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September 22, 2017


Canada Ranks Near Bottom In Healthcare

Despite spending more on healthcare than almost every other comparable country with universal healthcare, Canada ranks near the bottom in the number of physicians and acute care beds and suffers from the longest wait times, says a study by the Fraser Institute. “Canadians pay a lot for their universal healthcare system, but compared to other countries with universal healthcare, our system performs poorly on a number of key measures,” says Bacchus Barua, associate director of health policy studies at the Fraser Institute and co-author of ‘Comparing Performance of Universal Health Care Countries, 2017.’ In 2015, the most recent year of comparable data, Canada’s healthcare spending as a share of GDP (10.6 per cent) ranked third highest ‒ after adjusting for age ‒ behind only Switzerland and France. However, it ranks 25 out of 29 countries for number of physicians (2.7 per 1,000 people) and last for the number of acute care beds ‒ 2.1 per 1,000 people. And when it comes to critical technologies, Canada ranks 20 out of 27 for the number of Magnetic Resonance Imaging (MRI) machines with 9.8 MRI scanners per million people. “To improve Canada’s healthcare system, policymakers should learn from other successful universal healthcare countries, for the benefit of Canadians and their families,” he says.

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Filling Gaps Would Help Ability To Monitor Systemic Risk

Ottawa and the provinces should bolster their ability to monitor and deal with systemic risks to the financial system, says a report from the C.D. Howe Institute. In ‘Opportunities for Better Systemic Risk Management in Canada,’ author Nicholas Le Pan recommends greater co-ordination by regulators to fill gaps in the current system. “The International Monetary Fund, for example, has identified gaps in Canada’s ability to monitor and deal with systemic risk in its financial system,” says Le Pan, a former federal superintendent of financial institutions. Gaps in the current system include the lack of one agency or formalized grouping of agencies with the clear legal authority or mandate to manage all aspects of systemic risk across the country. To improve co-ordination of systemic risk monitoring, he argues Ottawa’s Capital Markets Regulatory Authority (CMRA), a co-operative securities regulator, could play a key role in these efforts. Notably, says Le Pan, this authority has the potential to fill a meaningful contributory role in an area – systemic risk in capital markets – that has arguably been under-developed in Canada. The report is at Systemic Risk

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Public Promise Of Healthcare Shifting

The public promise of healthcare in Canada is shifting, says a Mercer white paper. With governments rethinking the model and government spending for healthcare, employers can expect the free universal healthcare solution to become a thing of the past, at least the way it stands now. This means employers will be paying more to offer employer healthcare benefits. To ease the impacts to the bottom line, the government will try to leverage innovation to combat the shrinking public promise. As provinces revise their healthcare commitments, employers will need to consider increasing private sector responsibilities, rising healthcare costs and double-digit inflation, an aging population, changing employee expectations, and innovation within the private sector.

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Tax Rule Changes Proposed For Master Trusts

The federal department of finance has proposed revising the GST/HST rules applicable to pension plans to ensure that they apply fairly and effectively to pension plans that use master trusts or master corporations, says an Aon Hewitt ‘Radar.’ It has published ‘Legislative and Regulatory Proposals Relating to the Goods and Services Tax/Harmonized Sales Tax and to the Excise Act.’ The proposals also include amendments to improve the clarity and effectiveness of the GST/HST rules applicable to certain pension plans and financial institutions by introducing clarifications and technical improvements to those rules. These proposals are similar those published last year, subject to consultation.

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Fed Offers Details On Unwinding

The U.S. Fed has finally provided clearer details on how it will start unwinding its gigantic balance sheet, says Olivier Marciot. The Unigestion investment manager says as one of the world’s largest central banks, it will soon stop reinvesting proceeds of maturing debt accumulated through various quantitative easing (QE) programs. The balance sheet runoff will start in October, with reductions in the tens of billions of dollars per month. This paves the way for other central banks to reduce QE where it is still alive and tighten monetary support slowly, but surely, he says. The FED left interest rates unchanged.

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SEI Tries Blockchain

SEI has formed a strategic partnership with London-based blockchain and regtech company, Coinfirm, to create a new asset transfer industry benchmark. The initiative is part of a global push by SEI to utilize blockchain and other leading-edge technologies for the benefit of the company’s clients. They will embark on a pilot program with UK clients of SEI before rolling out the offering to other clients and the wider market in 2018.

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Claims Can Be Submitted On Any Channel

Users can now submit any group benefits claims, including disability claims, using the channel most convenient for them through Manulife’s new group benefits homepage and mobile app. “The newly designed plan member homepage brings the most important information to the forefront, where plan members can easily and efficiently transact with Manulife in the way they want to,” says Donna Carbell, senior vice-president, group benefits, at Manulife. Manulife Mobile uses fingerprint recognition and is available for iPhone and Android devices. It also allows users to review recent claims and payment information, see their benefit balances and access their benefits card, and find healthcare providers in their area.

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Pace Of Liquidations Falls

The pace of hedge fund liquidations fell to 222 in the quarter ended June 30, compared to 259 firms that closed in the first quarter of 2017, says data from Hedge Fund Research. The number of funds shuttered in the second quarter of 2016 totaled 239. There were 180 hedge fund launches in the three months ended June 30, compared to 189 in the prior quarter and 170 in the second quarter of 2016. If liquidations continue at the current pace, the total for calendar year 2017 would be 962 versus a total of 1,057 in 2016, its report says.

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Simutin Drives Research

Mikhail (Mike) Simutin, an associate professor of finance at the University of Toronto’s Rotman School of Management, is associate director of research for the International Centre for Pension Management (ICPM). In the new role, he will drive ICPM’s research initiatives and strengthen the organization’s position as a global pension research hub. A professor at the Rotman School since 2010, Prof. Simutin’s own research primarily focuses on studying institutional money management and understanding risks that affect asset prices.

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de Bever Discusses Challenges

Leo de Bever, former chief executive officer and president of the Alberta Investment Management Corporation, will discuss the challenges and opportunities the current geo-political environment presents for pension plan investments at the CPBI Southern Alberta ‘Professional Development Day 2017 (Investments).’ The session also features sessions on the future of renewable energy and reducing carbon emissions; emerging issues in fiduciary responsibility with respect to group retirement plan investments; and investment strategies for defined benefit and defined contribution plans in a low interest rate environment. It takes place October 19 in Calgary, AB. To register, visit Professional Development

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September 21, 2017


Parents Delay Retirement For Children

Almost half of Canadian parents will delay their retirement to pay for their children’s education, says a survey for the Financial Planning Standards Council (FPSC). Its ‘Children and Financial Dependence’ shows while 45 per cent of parents say that education costs will delay their retirement, many don’t consider how withdrawing money from a registered retirement savings plan or a registered retirement income fund may affect finances in the long run, says Kelley Keehn, personal finance educator and the FPSC’s consumer advocate. Gender also plays a role in determining which parents provide the most financial support for children. For example, 22 per cent of men versus 12 per cent of women would postpone their retirement to help children buy a starter home. Parents in Quebec, however, are less likely than parents in the rest of Canada to make these financial sacrifices. Only 12 per cent of parents in Quebec said they will help their children buy a home even if it prevents them paying down debt compared with 21 per cent of parents in other provinces.

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DC Cost Disclosure Required

Money managers will be required to disclose administration charges and transaction costs to defined contribution plans starting in 2018, says the UK Financial Conduct Authority. Firms must provide information about transaction costs, calculated using the ‘slippage cost’ methodology, and information about administration charges to the governance bodies of DC plans. The slippage cost approach identifies the price of an asset by comparing the price at which a transaction was executed with the price when the order to transact entered the market. Firms that do not have the relevant information must obtain it through external providers, which will be required to supply the data to the DC plans.

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Organizations Unaffected By MSP Fee Change

Organizations that administer the Medical Service Plan (MSP) premium on behalf of employees in British Columbia will be unaffected by an announced reduction in rates, says a Mercer ‘Response.’ The government will reduce the rates by 50 per cent for all residents as of January 1. Additionally, the threshold for the elimination of premiums has been increased from a net income of $24,000 or below to $26,000 or below for one adult and $29,000 or below for two adults. It also intends is to move towards the elimination of MSP premiums over the next four years. The transition to the new rates should be seamless and looking forward as the government moves to eliminate MSP premiums in total, employers who pay the MSP premium on behalf of their employees will start to see savings as the premium reduces and eventually is no longer required. This will represent a small reduction in the benefits employees receive as part of their total compensation package.

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Commercial Mortgages Overlooked

One of the alternative fixed income investments on the lower-end of the risk scale that’s often overlooked is the conventional commercial mortgage, says Philip Gillin, executive vice-president and portfolio manager, Bentall Kennedy (Canada) Limited Partnership and Sun Life Investment Management. Writing in its ‘Insights,’ he says while there are a lot of other products out there that are more esoteric and hold the potential for higher yields, “it’s hard to ignore an asset class that routinely delivers returns above risk-free government treasuries and is on the conservative end of the risk spectrum.” Commercial mortgages lie outside of the realm of government and corporate bonds, so diversification is increased through exposure to a broad range of borrower covenants backstopped by tenant rental payments. He says one reason they are not included in portfolios is that they are tied to real estate, which is a private asset class that not everyone has exposure to or understands. Second, few pension funds have the ability to originate mortgages directly and may not know where to turn to find an intermediary to do this. Finally, mortgages are less liquid than public bonds and require a longer-term commitment. “Of course, some of the higher yield for commercial mortgages is linked to this illiquidity premium, but by giving up some liquidity, investors may be rewarded with significantly higher yields,” he says.

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Amazon Reportedly Looks At PBM

Axios reports that Amazon is talks with ‘mid-market’ pharmacy benefit managers (PBMs). It is said to be targeting a mail-order pharmacy aimed at uninsured consumers or those with a high deductible. Amazon would need 18 to 24 months to secure drug licences in all 50 U.S. states. It could start a mail order pharmacy targeted to customers who pay cash for their medications, but this is only speculation.

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Weakness, Volatility Create Valuation Risk

Valuation risk in Europe is at its highest level due to financial weakness and geopolitical uncertainty, says the European Securities and Markets Authority. Its ‘Trends, Risks and Vulnerabilities’ report cited high asset price valuations as the “major risk for European financial markets in the second half of 2017,” with the main risk drivers identified as uncertainties around geopolitics, the resilience of economic growth, and debt sustainability. A number of money management executives agree valuations in global equity and credit markets are high. However, while some have moved to take profits from what they see as expensive valuations and are cautiously risk-on, they generally agree markets are not yet in bubble territory. Some are even anticipating further upside moves in European equities in particular.

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Breton Hill Joining Neuberger Berman

Neuberger Berman will enhance its quantitative investment capabilities by adding the team from Breton Hill Capital. Based in Toronto, ON, Breton Hill utilizes quantitative research and proprietary technology infrastructure informed by capital markets experience. Its solutions range across the risk and return spectrum with a focus on alternative risk premia and multi-factor solutions spanning equities, currencies, commodities, and rates. It manages approximately $2 billion in client assets. It is expected to join in the fourth quarter of 2017.

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CIBC Adds Private Debt Pool

CIBC Asset Management Inc. has launched a long-term private debt pool, a product for institutional investors focused on unrated private securities in the infrastructure and power sectors. The pool was designed for investors seeking contracted cash flows that align with their liabilities and offers the potential for an enhanced yield without incremental credit risk. Doug MacDonald, managing director and head, institutional asset management, at CIBC Asset Management, says “Infrastructure investing is about seeking stable returns through contracted cash flows while minimizing management and operational risk. These cash flows can help institutions invest their assets to better match long-term liabilities.” 

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Canadian ETF/ETPs Increase

Assets invested in ETFs and ETPs listed in Canada have increased 26.6 per cent in the first eight months of the year to reach a new record of US$107 billion at the end of August 2017, says ETFGI’s August 2017 preliminary Canadian ETF and ETP industry insights report. ETFs and ETPs listed in Canada gathered US$2.32 billion in net inflows in August marking 11 consecutive months of net inflows and a record level of US$13.88 billion in year-to-date net inflows. Equity ETFs and ETPs gathered a record level of US$1.79 billion in net inflows in August, bringing net inflows to a record level of US$6.85 billion, which is much greater than the net inflows of US$4.87 billion over the same period last year and more than the US$6.23 billion gathered in all 2016. Fixed income ETFs and ETPs have gathered a level of US$179 million in net inflows in August, growing net inflows to a level of US$3.49 billion, which is less than the same period last year which saw net inflows of US$4.08 billion.

 

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Deckart Becomes Lead Manager

Christian Deckart (CFA) will become lead manager of the Mawer global small cap strategy effective January 1, 2018. He joined the firm in 2013 and has been co-manager of the strategy since 2015. He is also the co-manager of its global equity strategy.

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Trustees Explore Strategies

SHARE’s ‘Responsible Investment Master Class’ provides experienced trustees with the opportunity to explore strategies for embedding responsible investment into pension fund governance and investment oversight in an interactive and hands-on setting. The course will be led by Rob Lake, an independent responsible investment advisor, and Shannon Rohan, director of responsible investment at SHARE. It takes place October 10 in Toronto, ON. For information, visit Master Class

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September 20, 2017


Third Using Health Apps

Thirty-two per cent of Canadian adults consult health apps on their mobile devices, but only 28 per cent of those in poor health do so, says a study by Canada Health Infoway in partnership with HEC Montréal and CEFRIO. ‘Diffusion of Mobile Health Apps and Smart Connected Devices in Canada’ also shows 24 per cent use smart connected devices to track health conditions or well-being. “The findings of the study demonstrate the opportunity Canadians have to be proactive in their overall wellness through the use of mobile apps and smart connected devices such as watches, wristbands, or other wearables.” says Michael Green, president and CEO of Canada Health Infoway. Canadians using mobile apps or smart connected devices to track their health or well-being are typically younger adults between the ages of 18 and 30 (41 per cent); employed (59 per cent); university educated (55 per cent); make an annual family income of more than $80,000 (46 per cent); and are not currently living with a chronic illness or condition. Only 28 per cent of Canadians that use mobile apps or smart connected devices to track their health or well-being report having a specific chronic illness or condition.

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Spread Of ESG Has Ramifications

More than a quarter of North American institutions use environmental, social, and governance (ESG) standards in their investment portfolios and approximately 60 per cent of institutions that have not yet incorporated ESG into their portfolios say they are open to doing so in the future, says a Greenwich Associates special study on ESG investing. “The spread of ESG standards among institutional investors has important ramifications, not only for asset managers competing for institutional mandates, but also for retail investors, businesses, policy makers, activists, and virtually anyone else with an interest in how the global economy and global markets develop,” says Andrew McCollum, Greenwich Associates’ managing director. The study shows the relatively widespread adoption of ESG among institutional investors is a recent development in North America. Twenty-seven per cent of institutions participating in the study employ some type of ESG standards in their portfolios. About half these current users ‒ and nearly two-thirds of the ESG users among public and corporate pension funds ‒ started using ESG within the past three years. Endowments and foundations were the earliest adopters and have the most experience with ESG. Among institutions that are not using ESG, one per cent have concrete plans to adopt ESG, one-in-10 say they are considering adopting ESG, and half say they are open to considering it in the future. Thirty-nine per cent say they will not consider adopting ESG at any time. 

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India Among Fastest Growing Economies

India is among the fastest growing major economies, says Atul Penkar, head of offshore equities at BSLAMCL and lead sub-adviser of the Excel India Fund. He told the Excel Funds ‘Expert Insights Into India: The World’s Growth Giant’ that its gross domestic product (GDP) is likely to grow at four to five percentage point higher than those of the developed markets. Since 2001, it has been growing at around seven per cent, ranking only behind China and well ahead of the U.S. and Canada. It now ranks as the seventh largest economy in the world. The major contributor to this is its demographics. Its working age population will reach 1.1 billion by 2050 and an Indian born in 2005 will spend an estimated $187,000 in their lifetime and this will multiply throughout the economy. As it shifts towards urbanization, its growth projections will continue to exceed expectations and it could be the second largest economy in the world by 2040, he said. Investors in India will find reasonable valuations and growth drivers in the near term include positive real rates to drive financial savings; increased consumption, both rural and urban; increased government expenditure; the recovery of commodity prices; and lower interest rate expense due to declining interest rates.

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White Label Funds Combine Styles

Defined contribution pension plan sponsors can gain from revamping their lineups with a focus on “reframing the design of actively managed options with an emphasis on fewer, broader investment options to ease participant decision-making, says a white paper from Willis Towers Watson. It makes the case for multi-manager white label funds which can combine several active risk managers with complementary styles as well as lower-cost passive and smart beta strategies. As a result, these funds aim to provide participants with broad exposure to multiple asset classes as well as “skilled managers potentially at a total net cost below that of many stand-alone active fund options.” As a result, these funds may be able to secure similar returns at lower risk or higher returns at similar risk.  

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Tribunal Revisiting Pilot Retirement

The Canadian Human Rights Tribunal will be revisiting whether Air Canada was wrong to force some pilots to retire at age 60. It will hold another hearing to determine whether the airline had the right to force 45 pilots to retire at an age it deemed to be the industry standard. The decision says the case originally had 97 complainants, but 52 of them will not have their retirement age scrutinized by the tribunal. The new tribunal hearing is expected in early 2018.

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Emerging Markets Offer Potential

Canadian institutions like the Canada Pension Plan Investment Board and the Ontario Teachers’ Pension Plan are investing in emerging markets and for good reason, says Bhim D. Asdhir, president and CEO of Excel Funds Management Inc. Speaking at its ‘Expert Insights Into India: The World’s Growth Giant’ session, he said this is a promising sign because institutional investors are always the first into promising markets and they have decided to invest in a big way. One of the big attraction is the population in these markets. They have a population of six billion, far above the 1.6 billion in developed markets and the population in developed markets is aging, unlike emerging markets where the populations are much younger. These countries are going through rapid expansion and their labour forces are moving from poor to middle class where, eventually, everyone will have one car and two televisions. For investors who missed out on the Chinese boom where the economy has grown five-fold in the past 10 years, “you have to get India,” he said as it “will be a shining star of world economy.”

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Investors Look To Alternatives

Overall total net inflows into alternatives in 2016 were $669 billion; bringing industry-wide assets under management (AUM) to $4.46 trillion, says a survey by Interlinks. It found one-third of limited partners (LPs) confirmed their current allocations to alternative investments was more than 30 per cent with two-thirds of those looking to increase their investment saying they plan on increasing their allocations to alternatives by between one per cent and 10 per cent this year. Key areas of focus for LPs are hedge funds, private equity, private credit funds, and real estate. Of LPs interested in direct investing, 60 per cent confirmed they had increased their pace of direct investing ‒ as opposed to allocating to funds.

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Childless Also Seek Job Flexibility

While working parents are certainly helping drive the flexibility trend, there are plenty of job seekers without children that seek and value work flexibility, says FlexJobs’ 6th annual survey While some findings were not too shocking (for example: workers are most interested in 100 per cent telecommuting, people think they are more productive working from home instead of the office, and the majority have left or considered leaving a job because it did not offer flexible work options), other findings were more surprising. “There is a much broader diversity in the types of people who want and/or need flexible work ‒ especially telecommuting, flexible, and/or part-time schedules ‒ than is commonly recognized when looking at the workforce. This is largely because many historical and antiquated stigmas continue to fuel misconceptions about what flexible jobs are and who wants them,” says Sara Sutton Fell, founder and CEO of FlexJobs. While Millennials have been in the spotlight of the job market for some time as the main proponents of flexible work, the rate of response from older workers was roughly the same as those from younger job seekers. While some respondents said they would be willing to exchange certain benefits to have work flexibility, such as vacation time or health insurance, 43 per cent said that should not be necessary. This is strong indication that work flexibility is no longer considered a negotiating strategy or perk but, increasingly, an expected job benefit, she says. Reasons for desiring flexible work include health or disability concerns and bad commutes.

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Ombudsman Reports Record Numbers

Canada’s OmbudService for Life & Health Insurance (OLHI) reports a year of record numbers and renewed priorities. It says its complaint volumes increased by 23.2 per cent across Canada, marking an historic high. Complaints from Quebec (+36.2 per cent), the Prairie provinces (+25.6 per cent), and British Columbia (+ 24.4 per cent) all increased. For fiscal 2016/17, OLHI received 2,632 complaints, with 57.5 per cent of these relating to denied claims. Disability and life and employee healthcare and dental, together, made up 83.9 per cent of all product complaints. Web visits rose by 19.1 per cent over last year, reaching nearly 85,000 and public contacts exceed 87,000. Among its business plans for the future is increasing visibility outside central Canada. This past year, complaint volumes rose in Manitoba, Saskatchewan, Alberta, and British Columbia. To build on this momentum, OLHI established a physical presence in Edmonton, AB. For more detail on OLHI’s operations, including case studies and statistics, the full 2016/2017 annual report is available at OLHI Report

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Parent Joins Aon

François Parent is an associate partner with Aon’s legal consulting team. He will lead its legal efforts in the Quebec market, providing practical and strategic assistance to public and private sector clients on issues affecting pension and employee benefits plans. He has more than 20 years of experience practicing law, most recently as a partner with Lavery.

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ESG Integrations Trends Examined

Trends in ESG integrations and stewardship, sustainability, and the metrics of materiality will be among the topics covered at the ‘Sustainable, Responsible, Impact Investing Conference.’ Other sessions will look at the purpose of capital and climate change. It takes place November 1 to 3 San Diego, CA. For information, visit SRI Conference

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September 19, 2017


NDP Moves To Protect Pensions

The federal New Democrats Party (NDP) has launched an ‘End Pension Theft’ campaign. It plans to introduce a private member’s bill (PMB) for legislation that would protect the pensions workers and retirees have earned during bankruptcy proceedings. Under the Companies’ Creditors Arrangement Act (CCAA), corporations can divert money meant for workers’ pensions to pay off their secure creditors, who, in many cases, are often their parent companies, it says. A PMB, to be introduced this fall by the NDP’s pensions critic Scott Duvall, would fix the legislation in order to first protect workers’ pensions and benefits and force companies to provide termination or severance pay before paying secured creditors. Since 2009, it says, the government has granted 286 companies creditor protection under the bankruptcy laws, including Can-West, Bauer Hockey Retail Corp., SunEdison Canadian Construction LP, Golf Town Canada Holdings Inc., and the Victorian Order of Nurses for Canada. Under the CCAA, Canadian companies can file for protection from their creditors to get time to work out their financial problems. Companies are supposed to develop a restructuring or organization plan within 90 days so they can keep operating. As long as the act is in place, creditors are not allowed to take any action to collect money owed them.

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Tax On Insurance Unpopular

Almost three-quarters of Saskatchewan residents are opposed to a government decision to apply provincial sales tax (PST) to a range of insurance products, says a survey the Financial Advisors Association of Canada (Advocis). It shows 73 per cent said they oppose or strongly oppose taxing insurance. Saskatchewan’s plan to apply its six per cent PST to insurance premiums, including individual and group life and health insurance, took effect August 1.

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CLHIA Welcomes Transparency

The Canadian Life and Health Insurance Association (CLHIA) welcomes the move to more transparency on the invoices Quebecers receive when they pick up their medications at the pharmacy. A detailed invoice for drugs will be issued at the pharmacy which itemizes the pharmacist’s fee, the price of the medication, and the wholesaler’s margin. Only one of these items vary from one pharmacy to another: the pharmacist’s fee. Drug costs, including pharmacists’ fees, have a significant impact on the cost of group insurance and this is a concern for many employers. The detailed invoice will increase awareness and help Quebecers make informed choices about costs when they purchase their prescription drugs. In turn, this will help ensure the viability of their current supplementary health insurance plans.

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Blockchain Speeds Claim Settlement

The introduction of blockchain technology in the insurance industry will likely help firms cut expenses and speed up claim settlement, says Moody’s Investors Service. It says the Blockchain Insurance Industry Initiative (B3i) unveiled a prototype that uses blockchain technology to streamline contracts between insurers and reinsurers, providing insurers, reinsurers, and brokers with a shared view of policy data and documentation in real time. Once the technology “becomes mainstream,” which Moody’s sees as likely, use of the application will broaden to various types of reinsurance, catastrophe bonds, and other insurance-linked securities.

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Strides Made In Gender Diversity

Osler’s third annual report on the state of diversity disclosure practices by TSX-listed companies (other than closed-end and ETFs) reveals an increasing proportion of companies have made some strides to improve gender diversity in leadership roles. But there is still considerable distance to be covered before Canadian companies are at par with international firms that have led the way in prioritizing diversity in their executive suites and on their boards of directors, says ‘2017 Diversity Disclosure Practices Report: Women in leadership roles at TSX-listed companies.’ A key catalyst for change is coming from institutional shareholders. “While improving gender diversity has been a focus of legislators and regulators, institutional shareholders are more visibly expressing their support for greater gender diversity on the boards of companies in which they invest,” says Andrew MacDougall, an Osler partner. It shows a significant jump in the number of companies that disclose they have a written board diversity policy and a significant decline in companies without any women representatives on their board.

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Alternative Data Sets Pay Off

Ninety per cent of asset managers and hedge funds that employ alternative data sets as part of their investment strategies say the use of this data is paying off by delivering hoped-for returns, says a study from Greenwich Associates. This high level of satisfaction is fueling demand and driving the total spend on alternative data sets by investors in Europe and the U.S. to nearly $170 million per year. Nearly half the asset managers interviewed and just shy of three-quarters of hedge funds plan to beef up their alternative data spending in 2018. “Looking ahead, data captured from the internet of things (IoT), which includes a long list of internet-connected devices from light bulbs to automobiles, presents a large opportunity for both providers and investors,” says Dan Connell, head of market structure and technology at Greenwich Associates and co-author of the report. “The potential upside continues to outweigh the challenges and we expect to see the demand for alternative data and the tools needed to put that data to work grow.”

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Hedge Funds Generate Gains

Hedge funds generated gains of 0.97 per cent in August 2017, extending their streak to 10 consecutive months of positive returns, says the Preqin ‘All-Strategies Hedge Fund.’ The benchmark has posted returns of 7.03 per cent in 2017 so far and 9.79 per cent over the past 12 months. All leading strategies produced positive returns for August. Equity and macro strategies funds both generated monthly performance of 1.07 per cent, the highest returns of all leading hedge fund strategies. Emerging markets funds were once again the highest performing geographic region, returning 2.47 per cent, which has brought 2017 gains to 12.26 per cent.

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Marton Joins bfinance

Les Marton is a senior director with bfinance’s Canadian team. He brings more than 30 years’ experience of global capital markets, most recently as managing director, head of cap intro and hedge fund consulting with Scotiabank Global Banking and Markets in Toronto, ON. He will work closely with major institutional investors across public and private pension funds, insurers, family offices, foundations, and endowments in Canada.

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Trumponomics Impact Examined

The International Foundation of Employee Benefits Plans’ ‘Canadian Investment Institute’ features global and Canadian economic updates and information about the issues impacting funds. Topics this year include blockchain technology, what Trumponomics mean for Canada, and enhancing returns through the use of non-traditional credit strategies It takes place November 19 to 22 in Southampton, Bermuda. For information, visit Investment Institute

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September 18, 2017


New Technologies Provide Opportunities For Healthcare

All aspects of healthcare and technology are changing rapidly, and providers need to keep an open mind, says Paul Clark, chief technology officer with WorldCare International Inc. Speaking at the Benefits and Pensions Monitor Meeting & Events ‘Technology And Healthcare Plan Innovation’ event, he said there are many innovations that can be (or are) used in healthcare. They include wearable devices such as fitness trackers, cell phones, medical alert devices, and implantable devices. The Internet of Things (IoT) – where devices can communicate with other devices or humans – includes Wi-Fi scales, blood pressure cuffs, glucose monitors, medication reminder/verification, and infant monitoring. Hospital intensive care units have been using IoT for years, said Clark. Monitoring devices are also prevalent, for sleep, heart, and activity, for example. “There are many companies and providers [of these devices and technologies] and many more are entering. They are all figuring out where they fit. The term I like is ‘connected health.’ It consists of a whole entire ecosystem within healthcare.” All these devices are generating a lot of data. More than 2.5 exabytes of data is produced every day (equivalent of 90 years of HD video); but data collection is barely at the tip of the iceberg. “Now we have the data, what do we do with it? How can we put it to work?” Clark said these technologies provide many opportunities from individual use to clinical use. They could have a major impact on chronic disease management and provide population health management, personalized medicine, and address the shortage of healthcare providers. Communication will be critical for successful use of these technologies. Providers will need IT support for installation and use, and establish rules about the use of any data collected.

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Pension Could Be Used For Start-ups

A UK business organization, the Institute of Directors (IoD), wants the British government to introduce limited, tax-free withdrawals from personal pensions if the money is used for start-up investment. Its report, ‘The Age of the Older Entrepreneur,’ says age is not an obstacle to starting a business. The government should consider introducing tax incentives to encourage people to pursue their ideas and invest in training, so that they can continue to have fulfilling working lives beyond the age expected by previous generations. A theoretical cap on the withdrawal amount could be set at $133,000, or 10 per cent of the fund value if smaller.

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Benefit Plans Must Adapt To Change

Healthcare in Canada is changing and technology is no longer something in the distant future anymore, says Tim Clarke, founder and director of tc Health Consulting Inc. He told the attendees at the Benefits and Pensions Monitor Meeting & Events ‘Technology And Healthcare Plan Innovation’ event that new ideas are here already – new services, technology-driven health promotion, apps to assist with well being, unlimited data, and more. Employer benefit plans need to adapt, but how and who pays? Essentially there are three buckets when it comes to payment of healthcare options. One is where the employers pay for what the government doesn’t cover, one is public health, and the last is the individual who pays out-of-pocket. Employers are not paying for all the new treatments that are coming out, said Clarke, but, with all the new treatments and services available today, perhaps there are solutions that will enhance members’ health and make the plan more successful in its goals. Employers may be a bit resistant to change when the current plan is running smoothly and they are managing to keep employees happy and costs under control. But Clarke suggests they look at the big picture. Assess both the old and the new, try to understand the ‘why’ behind the treatment or service, prioritize, and manage the change. A plan may currently be willing to pay $150 for a session with a psychologist, but they’re not willing to pay $5.99 for a meditation app that the member can use indefinitely. Maybe it’s because employers don’t want to go through thousands of apps to select ones that support their business; but there are partners that can do this type of thing for them. Employers should select partners who aggregate tools and resources. Changes will continue to disrupt the industry and employers will need to think about how these changes may affect their benefit plans.

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AIMCo Has MRD

Alberta Investment Management Corporation (AIMCo) has concluded discussions with the government of Alberta on a formalized mandate and roles document (MRD). The MRD fulfills the obligation that all agencies have clearly articulated roles and responsibilities. The document was created collaboratively between the Joe Ceci, president of the Treasury Board, minister of finance, and the AIMCo board. The outcome is an MRD that provides a clear articulation of the role of the public agency with respect to its relationship to government and which outlines the goals and performance expectations of the minister. 

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Insurance Industry Still Resistant To Change

There is still resistance to change in the life and health insurance industry; an industry that is not known as a fast changer, says Karen Voin, assistant vice-president, group benefits and anti-fraud, with the Canadian Life and Health Insurance Association Inc. (CLHIA). She told the Benefits and Pensions Monitor Meeting & Events ‘Technology And Healthcare Plan Innovation’ event that still the pace of change will continue and it will affect benefit plans, and sustainability will continue to be a concern. Openness to change is growing, however, and more management of plans is a trend in the market. And the environment is changing with technology advancements, cost pressures, demographic changes, and public/private plan co-ordination, to name a few. As well, expensive specialty drugs are creating concerns on sustainability. “They can be lifesaving, but come with a very high cost,” said Voin. The industry is responding by advocating for government action to lower costs, supporting the Patented Medicine Prices Review Board (PMPRB) reform, and encouraging an enhanced federal role, as well as other actions. Insurers are actively promoting numerous drug plan management solutions to clients such as generic substitution, managed formulary designs, preferred provider networks, pharmacy agreements, and more. Going forward, cost constraints on both public and private payers will continue to play a role in driving change. This creates a need for continued and increased collaboration between public and private payers and other stakeholders. CLHIA is advocating and working closer with the government. The joint buying power of private and public plans is what is needed for bringing down costs for all Canadians, said Voin.

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Global Economy Expected To Grow

Over the next five years, the global economy is expected to experience a 2.4 per cent real average annualized growth, says a report from Northern Trust. ‘Northern Trust’s Capital Market Assumptions five-year investment outlook’ acknowledges equity valuations are high in developed markets, but it predicts low inflation and steady economic growth will continue to keep stocks attractive. The report also says the highest regional average annualized return will come from emerging markets at 8.4 per cent; followed by 7.2 per cent for Europe, 6.6 per cent for the UK, six per cent for Japan, and 5.9 per cent for the U.S.

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Employee Engagement Better Barometer

Employee engagement is a better barometer to justify the expense of offering financial wellness programs, says Ernst & Young. Its poll of HR professionals shows while 14 per cent do not have a program and half of that group have never considered it, only 16 per cent felt they could justify adding a financial wellness program without knowing the anticipated ROI. Among those who already offer some type of benefit, 34 per cent felt they could offer the benefit without knowing the ROI. Among employers who do not currently offer a financial wellness program, 59 per cent say the biggest factor they will consider is price, followed by the ease of the program (53 per cent) and breadth of the program (44 per cent). Of employers that do offer a program, 35 per cent focus less on cost and more on the breadth of the program (47 per cent) and the quality of employee communications (45 per cent). The survey showed that those who offer financial wellness plans saw a direct correlation to employee retention, well-being, and productivity.

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Beware Of Mid-life Knee Crisis

People’s mid-life crises are leading to another crisis – the mid-life knee crisis, says Dr. Syed Y. Haider, an orthopaedic surgeon at Markham Stouffville Hospital. Speaking at the Benefits and Pensions Monitor Meeting & Events ‘Technology And Healthcare Plan Innovation’ event, he said that ‘clicking’ sound when the mid-life crisis sufferer gets in and out of his sports car is really his knees. “The 45- to 65-year-old demographic is the biggest cohort that suffers from arthritis. In fact, 55 per cent of people with arthritis are under 65.” Osteoarthritis is not a bone disease, but a disease of the cartilage. And osteoarthritis of the knee has a rapid increase with age; it is the second most chronic disease in women and third in men. There are many causes, said Haider, including genetics, obesity, aging, and trauma. There are now also many treatments including lifestyle intervention, physiotherapy, medication, alternative treatments, braces, and injectables. If those treatments are not effective, surgery – partial or full knee replacements – is an option. New technologies continue to enhance treatment, things like robots that can do the surgery, advances in stem cell treatment, and custom-made cartilage replacements which are made by 3D printers. These technologies exist today and are used in countries such as the U.S. and the UK. Haider said it is important for the health insurance industry to stay relevant – be aware of advances in treatments and patient care and modify a benefit plan accordingly. For example, many new treatments have patients in and out of the hospital in one day, which means private room coverage may not stay relevant. He suggests offering more flexible products, giving patients more autonomy, and moving towards a more preventative solution through education, communication, and awareness.

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ETFs/ETPs Gather Record Inflows

Assets invested in ETFs/ETPs listed globally have increased 35.5 per cent in the first eight months of the year to reach a new record of US$4.800 trillion at the end of August, says ETFGI. ETFs and ETPs listed globally gathered a record US$42.43 billion in net inflows in August marking 43 consecutive months of net inflows and a record level of US$433.69 billion in year-to-date net inflows which is more than double the US$216.59 billion in net inflows at this point last year and the US$43 billion more than the US$390.61 billion net inflows gathered in all 2016. Equity ETFs/ETPs gathered a level of US$23.47 billion in net inflows in August, bringing year-to-date net inflows to a record level of US$295.67 billion, which is much greater than the net inflows of US$74.25 billion over the same period last year and more than the US$234.44 billion gathered in all 2016. Fixed income ETFs and ETPs have gathered a level of US$11.15 billion in net inflows in August, growing year-to-date net inflows to a record level of US$107.28 billion, which is greater than the same period last year which saw net inflows of US$93.56 billion. Commodity ETFs/ETPs accumulated net inflows of US$1.39 billion in August. Year-to-date, net inflows are at US$5.64 billion, which is significantly less than the net inflows of US$33.68 billion gathered over the same period last year.

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Foster Joins Accompass

Jonathan Foster is vice-president, executive compensation, at Accompass. He was previously a partner at a Canadian consulting firm and has a decade of experience in the areas of board governance and executive compensation.

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Sorenson Speaks At Forum

James Lee Sorenson, one of the world’s leading impact investors, is the keynote speaker at the ‘Social Finance Forum 2017.’ He is president of the Sorenson Impact Foundation and has personally given $13 million to create the Global Impact Center at the University of Utah, which teaches students how to create sustainable change through impact investing. It takes place November 9 and 10 in Toronto, ON. For information, visit http://www.socialfinanceforum.ca

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