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December 7, 2018


Working Longer May Be Coming

In a world where real wages are declining and the middle class is shrinking, workers are unprepared to defer the amount of income needed to retire before 65 and face the prospect of working longer, says Joe Nunes, executive chairman, Actuarial Solutions Inc. Speaking at the Toronto Area Chapter of the International Society of Certified Employee Benefit Specialists professional education opportunity ‘Defined Contribution: Past, Present & Future,’ he said government sponsored programs will adjust to this truth and employees and employers need to prepare for longer working lives. While the Fraser Institute believes things are not as bad as thought and that many Canadians are adequately prepared for retirement, 90 per cent don’t have retirement plan, said Nunes. And working longer is not a retirement plan, he said, it is a hope just as winning the lottery is. Actuaries are also promoting the need to delay government retirement benefits. They say that low investment returns are making retirement more expensive and social security can be maximized by deferring benefits. Combined with the fact people are living longer, they should be expected to work longer with perhaps 70 targeted as the age of retirement and people given the chance to work until they are 75. However, he suggested the real reason for encouraging later retirement is because boomers are starting to exit the workplace and employers need to find a way to sustain their workforces.

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NIA Calling For Enhanced Options

The NIA (National Institute on Ageing) is working with a coalition comprised of pension and seniors advocates to enhance Canada’s retirement income options. It is asking the government of Canada to make collective longevity risk pooling arrangements available to Canadians. In a letter to the federal minister of finance and the minister of seniors, it recommends regulatory and legislative changes that could be enacted quickly, with no material cost to government. Currently, there are barriers to extending retirement income options. Employer or other group-sponsored collective solutions with defined contribution pensions or group RRSP/TFSA components are blocked from setting up variable payout life annuity-type group arrangements for their employees. To rectify this, the government can amend the income tax regulations that prevent the creation of new collective variable payout programs that allow pension plans to pool the assets of their retired DC members – providing economies of scale, better investment management, and longevity risk protection. As well, the Income Tax Act (ITA) needs to be amended to allow individuals to purchase a deferred life annuity with their registered savings with a benefit commencement date at age 85. Currently, they are required to do this by age 71. This would allow individuals to cost-effectively mitigate their longevity risk, while leaving the bulk of retirement savings to manage flexibly during the earlier part of retirement.

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Key Themes Shape Outlook For Canada

Consumption, crude oil, and competitiveness are key themes that will shape the outlook for the Canadian economy in 2019 and several years thereafter, says Russell Investments’ ‘2019 Global Market Outlook.’ It says nearly 60 per cent of Canadian economic output is attributed to personal consumption, which is highly correlated to housing trends which are slowing. As well, the price of crude oil has become increasingly volatile due to domestic pipeline constraints. A healthy energy sector is not only critical for business investment, but also exports, as energy products account for nearly 20 per cent of total Canadian exports. Finally, it says it’s no secret Canada has become less competitive than its American and Mexican counterparts, in part due to the strength of the Canadian dollar during the commodities boom in the 2000s and subsequent rising labour costs relative to the U.S. and Mexico and in part due to lack of investment more generally. It sees GDP growth of 1.7 per cent to 2.1 per cent next year which is near trend (defined by the Bank of Canada as 1.8 per cent to 1.9 per cent). It says while there is value in Canadian equities, care needs to be taken that they are not becoming a value trap. Above all, what has dogged domestic equities is that the key Canadian index simply does not have what worked well for most of 2018: technology and growth exposures. On a relative basis, as sentiment shifts away from the factors that have dominated returns in 2018, there could be some unlocking of the ‘trapped’ value so long as oil prices co-operate.

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Climate Change Presents Opportunities

While 80 per cent of respondents to the ‘2018 RIA Investor Opinion Survey’ are concerned about climate change and the environment, most investors view climate change as a financial issue and 70 per cent believe it will have negative financial impacts on companies in some industries within the next five years. Most investors recognize climate change also presents opportunities and 66 per cent of respondents would like a portion of their portfolio to be invested in companies that are providing solutions to climate change and other environmental challenges. It also shows respondents ranked environmental issues as the most important factor among ESG (environment, social, and governance) issues and 86 per cent agree that financial advisors and institutions should be knowledgeable about how ESG risks could affect their investments. And while 71 per cent of respondents agree that companies with good ESG practices are better long-term investments, 81 per cent of respondents know little or nothing about responsible investing.

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Organizations Aspire To Culture Of Wellbeing

Workplace productivity, job satisfaction, and employee retention are linked to physical health and financial wellbeing, among other elements of broader total wellbeing, says Buck’s eighth edition of its ‘Working Well: A Global Survey of Workforce Wellbeing Strategies’ survey. It found that 40 per cent of participating organizations believe they have achieved a culture of wellbeing in 2018 compared to only 33 per cent in 2016. Among the remaining respondents, 81 per cent aspire to achieve a culture of wellbeing. Nearly 75 per cent of employers view support for total wellbeing as an important element in their employee value proposition, with the same number citing it as a part of their corporate image or brand – a dramatic rise from 38 per cent in 2016. Almost half say it supports diverse needs by generation or life stage. In addition, the survey showed a significant rise (up from 66 per cent in 2016 to 73 per cent in 2018) in employers’ focus on reducing healthcare or insurance costs. It found the top factors influencing employee wellbeing are stress (95 per cent); work/life issues (94 per cent); depression, anxiety, and weight management issues (93 per cent); and access to healthcare services (92 per cent). Among the key findings are that companies are increasingly relying on technology to drive efficiencies in benefits delivery, including greater personalization and relevance. The most effective approaches include predictive analytics (84 per cent), incentive tools and tracking (80 per cent), portal hubs (69 per cent), and decision-support tools (63 per cent).

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Solvency Funding Deadline Extended

British Columbia has extended the deadline to comment on its solvency funding framework for defined benefit pension plans. The original closing date was the end of the day on December 14. It is now the end of day January 31, 2019. The consultation paper may be found at Solvency Funding. The next stage of the review is to schedule focused consultation meetings with interested stakeholders, starting in January 2019. Those seeking an invitation can eMail PBSA.SolvencyReview@gov.bc.ca with their name and eMail address and the stakeholder group identified.

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ESG Indexes Under Development

FTSE Russell and Sustainalytics, an environmental, social, and governance (ESG) research firm, are working together to develop ESG indexes. The collaboration will result in ESG-factor versions of the core Russell 1000, 2000, and 3000 family of U.S. indexes, using Sustainalytics’ ESG risk ratings tools. Rising demand across client segments for ESG indicates a need for choice and different methods for how to approach ESG.

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CDPQ Makes Loan TO SSQ

The Caisse de dépôt et placement du Québec (CDPQ) will loan $150 million to SSQ Insurance, one of the largest insurance and investment companies in Québec. It will allow SSQ to optimize its capital structure and pursue the execution of its strategic plan, which includes a focus on innovation and Canada-wide development. It will also continue its digital transformation in order to continuously and efficiently meet the rapidly changing needs of its clients, particularly in the insurance industry. CDPQ’s initial investments in SSQ go back to the beginning of the 2000s.

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Canadian ETFs Inflows Strong

Canadian ETFs experienced strong net inflows of more than $2.1 billion in November, with Canadian equity ETFs leading the way, says the ‘Canadian ETF Flows’ report from National Bank Financial Inc. (NBF). Canadian equity ETFs had net inflows of $1.3 billion while fixed income ETFs brought in $691 million in November. In contrast, flows to U.S. and international equity ETFs were flat in the month, with the former bringing in $30 million in assets while the latter experienced net outflows of $28 million. So far in 2018, a net $18 billion has flowed into Canadian ETFs.

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Peters Has New Role

Steph Peters is associate vice-president, client channel marketing, at AGF Investments Inc. She joined the firm in 2017 as director, institutional marketing, from Aberdeen Asset Management where she was senior marketing manager, Canada. Most recently, she was director, client channel marketing.

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Communicating Benefits Examined

Communicating total reward programs to employees is not new, however, the modalities of communication are continually changing. In ‘Diligence & Dazzle: Total Rewards Communication,’ the CPBI Southern Alberta Region will examine combining the due diligence of communicating benefits, retirement, and compensation with innovation and creativity. Speakers are Brent Perdue, manager, compensation, at Encana Corporation; and Dylan Snowdon and Lauren Barteluk, lawyers and associates at Carbert Waite LLP. It takes place December 13 in Calgary, AB. For information visit Total Rewards

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December 6, 2018


Public Sector DB Subsidized By Taxpayers

Government employees don’t pay the full cost of their defined benefit pensions. Taxpayers provide a $22 billion annual subsidy by assuming undisclosed investment risks for which they are not compensated, says the Fraser Institute. “The issue is not whether government employees should have DB pensions, but rather how much they should pay for these pensions,” says Philip Cross, a Fraser Institute senior fellow and co-author of ‘Risk and Reward in Public Sector Pension Plans: a Taxpayer’s Perspective.’ The study, co-authored by pension expert Malcolm Hamilton, finds that defects in public sector pension accounting let public employees pay less for their pensions than they should and less than private sector workers would be expected to pay. “There is nothing wrong with government workers having good pensions – as long as they pay a fair price for these pensions,” says Cross. The paper further notes that the approach taken by public sector employers is prohibited in the private sector where accounting standards require employers to properly measure and disclose pension costs.

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Institutional Investors Positioned For Turbulence

Nearly two-thirds (65 per cent) of institutional investors predict that the decade-long U.S. bull market will end in the next 12 months, bringing to a close the historic bull market that brought record-high stock prices and record-low volatility, says ‘Keep Calm and Invest On.’ But even as they anticipate more turbulent times, six in 10 say they feel prepared to handle the risks in 2019, says a Natixis Investment Managers report. “Our research shows institutional investors are already positioned for the potential market turbulence on the horizon,” says David Giunta, CEO for the U.S. and Canada at Natixis. “For these sophisticated investors, actively managed strategies and alternative investments are their tools of choice to help optimize their portfolios for the challenges ahead.” It finds institutional investors anticipated today’s market challenges given the trends of the past several years. As a result, few of them plan drastic changes to return assumptions or portfolio strategy and will remain focused on active management to guide them through more volatile markets in the year ahead. Eight in 10 (79 per cent) institutional investors agree the market environment in 2019 is likely to be favourable for active portfolio management. Accordingly, they continue to increase their allocations to active strategies while their use of passive strategies continues to decline. Current allocations are split 70 per cent active and 30 per cent passive, up from 64 per cent active with 36 per cent passive in 2015.

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Asset Managers Satisfied With Outsourced Trading

Key market developments that have led to the rise of outsourced trading firms include heightened best execution requirements, increasing complexity and sophistication of trading tools and technology, market structure challenges, and shrinking commissions, says Greenwich Associates. Its ‘Outsourced Trading: Helping the Buy Side Improve Execution and Enhance Operational Efficiency’ report investigates outsourced trading and the perception of U.S. institutional asset management and hedge fund professionals toward this growing industry. It found high levels of satisfaction among those currently employing outsourced trading services, with 71 per cent of respondents calling themselves ‘extremely satisfied’ with their providers. The top reasons clients of outsourced trading are satisfied include the need for additional support for their own trading desks (47 per cent), cost savings (33 per cent), and improved execution performance (26 per cent). Depending on the chosen outsourced trading firm, such expertise could include equity derivative/options trading (obviating the need to hire an options trader), exposure to international markets (without having to open a desk overseas or hire someone to work through the night), and help in overcoming regulatory or local market challenges. Asset managers can work with one or multiple outsourced trading providers and can outsource some or all of their trading workflow. 

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Solvency Benefits From Asset Returns

Financial markets remained volatile and bond yields declined, but Canadian defined benefit pension plans benefited from higher asset returns in November, says the ‘Aon Median Solvency Ratio’ survey. At month’s end, median solvency stood at 100.6 per cent, a marginal decrease from October. “What’s remarkable is that solvency remains so strong even after two dramatic equity market selloffs in each of October and November, but that won’t be guaranteed when the next downturn comes,” says Calum Mackenzie, partner and head of investment in Canada for Aon. “Were it not for a late-November rebound in equities, the monthly solvency numbers would not have been as high; the monthly data, in effect, benefited from a timely upside move.” Higher bond yields had been insulating pensions from the markets’ ups-and-downs, but that trend reversed in November and long yields declined. As markets enter a new phase of volatility and the yield curve flattens, plan sponsors should be building greater resilience and responsiveness into their investment and risk-mitigation strategies, he said, as “at this stage of the economic cycle, any rebounds might prove very short-term.” Of surveyed plans, 48 per cent were more than fully funded as of November 30, down 0.2 percentage points from the previous month-end. Gross pension assets returned 1.8 per cent as all equity and fixed income asset classes rose. Alternative asset classes performed strongly as investors responded to equity market volatility. Global infrastructure ended November up 3.1 per cent and global real estate increased by five per cent.

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EY Canada Adds To Mental Health Coverage

EY Canada now covers 100 per cent of mental health services up to $5,000 each for all employees and their dependents annually. Stephen Shea, its managing partner, talent, says it believes “it’s our responsibility to support them and help them live their best professional and personal lives. That means offering meaningful mental health benefits that allow them to take care of themselves and their families.” The new plan also includes an expanded roster of mental health professionals. In addition to psychologists or registered social workers, EY people can now claim the costs of psychoanalysts, psychotherapists, clinical counsellors, and marriage or family therapists.

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Letko Brosseau Opposes AGT Deal

Letko, Brosseau & Associates Inc. will vote against the proposed going private transaction of AGT Food and Ingredients by a group of investors led by Murad Al-Katib, its president and CEO, its management group, and investors ‒ Fairfax Financial Holdings Limited and Point North Capital Inc. With approximately 18.7 per cent of the outstanding shares, Letko Brosseau is the company’s largest shareholder. It believes that the proposed transaction significantly undervalues the company and that AGT could generate greater value for its shareholders over the long-term as a public entity.

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Focus Limits ESG Returns

Investors who see environment, social, and governance (ESG) factors as values-oriented and make it the primary object of focus, with investment outcomes somewhat less important or distracting from the focus on delivering investment outcomes may be limiting themselves, says Leola Ross, director, investment strategy research, at Russell Investments. In the article ‘Why ESG Matters To Investors And Investing’ at the Benefits and Pensions Monitor website, she says there are different ways of incorporating ESG into portfolios and while some options may, indeed, change short-term performance, in many cases, the performance differential may be a positive one.

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ETFs Can Deliver Active Management

Exchange traded funds (ETFs) have the potential to become a viable vehicle for managers to deliver active management, says research from Cerulli Associates. This could lead to more mandates for subadvisors as managers look to deliver more esoteric strategies within the wrapper. “During the past five years, the perfect storm of new ETF issuer entrants, investor preferences, and strong capital market conditions allowed assets within the ETF wrapper to explode,” says Matt Merritt, associate analyst at Cerulli. Total ETF assets currently stand at $3.7 trillion, a growth rate of 141 per cent between the third quarter of 2013 and 2018. While currently, more than three-quarters of total ETF assets are passively managed, market-cap-weighted index products, most new issuers prefer to leverage their active management capabilities and deliver active or strategic beta ETFs. In the first half of 2018, more than 100 new ETFs entered the market, with 68 per cent of them being either strategic beta or actively managed strategies.

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Public Companies Must Address ESG Issues

Most institutional investors demand public companies address environmental, social, and governance issues to be regarded as trustworthy, says a survey by Edelman. The second annual ‘Edelman Trust Barometer Special Report: Institutional Investors’ shows that 89 per cent of investors have changed their voting and/or engagement policy to be more attentive to ESG practices, with 63 per cent reporting that this change has taken place in the past year. Nearly all investors ‒ 98 per cent ‒ believe that companies have an urgent obligation to take a stand on societal issues, such as cybersecurity, income inequality. and workplace diversity. Investors are relying on corporations to address issues that are shaping the business and political environments.

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IKEA Shares Profit

IKEA will pay $154.8 million into Canadian co-worker retirement programs for their loyalty and contribution. Through ‘Tack!,’ the Inkga Group loyalty program, every full-time co-worker in Canada who has worked at IKEA for a full fiscal year, will receive $1,498, regardless of their position or salary level. Eligible part-time co-workers will also receive a proportional amount in relation to hours worked. In Canada, the Tack! loyalty program operates as a deferred profit sharing program. As part of the program, IKEA Group co-workers annually receive an extra pay-out in addition to existing RRSP contribution programs. Tack! is part of its total rewards package for co-workers, which also includes a performance-driven bonus program, subsidized meals, a co-worker discount, and a group RRSP. It was launched in 2013 by IKEA founder Ingvar Kamprad to share the success of IKEA with all co-workers around the world. Since then the Ingka Group has paid out €612 million globally.

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Northern Trust Acquires FX Solution

Northern Trust will acquire BEx LLC, a provider of foreign exchange (FX) software solutions, to drive continued innovation and growth in its global foreign exchange business. The acquisition will give it ownership of a platform providing algorithmic FX trading, global liquidity aggregation, and transparency in execution and pricing to institutional clients worldwide. BEx is a financial technology software firm dedicated to developing automated FX trading solutions.

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OMERS Sells Interest

OMERS Private Equity will sell a majority interest in Caliber Collision Centers to funds affiliated with Hellman & Friedman LLC. As part of this transaction, Caliber will be merged with Abra Auto Body Repair of America to form a collision repair provider with more than 1,000 centres across 37 U.S. states. OMERS Private Equity will retain a significant minority investment in the combined company. 

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Bremner Joins People

Jeff Bremner is director, partner relations – benefits solutions, Ontario, at People Corporation. He will work with third-party advisors to enhance their product portfolio using its proprietary TPA solutions. Previously, he was with Medavie Blue Cross where he spent nine years, most recently as manager, brokerage sales.

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Financial Education Boosts Wellness

The CPBI Northern Alberta Region will look at ‘Financial Wellness and Literacy.’ Kevin Cochrane, of the Enriched Academy, will share how unions, sports organizations, police associations, post-secondary institutions, and world class entrepreneurs have unlocked the key to success to implementing financial educational programs and the impact this has on employee health and wellness. It takes place January 16, 2019, in Edmonton, AB. For information, visit Financial Wellness

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December 5, 2018


Protectionist Mood Due To Anger And Fear

Much of what is being witnessed in the U.S. today is due to fear and anger that the government is dysfunctional and world trade is tilted against it. This is what is making the protectionist sentiments in that country grow, says Brian Mulroney, prime minister of Canada from 1984 to 1993 and architect of the original free trade agreement with the U.S. in 1992. Speaking at the Franklin Templeton ‘2019 Global Market Outlook,’ he said, however, protectionism is not the solution as it is destructive. More international trade is the better approach. He did say the U.S. has to ensure its economy cannot fail if it is going to be a world leader to ensure peace and security. However, he recalled the naysayers when NAFTA (North American Free Trade Agreement) was first proposed and even after it was ratified. Everyone was against his government when it tried to bring in free trade. He said he was told Canada could not compete with a country 10 times its size. His response was if the country could not compete in North America, it could not compete for world trade. However, since the agreement was put in place 25 years ago, trade volumes in Canada have tripled and the North American region with seven per cent of the global population generates 28 per cent of global wealth. This time around, the U.S. had a precise agenda for free trade negotiations with Canada and Mexico, but with the lowest unemployment in world, it could not argue that free trade with Canada was hurting it. Besides, it was time NAFTA was modernized, he said, as when it was first negotiated, cell phones, for example, were non-existent.

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Healthcare At Fingertips Wanted

Canadian employees are demanding healthcare at their fingertips ‒ apps that let individuals connect directly and instantly with nurse practitioners, physicians, and other health professionals through secure text and video chat, anytime and anywhere, says a study commissioned by Medisys Health Group. “Average smart phone usage has increased by 60 per cent over the past three years. This, coupled with ongoing access barriers and supply and demand challenges within our healthcare system, makes it clear why Canadians are looking to supplement traditional doctor’s office visits with virtual consults,” says Dr. Vivien Brown, vice-president, medical affairs, at Medisys Corporate Health. The survey shows two in three Canadians would use virtual care if it was provided in their employee benefit plan and 71 per cent are willing to trade off current benefits for improved access to healthcare professionals and technology-supported services like virtual care. Virtual care is most appealing to parents and caregivers (69 per cent), those dealing with chronic health conditions (70 per cent), and Millennials (67 per cent). Participants says the biggest benefits of virtual care are access to care during late hours and weekends (67 per cent), convenience (66 per cent), avoiding increasing wait times at urgent care during late hours for minor health problems (62 per cent), less time missed at work (47 per cent), more regular visits with a healthcare professional (45 per cent), and less stress (29 per cent). However, only nine per cent of employee benefit plans currently include virtual care coverage.

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Marijuana User Termination Lacked Cause

Not seeing an employee smoking marijuana in the workplace or sharing anything with a co-worker meant, despite other observations, the termination of an employee for doing so was without cause, says Bonny Mak, a partner at Fasken. In ‘Year in Review: The Best, The Worst, The Unbelievable’ at the Fasken Institute, she said in Bombardier Transportation v. Unifor Local 1075, the employee was terminated on the grounds he had violated a company policy prohibiting the smoking of marijuana in the workplace after a supervisor saw him in a secluded area of the parking lot where hand-fashioned pipes, made with material from the employer’s company, could be seen on the ground. On closer observation, the supervisor smelled the strong odour of marijuana on the employee and even saw some smoke exhaled. He also saw the employee drop something which smoldered when it hit the ground. In a resulting meeting with the HR department, the supervisor contended the employee seemed jittery. The employee admitted to smoking marijuana, but claimed it was for a medical condition. The termination was grieved to a labour arbitrator who, even though he found the employee not credible as he could not produce any evidence of needing medical marijuana, ruled there was no justification for the termination since the employee was not seen actually smoking any marijuana. Mak said because it is the very early, early days of legal recreational marijuana use in Canada, the law in this area is still very uncertain.

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Sears Lawsuit Gets Green Light

The Ontario Superior Court has given the green light to two lawsuits targeting U.S. billionaire businessman Eddie Lampert and his hedge fund, ESL Investments, in connection with $509 million in dividends paid to Sears Canada shareholders in 2013.The lawsuits ‒ each initiated on behalf of Sears creditors including pensioners ‒ both claim the payout was detrimental to the company and orchestrated by Sears Canada’s largest shareholders ‒ Lampert and ESL ‒ for their own benefit. The goal of the lawsuits is to recoup money for Sears Canada creditors including 18,000 retirees who had their pensions cut by 20 per cent after the retailer folded and left behind an underfunded pension plan. Retirees claim Sears owes them nearly $730 million which includes $260 million for the pension fund shortfall and $421 million for lost retiree health benefits. The plaintiffs also allege that Sears Canada’s board of directors at the time failed to do their “due diligence” before authorizing the dividend payment, which “crippled the retailer’s ability to remain in business.” At the time of the dividend payment, Sears had an operating loss of $187.8 million and the pension fund was short $133 million, according to court documents. As a result of a tentative agreement in October, pensioners stand to collect about $48 million of what they’re owed. Lampert is chair and CEO of ESL as well as chair of Sears Holdings in the U.S. which filed for bankruptcy protection last month with plans to restructure.

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Environment Good For Risk Assets

While there may be more volatility going forward, the environment is good for risk assets, says William Yun, executive vice-president for Franklin Templeton multi-asset solutions. He told its ‘2019 Global Market Outlook’ that its expected returns range from 2.3 per cent for government of Canada bonds to 7.2 per cent for emerging markets equities. The restart of normalization in interest rate policy could result in rising volatility following a calm period since 2009. This has prompted a rise in passive investment. Emerging markets will provide better returns because these countries are growing faster than the rest of the world. Their share of global GDP has grown from just 40 per cent in 1990 to around 60 per cent in 2017 and it will go higher. Consumption in emerging markets is also growing. In 2015, it was just over $6 trillion and by 2030 it will grow to near $30 trillion. Debt issuance in these economies is stronger with more dependence on local currencies and less on the U.S. dollar, And, their debt to GDP is running at around 60 per cent, half of that in the developed world where debt to GDP is at 120 per cent. Finally, they are less reliant on trade with slower growing developed markets. Trade with the U.S. is now being replaced by trade with China. In contrast, the outlook for Canada is not as bright, said Ian Riach, a senior vice-president and portfolio manager at Franklin Templeton multi-asset solutions. He said the country faces a number of short-term challenges due in part to trade uncertainty, shrinking manufacturing, and a weaker Canadian dollar. Unlike emerging markets, consumer debt is an issue which will result in less consumption and declining retail sales ‒ important contributors to the economy ‒ lasting until the debt issue is resolved. This means in the short term, investors need to be cautious about investing in Canada, he said.

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Control Over Hours Increases Satisfaction

Workers whose jobs give them some control over their hours of work report higher levels of job satisfaction, says a study based on the Longitudinal and International Study of Adults (LISA). Canadian workers reported various degrees of job flexibility. For example, 37 per cent of men and 33 per cent of women reported a high or a very high degree of control over how their work is done. Furthermore, about two in 10 men and women reported that they had a high or a very high degree of control over their hours of work. Of all aspects of job flexibility examined in the study, control over hours of work was most strongly associated with job satisfaction. Specifically, 61 per cent of men who reported a ‘high’ or ‘very high’ extent of control over their work hours were satisfied with their job, compared with 46 per cent among those who had less control over their work hours. Among women, 60 per cent of those who had a ‘high’ or ‘very high’ control over their work hours reported being satisfied with their job, while just under half of those with less control reported employment satisfaction. The relationship between control over hours of work and job satisfaction remained even after accounting for other factors that are also associated with job satisfaction, such as personal characteristics and job quality indicators (that is, wages, work hours, training, union status, pension plan, or responsibilities at work).

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Terminating Benefits Ruled Unconstitutional

The Human Rights Tribunal of Ontario (HRTO) still has to decide if terminating benefits for people who work past age 65 is discriminatory. In the meantime, its interim decision in Talos v Grand Erie School Board has found the section of the Human Rights Code of Ontario which permits this is unconstitutional and discriminatory, says Alyssa LeBlanc, an associate at Fasken. Speaking at the Fasken Institute on the ‘Year in Review: The Best, The Worst, The Unbelievable,’ she said the case involves a teacher who continued to work past age 65. His extended health, dental, and life insurance was terminated at age 65. At the time, this was allowed under Section 252 (2.1) of the code. The applicant submitted that this section was unconstitutional. The tribunal decision said this, in combination with the employment standards act, created a distinction between over 65s and under 65s doing the same work. It also put a burden on the employee that a 64-year-old would not face, especially since the employee was depending on the benefits to cover the healthcare costs of an ailing wife who had no benefit plan. An employee under age 65 would not have this burden. Nor could it find any financial or actuarial evidence that providing these benefits would add to the costs of the school board’s benefit plan. In fact, some benefit plans do not terminate benefits for employees even as old as 73. She said the decision was not based on merit, it only determined if the school board could use the section as a defence for its action.

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Great-West Life Expands Virtual Care

Great-West Life has expanded its Dialogue Technologies Inc. virtual healthcare service in Canada into every province and the Yukon, with around the clock access. Great-West has been offering Dialogue’s services to select employers based in Ontario and Quebec. After increased demand and positive feedback from those who had adopted the service, it decided to roll out the service to its 10,000 employees and expand the offering to employers from coast to coast. Brad Fedorchuk, executive vice-president, group customer, at Great-West Life says, “With faster access to healthcare and treatment options, patients are better able to manage their health and the health of their families which, in turn, can lead to increased productivity and reduced absenteeism. It’s a win-win for employers, their employees and their employees’ families.”

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Second Opinion Expanded To Mental Health

Novus Health is expanding its Canadian medical second opinion program by developing extended support for mental health diagnoses. The program empowers individuals with the information they need to make informed decisions about their health. With mental illness a leading cause of disability in Canada and access to mental health services challenging in some parts of the country, particularly in isolated areas, individuals often need the input of multiple experienced mental health professionals to help get them on the right treatment plan. Through the program, individuals diagnosed with a critical or life-threatening illness or a mental health condition receive the information and resources they need to make informed decisions about their care.

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Pavilion Acquisition Completed

Mercer has completed its acquisition of the investment consulting, alternatives consulting, and wealth management operations of Pavilion Financial Corporation. The Pavilion alternatives platform will feature a customized consulting offering of a full-spectrum alternatives boutique, and the implementation and research capabilities of a global firm. Wealth management clients will have expanded advice and access to tools and products, including Mercer’s bundled retirement savings investment products.

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Stake In Fibre Acquired

An OMERS Infrastructure majority-led consortium, including Allianz Capital Partners and AXA IM ‒ Real Assets, has entered into an agreement with Altice France to acquire a 49.99 per cent stake in SFR FttH, a company to be formed by Altice France which will hold and further develop its existing fibre to home business in France. SFR FttH is a newly incorporated company comprising five million fibre to homes in medium and low density areas. With approximately one million homes covered and an additional four million homes to be rolled out in the medium term, it is the largest alternative fibre to home infrastructure wholesale operator in France.

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Miller Joins Sun Life

Colin Miller (CFA) is managing director and head of client relationships at Sun Life Institutional Investments (Canada) Inc. He has over 15 years of industry experience, with a focus on institutional investing, and was most recently vice-president, national accounts, at Canoe Financial. Prior to that, he was director, client relationships, defined benefit solutions, at Sun Life Financial.

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Indigenous Economy Investing Examined

‘Investing in Reconciliation and the Indigenous Economy: The Role for Institutional Investors’ is designed for investors interested in better aligning their investment practices with the principles of reconciliation. The event is sponsored by SHARE and NATOA. It takes place February 21, 2019, in Ottawa, ON. For information, visit Indigenous Economy

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December 4, 2018


Pension Systems More Stable

Improvements in the design of pension systems over the last decade in OECD countries have made them more financially sustainable and governments should now focus on ensuring they provide people with an adequate retirement income, says the ‘OECD Pensions Outlook 2018.’ It says that governments face challenges including population aging, low returns on retirement savings, low growth, less stable employment careers, and insufficient pension coverage among some groups of workers. These issues have eroded the belief that pension systems, pay-as-you-go or funded, will deliver on their promises once workers reach retirement age. Many countries have introduced automatic mechanisms to adjust pension benefits to economic and demographic developments, as well as default options to help people that do not want to or cannot make choices. Countries have also taken measures to strengthen safety nets to prevent old age poverty, says the report. Regulators and policy-makers have also taken steps to make regulatory and supervisory frameworks for funded pension arrangements more robust to make sure they manage people’s savings in their best interest.

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Companies Stay Private Longer

Companies are staying private longer and raising more capital privately than in the past as investors shift to private markets from public, says a report by the CFA Institute. It says well-funded institutional investors are leading a shift in capital formation away from public markets and toward private markets. Private capital-raising carries fewer regulatory burdens and typically enables companies to retain greater control over their businesses. It also found that companies are staying private longer, with the median time to an initial public offering for a U.S. company rising to 7.7 years in 2016 versus 3.1 years in 1996. The report says these firms are also able to raise more capital, with a median $97.9 million raised prior to IPO in 2016 versus $12.2 million in 1996. The CFA found similar trends in the UK and eurozone. The CFA warned that the amount of capital available in private equity funds ‒ so called dry powder ‒ had increased in recent years along with “a growing perception that valuations are high with no discount for the illiquidity of the underlying investments.”

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European Plans Refresh Investment Approaches

European retirement plans are refreshing their approaches to investment in order to generate returns, says a survey by CREATE-Research and Amundi. Fears of another shock to the economy, along with fading trust in European politics and the rise of populism, are creating long-term investment risks. This has led to the rise of new asset allocations and thematic investing, it says, as almost two-thirds of respondents expect global equities and illiquid assets such as real estate, infrastructure, and alternative credit to be favoured by investors in a continued search for yield. One respondent quoted in the report said: “There’s no fuel left in this bull market. It says diversification tools that were once peripheral are becoming mainstream, with 58 per cent of respondents implementing risk-factor investing; 53 per cent using uncorrelated absolute return investing; and 48 per cent turning to alternative risk premium strategies.

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ENCON Launches V+

ENCON Group Inc. has launched V+ (V Plus), an online portal for individuals to purchase post-retirement personal life, health, and travel insurance. Accessible through encon.ca, V+ allows Canadians preparing for retirement to obtain quotes and enroll in one of its life, health, or travel insurance plans within minutes. Existing policyholders also benefit from a self-service account management dashboard that allows them to review their policies, make changes to their banking and contact information, and view or download renewal information.

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Decisions Made Using More Factors

Although price will remain an important consideration, European fund investors will take even more factors into consideration when making investment decisions, says Cerulli Associates, a global research and consulting firm. “Institutional investors will increasingly favour asset managers offering self-indices that provide exposure to new and specific niche markets or sectors in a cost-effective fashion,” says Fabrizio Zumbo, associate director, European retail research at Cerulli. Asset managers have started to build self-indices intended to be more flexible than the indices provided by third parties. The self-indices are more in line with the specific and tailored exposure requested by investors and, importantly, do not have additional third-party costs. Specifically created market- and factor-exposure indices being built and tracked by managers are aimed at balancing liquidity and costs. The integration of specific environmental, social, and governance (ESG) factors into ‘hyper-tailored’ self-indices is an example.

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Berlin Packaging Recapitalized

Oak Hill Capital Partners and the Canada Pension Plan Investment Board (CPPIB) have entered into a recapitalization agreement with Berlin Packaging L.L.C. to facilitate the next stage of its growth. Berlin Packaging is a supplier of packaging products and services to companies in multiple industries, providing customers of all sizes with a one-stop shop for glass, plastic, and metal containers and closures. The company’s offering of services includes structural and brand design, worldwide sourcing, warehousing and logistics, and capital financing.

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Wall Joins Morneau Shepell

Andrew Wall is a consultant at Morneau Shepell. Most recently, he was an associate at Mercer, a firm he joined in 2013 as an actuarial analyst.

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Real Estate Discussed

A panel of Graham Drexel, chief financial officer at Grosvenor Americas; Craig Hennigar, director, market intelligence, Canada, at Colliers International; and Andrea Schmelcher, an investment consultant at Westcoast Actuaries; will discuss the state of the industry at the ‘2019 REALPAC/MSCI Canada Real Estate Investment Forum (Vancouver).’ Simon Fairchild, MSCI’s executive director, will present the 2018 results of the ‘REALPAC/IPD Canada Quarterly Property Index.’ It takes place February 5 in Vancouver, BC. For information, visit REALPAC/MSCI Vancouver

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December 3, 2018


CLHIA Wants Drug Benefits Ensured

The Canadian Life and Health Insurance Association (CLHIA) wants the Quebec government to ensure that all Quebecers maintain their existing drug insurance benefits. In a pre-budget submission to the government, it calls the Quebec drug insurance model generous and comprehensive. Since the creation of the public drug insurance plan in 1997, Quebecers’ access to drugs has improved. The Quebec model guarantees that all citizens are covered at all times, either by the public plan or privately. It is estimated that close to 5.5 million Quebecers (66.1 per cent of the population) are covered under private group insurance or benefit plans that provide drug coverage. With the federal government now looking into national pharmacare and the drug insurance model in that plan unknown, it says Quebec must guarantee that all Quebecers continue to enjoy their existing drug insurance benefits. As well, any reform in this area must proceed without imposing additional costs to either taxpayers or employers.

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Pharmacist Scope Of Practice Expands

Saskatchewan plan sponsors may see an increase in prescription drug costs as a result of plan members’ added convenience of more readily receiving prescriptions from a pharmacist, says an Eckler ‘GroupNews.’ The province has expanded pharmacists’ scope of practice. Under the agreement with the Saskatchewan Pharmacists Association, pharmacists can prescribe for minor ailments such as emergency contraceptives, obesity, conjunctivitis (pink eye), fungal nail infections, and shingles. It also allows pharmacists to administer flu shots to children ages five to eight and to people living in personal care homes and assisted-living apartments. For many, these are common ailments for which they may not otherwise have sought care from a doctor and using a pharmacist gives them access to more treatment. However, this change may also result in employees’ requiring fewer scheduled medical appointment which may reduce the number, frequency, and length of employee absences during work hours.

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Remote Employees Happier

A happy workforce usually means a successful business and the people most responsible for that success are more likely to stick around, says Karla Jo Helms, CEO of JoTo PR. One way to help achieve this is to allow employees to work remotely from home. In the article Working Remotely Might Be Perk Your Company Missing’ at the Benefits and Pensions Monitor website, she explains some of the benefits she has discovered from allowing this.

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Retirement-related Risks Consistent

The U.S. Society of Actuaries (SOA) has found some concerns around retirement-related risks are consistent across each generation, while others, such as the ability to deal with unexpected expenses, vary by age, and there is a significant amount of variation on how much planning and preparation individuals undertake to withstand financial risks. The ability to handle unforeseen expenses increases with age, peaking with early Boomers and then declining for the Silent Generation, those born between the mid-1920s and mid-1940s. Six in 10 early Boomers say they could afford a $10,000 expense using their savings or emergency funds. Only 46 per cent of Millennials would use their savings, which is not surprising since they have lower assets and more competing financial priorities. Those in the Silent Generation are particularly vulnerable, with half not being able to use their savings for an unexpected $10,000 expense. This is consistent with and may be reflective of the fact that only half of all respondents are prioritizing building up an emergency fund to safeguard against unexpected expenses. Two-thirds of respondents are concerned that the value of their savings and investments might not keep up with inflation in retirement. This concern also decreases with age, with almost three-quarters of Millennials (73 per cent), compared to just over half of the Silent Generation (53 per cent), expressing high concern over inflation. The SOA says as Millennials have the longest time until retirement and thus greater uncertainty, their concern over inflation risk is understandable.

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CPPIB Broadens Energy Portfolio

The Canada Pension Plan Investment Board (CPPIB) is broadening its energy and resources portfolio through a new innovation, technology, and services investment strategy focused on emerging technologies poised to become large and critical segments of the energy value chain. Its initial investment in this strategy is a preferred share investment in ChargePoint. The investment was jointly made with CPPIB’s thematic investing group which focuses on both public company and earlier-stage investments across a number of themes including transformative innovations in the transportation industry such as electrification, autonomy, and mobility as a service. ChargePoint is a provider of an electric vehicle charging network with charging solutions to support drivers at home, work, around town, and on the road.

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Paquin Joins People

Catherine Paquin is a consultant in the group retirement solutions division at People Corporation. Her career in the pension and investment industry spans over 15 years. Most recently, she was senior director, group savings and retirement, for iA Financial Group.

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Global Market Outlook Provided

The CPBI Saskatchewan Region will present ‘Global Perspectives ‒ The Collapse of Intellectual Property.’ Robert M. Almeida Jr., an investment officer and global investment strategist for MFS Investment Management, will provide a global market perspectives outlook and will explore the effects of the collapse of intellectual property on global markets. It takes place January 16 in Saskatoon, SK, and January 17 in Regina, SK. For information on the Saskatoon session, visit Saskatoon Perspectives. Information on the Regina event is at Regina Perspectives

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