Funds Not Managing Climate Risk Adequately
Based on their public disclosures, it is clear that Canada’s pension funds are not adequately managing the risks and seizing the low-carbon opportunities presented by the climate crisis, says Shift Action for Pension Wealth and Planet Health’s ‘Canada’s Pension Funds and Climate Risk 2019’ report. Those that are taking action are just getting started. Canadian pension funds that are already investing in climate solutions but are only doing so at levels that are far too low relative to the potential for profitable growth or at the levels required to solve this challenge. To be successful in the face of climate change, the tone of leadership needs to be set from the top, it says. To achieve what is needed, climate change strategy and expertise must become part of the core governance and leadership structure. And there are no good excuses for falling behind. While a perfect set of rules has yet to emerge, best practices have been developed and implemented by leading funds internationally. Integration of sustainability and climate change into fund management is fast becoming mainstream. Rather than acting as a barrier, the fiduciary responsibility held by asset managers to manage funds responsibly actually requires that robust plans be put in place to better manage climate risks and opportunities. It has also been shown that pension fund beneficiaries prefer their pension savings to be invested in a sustainable and transparent manner. Funds should not shy away from being pro-active in their disclosure and outreach around how they are stepping up to face this critical challenge, says the report.
Proposal Will Penalize Some Plans
While Quebec is proposing to amend the scale used to determine target levels with respect to stabilization contributions applicable to private sector pension plans, the current scale has allowed, when compared to the previous funding rules as they read before January 1, 2016, plan sponsors and administrators to turn their focus to establishing long-term integrated investment and funding policies that reflected a plan’s characteristics and aligned with the long-term funding objectives of the plan sponsors, says an Eckler ‘Special Notice.’ As a result, some plans have improved their match between assets and liabilities, or increased their exposure to return-seeking investments to improve long-term expected returns. The proposed revised scale will not have a significant impact on typical plans with 40 per cent to 60 per cent of their assets invested in fixed income investments and a ratio of durations between 25 per cent and 50 per cent, with the target level of the stabilization provision changing by minus one per cent to two per cent. The proposed scale, however, will penalize plans for privileging a strategy with more variable-yielding investments over the long term, especially plans where assets are matched to liabilities using derivative products. For example, a plan with a 60 per cent allocation to variable-yielding investments that has fully matched its liabilities using derivatives would see its stabilization provision target level increase from 11 per cent to 17 per cent, which represents a 55 per cent increase. However, the proposed effective date of December 31 will be a partial relief to plan sponsors and administrators as it will allow time to analyze and potentially revisit recent investment strategies made after the release of the current scale. Plan sponsors will need to carefully review the impacts of proposed changes with their consultants and make the appropriate decisions to realign their investment and funding objectives with their risk budget. Plans with a cost-sharing agreement should also take a proactive approach to communicating changes to plan participants.
Biosimilars Lag In Some Disease Areas
While there is an increase in use of biosimilar medications (alternatives to first-on-market specialty biologic drugs which are made or contain living organisms) in some disease areas, others still lag behind, says the ‘2019 TELUS Health Drug Data Trends and National Benchmarks Report.’ Laura Mensch, vice-president, health benefits management, at Telus Health, says to encourage use of these innovative medicines, policy changes like the one made this spring by the British Columbia government are needed. It became the first public payer to implement a mandatory switching policy for biosimilar drugs, dramatically increasing the focus on the use of these medications. Policy changes like these are expected to drive drug costs down and help to build a more sustainable system, she says.
Inflation Worries Motivate Dovish Central Banks
Worries about low inflation have provided at least a partial motivation for dovish central banks over the past six months, says Eric Lascelles, chief economist at RBC Global Asset Management in his ‘#MacroMemo.’ To be clear, realized inflation is not actually all that depressed. U.S. core CPI is currently perched at 2.1 per cent YoY (year over year) and headline U.S. CPI is just 1.6 per cent YoY. Superior measures of the inflation trend argue inflation is a little high, if anything. Trimmed mean CPI is 2.1 per cent and median CPI is 2.8 per cent. All of this is in stark contrast to 2010, when headline CPI was briefly at a rock-bottom minus two per cent YoY and core CPI fell to just 0.6 per cent YoY. That was a serious risk. For its part, Canadian core and headline CPI are both slightly above their two per cent target. However, inflation expectations are low and falling, even for the fairly distant future. Worries about low inflation are counterintuitive given that high inflation hurts economic growth, limits the application of monetary stimulus, and obliges investors to pay a higher effective tax rate on their real capital gains. Still, low inflation is to be avoided given the threat of a deflationary trap and the limitations low inflation places on central banks seeking to deliver stimulus during times of crisis. The most obvious solution is to recognize that the true neutral policy rate needed to achieve normal inflation over the long run is likely lower than previously thought, which is quite a statement given that the post-crisis neutral is already acknowledged to be a few percentage points below the prior norm, he says.
Well-being Programs Broadening
U.S. employers are broadening their well-being programs to encompass many aspects of life, says a white paper from Optum and the National Business Group on Health. ‘Workplace Well-Being and the Employee Experience’ says they are now considering physical, social, financial, community, and mental health, all in an effort to help their workers become more productive at work. Employees showed a “profound interplay among the dimensions of financial, physical, and mental health, as well as community and social health,” it says. “Equally as important, they also provide a roadmap for employers, suggesting practical, new opportunities to improve the employee experience.” Employee desire is first and foremost for their employer to help them with their financial health, followed closely by their mental health. Finally, employers should consider investing in the health of the communities surrounding their workplace locations as this has a positive impact on employee well-being. The survey found that 38 per cent of employees who are not offered any kind of well-being program say their overall well-being is either excellent or good. For those who are offered between one and three well-being programs, this jumps to 43 per cent, and for those offered either four or five well-being programs, the percentage rises to 58 per cent.
China’s Economy Boring
China’s economy is boring, but that’s not necessarily bad for investors, says Andy Rothman, an investment strategist at Matthews Asia. It is boring because manufacturing, investment, and exports are weak, but consumption and services, the largest part of the economy, are healthy, and employment is stable. The government seems prepared to tolerate boring, rather than turn to stimulative monetary and fiscal policy. Two sources of anxiety are leading to a boring economy. The first is tensions with the U.S. President Donald Trump administration which have led China’s business community to reduce output and defer investment. Real (inflation-adjusted) industrial production rose 5.6 per cent year-over-year (YoY) in the second quarter, down from 6.6 per cent in the second quarter of 2018. Nominal investment by privately-owned companies rose 5.3 per cent in the quarter, down from 6.4 per cent during the first quarter and 8.7 per cent in the fourth quarter of 2018. However, he says it is worth noting that corporate investment is slowing globally as well. A second source of anxiety is the Chinese government’s ongoing campaign to reduce risks in the financial system, which has led to a sharp crackdown in off-balance sheet or shadow credit. This has reduced systemic risks, but has also meant that the firms that relied on non-standard credit sources, especially small private companies, have struggled (even more than usual) to get access to credit.
Cyber Incidents Rise Against Financial Services
The number of cyber incidents reported by UK financial services firms to the Financial Conduct Authority (FCA) increased by over 1,000 per cent during 2018. Nearly 20 per cent of them were targeted at the wholesale and investment management sector, says the FCA. Out of the total 93 cyber incidents reported to the UK’s financial regulatory body, half were phishing attacks, while 20 per cent were ransomware attacks. It says 21 per cent of the reports were triggered by third-party failure, 19 per cent from hardware or software issues, and 18 per cent were caused by change in management. “Firms are operating in an environment where cyber threats and breaches are rising in both number and sophistication, resulting in an increasing focus from regulators globally,” the FCA says, calling on companies to take specific measures to protect against the reputational and financial risk of cyber-attacks. These include implementing a regulatory cybersecurity program, monitoring regulator guidelines, and educating staff on cybersecurity.
Chin Heads Institutional Client Business
Kin Chin is senior vice-president and will lead the institutional sales, client service, consultant relations, and marketing teams at CI Institutional Asset Management (CIIAM). He joined CIIAM in 2017 in an institutional sales and consultant relations role. Prior to this, he was with BlackRock and Mercer in Toronto, ON.
OHS Focus Of Congress
‘World Congress 2020,’ a global forum on emerging occupational health and safety (OHS), is coming to Toronto, ON. OHS professionals can join experts and decision-makers from around the world to exchange ideas on the latest developments and innovations in safety and health at work. Organized by the International Labour Organization and the International Social Security Association, it is being co-hosted by IWH and the Canadian Centre for Occupational Health and Safety. It takes place October 4 to 7. For information, visit OHS Congress
Specialty Drug Costs Continue To Rise
The cost for specialty drugs, including those used to treat cancer and rare diseases, has continued to rise and may soon surpass traditional medications, says the ‘2019 TELUS Health Drug Data Trends and National Benchmarks Report.’ One solution to relieve pressure on employer-sponsored benefit plans, says Laura Mensch, vice-president, health benefits management, at Telus Health, is establishing a needs-based approach where public payers shoulder the cost of these high-priced drugs. However, patients will need reassurance that they will receive the best treatments and therapies and continue to enjoy a quality of life should such a model come to fruition. The most recent policy development came in June when the Advisory Council on the Implementation of National Pharmacare’s ‘A Prescription for Canada’ report called for a detailed national strategy for funding expensive drugs for rare diseases by 2022. This, and the commitment in the 2019 federal budget of $500-million per year, beginning in 2022, to pay for expensive drugs for rare diseases represents a distinct change in healthcare funding in Canada, she says.
Privacy Framework Needs Change
The current system for identifying Canadians is inadequate for the digital age, says the chief executive of Desjardins Group. Guy Cormier told MPs in an emergency parliamentary committee meeting Monday grappling with the fallout of a major data breach at his financial-services company that it is premature to discuss the situation while the police investigation is ongoing. However, he told lawmakers on the House of Commons’ public-safety committee that although he could not recommend a particular new regime for identifying people in the digital age, “the status quo is not an option” when it comes to preventing identity theft and protecting private data. He recommended the government convene a special working group made up of representatives from the government, the financial sector, telecommunications, legal experts, and others to determine a new framework for data and privacy in Canada. The breach, revealed in June, saw the leak of names, addresses, birthdates, social-insurance numbers, and other private information from roughly 2.7 million people and 173,000 businesses. A single employee, who has been fired since the breach was detected in December 2018, was identified as responsible. Denis Berthiaume, the chief operating officer at Desjardins, said the cybersecurity risk posed by employees was one of the most difficult to manage. But he said the company did have strong security policies and this was a case of an employee violating all those rules and procedures.
Injured Older Workers Off Job Longer
Older workers are not, on average, at greater risk of work- related injuries than their younger counterparts, says an article in the Ontario Occupational Health Nurses Association (OOHNA) Journal. However, if they do get hurt on the job, older workers tend, on average, to take longer to return to work. However, these longer post-injury absences are not explained by older workers having more severe injuries or certain types of injuries or by their working in more physically demanding jobs. In many cases, these longer absences post-injury are explained in part by the greater likelihood of older workers having pre-existing chronic conditions. Yet, even after taking pre-existing conditions into account, about 70 to 80 per cent of the effect of age on longer absences remains unexplained. It says workplace factors, including ageism, may explain the longer absences. This means occupational health nurses dealing with the return to work of older workers are advised to check their organization’s implicit biases about age and aging, consider the individuality of each older worker, implement return-to-work plans that incorporate healthcare, case co-ordination and work modification interventions, and implement accommodation policies and programs that are flexible and promote autonomy among all workers.
Corporate Failure On Climate Change Found
A climate change group backed by institutional investors and asset managers has found a significant degree of corporate failure in terms of action related to the Paris Climate Agreement. However, it says the situation is improving. Only one in 10 of the world’s 274 highest-emitting companies are reducing carbon emissions fast enough to keep global warming below 2°C in line with the Paris aims, says the Transition Pathway Initiative (TPI), which has backing from groups like Calpers and the Church of England. It also found 25 per cent of companies were not reporting emissions and 86 per cent were yet to undertake and disclose climate scenario planning, which is considered highly important for investors. Other findings show that 46 per cent of companies are failing to adequately integrate climate change into their business decisions and only one in eight companies are reducing carbon emissions at the rate required to keep global warming below 2°C. TPI is urging investors to adopt “an emergency footing” to get companies moving faster on climate change. Some of the more positive findings are that among the companies assessed for the second consecutive year, 35 of 130 companies improved how they integrate climate change into their business decisions and one in four companies assessed for a second year were improving on climate management.
Employee Happiness Linked To Productivity
Wellbeing in the workplace is increasingly important, with good employee health and happiness increasingly linked to better performance and productivity. In fact, an RBC Insurance poll has found the majority of working Canadians (80 per cent) report that their overall wellbeing would improve if their employer were to offer a personalized wellness program that is customized to an individual’s specific wellness and health related interests and goals. Other aspects of daily life they say would improve if offered this type of program include their physical health (78 per cent), favourable opinions of their employer (77 per cent), job satisfaction (73 per cent), mental health (71 per cent), and job productivity (68 per cent). The poll also revealed that 94 per cent of working Canadians are more likely to work for an employer that cares about their overall health and wellbeing. When it comes to group benefits overall, flexibility, and customization are important. Nine in 10 working Canadians value choice in their group benefits plan and nearly as many (84 per cent) agree that they would be more likely to participate in a workplace wellness program that is customized to their specific wellness goals. In return for this type of customization, 76 per cent would be willing to share their health and wellness related information and goals with an insurer.
CalPERS Misses Target
The California Public Employees’ Retirement System (CalPERS) is expected to miss its seven per cent investment return goal by a 300-basis point margin for the state fiscal year ending June 30. At the end of 2018, midway through the 12-month fiscal year, CalPERS investment returns were just at a break-even point, but an upward trending stock market and interest rates drops over the last six months helped the retirement system nearly catch up. The 2018-2019 fiscal year returns come after CalPERS saw an 8.6 per cent investment return in the 2017-18 fiscal year, and 11.2 per cent in the year before that. The pension’s plan worst recent returns were in 2015-16, when it produced a 61 per cent return. CalPERS is only around 70 per cent funded and the state and local towns and school districts have all been facing rising rates to pay for the shortfall.
Action Needed To Address Today’s Risk
Investors should take action to get back to neutral equity and fixed income positions that address today’s risks, while adjusting weightings within those asset classes to capture relative opportunities to enhance returns, says GLC Asset Management Group Ltd.’s ‘Mid-Year 2019 Capital Market Outlook.’ “We believe the global economy has enough positive momentum to exit the current global slowdown within the next two to four quarters,” says Brent Joyce, chief investment strategist at GLC. “What’s causing us concern are the sharp advances in equities, commodities, and bonds. It is tough to justify a ‘bull market’ in everything. We see a balanced and diversified asset mix that includes both equities and fixed income as most appropriate to navigate through our forecast horizon.” While fixed income remains attractive as a risk-mitigation tool, it recommends a neutral weight. In recommending broad and diversified geographic and sector allocations, with a slight equity overweight toward Canada, it suggests neutral exposure to U.S. and EAFE equities and a low-to-neutral weight in emerging markets.
Technology Makes EAPs Affordable
Technology can make employee assistance plans (EAPs) more affordable, says Novus Health, by as much as 75 per cent. Pamela Kwiatkowski, its senior vice-president of distribution and client experience, says platform scalability makes it is easier to charge low rates per member per month. However, the real value lies in “basic health management: a better user experience, improved health outcomes, and more positive relationships between our clients and their members in the long run;” says Robin Ingle, Novus Health’s CEO. Integration capability enables clients to unify their existing health management programs and services into a single, seamless, easy-to-use web and mobile destination and customize it to meet their specific health management and marketing goals. As well, centralized digital ecosystems help insurers create a marketplace for adjacent products and services.
Funds Flow Into ETFs
ETFs and ETPs listed globally gathered net inflows of US$68.95 billion in June, says ETFGI. This brings year-to-date net inflows to US$209.54 billion. Assets invested in the global ETF/ETP industry have increased by 6.1 per cent, from US$5.31 trillion at the end of May, to US$5.64 trillion setting a new record.
Benefit Trends Examined
The Benefits and Pensions Monitor Meetings & Events’ ‘Benefits Trends & Insights’ session will examine concerns at the forefront of plan sponsor concerns ‒ drug costs, wellness, and the escalating challenges of chronic disease and their impact on the workplace. It takes place September 12 in Toronto, ON. For information, visit Benefits Trends
Employees Fired Over Benefit Fraud
A geriatric healthcare facility in Toronto, ON, has fired or accepted the resignations of about 150 employees amid allegations they defrauded their benefits plan of millions of dollars over the past eight years. Baycrest Health Sciences estimates the losses at $4 million to $5 million. The final cost of unravelling the situation, hiring replacement staff, and implementing preventative measures has yet to be determined. While one defrauded the plan of as much as $100,000, most were around $20,000. The alleged frauds involved submission of receipts for services or products that weren’t received and claims for reimbursement of an authorized item but using the cash to buy something else unauthorized. The plan is 75 per cent financed by taxpayers and 25 per cent by employees.
Pension Benefits Critical Factor On Job Decisions
Pension or retirement benefits are a critical factor for most workers when deciding whether to accept a job to stay with their current employer, says research from Accenture covering countries in Europe, Asia-Pacific, and South America. Specifically, the research found that 68 per cent of workers with pension or retirement plans said those benefits were a critical factor in deciding whether or not to accept a job and 62 per cent said they were a critical factor in staying with a job. The research also found strong interest among workers for more help in planning for their retirement, and strong interest ‒ but limited current use ‒ of digital channels for pensions and retirement information and planning. For instance, 84 per cent said they want more help with pension and retirement planning and more than five in six want help with coaching.
Investor Positive On Impact On Planet
Many professional investors say they are positive about their impact on the planet, says research from NN Investment Partners. Over 60 per cent of professional investors surveyed believed they were making a “tangible and positive” impact on society, while only 13 per cent felt their impact was negligible or non-existent. The most widely accepted benchmark to measure responsible impact is the United Nations Sustainable Development Goals (SDGs) – adopted by all UN member states with the aim of making a better and fairer future. Just under 50 per cent of respondents – who were drawn from various countries in Europe ‒ believed they have the scope within their decision-making parameters to invest in a way that is responsible. The survey also suggested the majority would do more responsible investing if they had the professional scope to do so.
Global Outlook Deteriorates
The outlook for the global economy has deteriorated over recent months as, despite a somewhat more positive start to the year than expected with growth in both the United States and the euro zone surprising on the upside, the global manufacturing and trade outlook has worsened on fears of a protracted international trade conflict, says Aviva Investors’ ‘Q3 House View.’ This has prompted it to revise down its growth expectations for 2019 and 2020, with no meaningful recovery expected over the next 18 months. This downward revision reflects expectations of slower growth across most regions and is somewhat below the current consensus for this year and next. Looking across the major economies, only the United States is expected to deliver above-potential growth in 2019, with all the major economies at or below potential in 2020. As a result, the steady erosion of spare capacity that has happened globally over much of the past decade is expected to stall and even reverse a little. That is expected to ease wage and price pressures and bring a more accommodative monetary policy stance. This combination of looser monetary and fiscal policy will be enough to stave off a more serious downturn. Historically, global growth below around 2½ per cent was consistent with a recession.
Push And Pull Driving ESG Incorporation
The incorporation of environmental, social, and governance (ESG) dimensions into investment analysis and decision-making processes and reporting has traditionally been optional and a low priority for institutional investors outside the ethical and socially responsible investment sphere. However, this is changing rapidly owing to both push and pull factors, says Scientific Beta’s enhanced ESG and climate risk reporting paper. On the one hand, institutional investors are increasingly required, or expected, to explain how they factor in ESG dimensions and, notably, climate change into investment decisions and to report on their ESG incorporation processes and the ESG performance of their investments. On the other hand, a growing number of institutional investors consider that the ESG characteristics of investments may have a material impact on investment risks and returns or recognize that an increasing share of end-investors wish to see the environmental and social impacts of investments considered together with their financial characteristics. Comprised of ESG norms and climate change analytics, its enhanced ESG reporting assists investors with the incorporation of ESG dimensions in investment management. The ESG norms analytics measure index exposure to companies that are found to fall short of global standards of responsible business conduct and corporate governance or to have involvement in activities that conflict with global norms or their objectives. Reporting in respect of fundamental norms of ethical and responsible business is anchored on the global conventions underlying the United Nations Global Compact and measures exposure to companies with current or recent implication in critical ESG controversies in respect of their fundamental responsibilities in the areas of human rights, labour, environment, and anti-corruption associated with a high risk of future serious violations of fundamental ethical norms. The climate change analytics support assessments of the indirect contribution of index-tracking portfolios to climate change, assessment of index exposure to companies and sectors with high potential to transition risks, and assessment of index constituent exposure to physical risks.
U.S. Tariffs Boost Asian Economies
The initial round of tariffs imposed by the U.S. government on China imports earlier this year has started to make significant and demonstrable impacts on global trade, says analysis by PwC. Its ‘Global Economy Watch’ shows that U.S. imports from China fell by around 15 per cent year on year in the first quarter of 2019. This fall has created opportunities for other regional trading partners, with imports to the U.S. from a group of eight other Asian economies ‒ Bangladesh, India, Indonesia, Malaysia, South Korea, Taiwan, Thailand, and Vietnam ‒ growing by more than 16 per cent. Mike Jakeman, senior economist at PwC UK, says, however, if the goal is to primarily tackle trade imbalances, “then bilateral tariffs are an imperfect tool: import substitution can simply re-create the problem elsewhere. So, as a result of Vietnam becoming more competitive than China, the U.S.’s trade deficit with Vietnam stood at $13.5 billion in the first quarter, compared to $9.3 billion in the same quarter a year ago.”
Global Easing Cycle Begins
A global easing cycle has begun as almost every major central bank has already cut rates or has signaled an intention to do so in the near term , says Manulife’s ‘Q3 2019 Global Macro Outlook.’ This has prompted it to change its forecast for the rate path in the United States and Europe, along with several other smaller central banks. However, elevated trade tensions and associated uncertainties are weighing on global economic activity, particularly within China and the United States. This uncertainty has dented business confidence, which exacerbated a slowdown in growth in these economies. U.S. growth is also showing growing evidence of being in the end cycle with the likelihood of particularly weak growth in mid-2020. However, a technical recession is unlikely especially if the U.S. Federal Reserve (Fed) cuts interest rates in 2019. Canada remains a bright spot in the developed-market world and the Bank of Canada will not be in lockstep with the Fed in terms of implementing interest rate cuts this year, which should provide some further near-term support for the Canadian dollar along with a flatter yield curve.
NEST Boosts Assets
The UK’s National Employment Savings Trust (NEST) boosted its assets 111 per cent to £5.7 billion ($7.4 billion) for the 12 months ended March 31. The government-backed multi-employer defined contribution plan, known as a master trust, is also now managing assets on behalf of 7.9 million participants and 720,000 employers up from 6.4 million and 616,000, respectively, a year earlier. It delivered an average annualized return of 9.2 per cent net of fees over the five years ended March 31 for funds in the growth phase of the default strategy.
FactSheet Using Sustainalytics
Sustainalytics’ ESG (environmental, social, and governance) research and ratings products are now available via FactSet, a global provider of integrated financial information and analytical applications. FactSet’s workstation now allows clients to integrate ESG considerations directly into their stock selection research and portfolio analysis and reporting. It helps investors with risk management, values alignment, and the impact on revenue from sustainable products and services.
Millot Speaks At AIMA
Bertrand Millot, chief stewardship investing officer of the Caisse de dépôt et placement du Québec (CDPQ), and Jonathan Hausman, head of global strategic relationships of the Ontario Teachers’ Pension Plan, will be among the featured speakers at the ‘5th Annual AIMA Canada Investor Forum.’ It will also feature one-on-one networking opportunities with participants provided with access to 20-minute match-making sessions throughout the day to discuss their companies and services. Conference sessions will be featured on areas such as hedge funds, alternative credit, and ESG and investing for impact. It takes place October 17 to 18 returns in Toronto, ON. For information, visit AIMA Forum
Canada Can Get Positive Healthcare Reform Lessons
Switzerland and the Netherlands ‒ two countries that provide universal access to high-quality healthcare with shorter wait times, greater availability of medical resources, and often superior outcomes compared to Canada ‒ are positive reform lessons for this country, says the Fraser Institute. And importantly, both countries also maintain universal coverage for pharmaceuticals. “Many proponents of national pharmacare note that Canada is the only industrialized universal healthcare country that does not provide universal coverage for prescription drugs, but those same proponents often ignore the fact that other countries provide universal healthcare markedly differently than Canada,” says Kristina Acri, professor of economics at Colorado College and the co-author of the study ‘Universal Insurance for Pharmaceuticals in Switzerland and the Netherlands.’ Both Switzerland and the Netherlands provide universal access for all healthcare services (including pharmaceuticals) through a regulated ‒ but competitive ‒ market of private insurers. Individuals are required to pay health insurance premiums and are subject to some cost-sharing (co-payments and/or deductibles). Low income citizens and those facing high drug costs are protected through premium discounts, cost-sharing exemptions, and other public-safety nets. “Canadians would be well-served if their governments recognize the successful universal healthcare systems in other countries such as Switzerland and the Netherlands as models for reform, including covering prescriptions drugs,” says Acri. A sign of governments continuing to ignore these positive reform lessons from other countries is the federal government’s recent report on national pharmacare. It proposed a ‘single-payer’ model where government (funded by taxpayers) pays for coverage, which would likely replicate many of the observed failures in Canada’s current single-payer healthcare system.
Sponsors Reluctant About Auto Features
Despite the popularity of automatic plan features, many plan sponsors still seem reluctant to incorporate them into plan designs says a survey by J.P. Morgan Asset Management. Nearly 60 per cent believe participants should make their own decisions about how to use the plans, including whether to participate, how to contribute, and how to invest, the survey found. Plan sponsors in the so-called ‘hands-off’ camp edged out those in the ‘proactive’ group, albeit by a slight margin. Forty-one per cent viewed themselves as having a proactive philosophy, meaning they believed in positioning participants for greater retirement success through auto-enrolment, auto-escalation, personalized communications, and helping with investment decisions. Overall, 55 per cent of plan sponsors offered automatic enrolment, up from 43 per cent in 2013. Even fewer plan sponsors ‒ 38 per cent ‒ offered auto contribution escalation, up from 21 per cent in 2013. Plan sponsors that chose not to offer automatic features cited a belief that employees are responsible for saving on their own.
Classic Fee No Longer Standard
The classic ‘two and 20’ fee model is no longer the standard structure charged by the hedge fund industry, says a survey by AIMA and RSM. The survey shows a new average management fee of 1.3 per cent of assets under management (AUM) and 1.4 per cent for new funds launched in the past 12 months. Discussions with managers and investors during the research reveal a shared belief that managers’ share of profit should be about one-third and as fund managers and investors focus on customization and deeper partnerships to align interests, attention is no longer solely on fees. Findings demonstrate that a maturing industry and institutional investor base now require hedge funds to deliver customized solutions, closer collaboration, and closer communication. Over half of surveyed managers now use customized investment solutions and managers who can respond to individual investor needs are best positioned to grow.
Formularies Approve CINV Drug
Purdue Pharma (Canada)’s AKYNZEO Oral is now reimbursed by the Ontario Public Drug Program and the Régie de l’assurance maladie du Québec (RAMQ) and by the Non-Insured Health Benefits (NIHB) program for the prevention of chemotherapy induced nausea and vomiting (CINV). CINV is an expected and feared side effect of chemotherapy which can have a significant impact on a patient’s quality of life and willingness to continue with their chemotherapy treatment. The effects of chemotherapy can vary from patient to patient, and severe nausea and vomiting can result in a loss of fluids and nutrients. AKYNZEO provides long-lasting protection from CINV that is given approximately one hour before chemotherapy. Reimbursement of AKYNZEO in Ontario and Quebec and by the NIHB is provided under specific medication conditions.
Mercer Creating Investing Solution
Mercer has joined forces with Wealthsimple to create ‘Mercer Invest Wise,’ a digital saving and investing solution for the Canadian workforce to manage their personal finances, including their retirement savings. The low-fee solution combines Wealthsimple’s advice model and technology with Mercer’s 70 years of investment expertise advising some of the largest retirement plans in the world. “This new service brings investment solutions to the Canadian workforce that were previously only available to the largest retirement plans in the country. It’s an alternative to high-fee, more limited options available in the retail market for people who want to save more in an affordable way and simply and easily transition into retirement with confidence,” says Jean-Philippe Provost, senior partner and wealth business leader for Mercer Canada. It will be available to employers and their workforce, giving organizations another tool to ensure their benefit packages remain competitive and continue to meet the evolving needs of their employees. With growing evidence that financial and physical health are closely linked, employers see that the voluntary saving solution as part of a total rewards package can support employee financial wellness, which, in turn, may foster a more productive, engaged and healthier workforce.
Bentall GreenOak Enters Logistics Market
BentallGreenOak, formed following the merger of Bentall Kennedy and GreenOak Real Estate, has entered into the UK logistics mark via a forward funding development. The global real estate manager has acquired two land plots and will forward fund the development of two logistics assets in Peterborough. The development forms part of the wider Peterborough Gateway logistics park and construction for both buildings will start on site in September and will be completed in the second quarter of next year.
U.S. ETFs Have Inflows
The U.S. market saw the largest monthly inflow of the year in June, with US$50 billion flowing into ETFs, says a National Bank report. Fixed income ETFs accounted for US$26 billion, the highest monthly inflow ever recorded, the report says, reflecting “a continued defensive stance.” For the first half of 2019, fixed income ETFs saw US$74 billion in net inflows, accounting for 63 per cent of the US$118 billion total. ESG products have had a “blockbuster” first half, the report says, with the US$4.2 billion in flows already topping any previous total for a full year.
Plan Administrator Checklist Offered
The Canadian Group Insurance Brokers’ ‘Building and Using a Plan Administrator Checklist’ is designed for those who specialize in employee benefits or that want to. Dave Patriarche, president of Mainstay Insurance Brokerage Inc. and the CGIB, will help create a checklist to utilize when installing new cases, training new plan administrators, and conducting client renewals. Information reviewed will include taxation, privacy, administration, and HR issues. It takes place August 14 in Vaughan, ON. For information, visit Administrator Checklist