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February 23, 2018


Workers See Benefits Of AI

Four out of five workers can see the potential benefits in AI to improve their workplace experience, but have concerns due to a lack of strategy and/or communication on the part of their leaders, says a global survey by the Workforce Institute at Kronos Inc. It found employees would welcome AI if it simplified or automated time-consuming internal processes (64 per cent), helped better balance their workload (64 per cent), increased fairness in subjective decisions (62 per cent), or ensured managers made better choices affecting individual employees (57 per cent). Workers in Mexico are most enthusiastic about AI’s benefits while Canadian and U.S. employees are also ready to welcome the technology. The two countries where employees are least likely to embrace AI are France and Germany. According to the survey, three out of every five organizations (58 per cent) internationally have yet to discuss the potential impact of AI on their workforce with employees. However, two-thirds of global employees (61 per cent) say they’d feel more comfortable if employers were more transparent about what the future may hold. Some industries are more transparent than others. In Canada, 37 per cent of financial services organizations, 33 per cent of manufacturing industries, and 27 per cent of logistics/transportation organizations have discussed the topic openly. While employees see opportunity for AI to improve their jobs, about a third (34 per cent) expressed concern that AI could someday replace them altogether, including 42 per cent of Gen Z employees.

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Jitters Cast Shadow Over Outlook

Just when the world economy seemed to be shifting to a higher gear, equity market jitters have cast a shadow over the global outlook, says an ‘AB Global Economic Outlook.’ However, at this stage, it doesn’t think there’s reason for major concern as market losses have been modest in light of the strong gains of recent years. As well, cyclical momentum is strong and monetary and fiscal policy are still highly supportive. However, it says it’s hard not to see recent market turmoil as a taste of what’s to come as in a world in which central-bank support for asset prices can no longer be taken for granted. For the time being, it says monetary accommodation will be withdrawn gradually and that market concerns are, therefore, overdone. But that’s likely to change later in the year as the risk of an upside inflation surprise starts to rise, bringing with it the prospect of a more aggressive monetary-policy response. “Either way, bond yields look set to rise further,” it says.

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Annuities Ease Retirement Worries

Seventy-three per cent of U.S. retirees who own an annuity believe they will be able to live the retirement lifestyle they want, compared to 64 per cent of retirees who do not own an annuity, says a LIMRA Secure Retirement Institute survey. And 69 per cent of retirees who own an annuity think their savings will last them through age 90, compared to 57 per cent of those who do not own an annuity. The study also found that 56 per cent of retirees who work with an adviser own an annuity, compared to 28 per cent of retirees who do not work with an adviser.

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Canadians Dip Into Retirement Savings

Almost one-quarter (24 per cent) of working Canadians are dipping into their retirement savings, says the Sun Life ‘Financial Barometer.’ The survey shows 63 per cent did so because they needed to, for example, pay for health expenses or repay debt; 24 per cent were fulfilling their obligations as part of the First Time Home Buyers’ Plan; and 13 per cent just wanted to go on vacation or purchase a car. Tom Reid, senior vice-president, group retirement services, at Sun Life Financial Canada, says “Although it can seem far away, retirement creeps up faster than you think – building a financial plan and making meaningful contributions will pay off in the long run.

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OSFI Posts RPIS Guide

OSFI has posted a revised instruction guide to assist administrators of pension plans with defined benefit provisions registered or having filed an application for registration under the Pension Benefits Standards Act, 1985 to complete the Replicating Portfolio Information Summary (RPIS). A revised RPIS has also been posted which is consistent with the form accessed through the Regulatory Reporting System, which was updated in November 2017. The revised instruction guide updates the one published in April 2016. The revisions reflect recent changes made to the RPIS and include modifications that streamline the information and make it more user-friendly.

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Strong Returns Help Drive Private Equity

The strong returns and distributions of the private equity industry have helped to drive increased interest in the asset class, says Preqin. However, record levels of dry powder have increased competition for assets and have helped to drive up already high prices, leading to fund managers identifying valuations as the biggest challenge they face in 2018. Although the majority of fund managers are still confident in their ability to deliver returns, concerns over high pricing have prompted over a third of managers planning to reduce the targeted returns of their funds in market. Distributions outstripped capital calls as well in 2017, further increasing investor appetite for private equity investments. This has led to increasing levels of competition for deal opportunities among managers and 92 per cent of respondents say finding attractive investment opportunities is as difficult or harder than 12 months ago. 

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Bristol Gate Launches ETFs

Bristol Gate Capital Partners Inc. has launched Canadian dollar-denominated units of Bristol Gate Concentrated Canadian Equity ETFs, Bristol Gate Concentrated U.S. Equity ETFs, and U.S.-dollar denominated units of Bristol Gate Concentrated U.S. Equity ETFs. They seek to generate long-term growth of income and capital by investing primarily in a concentrated portfolio of publicly-traded equity securities of Canadian and U.S. companies that pay a dividend.

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Greystone Acquires Power Plant

The Greystone Infrastructure Strategy has acquired a 100 per cent equity interest in the 7 MW Crowsnest Pass Power Plant located in Sparwood, BC, from a private equity fund managed by Kensington Capital Advisors Inc. Operational since 2012, the plant is a waste heat recovery project that converts waste heat, produced by a natural gas compressor station, into electricity. The electricity produced is sold to BC Hydro under a 20-year electricity purchase agreement. This investment adds geographic diversification to the Greystone Infrastructure Strategy and complements existing investments in the U.S., Ireland, and Sweden.

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Gueto Joins MGI Canada

Rocio Gueto is senior director, client service, focusing on managing investments client relationships for Mercer Global Investments (MGI Canada). She has over 15 years of global experience in the institutional investment management industry, as well as in risk management, compliance, and structured financing. Previously, she was director of relationship management at Desjardins Global Asset Management.

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Panel Discusses Wellness

The ‘CPBI Ontario Benefits Outlook Signature Series: Wellness’ will feature a panel of Mary Duncan, chief human resources officer, CAA Club Group; Paula Pettit, an associate at Miller Thomson; Laura Pratt, national practice leader, organizational health, at Great-West Life; and Eda Shere, director of business development at Wellpoint Health Services. They will explain how wellness should be defined, what a wellness program can include to be successful; and what plan sponsors should consider before implementing or changing a wellness program. It takes place March 6 in Toronto, ON. For information visit: Wellness

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February 22, 2018


Caisse Builds Resilient Portfolio

The Caisse de dépôt et placement du Québec will continue to build a more resilient portfolio to withstand recent market volatility. “We are facing an unusual environment,” says Michael Sabia, president and chief executive officer of the Caisse. “Markets are grappling with, on one hand, reasonably solid economic fundamentals, based on synchronized growth worldwide and, on the other hand, investor concerns over how changes in monetary policy to curb inflation will impact interest rates. After years of performance bolstered by central banks, it’s no surprise that the normalization process triggers market reactions like those we have seen recently,” he says. Its financial results for the year ended December 31, 2017, show the annualized weighted average return on its clients’ funds is 10.2 per cent over five years and 9.3 per cent in 2017. For the five-year period, its eight main clients received returns between 11.5 per cent and 8.7 per cent, reflecting their differing investment policies and tolerance for risk. For 2017, their returns were between 10.9 per cent and eight per cent. Net assets totaled $298.5 billion, increasing by $122.3 billion over five years, with net investment results of $109.7 billion and $12.6 billion in net deposits from its clients. In 2017, net investment results were $24.6 billion. Net deposits totaled $3.2 billion.

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Impact On Jobs Underestimated

The federal government has likely underestimated the negative impact on jobs of the planned Canada Pension Plan (CPP) increases, says an analysis from the Canadian Federation of Independent Business (CFIB). Starting in 2019, CPP premiums will rise for five straight years, followed by another two years where the maximum amount of income CPP premiums are levied upon will increase. ‘Forced Savings: the hidden costs of expanding public pensions’ found that the CPP hike will initially cost 64,000 fewer jobs, 4.5 times greater than the federal government’s projection of job losses. The analysis also shows that negative job impacts will last until the late 2020s, after which the impacts transform into constrained wage growth and higher government deficits. It also says the pension increase will result in slower wage growth. Household disposable incomes will drop by $700 in 2025 (in today’s dollars) and remain in the red at negative $400 as late as 2040.

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Life Expectancy Decline Not Necessarily Good News

U.S. defined benefit plan sponsors should not be tempted to conclude that a National Center for Health Statistics (NCHS) report showing that life expectancy at birth declined for the second consecutive year is good news for pension plan costs, says Segal Consulting. DB plan sponsors should look beyond the headlines as life expectancy continues to improve for retirement-age Americans. The NCHS report says between 2015 and 2016, death rates increased significantly for the under-45 age groups studied. In contrast, death rates decreased for the post-65 retirement-age groups. Segal says as additional experience emerges, there may be refinements necessary in actuarial assumptions for pension plans, but they should be based on longer-term trends.

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Investors Braced For Volatility

Volatility finally roared back to abnormally tame markets, but most institutional investors were already bracing for impact and their efforts to diversify and build durable portfolios may now pay off, says a survey by Natixis Investment Managers. Seventy-eight per cent of institutional investors expected stock market volatility to spike in 2018 and they are making opportunistic allocations to active management and alternative investments in order to help meet average long-term return assumptions of 7.2 per cent this year. Seven in 10 investors agreed that the addition of alternatives is important for diversifying portfolio risk and 76 per cent think the current market favours active managers. And while alternative investments can present a range of portfolio risks, 74 per cent say the potential returns of illiquid investments are worth the risk. That said, two-thirds report that solvency and liquidity requirements have created a strong bias for shorter time horizons and highly liquid assets and hidden risks lurking within the dynamic macro-economic and regulatory market make it even more challenging for institutions to balance short-term opportunities and long-term objectives.

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PIAC Fears Mismatch

While the Pension Investment Association of Canada (PIAC) appreciates the policy intent of the HM Revenue & Customs’ ‘Taxing gains made by non-residents on UK immovable property’ proposal, it says the document can create a mismatch during the disposal of pension plan holdings in the UK. The policy says an overseas pension fund should not be subject to UK tax on the disposal of an investment in UK property where that pension fund is beneficially entitled to the gain. However, for a number of commercial and legal reasons, Canadian pension funds are unlikely to hold property directly and instead may utilize various holding subsidiaries to directly own UK real estate. Disposing these holdings would be taxable under the proposals. It also has concerns about the definition of an overseas pension scheme which it describes as multi-layered and complex. Furthermore, the definition of an overseas pension scheme contains different criteria from those required to be a qualifying institutional investor. PIAC believes using multiple definitions to identify investors, who are expected to meet the same policy objective, creates unnecessary complexity and a compliance burden.

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Quebec Employers Face Additional Accommodation Duty

Quebec employers have an additional duty when an employee returns to work after having suffered a work-related injury, says an ‘Employment & Labour Bulletin ‒ Blakes Business Class.’ A Supreme Court of Canada (SCC) decision in Québec (Commission des normes, de l’équité, de la santé et de la sécurité du travail) v. Caron confirms that as a general rule, employees who suffered a work-related injury and become able to carry on their pre-injury employment within one or two years (depending on the size of the employer) are entitled to be reinstated or be reassigned. Equivalent employment means employment of a similar nature (professional qualifications required, wages, social benefits, etc.) to the employment held by the workers when they suffered the work-related injury. In practice, in accordance with the judgment, an employer could be required to determine whether adjustments or changes can be made to certain positions when an employee who has suffered a work-related injury is able to return to work, even if there is no equivalent or suitable employment. According to the case law regarding accommodation, the employer would be required to agree to such adjustments or changes, short of undue hardship, it says.

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Retirees Struggle With Debt

A worry-free retirement may be a thing of the past as Canadians struggle to manage debt, says the Sun Life ‘Financial Barometer.’ It found one-in-four (25 per cent) retirees are living with a mortgage and unpaid credit cards. In fact, one-in-five (20 per cent) retirees are still making mortgage payments and they still use credit in some of the same ways they did before retirement. It says 66 per cent have unpaid credit cards; 26 per cent are making car payments; seven per cent have unpaid health expenses; seven per cent owe money on holiday expenses or vacation property; and six per cent haven’t paid off home renovations.

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Revised Guide Posted

OSFI has posted a revised instruction guide on completing the ‘Actuarial Information Summary (AIS)’ to assist administrators of defined benefit pension plans with provisions registered or having filed an application for registration under the Pension Benefits Standards Act, 1985. A revised AIS has also been posted to be consistent with the form accessed through the Regulatory Reporting System which was updated in November 2017. The revised instruction guide updates the previous one published in June 2015. The revisions to the instruction guide reflect the recent changes made to the AIS and include modifications that streamline the information and make it more user-friendly.

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Pike Efforts Honoured

Jagoda Pike, president and CEO of Homewood Health, has been honoured as a ‘Woman of Distinction’ by the Guelph Region YWCA’s 2018 ‘It Takes a Village’ campaign. It recognizes remarkable role models, pioneers, and outstanding achievers. Prior to joining Homewood Health, she was the first woman to serve as president of Star Media Group and publisher of the Toronto Star. Since joining Homewood in 2012, she has guided the organization’s growth to become a national leader in mental health and addiction care, while also developing a research mandate working with the Homewood Research Institute.

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Considerations For Medical Cannabis Presented

Practical considerations for plan sponsors to begin thinking about as they develop policies and coverage of medical cannabis will be presented by Mike Sullivan, CEO and co-founder of Cubic Health, at the Benefits and Pensions Monitor Meetings & Events ‘Benefits 2018’ session. It will also feature a discussion on helping workers impacted by mental illness in a helpful and cost-effective way. Sullivan joins Richard Heinzl, global medical director from WorldCare International Inc.; and Sarah Dulong, a mental health claims advisor, and Roger Friesen, director, life and disability claims from Co-operators Life Insurance Company as presenters at the session. It takes place March 20 in Toronto, ON. For information, visit Benefits 2018

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February 21, 2018


Comparison To DB Improves TDF

A simplified framework to help retirement plan fiduciaries improve the effectiveness and efficiency of target date fund (TDF) monitoring is to compare the choices of TDF managers with the established practices of major defined benefit pension plans, says a white paper published by P-Solve. It found despite the complexity of TDFs, there are some major features common to most TDF structures that could form the basis of ongoing comparisons and analysis. These are the TDF asset allocation, especially the overall level of equity exposure and the quality of equities held; the management style, including active and passive management decisions, use of proprietary funds, and strategic versus tactical asset allocation; and finally, the fairness of fees. Failing to evaluate these factors carefully and on a manager-by-manager basis could result in a mismatch between an employer’s goals and participant investment results, it says. The conclusion in the paper is that the “typical TDF takes high levels of equity risk, attempts market timing that is unlikely to be rewarded on average, uses much more active management than most pension funds, and is expensive.” This high equity exposure forces many to delay retirement or accept a reduced standard of living in retirement.

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OCIO On Upward Trajectory

The percentage of asset managers winning new business through an outsourced chief investment officer (OCIO) provider has been on an upward trajectory, says Cerulli Associates’ ‘U.S. Outsourced CIO Function 2017: Identifying Emerging Opportunities Across Institutional Investors.’ The clear majority (90 per cent) of asset managers polled by Cerulli in 2017 have won a mandate through an OCIO provider, up from just 33 per cent in 2014. “Total OCIO assets under management continue to exhibit double-digit, year-over-year growth,” says Michele Giuditta, a director at Cerulli. “As more institutions cede discretion for manager hiring decisions to their OCIO provider, they are gaining more influence over the placement of institutional assets. Accordingly, asset managers are placing greater importance on OCIO-intermediated assets.” Nearly two-thirds (63 per cent) of asset managers surveyed anticipate the OCIO business will be very important to their overall institutional sales goals in three years, up from 37 per cent that currently view it as very important. Last year’s survey showed that 55 per cent of asset managers anticipated the OCIO business to be very important to their overall institutional sales goals in three years, up from 30 per cent that viewed it as very important.

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Japan Raising Pension Collection Age

To address the issue of a rapidly aging population combined with a declining birthrate, Japan’s government will raise the public pension collection age to 71. This is also due to a desire to keep older adults working as they are physically healthier now than they have been in previous generations as a result of advances in healthcare-related science and technology. Japan’s currently allows pensions to be collected at any time between the ages of 60 and 70, with monthly payments being raised should the participant wait until they are 65 and older. The government also wants companies to raise their retirement ages or extend post-retirement employment. To help encourage people to work a few more years, the government will support advanced technology developments such as nursing robots to help the elderly. It is also considering providing support for those looking to start their own businesses. The ministry of health will design a new system once it studies 2019’s pension financing before considering revisions to pension laws in fiscal 2020.

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Private Debt Outperforms Expectations

Four out of 10 alternative investment consultants feel private debt has outperformed their expectations in 2017 – the highest proportion of any asset class, says Preqin’s ‘February Private Debt Spotlight.’ As a result, even as fundraising and assets under management reach record highs, the majority (53 per cent) are recommending that investors increase their allocations to private debt in 2018. In fact, eight per cent of consultants now recommend that private debt investments form more than 15 per cent of investors’ portfolios, a proportion that no surveyed consultant advised a year before. These recommendations come despite key issues facing the industry in 2018. Three out of four consultants note that central banks raising interest rates in key markets will be a challenge for the market in 2018. As well, prominent proportions also note that deal flow (68 per cent) and governance (55 per cent) will be issues.

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Hedge Fees Drop

Data from Deutsche Bank’s 16th annual ‘Alternative Investment Survey’ found that across all investor types, the average hedge management fee is 1.56 per cent, down from 1.59 per cent a year ago. Corporate and public pension funds pay the lowest average management fees of all investor types surveyed at 1.38 per cent and 1.47 per cent, respectively. Average hedge fund performance fees also have dropped to 17.43 per cent in 2018, compared to 17.69 per cent the previous year. Corporate pension funds are charged the lowest fee ‒ 16.25 per cent ‒ on average, followed by investment consultants, which pay an average 16.35 per cent incentive fee.

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ETFs Hit New High

Assets invested in ETFs listed in Canada increased by $4.94 billion during January to reach a new record high of $122 billion, says ETFGI’s January 2018 Canada ETF and ETP industry insights report. This topped the previous record of US$117 billion set at the end of 2017. In January 2018, ETFs listed in Canada saw net inflows of $1.68 billion. Equity ETFs gathered the largest net inflows with US$852 million, followed by active ETFs with US$636 million.

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Reid Joins Eckler

Euan Reid is an actuary and senior consultant with Eckler Ltd. He consults to plan sponsors on a wide array of pension issues, including plan design projects, restructuring activities, and funding and accounting issues. Previously, he was a partner in his previous firm in London, England, advising mainly defined benefit pension plans.

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Ontario Funding Examined

‘Ontario Funding Reforms’ is the topic of an ACPM Ontario Regional Council event. Dave Makarchuk, a partner in the wealth business at Mercer Canada; and Linda Byron, a senior partner at Aon; will share their thoughts on the actuarial and investment implications for pension plans of Ontario’s funding rules to improve the sustainability of single employer defined benefit and multi-employer pension plans. It takes place March 7 in Toronto, ON. For information, visit Ontario Funding

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February 20, 2018


Coalition Gives Advisors Voice

The NCBA (National Coalition of Benefit Advisors) is an effort to create a unified voice of benefit advisors. It says to protect the consumer means it must protect the advisor as the advisor is the only opposing voice to insurer goals and in protecting Canadian consumers in the benefits arena. Any matter that can run contrary to the goals of plan sponsors are of utmost importance to the new organization. Its immediate mandate is to stop G19, the Canadian Life and Health Insurance (CLHIA) guideline on compensation disclosure in group benefits and group retirement services. It doesn’t believe G19 represents disclosure appropriately. It wants to restart the disclosure discussion using a collaborative consultative model between key stakeholders at the table jointly. For more information, eMail join_ncba@ncba.ca

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Contributions To RRSPs Rise

Contributions to registered retirement savings plans (RRSPs) totalled $40.4 billion in 2016, up 3.1 per cent from 2015, says Statistics Canada. Data based on tax returns filed for 2016 show increases in contribution amounts occurred in about half of the provinces and territories, while the other half experienced a decrease in 2016. New Brunswick (8.5 per cent) and Quebec (six per cent) had the highest contribution increases. The Northwest Territories (down 4.8 per cent) and Newfoundland and Labrador (down 4.7 per cent) had the largest declines. While there was an overall increase in total RRSP contributions, the total number of contributors was down slightly. Just over 5.9 million tax filers contributed to an RRSP in 2016, down 0.9 per cent from 2015. The peak over the last decade occurred in 2007 when just under 6.3 million individuals contributed to an RRSP. Nationally, the median contribution in 2016 was $3,000, unchanged since 2013.

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Exposure To UK To Drop

A number of institutional investors have indicated they will reduce their UK exposure in the next six months, says State Street’s quarterly ‘Brexometer Index.’ The move is considered to be connected to Brexit and reflects a trend in falling sentiment towards the UK. Despite increasing optimism towards the global economy, the survey suggested that 24 per cent of the investors intended to reduce UK holdings. This marked a six per cent increase from the final quarter of 2017 and greater than the average throughout 2017. The majority (87 per cent) of institutional investors said the economic impact of Brexit would probably have an impact on their business operating model. This represented a 16 per cent increase from the third quarter of last year.

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Plans Are To Increase Hedge Fund Allocations

Half of allocators expect to increase their investments in hedge funds in 2018, says a survey by Deutsche Bank’s prime brokerage unit. Of those surveyed, 39 per cent said they will maintain their current allocation to hedge funds and 11 per cent said they will reduce it this year. In 2017, by contrast, 37 per cent of survey respondents said they intended to grow their hedge fund portfolios, 41 per cent said they would hold to their status quo, and the remainder said they would cut back their allocation. It found 56 per cent of pension fund officials intend to increase hedge fund investments, 29 per cent plan no changes, and 15 per cent will decrease the size of their portfolio.

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OMERS Add To Thames Holding

OMERS Infrastructure Management Inc., the infrastructure investment manager of OMERS, has purchased of an additional four per cent interest in Kemble Water Holdings Limited, the ultimate holding company of Thames Water Utilities Limited. Following completion of the transaction, OMERS Infrastructure will increase its overall interest in Thames Water to approximately 32 per cent.

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Bergin Joins BFL

Áine Bergin is a retirement consultant with BFL Consulting in Toronto, ON. She will be responsible for developing group retirement plan solutions to suit clients’ needs. She has 10 years’ experience in retirement consulting with Mercer Ireland where she worked with large multi-national companies going through pension change, employee education, and providing financial advice to individuals on their wealth management.

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Panel Discusses Sustainability

The CFA Society Toronto’s 10th annual ‘Spring Pension Conference’ will feature a CIO panel discussion on innovation, disruption, and sustainability and a U.S. chief economist’s view on the global economy including NAFTA. Other featured speakers will include Eleanor Marshall, vice-president, pension and benefits at BCE & Bell Canada; Diana Van Maasdijk, co-founder and executive director at Equileap; Karthik Ramanathan, senior vice-president and director of bonds at Fidelity Investments. It takes place April 5 in Toronto, ON. For information, visit CIO Panel

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February 16, 2018


Shortcomings Undermine Carbon Effort

The world’s largest banks have urgent shortcomings that threaten to undermine efforts to support the transition to a low carbon economy, says the ‘Banking on a Low Carbon Future’ report by Boston Common Asset Management. It says that despite progress in some areas and several examples of individual best practice, the sector is failing to capture the risks and opportunities of climate change. The banking sector is failing to embed climate into its core practices for climate strategy, risk management, and low carbon opportunities. It says less than half (49 per cent) of banks are implementing climate risk assessments or 2ºC scenario analysis which means decision-making on portfolio shifts is not supported by robust data. As well, despite widespread disclosure of their low carbon products and services, only 46 per cent of banks set explicit targets to promote such products/services.

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Canadians Dip Into RRSPs

Canadians continue to dip into their retirement savings to fund short-term expenses, says BMO Financial Group. Its eighth annual registered retirement savings plan (RRSP) study found 40 per cent of Canadians have made a withdrawal from their RRSP. Those who have done so have withdrawn an average of $20,952, an increase of $3,739 compared to an average of $17,213, last year. Reasons for withdrawing from their RRSPs include purchasing a home (27 per cent); helping to pay for living expenses (23 per cent); needing funds for emergencies (21 per cent), and paying off debt (20 per cent).

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Changes Proposed For PBGF

If the proposed changes to the assessment formula for the Pension Benefits Guarantee Fund (PBGF) are adopted, they would result in the elimination of some components of the current PBGF assessment structure, the addition of a new component based on a pension plan’s PBGF liabilities, and an increase in some components of the current PBGF assessment structure, says a Morneau Shepell ‘News & Views.’ The proposed changes to the PBGF assessments are related to the 50 per cent increase in the PBGF coverage limit. Components eliminated include eliminating the basic assessment of $5 per pension plan member and eliminating the current minimum pension plan assessment of $250. A new component based on a pension plan’s PBGF liabilities will see the introduction of an assessment component equal to 0.015 per cent of a plan’s PBGF liabilities. As well, the existing risk-based assessment formula will be revised to increase existing rates for each tier of the laddered three-tier, risk-based assessment formula by 50 per cent; and the plant closure permanent benefit assessment would increase from two per cent to three per cent times the liability for plant closure and permanent lay off benefits that the employer elected to exclude from solvency liabilities. As well, the maximum assessment per plan member would increase from $300 to $600. The Ontario Ministry of Finance says the proposed changes fit within the broader framework of proposed reforms to the funding rules for pension plans registered in Ontario. However, defined benefit pension plans that are registered in jurisdictions outside Ontario will also be impacted by these proposed changes to the PBFG assessments.

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Auto Features Increasing In Use

Defined contribution plans are increasing their use of automatic features and raising initial deferral rates, says a survey by the Plan Sponsor Council of America. It found 59.7 per cent of U.S. plans offered auto enrollment in 2016, the last year data were available. That represents an improvement from the 57.5 per cent in 2015 and continues a steady string of annual increases since 38.4 per cent of plans offered auto enrollment in 2009. Among plans offering auto enrollment, 73.4 per cent also offered auto escalation in 2016, up from 68.3 per cent in 2015. There has been a steady increase in plan usage of auto escalation since 2011, when 55.2 per cent offered this feature. More DC plans are setting their initial auto enrollment default rates at more than three per cent, historically the most common rate set by plan executives. In 2016, 53.5 per cent of plans exceeded the three per cent level.

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UCITS Managers Need Innovation

With fund quality and investor choice on the rise, managers entering the alternative UCITS arena need to focus on being innovative and user-friendly, says Cerulli Associates. Hedge funds, in particular, have realized that launching UCITS (Undertakings for Collective Investment in Transferable Securities Directives) versions of their strategies can increase their standing globally and in Europe. Many have entered the alternative UCITS space with great success. These new entrants, equipped with a wealth of expertise and specialist strategies, have driven up the quality and choice of UCITS funds available to investors. With major fund platform providers increasingly seeing alternative UCITS as an important revenue driver, it believes that the alternative UCITS market will continue to grow at a double-digit pace in percentage terms. Although equity long/short remains by far the most popular alternative UCITS strategy by fund number, asset growth in this strategy is stalling, with macro and multi-strategy attracting more capital.

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Great-West Contributes To Technology Start-ups

Great-West Life is contributing $300,000 over three years to the Creative Destruction Lab ‒ Toronto to help technology entrepreneurs take their ideas from the drawing board to the marketplace. Located at the University of Toronto’s Rotman School of Management, the lab works with technology start-ups promising to deliver massive improvements to economic productivity and human well-being. The nine-month program provides entrepreneurs with access to experienced industry mentors, business development support from top Rotman business students, and funding opportunities with leading venture capital firms.

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Hughes Looks At Risk

Mark Hughes, group chief risk officer at Royal Bank of Canada is the next keynote speaker at the ‘Global Risk Institute for Financial Services Speaker Series at Rotman.’ He will discuss ‘What Keeps Risk Managers Awake At Night – Yesterday, Today and Tomorrow?’. It takes place March 20 in Toronto, ON. For information, visit Risk Managers

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