Industry News

Consider signing up for our Daily News Alert Email to receive relevant industry news, headlines and articles delivered directly to your inbox

Subscribe Now

November 21, 2017


CPPIB In Blockchain Swaps Test

The Canada Pension Plan Investment Board (CPPIB) was part of a successful six-month blockchain technology test in the $2.8 trillion equity swaps market. The program, which saw Goldman Sachs Group (GS) and J.P. Morgan Chase complete the swap, was managed by blockchain startup Axoni. It kept track of the swaps contracts after they were executed, recording things like amendments or termination of the deals, stock splits, and dividends, and achieved a “100 per cent success rate,” it says in a statement. Other participants included Citigroup, BNP Paribas, and Credit Suisse Group.

Share This:


Overdiversification Has Consequences

U.S. pension plans could face consequences as a result of active manager overdiversification, says the CFA Institute. The consequences might include overall poor performance because the more active managers a plan uses within an asset class, the less the potential for outperformance, says Ric Thomas, global head of strategy and research for the investment solutions group at State Street Global Advisors, and lead author of the white paper, ‘What Free Lunch? The Costs of Overdiversification.’ Two ratios to help investors determine the optimal number of active managers in an asset class were created. The FAR equation, for example, shows if a plan hires nine uncorrelated money managers each with an active risk ‒ the standard deviation of the excess return over the benchmark ‒ of six per cent, then the resulting active risk for that overall portfolio would fall to two per cent and a lower active risk equals a smaller chance of outperforming the benchmark. The two ratios can help determine an optimal number of external managers.

Share This:


Administrator Discharged With Annuity

The administrator’s liability when a pension benefit has been bought out through an annuity purchase under reforms announced in Bill 177, the ‘Stronger, Fairer Ontario Act (Budget Measures), 2017,’ says a Hicks Morley ‘FTR Now.’ Currently, if a pension plan administrator purchases an annuity to provide for a member’s pension benefit, the Pension Benefits Act (PBA) does not discharge the administrator for liability. Bill 177 would amend the PBA to discharge the administrator of a single employer pension plan upon completing the purchase of an annuity for a pension, deferred pension, or ancillary benefit, in accordance with certain required conditions. The conditions include that the annuity must provide the same benefit to the former member, retired member, or spouse with payments in the same amount as would have been received from the pension plan if the annuity purchase had not been made. As well, the insurance company from which the purchase is made must be authorized to sell annuities; the contract to purchase the benefit meets prescribed requirements; and the purchase meets any other requirements that may be prescribed, including requirements or conditions relating to funding. The administrator will be required to file a certificate prepared and signed by the plan’s actuary certifying that the administrator has complied with these requirements. The PBA will also be amended to provide a mechanism for administrators who have already purchased buy-out annuities to certify that the purchase meets the new requirements. Administrators may adjust the original annuity purchase to satisfy the criteria if necessary so that they may be eligible for the discharge. It is anticipated that this change will increase interest in purchasing buy-out annuities to de-risk defined benefit pension plans, at least for single employer pension plans.

Share This:


New Brunswick Prohibiting Special Pensions

New Brunswick wants to prohibit any special pensions or payments to staff during transitions in government leadership. Amendments to its Financial Administration Act would ensure that, during a change in leadership, the government would not be able to provide a payment that is greater than the individual is entitled to under his or her legislated pension plans and his or her terms and conditions of employment. Since legislation is already in place to ensure the terms and conditions of various pension plans are respected, these amendments are aimed at eliminating any benefits that may be perceived as a “special pension.” The amendments would apply to employees in all parts of the public service, excluding bargaining employees who would continue to be subject to their collective agreements.

Share This:


Greater Clarity Needed On Gig Workers

A joint report on the gig economy by the UK’s Work and Pensions and Business, Energy and Industrial Strategy (BEIS) committees calls for greater legislative clarity over whether or not an individual is a ‘worker’ for the purposes of employment. ‘A framework for modern employment’ should help prevent businesses wrongly classifying workers as self-employed in order to avoid the legal obligations that come with worker status, says Nigel Peaple, deputy director DC, lifetime savings and research, at the Pensions and Lifetime Savings Association. However, it “is important that the pensions angle is remembered here: where someone is a worker for the purposes of employment law, they will almost always be a worker for the purposes of automatic enrolment. If government acts on the committees’ recommendations, many gig economy workers will be able to benefit from a workplace pension,” he says.

Share This:


Average Cash Holdings Slip

Money managers’ average cash holdings declined to 4.4 per cent of their portfolios in November, the lowest level since October 2013 and down from last month’s 4.7 per cent, says Bank of America Merrill Lynch. Its most recent monthly fund manager survey shows, at the same time, a record net 16 per cent of investors said they are taking above-normal levels of risk. The November survey also found that despite the falling cash levels, a record 48 per cent of investors believe that equities are overvalued. The biggest tail risk to markets remains a policy mistake from the Federal Reserve or European Central Bank, according to 27 per cent of investors (compared to 24 per cent last month); followed by a crash in global bond markets, according to 22 per cent, and a flash crash caused by “market structure,” according to 13 per cent of investors. On global growth, a net 36 per cent of investors expect a stronger global economy over the next 12 months, down from a net 41 per cent in October, the highest level since May. A record 56 per cent of investors expect above-trend growth and below-trend inflation over the next year, up from a net 48 per cent last month. Those expecting below-trend growth and below-trend inflation fell nine percentage points over the month to 25 per cent, the lowest level since May 2011.

Share This:


Natixis Changes Name

Natixis Global Asset Management has changed its name to better highlight its multi-affiliate business model. As Natixis Investment Managers, it offers investment solutions from high-conviction, high-active-share investment managers, while also providing evaluation and consulting support to help clients build portfolios to meet their long-term goals. It is also establishing the Natixis Investment Institute, which will build on the behavioral research of its Center for Investor Insight, the portfolio research and analytics of its Portfolio Research & Consulting Group, and more generally its market trend analysis and forecasting to provide clients with an understanding of the relationships between investor sentiment and investment decision-making.

Share This:


Barclay Has New Role

Tyler Barclay is director of sales at Great-West Life. Previously, he was an account executive, group benefits, a position he had held since 2009.

Share This:


Disabled Access Examined

Improving access to the labour force for people with disabilities is the theme of an upcoming three-day conference bringing together individuals with a disability, employer, and labour representatives, as well as disability support, advocacy, government, and research organizations. The ‘Disability and Work in Canada’ conference will review and celebrate progress to date on opening the world of work to persons with disabilities and injured workers. It will also identify current challenges and opportunities and develop a vision and strategy to advance the inclusion of people with disabilities in the labour force. It takes place November 27 to 29 in Ottawa, ON. For information, visit Disabled Conference

Share This:


November 20, 2017


Regulations Needed To Define Reduced Solvency

Bill 177, the ‘Stronger, Fairer Ontario Act (Budget Measures), 2017,’ contains limited provisions to reflect a new funding framework for defined benefit plans in Ontario, says a Blakes ‘Business Class.’ Certain references to “solvency deficiency” throughout the Ontario Pension Benefits Act (PBA) will be changed to “reduced solvency deficiency,” which will be defined by the regulations expected to be released before the end of the year. Similarly, references to “surplus” in the unproclaimed sections of the Ontario PBA relating to contribution holidays will be changed to “available actuarial surplus,” which will also be defined by the anticipated regulations. A new term “provision for adverse deviations” will be added to the Ontario PBA and is to be defined in the anticipated regulations. Further, the unproclaimed sections of the Ontario PBA relating to contribution holidays will be amended to allow for the reduction or suspension of any contributions required to be made by members and employers of a jointly sponsored pension plan for the provision for adverse deviations in respect of the normal cost of the pension plan, if the plan had a surplus and prescribed requirements are satisfied. Currently, the PBA provides that the Superintendent of Financial Services shall not consent to the payment of surplus to an employer out of a continuing pension plan unless certain requirements are met. Amendments will be made to this section to add a requirement that at least twice the provision for adverse deviations in respect of the normal cost of the pension plan must be retained in the pension fund as surplus.

Share This:


Employers Get Certainty On Union Role In Accommodation

Unions do not have an independent legal right, separate and apart from their collective agreement rights, to be involved in every unionized employee’s accommodation request, says Fasken Martineau. This was recently confirmed when the Supreme Court of Canada (SCC) dismissed a union’s application for leave to appeal a decision of the BC Court of Appeal in ‘Telecommunications Workers’ Union v. Telus Communications Inc.’ This outcome provides certainty about an employer’s obligations in the accommodation process and ensures that employers can address straightforward accommodations without getting bogged down by unnecessary procedural delays. It also helps to protect the privacy of employees who are making accommodation requests. The union had brought a policy grievance against TELUS seeking rights of notice, information, and consultation in respect of any request made by a bargaining unit member for an accommodation (disability, family status, religion, etc.). The applicable collective agreement did not provide for such rights. An arbitrator found that the union had these rights even where the employee did not seek the union’s involvement and the accommodation was a “straightforward” matter that could be implemented without the need for the union’s agreement. However, the BC Supreme Court quashed this decision saying the arbitrator’s conclusion was unreasonable and inconsistent with the weight of arbitral case law that overwhelmingly found the opposite. Employers should be relieved by this outcome, says Fasken Martineau. If upheld, the arbitrator’s decision would have seriously complicated the accommodation process for all unionized employers in Canada. Employers seeking to respond to requests for accommodation would have been hindered by a legal duty to inform, notify, and consult with unions in respect of each and every accommodation request. This would have resulted in significant cost and delay for both employers and employees, particularly in situations where an employer is entitled to implement a straightforward accommodation without needing the agreement of the union.

Share This:


End Of Oil Calls Grow Louder

The chorus of people who believe oil’s end is nigh has grown louder, says Justin Anderson, an equity analyst at Mawer Investment Management Ltd. In the articleThe End Of Oil?’ at the Benefits and Pensions Monitor, he says despite arguments that support the end of the need for oil, the case for its continued use as a driver of the global economy is just as strong.

Share This:


Impact Returns Can Reach Market Rate

Impact investors that target market rate returns can achieve them, says the Global Impact Investing Network (GIIN). It has found that across private market strategies – private equity, fixed income, and real assets – the distribution of impact investing fund returns is similar to analogous conventional markets. The impact themes pursued by fund managers in its survey included financial inclusion, access to clean energy, sustainable timber, and low-income housing. It also found that, as in conventional markets, performance varies from one fund to the next, indicating that fund manager selection is key to achieving strong returns.

Share This:


India Injects Funds Into PSBs

Indian public sector banks (PSBs) have been under stress as the total amount of non-performing assets had risen to US$150 billion, says Excel Funds Management Inc. These non-performing loans have severely restricted the ability of PSBs to extend further loans and limited access to credit impacting the ability of businesses to make fresh investments. However, the government says will inject US$32 billion into the PSBs to provide them relief. Investors see this move as a positive since it could help remove a significant overhang on credit availability, which with time might allow for higher loan growth to further encourage investment. As well, competition between banks will likely reduce the cost of lending for businesses and as credit becomes more readily available, a virtuous cycle of investment can be expected to kick start in the upcoming months. One of the key issues with this is the question of moral hazard. Banks are being bailed out even though they were at fault and were expected to exercise better judgment regarding loan lending practices. However, the government is attempting to address this issue by adopting a differential approach towards allocation of recapitalization funds. Stronger banks with better track record are likely to get a preference in the allocation of funds.

Share This:


DB Terms Need To Be Revisited

Terms that have traditionally been used with respect to defined benefit plans need to be revisited in light of regulatory and market developments, says Willis Towers Watson. In ‘Ten Investment Actions for DB Plans in 2018,’ it says first off, pension plans have dealt with their fiduciary duties by ensuring that any decisions made with respect to the plan are reasonable and documented. Today, plans are being held to a higher level of scrutiny and more parties are considered fiduciaries and expected to be experts. Plan sponsors also need to be more diligent about ensuring that their assets will, indeed, support future benefits for employees and because people retire at different points, sponsors need to be aware that, in some cases, the member’s investment time horizon can be very short. As well, pension plan sponsors need to continually monitor their investments in light of changing market conditions, price interest rate increases for lower than expected gains, seek longer duration fixed income assets for liability driven investing, use a greater variety of investments and consider new investment ideas, have fiduciary committees become more proactive and meet more regularly, look to outsource the entire investment management process to make it more efficient and less costly, and focus less on short-term investment return goals.

Share This:


Ambachtsheer Offers Solution For Netherlands

Successful reform of the Netherlands’ pension system will require “strong political leadership and a strong dose of national solidarity”, says Keith Ambachtsheer, director emeritus of the Rotman International Centre for Pension Management (ICPM). In an open letter to Wouter Koolmees, the new Dutch social affairs minister, he says he was given the same task of overhauling the Dutch system in 2014. The emphasis on solvency in the very large pillar workplace-based pension sector has had a counterproductive effect on plan participants: less rather than more trust in the pension system because young workers believe they are overpaying in relation to the future benefits they are accruing. Measures to ensure the long-term solvency of pension schemes are causing both the young and the old to lose faith that the system operates in their interest. To solve this problem, people need to understand it. For many Nederlanders, their workplace pension have become far more complex than they need to be. Another step is to recall why Dutch academic Jan Tinbergen was the first recipient of the Nobel Prize in Economics in 1969, he says. Tinbergen designed a pension scheme structure where separate instruments focus on long-term wealth-creation and on delivering a lifetime pension. Over the course of their working lives, scheme participants begin by accumulating units in the wealth-creation instrument and eventually shift these accumulations into the safety instrument as they approach retirement.

Share This:


Ezra Launches Website

Don Ezra is showing people that they don’t need to be experts to take control of their retirement. The long-time Russell Investments icon and author of five books has launched a website, www.donezra.com. The website also offers a link to his blog where he has covered topics ranging from common sense and investment principles to how income is needed to maintain a lifestyle.

Share This:


Ontario Teachers’ Invests In Mussels

The Ontario Teachers’ Pension Plan (Ontario Teachers’) has acquired Atlantic Aqua Farms, the largest grower of live mussels in North America, from San Francisco, CA-based Encore Consumer Capital. The purchase marks its first venture into the realm of aquaculture and falls under its natural resources mandate to invest in the global food basket, with an eye on sustainable sources of food production. “Demand for protein is increasing and in the context of land constraints and environmental considerations, aquaculture is among the most sustainable sources to meet this demand,” says Andrew Claerhout, the plan’s senior managing director, infrastructure and natural resources. Based in Prince Edward Island, Atlantic Aqua Farms has been supplying North American consumers with its Canadian Cove brand mussels for over 25 years.

Share This:


Chakravarti Joins Ivanhoé Cambridge

Chanakya Chakravarti is managing director, India, growth markets at Ivanhoé Cambridge. He has more than 27 years of experience, including over 20 years in real estate advisory, investment, and development in India and sub-Saharan Africa. Most recently, he was managing director, global alternatives, real estate Asia, at JPMorgan Chase in Mumbai, India. Ivanhoé Cambridge is a real estate subsidiary of the Caisse de dépôt et placement du Québec.

Share This:


Human Versus Machine Examined

Kumar Murty, head of the mathematics department at the University of Toronto; Michael Rudd, senior director of investments for Sigma Analysis & Management; and Tim Friederich, a senior solutions specialist and a director with Allianz Global Investors; will among the featured speakers at the ‘MMF Symposium: The Human vs The Machin.’ The session will examine whether the concept of the human versus the machine is hype or evident truth. It takes place January 18 to 21 in Collingwood, ON. For information, visit MMF Symposium

Share This:


November 17, 2017


Plans In Alberta Increase Steadily

The number of active, retired, and deferred members of pension plans in Alberta has steadily increased from 300,000 to 473,000, an increase of 60 per cent, over the last decade, says its Office of the Superintendent of Pensions. Its 2016 report shows increases occurred in all types of plans: 38 per cent in defined benefit plans, 70 per cent in collectively bargained multiemployer plans (CBMEPs), and 92 per cent in defined contribution plans. However, in spite of this growth, DC plan membership still represents only 19 per cent of total plan membership as of 2016, a small increase from the 16 per cent as of 2006. Assets have increased to $54 billion over the decade, a 149 per cent increase. DB plans have increased by 140 per cent, CBMEPs by 164 per cent, and DC plans by 221 per cent. By type of member, actives have increased by 39 per cent, deferreds by 88 per cent, and retirees by 95 per cent. Special payments in respect of solvency deficiencies were $1.67 billion while special payments in respect of unfunded liabilities were $537 million The superintendent’s office cancelled Certificates of Registration for 77 pension plans during the period under review. The terminated plans covered 8,685 members. Consistent with previous years, the majority of the members affected (6,677) continued membership in another registered pension plan. The report also sets out the superintendent’s key challenges for the coming years. These include determining the appropriate degree of funding for DB pension plans and whether solvency funding is an appropriate funding standard; the short- and longterm effects the current economic climate will have on the existence and affordability of pension plans; and the appropriateness of fees charged, investment options provided, and investment information provided to members in DC plans.

Share This:


Scrutiny Could Save Healthcare Money

There is a huge potential for savings from more public scrutiny of non-medical categories of health spending, says paper from the Canadian Health Policy Institute (CHPI). To manage public healthcare costs, governments devote substantial resources to assessing the cost-effectiveness of, and rationing access to, pharmaceuticals, medical devices, and diagnostics that directly benefit patient health outcomes, even though such medical technologies account for a minor percentage of total health spending. ‘Costs without benefits for patients? Non-medical spending in Canada’s public health system’ says governments also spend a lot of political effort to control the number of practicing physicians, physician fees, and hospital operating budgets (and by extension the number of practicing nurses), even though it is these health professionals that deliver medical care directly to patients. By contrast, there is a serious lack of political attention to assessing the efficiency and effectiveness of healthcare administration and to scrutinizing spending on things other than medical care. The evidence suggests that billions of dollars are potentially being squandered annually on non-medical expenses without any demonstrable benefits for patients, it says.

Share This:


Alexa Comes To Manulife

Manulife is launching ‘Manulife Benefits skill for Amazon Alexa.’ From tracking vision care to dental and other medical account balances, its group benefits plan members can inquire through any Amazon Alexa-enabled device in Canada starting December 2017. Manulife Benefits was built for voice services and uses voice recognition technology to present customers with key account information in a simple and conversational way. “The days of expecting plan members to fill out forms or wait for a response on a quick balance check are over. Smartphones and other technologies have changed the way people do things,” says Donna Carbell, senior vice-president, group benefits, at Manulife. “They want to interact when and where it’s convenient for them, so we’ve made it easier than ever for plan members to get the most out of their group benefits plan.”

Share This:


Employment Numbers Fall In October

Canada’s payroll employment fell for the first time in six months in October, says tracking just launched by the ADP Research Institute. The job tally declined by 5,730 last month following a September gain of 43,386. The job decline was led by goods-producing industries, including 8,200 in natural resources and mining and 7,200 in construction. Finance and real estate services provided the largest boost with 11,400 new positions. Still, Canada’s labour market is robust, adding 25 per cent more employees so far this year than it did in all of last year, said Ahu Yildirmaz, co-head of the institute. ADP plans to release data on the third Thursday of each month.

Share This:


SSgA Joins RIA

State Street Global Advisors (SSgA) has become an associate member of the Responsible Investment Association (RIA). The RIA is Canada’s industry association dedicated to advancing responsible investment, which refers to the incorporation of environmental, social, and governance (ESG) factors into the selection and management of investments. RIA membership has grown rapidly in recent years as investors increasingly seek investments that align with their values and manage exposure to ESG risks and opportunities.

Share This:


Canada Issues Ultra-long Bonds

The government of Canada has issued $500 million in ultra-long bonds on a tactical basis. The move is an effort to help reduce the cost of government financing over the long term and reduce refinancing risk, all to the benefit of Canadian taxpayers. This marks the second issuance of ultra-long bonds in 2017, following a $750 million issuance in August 29. The government has issued a total of $4.75 billion in ultra-long bonds since the start of 2014.

Share This:


Integrated Platform Improves Access To Healthcare

Tunstall Healthcare and TELUS Health will work together to provide Canadians with better access to healthcare. Using Tunstall’s ICP Integrated Care Platform which leverages remote monitoring and videoconferencing telehealth software solutions, they will seek to improve the lives of patients living with chronic disease and help prevent unnecessary hospital admissions. Through the use of this technology, clinicians can support these patients even if in remote areas of the country, while empowering them to stay active in the effective management of their own health and chronic conditions. By enabling them to track and upload their own vital signs from the comfort of their own home, the TELUS Home Health Monitoring solution powered by ICP, will allow virtual care teams to maintain a close watch on biometrics in real-time and intervene before a health issue arises, regardless of where they are located.

Share This:


Ramaswamy Heads Investment Solutions

Ram Ramaswamy is managing director, head of investment solutions for the Neuberger Berman Breton Hill team. He will develop portfolio insights and assist clients by providing investment solutions. Prior to this role, he spent 16 years at Goldman Sachs Asset Management in the alternative investments and manager selection group.

Share This:


Economists Provide Outlooks

The Economic Club of Canada’s ‘Economic Outlook 2018’ will feature chief economists from Canada’s ‘Big Five’ financial institutions. They are Beata Carinci, chief economist and senior vice-president at TD Bank Group; Douglas Porter, chief economist and managing director at BMO Financial Group; Avery Shenfeld, chief economist and managing director at CIBC Capital Markets; Craig Wright, chief economist and senior vice-president at RBC; and Jean-François Perrault, chief economist and senior vice-president at Scotiabank. It takes place January 5 in Toronto, ON. For information, visit Economic Outlook

Share This:


November 16, 2017


Ontario Proposes Pension Changes

Ontario’s Bill 177 proposes to provide permanent solvency funding relief, including rules respecting the provision of adverse deviations, says a Hicks Morley ‘FTR Now.’ The ‘Stronger, Fairer Ontario Act (Budget Measures), 2017’ has a number of pension-related initiatives including funding parameters for surplus withdrawal and contribution holidays and additional rules governing target benefits and variable benefits. It also sets out requirements for funding and governance policies and to establish a registry for missing beneficiaries. In addition, it sets out an administrator discharge respecting the purchase of pensions, deferred pensions, or ancillary benefits from an insurance company; improvements to Pension Benefits Guarantee Fund coverage; and multi-employer pension plan exemptions for payments on wind up of a pension plan.

Share This:


Target Benefit Promises Secure Pensions

Regulators need to create an environment for predictable, secure, and cost efficient pensions and one way to do this is to level the playing field for target benefit plans, says Randy Bauslaugh, lead for the national pensions, benefits, and executive compensation practice at McCarthy Tetrault. In the ‘Bullseye: The (not-so-new) Target Benefit Platform’ at its ‘7th Annual Pensions Seminar,’ he said while the general trend of pension standards is to accept and encourage target benefit plans, plans for non-union employees and not-for-profit entities are discriminated against because they cannot offer them. Ontario, for example, seems to require solvency funding for multi-employer pension plans (MEPPs) established pursuant to trust agreements, However, it clearly exempts MEPPs established through collective agreements and unionized plans from this requirement thus allowing target benefits. Further, recent Ontario legislative changes try to capture target benefit provisions by allowing MEPPs created through trusts or collective agreements to reduce benefits, which effectively makes them target benefit plans, only permits those with collective agreements to reduce benefits without a plan amendment. The problems, he said, are that there is a trend to a civil law approach with these plans which is complex and confusing. As well, the laws are based on a codified approach, as opposed to relying on common law and judicial opinions. Along with this is a “biased view” in Ontario that governance can’t effectively be shared unless there is a union in the picture. This view ignores 400 years of trust law, common sense, and union interests that conflict with a pension plan’s interests, said Bauslaugh.  

Share This:


Lower Drug Costs Could Affect Access

If Health Canada achieves its goal of lowering the maximum prices for drugs, the health of Canadians could suffer, says an MEI ‘Viewpoint.’ ‘Access to Medication: Preserving a Fragile Balance’ shows in countries that have implemented similar price control policies, new drugs have become less accessible to the population. “In wanting to reduce the prices of drugs, Health Canada runs the risk of reducing access to drugs instead,” says Mathieu Bédard, economist at the MEI and author of the publication. Earlier this year, Health Canada launched a consultation aiming to reduce the maximum prices of new drugs introduced in the country. However, Bédard says, “When we look at what has happened in places where public policies have imposed prices that are too low, it’s clear that it is patients who have paid the price. In New Zealand, a country often cited as an example for its drug prices, the public system’s access to treatments for diseases like diabetes, cancer, and high cholesterol can be delayed by more than 10 years compared to Canada,” says Bédard. In 2015, Canada was ranked 4th among OECD countries in terms of the proportion of new drugs brought to market. “If this balance is upset by a reform that lowers prices, the country could wind up at the bottom of the pack,” he says.

Share This:


Pension Records Need Protection

Pension records are fundamentally personal information which could be considered valuable to traders in identity theft, says Gregory Winfield, a counsel in the pensions, benefits, and executive compensation practice at McCarthy Tetrault. Speaking at its ‘7th Annual Pensions Seminar’ on ‘Administrative Pains & Governance Prescriptions: Privacy, Data Protection, and Internal Practices,’ he said the issue is sufficiently important that employees could be motivated to commence lawsuits if they feel their information has been improperly disclosed. Privacy in the context of registered pension plans should be a concern as personal information has become a commodity and identity theft a real concern. This means individuals are concerned ‒ both as employees and consumers ‒ about the collection, use, and disclosure of their personal information. As well, the law requires that organizations protect this information and even if there is no strict statutory privacy regime which applies, common law, internal policies, and protection of reputation mean protecting personal information needs to be taken seriously. This carries over to service providers for registered pension plans. This is a commercial activity which engages privacy legislation. To protect data, employers and plan administrators should ensure that they have robust systems to do this and clear contracts with service providers requiring the same of them. Employers may also want to consider ensuring contracts with service providers address privacy matters and align with any policies of their organization. As well, they should include pension plans in any reviews of their data protection systems, he said.

Share This:


Double-digit Growth For OCIO To Continue

Double-digit growth of worldwide outsourced chief investment officer (OCIO) assets managed on a partial or full discretionary basis will continue, says Cerulli Associates. ‘U.S. Outsourced CIO Function 2017: Identifying Emerging Opportunities Across Institutional Investors’ predicts a first quarter 2022 base case where OCIO assets under management (AUM) reach $2.3 trillion, but the market could be as large as $2.7 trillion. Most of the new business is coming from investors that are using the model for the first time and previously used an investment consultant under an advice-only relationship. However, providers expect increasing opportunities to come from replacement mandates. Together, defined benefit plans and non-profits continue to represent the majority of the AUM of OCIOs with the greatest growth opportunities over the next two years expected to come from non-profit and corporate DB clients for total portfolio services. They are also gaining momentum with a broader range of investors ‒ health and hospital systems, defined contribution plans, public DB plans, family offices, and sovereign wealth funds ‒ as institutions face myriad investment-related, operational, and regulatory challenges.

Share This:


Plans Successfully Recover Funds

Recent case law shows pension funds are successfully recovering funds which should not have been paid out, says Kelleher Lynch, an associate in the pensions, benefits, and executive compensation practice at McCarthy Tetrault. In the ‘Legislative & Case Law Update’ session at its ‘7th Annual Pensions Seminar,’ he cited three cases involving this. In a Quebec case, a retiree with Alzheimer’s had wandered off in 2007 and went missing. His de facto spouse was recognized as trustee of the retiree’s property and started to receive the monthly pension payout. The employer learned the man went missing in 2009 and asked for repayment of one year of benefits. However, the spouse argued that Quebec law presumed the retired member to be alive for seven years after their 2007 disappearance. His remains were found in 2013 and the time of death was determined to be 2007 when he disappeared. A court ruled the payments made after his death were not considered due and restitution was ordered. A case from British Columbia ruled restitution was required in a case where a pension plan co-ordinator transferred funds from dormant accounts into their own. Criminal charges were brought against the co-ordinator who was convicted and ordered to make restitution. In an Alberta case, a former vice-president of technology for a pension fund was sued for misappropriating funds. The respondent agreed to make restitution from the commuted value of his pension, but Alberta’s Employment Pension Plans Act contains provisions which prohibit this unless a person is convicted of criminal offence. However, its Civil Enforcement Act contains a provision which allows an exemption in cases of criminal action. While the respondent was not charged, it was determined a fraud had occurred and the respondent had constructively abandoned their pension entitlement.

Share This:


Investors Turn To Commingled Funds

In the decade since the Global Financial Crisis, private equity funds of funds have not kept pace with the growth of the overall private equity market, says Preqin’s ‘2017 Private Equity Funds of Funds Report.’ It shows many large investors have expanded their in-house investment teams and the majority now prefer to access the market solely through direct commitments to commingled funds. Just 14 per cent of investors view funds of funds as presenting the best investment opportunities in 2017 so fund of funds managers are exploring new avenues to appeal to investors and attract capital. For example, with many smaller investors lacking the experience or expertise to evaluate emerging managers, fund of funds managers have stepped in and over half (56 per cent) have shown interest in investing in first-time funds. Additionally, fund of funds managers have differentiated themselves from other firms by making greater use of alternative investment methods in order to offer investors more tailored routes to access the private equity market.

Share This:


State Street Expands Diversity Guidance

State Street Global Advisors will expand its guidance on corporate board diversity to the public companies in which it invests in Japan and Canada. In March 2017, in conjunction with the installation of its ‘Fearless Girl’ statue on Wall Street, it sent letters to 600 companies in the United States, United Kingdom, and Australia informing them that it would vote against the chair of their nominating committees if there were no female directors or candidates. Of those companies, it ultimately voted against 400 that had not initiated any efforts to increase board diversity since receiving the letter. As a result of these efforts, 42 companies to date have committed to increasing the diversity of their boards and seven have already added women. “The data shows that all other things being equal, companies with gender-diverse boards also have stronger long-term financial performance,” says Ron O’Hanley, president and chief operating officer of State Street. “… this expansion to Canada and Japan will further these efforts to drive better long-term performance and returns for investors.” Fifty-five per cent of companies in Japan’s Topix 500 and 40 per cent of the 700 companies in the Toronto Stock Exchange do not have any woman on their boards.

Share This:


FSCO Believes More Transfers Coming

The Financial Services Commission of Ontario (FSCO) expects as many as 12 single employer pension plans (SEPPs) to transfer or convert to jointly sponsored pension plans (JSPPs) in the next 12 months, says Lester Wong, its deputy superintendent of pensions. He told the ‘AMPs and Clamps: Monetary Penalties, Expanded Superintendent Powers, and the Road from FSCO to FSRA’ session at McCarthy Tetrault’s ‘7th Annual Pensions Seminar’ that so far there has been one ‒ the Royal Ontario Museum pension plan joining the CAAT plan last year. There is also one which has commenced. However, they have been in conversation with a number of other plans that are interested. He cautioned, however, that the rules on this are fairly prescriptive which means plans have to make sure their situations fit the rules. Otherwise, he said, FSCO cannot help them.

Share This:


Authentic Partners With GroupHEALTH

Authentic Benefits Consulting has become a partner in GroupHEALTH Benefit Solutions’ advisor network. The relationship expands Authentic’s offering to include GroupHEALTH products and services and gives GroupHEALTH access to Authentic’s industry expertise and client support. Based in Winnipeg, MB, Authentic has over 30 years of experience working in the employee benefits field as an insurance firm specializing in unbiased and accurate employee benefits plans.

Share This:


ETF/ETP Assets Increase

Assets invested in leveraged/inverse ETFs/ETPs listed globally have increased 14.1 per cent in the first nine months of the year to reach a new record of US$77.14 billion, says ETFGI. The leveraged/inverse ETF/ETP industry had 834 ETFs/ETPs, with 1,287 listings, assets of US$77.14 billion, from 59 providers on 19 exchanges in 16 countries. Leveraged/inverse ETFs and ETPs gathered US$4.69 billion in year-to-date net inflows with leveraged products suffering US$1.01 billion in year-to-date net outflows.

Share This:


McKeague Has New Role

Nikki-Lynn (Smysniuk) McKeague is manager, benefits, at the Saskatchewan Teachers’ Federation. Most recently, she was its manager of group life and health. She joined the federation from the University of Saskatchewan where she was a compensation and benefits analyst.

Share This:


Third PPAC Module Offered

The CPBI Saskatchewan Regional Council ‘Pension Plan Administration Certificate (PPAC) 3’ is the third of three modules in the PPAC program offered in partnership with Humber College. PPAC is designed for anyone from pension plan administrators to HR professionals in the industry to pension committee members. It takes place February 26 to March 2 in Regina, SK. To reserve a seat, eMail Karen Lovelace at saskatchewan@cpbi-icra.ca. For information, visit PPAC 3

Share This:


November 15, 2017


Migrating Seniors Impact Provincial Spending

Because Canada’s public healthcare funding model doesn’t account for interprovincial migration, the movement of seniors from province to province can materially impact provincial budgets, says study by the Fraser Institute. “Canada’s public healthcare funding model has several flaws including the fact that it doesn’t adjust for seniors moving around the country after they retire,” says Jason Clemens, executive vice-president of the Fraser Institute and co-author of ‘The Impact of Interprovincial Migration of Seniors on Provincial Health Care Spending. ‘The study finds that Canadian seniors consume 3½ times more healthcare services than a large portion of younger Canadians. As well, migrating seniors pay most of their lifetime taxes in one province during their working lives. But when they move to another province, they consume healthcare services in their adopted province. That means some provinces benefit financially while others shoulder higher costs. For example, British Columbia’s net inflow of seniors ‒ the largest in Canada at 40,512 ‒ increased health costs in that province by $7.2 billion between 1980 and 2016. On the other hand, Quebec ‒ which experienced the largest net outflow of seniors of any province (37.305) over the same period ‒ effectively saved $6 billion.

Share This:


Policies Deal With Missing Beneficiaries

The Financial Services Commission of Ontario (FSCO) has issued two policies related to missing beneficiaries, says a Morneau Shepell ‘News & Views.’ Policy A300‑900: Searching for Plan Beneficiaries says prudent administrators should establish processes and procedures to update member records in order to provide information and notifications required under the PBA and Regulations. A number of methods may be used, individually or in combination, to search for current addresses or other contact information, but administrators should choose search methods in the context of their particular pension plan. As well, it says termination and retirement packages should include a statement about the importance of keeping the administrator informed of any future changes to their contact information and administrators should follow up immediately when mail is returned. Policy A300-901 sets out FSCO’s requirements for granting a waiver from the requirement to provide statements to missing former members and retired members. The Pension Benefits Act and Regulations require that the biennial statements be sent to the last known address of a former member or retired member, unless FSCO provides a waiver of this requirement. Before submitting a waiver application, the administrator must ensure an individual-directed search has been undertaken for all individuals who are part of the waiver application. These policies provide a comprehensive scheme by which administrators can exempt themselves from the requirement to provide biennial statements to the last known address of missing former and retired members, says Morneau Shepell. Additionally, the search policy provides good general guidance for administrators in searching for missing former and retired members and keeping current contact information for such persons.

Share This:


Paris Accord Impacts Investors

Global efforts to meet targets set out in the Paris Climate Accord are going to impact investors and the sectors in which they invest, says a report from the FERI Cognitive Finance Institute. The impacts will be driven by a number of developments, it says, including the discrepancy between decarbonization commitments and action to meet these goals; reliance on new technologies; and the continued use of subsidies for fossil fuels in many markets. Investors can take steps to manage their exposure to this ongoing risk by evaluating the progress towards a low carbon economy by different sectors and countries; monitoring the exposure of their investments to technology that’s being developed to aid the transition; and assessing the preparations of companies to manage their risks and to seize on opportunities to take advantage of the transition. Sectors that are responsible for a high share of emissions include electricity and energy, agriculture, industrials, transportation, and buildings, says the report.

Share This:


Great-West Pilots Virtual Healthcare

Great-West Life will pilot a fully-bilingual virtual healthcare service to mark ‘Digital Health Awareness Week (#thinkdigitalhealth).’ Together with Dialogue, a virtual platform offering integrated healthcare services for employers, Great-West Life offers eligible employers a virtual healthcare service that connects their employees to a team of medical professionals who can diagnose a number of conditions, provide medical advice, make a referral to a specialist, or write a prescription. It can be accessed from any location, seven days a week. The one-year pilot is open to employers in Quebec and Ontario and extends to include their employees who may also be based in Alberta, British Columbia, or Nova Scotia.

Share This:


Lack Of Innovation Creates Openings

A lack of innovation and long-term underperformance within asset management has left the industry open to new entrants ‒ technology-enabled firms, says a report from Moody’s Investors Service. It says technological disruption in asset management is most likely to stem from innovations in distribution through better client contact, relevance, identification, customization, and retention. Some market share has already been ceded to robo-advisers. As well, digital payment firms like PayPal, which have large user bases and are seeking new revenue streams, could benefit from offering investment funds. Amazon, Apple, and Google could also enter the asset management industry not just for investment management fees, but also to enable data collection and keep their clients within their companies’ business ecosystems.

Share This:


Impact Opportunities Need Support

The UK government and financial industry need to support and increase the number of social impact investment opportunities in the market, says ‘Growing​ a Culture of Social Impact Investing in the UK,’ led by Elizabeth Corley, chairwoman of Allianz Global Investors, and an advisory group of 60 senior representatives from across the financial industry and social sector. It makes a number of recommendations including calling for an increase in the reporting of the growth of the social impact investment to give a better understanding of non-financial outcomes, it says. Consistency in how outcomes of social impact investment are reported and assessed is also needed as is making it easier for people to invest. Finally, it says momentum needs to be maintained and cohesion built across initiatives.

Share This:


Funds Maintaining Hedge Fund Allocations

Almost three-quarters of institutional hedge fund investors intend to maintain their current hedge fund allocation, says research from Ernst & Young Global. The ‘EY 2017 Global Hedge Fund and Investor Survey’ also shows while 11 per cent plan to increase the size of their portfolios, 15 per cent will reduce it. In 2016, 69 per cent of respondents said they would maintain the size of hedge fund investments, 18 per cent would raise their investment level, and 13 per cent would reduce their hedge fund target. More investors are investing now or intend to invest within two years in customized hedge fund portfolios. It found 62 per cent of 2017 survey respondents said they invest or will invest in hedge funds with customized fees and liquidity terms, compared to 48 per cent in 2016. About 40 per cent of institutions said they do or will invest in custom strategy hedge funds, compared to 20 per cent the prior year. More than half of survey respondents (54 per cent) expect the total expense ratio for hedge funds (the combination of management and performance fees) to decline, while 41 per cent said they expect fees to remain the same. Just five per cent of institutional fund executives said they think hedge fund fees will rise.

Share This:


GE Making Pension Contribution

General Electric Co. plans to contribute about $6 billion to its main defined benefit plan in 2018, an update to its February 10-K filing. Then, it planned to contribute about $1.72 billion to the plan in 2017. It contributed $330 million to its pension plan in 2016, after not making any contributions in 2015. GE anticipates this should fund the principal pension plan through 2020. As of December 31, 2016, its principal pension fund assets totaled $45.89 billion for a funded status of 64.2 per cent, down from 66.5 per cent in 2015.

Share This:


Consultation On ESG Launched

The European Commission has launched a consultation on how money managers and institutional investors could include environmental, social, and governance (ESG) factors into consideration when making decisions. The consultation is public and the commission is seeking comment from beneficiaries and retirement plan participants, pension and insurance providers, insurance companies, money managers, financial advisers, service providers such as those providing indexes and research, and law firms. The consultation paper, ‘Public consultation on institutional investors and asset managers’ duties regarding sustainability,’ follows up on a recommendation outlined by the High-Level Expert Group on Sustainable Finance in its interim report. One of its recommendations was for the commission to clarify that the fiduciary duties of institutional investors and money managers explicitly integrate material ESG factors and long-term sustainability. The consultation is open to comment until January 28.

Share This:


Program Addresses Absenteeism Due To Mental Health Issues

SSQ Financial Group is introducing a structured program offering solutions to counter the growing problem of workplace absenteeism related to mental health issues. ‘Myally’ involves peers ‒ called ‘allies’ ‒ who assist their co-workers as a preventive measure in cases of psychological distress. The program involves the deployment of a network of mental health allies in the participating workplace in order to identify co-workers showing warning signs of distress, lend an ear, and provide them with support. The allies are trained and equipped to direct their co-workers in need to the appropriate support services. Training will be provided by an experienced team of mental health professionals, supported by an online platform of specialized content.

Share This:


Mindfulness Reduces Negative Behaviours

Online mindfulness training reduces negative workplace behaviours such as bullying, rudeness, being hurtful to others, and trying to embarrass colleagues, says study by UBC’s Sauder School of Business. This helps to create a less toxic work environment. Participants in the study took the ‘30 Day Mindfulness Challenge,’ an e-mental health tool that’s also shown to reduce stress, increase resilience, and improve performance. “It’s well documented that mindfulness training has positive workplace benefits such as increased empathy, resilience, and focus, but it’s interesting to learn the 30 Day Mindfulness Challenge also makes employees behave more respectfully with colleagues,” says Dr. Daniel Skarlicki, Edgar F. Kaiser professor of organizational behaviour at the Sauder School. “This is important because negative treatment by co-workers is linked to stress as well as unhealthy conflict, ineffective teamwork, low employee morale, and poor performance.” There’s a clear link between bullying in the workplace and poor employee mental health. In the U.S., an estimated 37 per cent of workers have been bullied at the office. Of these, 45 per cent suffer stress-related health problems. In Canada, 35 per cent of employees said they have been bullied at work and 17 per cent quit their jobs because of bullying. Statistics Canada says employee absence due to bullying and harassment is estimated to cost $12 billion per year.

Share This:


OMERS Acquires Exclusivity

OMERS Private Equity, the private equity investment arm of the OMERS pension plan, has been granted exclusivity to acquire a majority stake in Trescal, an international specialist for calibration services. The proposed transaction will see the senior management make an equity reinvestment into Trescal alongside OMERS Private Equity. Headquartered in Paris, France Trescal operates across more than 110 sites in 22 countries in a range of sectors including defence, aerospace, telecommunications, transportation, and automotive. It entered into the agreement with Ardian, an independent private equity company.

Share This:


Timbercreek Reorganizes Debt Team

Timbercreek Asset Management Inc., together with Timbercreek Financial, has reorganized and expanded its debt investment team, including the expansion of the Canadian and U.S. debt origination teams and the creation of a dedicated debt asset management team. Julie Neault, a senior team member within the Canadian origination team, will be promoted to executive director, origination, leading the Canadian commercial debt investment team. Effective December 4, 2017, Yvonne McAndrew will join Timbercreek as executive director, global closing and portfolio servicing, from Wells Fargo where she was most recently senior counsel. Patrick Smith, currently director, debt origination, becomes director, debt investments.

Share This:


Lavoie Moves To Mercer

Gilles Lavoie is a senior investment consultant on the wealth team at Mercer Canada, focusing on bringing strategic investment advice to clients in Quebec. He has over 20 years of extensive industry experience in optimizing the management of various assets pools, including pension funds, insurance funds, endowments, and taxable investors.

Share This:


Results Of Index Revealed

‘2018 REALPAC/MSCI Canada Real Estate Investment Forum’ will reveal the 2017 results of the ‘REALPAC/IPD Canada Quarterly Property Index’ and feature panels of industry experts to discuss the results and state of the industry. It takes place February 2 in Toronto, ON; February 5 in Montreal, QC; and February 6 in Vancouver, BC. For information, visit Property Index

Share This: