effects of the potential significant differences between IFRS and
Canadian GAAP which may or may not be material. As the implications of the conversion are identified, continual
requirements for infrastructure, expertise, training and education will be assessed. The Corporation will continue to
assess the impact of adopting IFRS, and, as required, will update its quarterly MD&A disclosure to report on the
progress of its IFRS changeover plan. Parts C and D of this MD&A contain additional detail regarding the
adoption of IFRS by Lifeco and IGM, respectively.

In late 2008, as a result of credit and liquidity concerns, many financial institutions experienced financial
difficulty. In addition, world economies fell into a sharp and deep recession. A volatile period of financial crisis in
capital markets ensued, characterized by the disruption in the normal functioning of credit markets around the
world, a flight to reserve currencies and the largest decline in global equity markets in generations. Governments
unveiled unprecedented fiscal stimulus packages and central banks deeply cut interest rates. Central banks also
took steps to restore liquidity to the financial system. The crisis continued through to the second quarter of 2009
when economic fundamentals showed early signs of recovery. In the latter half of 2009, global capital markets
improved and volatility moderated compared to the prior year due to increasing signs of economic stabilization.
Credit spreads have narrowed as the pricing and capacity of debt markets have improved in 2009. While conditions
have stabilized, the timing and shape of recovery of the various economies in which the Corporation operates and
the effect on capital markets remain uncertain. How governments pull back on fiscal stimulus and when central
banks move to raise interest rates will have an important impact on future economic conditions.

Parts C, D and E of this MD&A contain a discussion of the effects of these market conditions on the results of
Lifeco, IGM and Pargesa, respectively.
                            P O W E R C O R P O R AT I O N O F C A N A DA                                     B 9

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