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May 15, 2018


Smaller Funds Likely Perform Better

The smaller the hedge fund is, the better its performance is likely to be, says a study by researchers at Purdue University’s Krannert School of Management, and Loyola Marymount University. ‘Size, Age, and the Performance Life Cycle of Hedge Funds’ says small funds outperform large funds and are more likely to maintain good performance. In addition, the contribution of the management fee to managers’ total compensation grows with fund size, suggesting decreasing incentives to improve performance. Although younger funds tended to outperform their older peers, age didn’t matter as much for smaller hedge funds. Since management fees tend to make up a larger portion of total compensation for fund managers as their company grows, they may have less incentive to improve fund performance. 

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Data More Noise Than Signal

Weaker data, particularly in Europe, have raised concerns that the global recovery is under threat. However, an ‘AB Economic Outlook’ says the data is more noise than signal and it remains confident about the global outlook. Part of the softness is tied to recent moderation of the very strong growth rates that survey and other data suggested when the year began. Seasonal factors (such as the weather) and the dampening impact from rising trade tensions account for the rest of the weaker data. But indicators in April seem to have stabilized, suggesting that solid global growth continues. It does think that underlying inflation will gradually tick higher and that central banks, led by the Fed, will slowly withdraw monetary-policy stimulus. This should push bond yields higher, with yields outside the U.S. likely to rise the most. But risks have increased, so investors should be prepared for more volatility. Headlines around trade policy and general political dysfunction are a persistent feature of the economic landscape, but have so far not been significantly disruptive.

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Focus Put On Stress

With this being ‘Mental Health Week,’ Morag Livingston, head of group risk and wellbeing at Secondsight, says employers need to look at what causes stress in their workplace. The focus of ‘Mental Health Week’ this year is stress and a recent report shows employers have seen an increase in stress related absence this past year. Two of the top three causes of stress are work related: workload and problems with a manager, she says in the article Mental Health Awareness Week: Managing Stress And Mental Wellbeing In Workplace’ which can be found at the Benefits and Pensions Monitor’ website.

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Dameski Has New Role

Alex Dameski is senior vice-president and chief operations officer at Northern Trust Canada. Most recently, he was a senior vice-president and head of relationship management and client service, a position he has held since June of 2014 when he joined the firm from Citi.

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ACPM Looks At ‘Next 150’

‘The Next 150: Fortifying Retirement for the Future’ is the theme of the ‘2018 ACPM National Conference.’ It will address the current and future retirement income challenges in presentations on a variety of issues including pensions and public policy, infrastructure investment, risk from the member perspective, and changing capital accumulation plan behaviours. It takes place September 11 to 13 in Quebec City, QC. For information, visit ACPM 2018

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May 14, 2018


WoB Needs To Be Priority

The Pension Investment Association of Canada (PIAC) wants the Ontario Securities Commission (OSC) to make the underrepresentation of women on the boards and in executive officer positions (WoB) a standalone priority once again. In general, it supports the overarching priority areas of the OSC. Its proposed ‘2018-2019 Statement of Priorities’ includes investor protection; effective compliance; responsive regulation; financial stability through effective oversight; and being an innovative, accountable, and efficient organization. In a letter to the OSC, it also notes an extensive and ambitious program of objectives and deliverables to align with each priority has been set out. In particular, it commented on the gender diversity priority. PIAC believes gender diversity is core to a well-functioning board. However, it also notes the issue of underrepresentation of women on the boards and in executive officer positions (WoB) has been referenced in the OSC’s statements of priorities since 2014. An earlier OSC priority to improve percentages of WoB has been downgraded to a ‘focus,’ yet the desired improvements have not materialized. PIAC encourages OSC leadership on this issue, lest it be perceived that improving the representation of women on boards and in executive officer positions is no longer considered important or urgent. It calls for the OSC to put the issue of gender diversity back on the agenda as a standalone priority in its own right.

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Americans Fear Outliving Savings

Nearly eight in 10 people say they are ‘extremely’ or ‘somewhat’ concerned about affording a comfortable retirement and two-thirds of U.S. adults believe there is a real chance they will outlive their savings, says Northwestern Mutual’s ‘2018 Planning & Progress Study.’ This year’s report ‒ subtitled ‘Living Long and Working Longer’ ‒ finds about one in three Americans have less than $5,000 in retirement savings and one in five have no individual private retirement savings at all. The average amount of retirement savings reported came in at just about $85,000, which is far short of what most Americans can expect to pay for healthcare expense alone in retirement. There is also an increasing number of Americans who anticipate retiring at 70 years or older rather than in the ‘traditional 65 to 69 range.’ Within the group expected to work beyond 70, 55 per cent suggest this will be due to necessity and 45 per cent say it is their choice. Importantly, these figures contravene real-world statistics showing most people still retire in the 65 to 69 range, if not earlier.

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OMERS Acquires Alexander Mann Solutions

OMERS Private Equity, the private equity investment arm of OMERS, will acquire Alexander Mann Solutions, a global provider of talent acquisition and management services, from New Mountain Capital. Alexander Mann helps clients, typically large international businesses, to recruit and retain talent through multi-year contracts. Its deliver solutions for over 100 clients across 85 countries. OMERS will support its management team and employees in deepening and expanding its sectorial and geographic focus, and invest in technology to further develop its value proposition for both new and prospective clients. It will also support efforts to drive consolidation in what remains a large but still fragmented market.

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CPPIB Invests In South Korea

The Canada Pension Plan Investment Board (CPPIB) and GIC will acquire a Grade A office building in Seoul, South Korea, from Kumho Asiana Group, parent of Asiana Airlines. Following this transaction, CPPIB and GIC will each own a 50 per cent stake in Kumho Asiana Main Tower, a landmark property located in the centre of the core office, government, and cultural precinct in Seoul’s central business district. Due to its prime location, surrounding amenities and historical and cultural importance, the district is favoured by both local and multinational tenants. The property will be managed by DWS (formerly Deutsche Asset Management).

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Mercer UK Collaborates On Digital Advice

Mercer UK and Wealth Wizards have joined in a strategic collaboration to provide Mercer’s UK’s customers with digital financial advice through its chartered financial planning team ‒ Mercer Jelf Financial Planning. The partnership initially launches with an automated defined benefit transfer robo-paraplanner, designed and developed by Wealth Wizards, ensuring that Mercer Jelf, continues to deliver consistent client outcomes safely and with the appropriate controls and governance in place for both existing and new customers. 

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Teachers’ Makes Appointments

Andrew Weston is managing director, investment lifecycle, in the enterprise operations division, and Jean-Charles Douin is managing director, private capital for Europe, the Middle East, and Africa, at the Ontario Teachers’ Pension Plan. Weston is responsible for the enterprise operations division’s client relationship management function supporting the investment division, as well as the enterprise collaboration and technology support and services teams. He joined the organization in 1999. Douin joined Ontario Teachers’ London, UK, office in 2008 at its formation stage. Since then, he has been a major contributor to the investment strategy and success of the private capital team in Europe.

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PPAC Course Offered

The CPBI Saskatchewan Regional Council, in partnership with Humber College, will again offer the ‘Pension Plan Administration Certificate (PPAC) 1.’ The first of three modules in the PPAC program offered, it is designed for anyone from pension plan administrators to HR professionals in the industry and pension committee members. It takes place September 17 to 21 in Regina, SK. For information, visit PPAC

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May 11, 2018


Canadian Institutions Lead In ETF Use

Canadian institutions that use ETFs allocate an average 18.8 per cent of total assets to exchange traded funds (ETFs), the highest average allocation found in any institutional market in the world, says Greenwich Associates’ ‘2017 Canadian ETF Study.’ This puts them at the forefront of a growing move by institutions around the world to integrate ETFs into their portfolios and ETF versatility is the primary driver of this proliferation. At the strategic level, Canadian institutions are increasingly using ETFs to obtain ‘core’ investment exposures and diversification benefits. Use of ETFs increased last year in each of the 10 primary portfolio functions covered in the study. “Canadian institutions are using ETFs because they are easy to use, fast to execute, liquid, simple, relatively cheap to trade, and provide diversification in a single trade,” says Andrew McCollum, Greenwich Associates managing director and author of ‘Canadian Institutions Lead the Way in ETF Investing.’ The steadily expanding use of ETFs reflects institutions’ embrace of the funds as an effective source of beta exposures that they are using alongside ‒ and at times in place of ‒ derivatives. Although ETFs are frequently employed as part of a switch from active to passive investment strategies, Canadian institutions are also using index ETFs to obtain exposures used to generate alpha at the asset allocation level in actively managed strategies.

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Generation X Struggles To Save For Retirement

The often-overlooked generation X is struggling to save for retirement, says Franklin Templeton Investments Canada’s ‘2018 Retirement Income Strategies and Expectations (RISE)’ survey. It shows over a quarter of Canadian gen-Xers haven’t saved anything for retirement, though there are still more retirement savers among them than in the U.S., where over a third of American gen-Xers haven’t contributed anything towards their retirement nest egg (28 per cent versus 37 per cent). This could be why more than half of North American gen-Xers would consider retiring later than planned if they do not have enough income (56 per cent in Canada and 59 per cent in the U.S.), it says. Even millennials who are likely decades away from retirement would consider retiring later, with over half of North American millennials open to pushing out their retirement timelines (51 per cent in Canada and 54 per cent in the U.S.). This reliance on retiring later is concerning as nearly a quarter of North American retirees actually retired earlier due to circumstances beyond their control like health issues and company downsizing (23 per cent in Canada and 22 per cent in the U.S.).

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PIAC Supports Variable Benefits Proposal

The Pension Investment Association of Canada (PIAC) strongly supports Ontario’s proposed change to its variable benefits regulations. In a letter to the Pension Policy Branch of the Ministry of Finance, it says the proposals address several issues. One is that it is cumbersome for non-financial institutions to offer products such as life income funds (LIFs) or retirement income fund (RIFs). As well, allowing them to remain in an employer’s defined contribution pension plans would lower management expense ratios for members who do not have access to an employer sponsored RIF or group product. It also allows pension plans to achieve economies of scale by keeping assets within the plan. This could see lower fees with external managers and give them sufficient assets to access more diversified products. However, PIAC also supports the proposal that the provision of variable benefits from DC plans be voluntary for employers. Some employers want to sever the relationship with members at retirement for strategic reasons, it says, so this decision needs to be in the control of the plan sponsor. It would also like to get more clarity on the ability to unlock 50 per cent of locked-in assets. If this extent of unlocking is not allowed, it will make the program less attractive to members since this feature is available with LIFs.

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Predicting Retirement Income Complex

Predicting retirement income levels from a DC plan with as much accuracy as possible is a complex task. Adding to the complexity of the predictive calculation is the growing appreciation that each plan member is unique and has their own individual retirement income needs. “The answer is simple,” says Eckler’s ‘Capital Accumulation Plan Income Tracker (CAPit)’: data. There’s lots of data that can be used to help better understand plan member behaviour and needs, enabling plan sponsors to strategize for better member outcomes. Plan sponsors can harvest relevant data from a number of sources starting with the recordkeepers, payroll providers, and HR systems. Analyzing the retirement income influencers specific to a plan’s members can help identify trends and plan member behaviours that influence how successful they will be in meeting their desired retirement income goals. This focus should be on data related to whether members are taking advantage of (and maximizing) any employer match; whether they are appropriately invested; and whether investment offerings are delivering enough. Despite strong investment returns in 2017, the tracker remained flat throughout the year, producing a 59 per cent gross replacement rate for males and 57 per cent for females.

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Alliance Forms Pharmacare Initiative

The Conference Board of Canada’s Canadian Alliance for Sustainable Health Care (CASHC) is launching the National Pharmacare Initiative (NPI). The goal of the NPI is to inform and support current public discussion and debate about potential approaches to ensuring universal access to pharmacare for Canadians. Several recent developments have led the Conference Board and CASHC to focus on this issue. These include the federal government’s announcement of the appointment of a national advisory council to study the implementation of a national pharmacare program in its 2018 budget and, more recently, the House of Commons’ Standing Committee on Health’s call for the establishment of a universal pharmacare program and guaranteed access under the Canada Health Act. The NPI will feature a variety of research, dialogue, and consensus-building activities between now and the end of 2018.

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Aon Launches Retiree Health Exchange

Aon has launched its retiree health exchange. ‘Aon Choice, Retiree Health Exchange’ provides retirees with access to a suite of insurance products aimed at reducing costs, simplifying administration, and empowering employees as they transition to retirement. It offers guaranteed acceptance to health, travel, and life insurance products, tailored to fit their needs and individual lifestyles.

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DB Plans Remain Positive

Canadian defined benefit pension plans remained in positive territory in the first quarter of 2018, says the RBC Investor & Treasury Services ‘All Plan Universe.’ Returns in the quarter were 0.2 per cent down from the fourth quarter of 2017 returns of 4.4 per cent. Pension returns were 2.9 per cent in the first quarter of last year. Canadian equities were greatly impacted during the quarter, posting a 3.9 per cent loss, compared to gains of 4.2 per cent and 2.3 per cent in the last and first quarters of 2017 respectively. The TSX Composite Index followed a similar trend, posting a 4.5 per cent loss during the quarter compared to a 4.5 per cent gain in last quarter. “The first quarter of 2018 was full of instability and volatility, with Canadian equities taking the biggest hit,” says Ryan Silva, director, head of pension and insurance segments, global client coverage, at RBC Investor & Treasury Services. “The healthcare and energy sectors and uncertainty around NAFTA trade negotiations as well as potential interest rate hikes weighed down the TSX Composite Index and other key indices. Geo-political concerns, coupled with international trade and interest rate anxieties also impacted global equity returns. Asset managers should remain vigilant to ongoing volatility for the remainder of the year and maintain a diversified portfolio to actively manage their risk exposure.”

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DC Plans Need Array Of Options

Defined contribution pension plans need to offer an array of retirement income and distribution options because individual financial needs in retirement can vary over time and from one person to another, says research from the Defined Contribution Institutional Investment Association (DCIIA). ‘Design Matters: Plan Distribution Options’ argues that plan sponsors must better evaluate their plan objectives with respect to retired and separated participants and then determine if the plans’ retirement income and distribution options align with these objectives. A pivotal question for sponsors to answer is whether they want their plans to encourage plan participation to continue through retirement or to actively encourage distribution of assets once active service separation has occurred, either as a result of a job change or retirement, it says. The research suggests it is much more common to see plan designs that are tailored to drive retired or terminated participants out of the plan. These plans generally only provide one or a few types of single lump-sum options, such as cash-outs, direct rollovers to another employer’s DC plan, or direct rollover to an individual retirement account (IRA) or rollover annuity. Options that encourage participants to remain in-plan are only “moderately prevalent.” However, while the industry has a long way to go before it is as effective at promoting rational decumulation as it is at promoting asset accumulation, DCIIA finds some emerging evidence that plan sponsors, consultants, and advisors are beginning to reconsider whether guiding participants towards lump-sum distributions, intentionally or unintentionally, through plan designs that encourage such distributions, is the most appropriate approach. The research indicates that when DC plans offer distribution options alongside a one-time lump-sum benefit payment, a good number of retiring plan participants are interested in, and take advantage, of these options.

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Companies Expanding Well-being Programs

Companies across the U.S. will continue to leverage and expand well-being programs to create healthier and more productive workforces, says the ninth annual ‘Health and Well-Being Survey’ from Fidelity Investments and the National Business Group on Health (NBGH). It shows more than two-thirds (67 per cent) of companies plan to expand their well-being initiatives over the next three to five years to include programs not specifically focused on physical health. In addition to traditional health-focused programs, such as weight management and smoking cessation, 92 per cent of employers are expanding their well-being platforms to include emotional health programs and 90 per cent are now including financial wellness programs, such as debt management and budgeting. Nearly nine out of 10 employers (86 per cent, up from 74 per cent in 2017) offer financial incentives as part of their well-being platforms and the average employee incentive amount increased to $784 for 2018, up from $742 in 2017. Financial incentives are expected to continue to be a key benefit within well-being platforms in the future as 29 per cent of employers indicate they plan to continue to increase the amount of financial incentives offered to employees over the next three to five years.

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Ontario Teachers’ Sells Stake In Helly Hansen

The Ontario Teachers’ Pension Plan (Ontario Teachers’) is selling its majority stake in Helly Hansen Group AS, the iconic Norwegian designer and marketer of high-performance outdoor and workwear apparel, to Canadian Tire Corporation, Limited. Ontario Teachers’ acquired Helly Hansen in 2012 and worked with the Oslo-based company to expand its brand internationally. The company this week reported its third consecutive year of record profit growth.

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Oxford Invests In European Logistics

Oxford Properties Group has made its first investment into the European logistics sector. The global real estate arm of the Ontario Municipal Employees Retirement System (OMERS) invested in GLP’s newly launched European Development Partners I (GLP EDP I). Late last year, following the acquisition of Gazeley, a developer and manager of European logistics real estate, GLP established GLP EDP I, a development venture to facilitate the development of Gazeley’s prime logistics sites across the UK, Germany, and France. Oxford, which currently owns and manages a logistics portfolio in North America, says the investment is part of its plan to increase its exposure to the logistics sector which is benefitting from global economic growth and a structural shift towards eCommerce. Online retailers typically require between two and three times the logistics space of traditional brick-and-mortar retailing.

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Area One Funds Adds Opportunities

Area One Farms has launched the Area One Farms Fund IV and Fund V. These offer investors the opportunity to invest in equity partnerships with Canadian farmers and farmland. Fund IV will offer Canadian institutional investors exposure to investments in farm partnerships in Canadian provinces where institutional investors are legally permitted and desired by local farmers. It is structured as a 10-year closed end fund and has already secured a cornerstone commitment of $100 million. Fund V will offer exposure to farm partnerships solely in Manitoba and Saskatchewan. It is structured as a perpetual entity with liquidity options starting in Year 5. The fund is open to Canadian individuals or private corporations or trusts that have 100 per cent Canadian beneficiaries.

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CPPIB Adds Enbridge Assets

The Canada Pension Plan Investment Board (CPPIB) will acquire 49 per cent of select North American onshore renewable power assets and Hohe See (two German offshore wind projects) from Enbridge Inc. and its related entities. The assets include 14 long-term fully contracted operating wind and solar assets in four Canadian markets and two operating assets in the U.S. (one wind and one solar), with a combined installed capacity of approximately 1.3 gigawatts. Enbridge and its affiliates will continue to manage, operate, and provide administrative services to the North American and Hohe See projects. Concurrently, CPPIB and Enbridge have entered into an agreement whereby the two parties will form a 50-50 joint venture to pursue future European offshore wind projects. These projects may be in the early development, late development, construction, or operational phase. 

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Howard Joins NFP

Dean Howard is managing director at NFP Canada Corp. Since 2007, he has been CEO of CBA Canada, a firm he joined from Hub International where he was executive vice-president.

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Telemedicine Marketplace Examined

‘Access to Healthcare: Employer Challenges and Opportunities’ will be examined at a CPBI Atlantic Region session in three cities. It will focus on the growing telemedicine marketplace and employer opportunities with respect to occupational health and disability management. Featured speakers are Travis Kelly, of Medavie Blue Cross, and Clay Swerdelian, of GOeVisit, in Moncton, NB; Halifax, NS; and St. John’s, NL. Alex Boucher, of Mercer, will join them in Moncton and Halifax. Sessions take place May 29 in Moncton, NB. ‒  Moncton Challenges; May 30 in St. John’s, NL ‒ St. John’s Challenges ‒ and May 31 in Halifax NS ‒ Halifax Challenges

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May 10, 2018


PfAD Needs Prudent Interpretation

Prudent and practical interpretation of the regulations changing Ontario’s pension funding rules for single employer pension plans should be applied, particularly when it comes to the Provision for Adverse Deviation (PfAD) and a plan’s investments, says a TD Asset Management report. ‘Insight into Ontario’s Pension Reform: Implications of the Final Funding Rules (Part 2)’ highlights where the finalized regulations (O.Reg 250/18) provide clarity and where ambiguity remains. The PfAD is a prescribed margin requirement, by which a pension plan will fund a reserve to protect against a future negative plan experience, it says. It is determined based on the status (closed or open) of a plan, its target asset mix, and the going concern discount rate. Plans deemed higher risk will require a higher reserve. Plans are only required to prefund 85 per cent of their solvency liabilities so for a pension plan that only invests in traditional asset classes (investment grade rated fixed income and public market equities), the effects of the new rules are straightforward. However, for plans that are more diversified, have exposure to alternative investments, use derivatives, or utilize a liability hedging strategy, there remains some uncertainty; as well as some new dynamics to consider, says the report. This means the new rules need to provide more guidance on the treatment of derivatives and interest rate hedging which is not rewarded under the going concern funding rules. The new rules went into effect May 1.

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Guidelines Set Out For LITBs

The Alberta government has set out guidelines for life income type benefits (LITB). ‘Interpretive Guideline #21’ explains what an LITB is and what is required for a pension plan to offer this option. An LITB is a retirement income option that may be offered to members of a pension plan that has a defined contribution provision. It mirrors the requirements of a life income fund (LIF), with the same minimum and maximum payment requirements, but is provided through the pension plan as opposed to requiring the member to transfer funds to a financial institution. There are several advantages for a plan member when an LITB is offered. In most cases, there is a cost savings for the plan member in terms of lower administrative and investment costs as the member is still part of the pension plan and is not paying individual fees on a retail basis. As well, members will usually have the same investment options that they had while a contributing member of their DC plan, thus eliminating the need to become familiar with a new set of investment choices. For more information, see LITB

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Family In Business Helps Women Entrepreneurs

Two key points stand out when it comes to women entrepreneurs in the ‘2017 Québec Entrepreneurship Index,’ says Michele Boisvert. executive vice-president, business outreach, at the Caisse de dépôt et placement du Québec. “For women that want to become entrepreneurs, coming from a family that is already in business is a key data point. It increases the probability that she will own a business in the future by 83 per cent,” she says. The other key factor is having university studies as this increases the probability that both women and men will become entrepreneurs. Something else that stands out, she says, is once a woman has decided to start her own business, she is no different than a man in terms of ambition, desire to succeed, and willingness to take risks. The point at which she is ready to act is where a difference can be made as women tend to put a stronger emphasis on the social impact of their businesses. “During the meetings I had with women entrepreneurs across Québec, many of them spoke about the importance of doing business while contributing socially to their communities,” she says.

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Managed Plans Improve Outcomes

With concern rising over the long-term affordability of prescription drug plans, employers and other drug plan sponsors should be looking to comprehensively managed prescription drug plans as a solution that promotes better health outcomes at a lower cost. This is the primary finding of the Express Scripts Canada ‘Prescription Drug Trend Report: Trends in Canadian Private Benefit Plans.’ “Year after year, we see increases in the amount spent by prescription drug plans,” says Mike Biskey, president of Express Scripts Canada. “And the majority of these costs are concentrated on a relatively small number of claimants. Clearly, there is an opportunity for better health and financial outcomes if we actively engage and guide this group, and we can do that through comprehensively managed plans.” Overall, private plan spending on prescription drugs increased by 2.5 per cent from 2016 to 2017, driven once again by increased spending on specialty drugs, which now account for 31 per cent of the total spend, up from 15 per cent in 2008. Claims by members with high-cost chronic conditions drive almost 80 per cent of plan costs with an average annual drug spending that is 15 times that of other claimants. These members make up just 20 per cent of claimants and have, on average, 7.8 chronic conditions, see 3.3 physicians, and take 8.9 medications. Providing targeted, timely support to help these members make decisions that optimize cost and care is essential. Comprehensively managed plans can provide support to these patients while reaping the financial benefits of optimized treatment.

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Views On Funding Reform Vary

While actuarial consulting firms generally view the current funding framework for defined benefit pension plans in Nova Scotia as overly stringent and volatile, labour groups and unions generally supported maintaining 100 per cent solvency funding, although some were open to moderate changes to the existing regime. The province has released its ‘Pension Funding Framework Review: What We Heard’ which reports the submissions made on pension funding reform. It received 54 submissions (including 25 individual submissions that contained essentially the same content and appeared to be part of the same initiative). Responding were nine plan sponsors/trustees; four labour groups/unions; two retiree organizations; six actuarial consulting firms; five industry organizations; and 28 private individuals. Three of the industry organizations preferred eliminating solvency funding and enhancing going-concern funding while two emphasized that harmonization with other jurisdictions should be considered when making any reforms. While several of the employer/plan sponsor submissions did not comment on target benefit plans, of those that did, the majority supported Nova Scotia developing a regulatory framework for TBPs. Those that supported the idea of TBP regulations did not feel TBPs should be restricted to unionized environments and largely supported permitting the conversion of past benefits to target benefits. Labour groups/unions and retiree groups were generally not opposed to the idea of TBPs if they were designed to increase pension coverage and did not allow employers to “walk away” from their pension responsibilities. To see the responses, visit What We Heard

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Pharma Problems Require Joint Effort

Two serious problems need to be solved in the Canadian pharma space, says Dean A. Connor, president and chief executive officer at Sun Life Financial. Speaking at its annual meeting, he said, first, more than four million Canadians are not enrolled in a plan or don’t have access to coverage and “we need to fix that. Second, we have two-tier medicine prices in Canada.” Lower prices negotiated by governments who’ve banded together for bulk price negotiations and higher prices are charged by pharma companies to the remaining buyers. All buyers need to be brought into the same tent to negotiate equally low prices for Canadians. However, he doesn’t see national pharmacare as the answer. “We don’t think the solution is to abandon the plans that 25 million Canadians are happy with today. For one thing, they would not be happy to find out that the typical provincial drug formulary covers only 4,400 medicines, versus the 14,000 that a typical health plan covers today,” he said. What needs to be done is to leverage the best of what works in the public and private systems today, expand it to increase access to coverage, and combine purchasing power to achieve equally low medicine prices for all Canadians. “That would be far more affordable than the cost of having governments take over all of pharmacare,” said Connor.

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Financial Knowledge Fails To Deliver Results

Although financial literacy levels are high, knowledge is not translating into action and financial security and wellness, says Mercer’s ‘Inside Employees’ Minds Financial Wellness’ survey. Among the findings is that just over half (51 per cent) of respondents stated they were knowledgeable about financial. However, seven out of 10 respondents stated difficulty in managing a financial shock (such as three months out of work); 39 per cent said their total monthly loan payment is more than their take-home pay; and 51 per cent are stressed by financial matters. “Something we see time and time again is financial literacy doesn’t translate into financial wellness,” says Jillian Kennedy, leader of Canadian DC and financial wellness at Mercer in Canada. “It’s a trend that spans all ages, income levels ,and gender. From productivity to engagement to employee health, it’s becoming increasingly important for employers to be a part of the solution in bridging wellness and literacy for employees.” Financial wellness reaches beyond retirement security or financial literacy to areas such as whether employees have control over their day-to-day and month-to-month finances. Mercer Canada has launched its ‘Mercer Financial Wellness Index’ where organizations can benchmark their workforces against the wider Canadian marketplace.

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Dramatic Rise Coming For EM Bond Funds

Managers of emerging market (EM) bond funds can expect a dramatic rise in flows over the next year as investors turn favourable on the outlook for these assets, says research from NN Investment Partners. More than seven out of 10 respondents expect institutional investor allocations to emerging market debt to rise over the next 12 months, including 10 per cent who expect a dramatic rise. The expected fundamental economic drivers for emerging market bonds to improve within three years are the support provided by emerging markets fundamentals and the credit quality of issuers. Emerging market economic growth has outstripped that of developed markets since 2000 and these countries are benefiting from recovering commodity prices and historically low inflation.

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Prime Alpha Identifies Skill

With signs that the beta wave may have crested, investors are taking a closer look at ways to squeeze more return from their equities, says Andrew Chin, chief risk officer and head of quantitative research, in the inaugural edition of ‘AB IQ.’ Since active management offers that potential, the question is which active managers simply rode the beta and style wave and which ones possess true skill that’s worth paying for. It has designed prime alpha to identify manager skill by removing the cyclical impact of factor exposures and isolating the idiosyncratic components of return. Its research shows prime alpha tends to be persistent over time as managers who deliver high levels of prime alpha do it more consistently than do managers who deliver simple excess returns versus a broad benchmark. This also allows investors to see if the returns they are paying for are from beta, strategic factor exposure, or manager skill. Separating returns into these ingredients can help institutions ensure that fees among their managers are appropriate and reasonable based on the mix, he says.

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CPPIB Acting As Trust Anchor

The Canada Pension Plan Investment Board (CPPIB) and Allianz Capital Partners will act as anchor investors in the first private infrastructure investment trust in India. IndInfravit Trust, sponsored by L&T Infrastructure Development Projects Limited (L&T IDPL), will initially acquire five operational toll roads and plans to grow in the future through additional investments in road infrastructure in India. CPPIB will invest approximately C$200 million for 30 per cent of IndInfravit units, Allianz has acquired 25 per cent of the units and L&T IDPL will hold 15 per cent. The remainder have been subscribed by other local and international institutional investors. The five toll roads initially constructed by L&T IDPL are spread across the Indian states of Karnataka, Telangana, Tamil Nadu, and Rajasthan which together have a total population of 238 million people and contribute around 24 per cent to India’s GDP. These toll roads have been operating for approximately five years now and are used by diverse groups of road users and for goods traffic. 

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Ramirez Joins RBC

Cristina Ramirez is a group consultant for RBC Group Advantage at RBC. Most recently, she was director of business development, group retirement, at Penmore Benefits. She has also held positions with Great-West Life, Fidelity Investments, and Sun Life Financial.

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Ex-NHLer Discusses Mental Health Issues

‘Mental Health from Under the Mask featuring Clint and Joanie Malarchuk’ will be the focus at a Paul Hansell Foundation event. Clint Malarchuk played over 300 games as a goalie for the Quebec Nordiques, the Washington Capitals, and the Buffalo Sabres in the NHL. He is now an author, mental health advocate, and suicide survivor. It takes place June 11 in Burlington, ON. For information, visit Ex NHLer

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May 9, 2018


New Approaches Needed For Adding To Drug Plans

With the number of high-cost drugs and drug spend rising, insurance companies are taking a whole new approach on how they add things to their drug plans, says Barbara Martinez, national practice leader, drug benefits solutions, at Great-West Life (GWL) Assurance Company. Offering ‘5 New Things to Talk About in Drug Plan Management’ at the Benefits and Pensions Monitor Meetings & Events ‘Benefits: Trends & Insights’ session, she said all major carriers are making big changes, moving away from ‘prescription by law’ plans and adding drugs based solely on Health Canada approval. At GWL, the change is called ‘SMART’ – sustainable, managed, and reasonable treatment. “Not all drugs are added automatically,” she said. “Some go though a review period and we make a decision on whether we believe it is cost effective and adds value to the drug plan.” Pharmacoeconomic assessment is now the norm and some drugs may be excluded all together. Martinez said that a lot of new drugs are not better than the old ones and don’t add a lot of value. Health Canada’s drug review process only considers if the drug is safe and if it works better than nothing. “They do not compare new drugs to old drugs.” The Patented Medicine Prices Review Board (PMPRB) goes deeper and looks at whether new drugs are a breakthrough, have substantial improvement, moderate improvement, or slight to no improvement. “Eighty-two per cent of drugs fall into the slight or no improvement category.” These drugs will not add a lot of value to a plan. “Pharmacoeconomics will help to determine which drugs have the most value. It is important that plans understand and accept this,” said Martinez.

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Hedge Funds Faring Better

After nearly a decade of underperformance, hedge funds are actually faring better than the stock market in 2018, says HFR. Its ‘Fund Weighted Composite Index’ finished April narrowly ahead of the S&P 500 which posted a loss through the first four months. Higher volatility, the rally in energy prices, and some bets in fixed income allowed hedge fund managers to post a 0.38 per cent gain the month, bringing the total return for the year to 0.39 per cent. It was the first time the industry has outperformed the basic stock market index since 2008. In that instance, both hedge funds and stocks got clobbered, but the former’s loss of 19.03 per cent wasn’t as dramatic as the 37 per cent decline in equities during the worst of the financial crisis. The biggest contributors to this year’s run have been healthcare and technology stocks which combined have netted a 4.54 per cent gain. Fixed income asset backed strategies gained 3.12 per cent.

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Digital Tools Can Help Healthcare Services

The healthcare system is in crisis, but there are new digital tools that are helping delivery of these services, says Vince Danielsen, president and chief executive officer of WELLO by INLIV. In a talk on ‘Addressing the Entire Spectrum of Healthcare Needs through Innovative New Approaches’ at the Benefits and Pensions Monitor Meetings & Events ‘Benefits: Trends & Insights’ session with Arthur Kennedy, director of Canadian operations, WorldCare International Inc., he said that tools like telemedicine and patient portals have the ability to reduce wait times and improve access to healthcare needed. The adoption of telemedicine is growing rapidly, he said, with 71 per cent of U.S. employers with more than 500 employees offering access to healthcare providers by phone, web portal, or televideo as a covered benefit in 2017. This is up from 59 per cent in 2016. He said telemedicine and portals can help people with everything from general wellbeing to episodic urgent care and from advice on pediatrics to care for aging parents. Like telemedicine, medical second opinion (MSO) provides peace of mind for the member with reduced emotional insecurity as well as time and financial savings, said Kennedy. WorldCare has partnered with INLIV, the parent company of WELLO, for eight years to help patients work with medical professionals to understand and comply with care, he said. And with more than 10,000 diseases and only 200 to 300 symptoms, diagnosis of disease can be extremely hard, emphasizing the value of its MSOs. As many as 26 per cent of MSOs result in a change in diagnosis and 75 per cent result in a change modification of the treatment plan, he said.

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Balanced Dominates Searches

Balanced/multi-asset investment dominated institutional investor and consultant strategy searches in spring, says eVestment. Its data shows balanced and multi-asset searches featured 13 times on its list of 20 most-viewed UK products in April. A total of eight new products showed up in the top 20 and four of these were U.S.-focused equity strategies. Three of the new U.S.-focused entrants were large cap products and one was a small cap. Among global investors and consultants, the top three universes by average views per product were unchanged, but entering April’s top 20 list in fourth place was the U.S. passive large cap growth equity universe. Asia Pacific clients pushed two new universes ‒ UK all-cap value equity (traditional and fundamental) long/short credit (alternatives) – to first and second place, respectively.

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Strategy, Support, Sustainability Key Steps To Healthy Workplace

Strategy, support, and sustainability are three steps in the journey to achieving a healthy workplace, says Meaghan Jansen, owner and corporate wellness specialist at Employee Wellness Solutions. Speaking on ‘Achieving a Healthy Workplace – A Sprint or the Boston Marathon?’ at the Benefits and Pensions Monitor Meetings & Events ‘Benefits: Trends & Insights’ session, she said that there is no quick-fix approach. Despite having all kinds of digital tools and apps to track how happy and healthy they are, people aren’t really changing their behaviours. Even though 85 per cent of Baby Boomers say they eat too few vegetables and fruit, 62 per cent say they are obese, and 30 per cent say they are often or always stressed, 80 per cent think their doctors would say they are healthy. There obviously is a disconnect. Jansen said prevention is key – keeping healthy people healthy because most of the chronic diseases today are preventable. It used to be a one-size-fits-all strategy for health and healthy change, “but it doesn’t work that way.” Success comes down to a strategy that goes beyond single initiatives. “The program needs to focus on the integration of a health and wellness culture … with a focus on healthy lifestyle changes,” she said. Employers need to find what is relevant to employees and what will get people to actually make the changes. With a strategy in place, companies must provide support from leaders and management and champions of the cause.

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Quebecor Buys Out Caisse

Quebecor Inc has entered into an agreement with Quebecor Media Inc. and the Caisse de dépôt et placement du Québec to repurchase all of the share capital of Quebecor Media still held by the Caisse. The agreement provides that Quebecor and Quebecor Media purchase 17.6 million shares, representing a 18.47 per cent stake in Quebecor Media. “Ultimately, these transactions will allow us to have complete control over our destiny,” says Pierre Karl Péladeau, president and chief executive officer of Quebecor.

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HumanaCare Acquires Tranqool

HumanaCare, a provider of employee and member health services, has acquired Tranqool, a virtual health platform. The Tranqool platform will provide HumanaCare members with chat and video access to counsellors and healthcare professionals. “Tranqool gives us the opportunity to deliver care virtually, while providing a robust platform to expand access to our existing employee assistance programs, medical second opinion, disability support, caregiving/healthcare navigation, and chronic disease management services” says Jamie Marcellus, president of HumanaCare.

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AIMCo Buys Brussels Shopping Centre

The Alberta Investment Management Corporation (AIMCo) and Portus Retail, a retail property specialist, have acquired Docks Bruxsel, an urban shopping centre in Brussels, Belgium. Portus Retail and AIMCo intend to build on the success of Docks Bruxsel’s unique shopping ‘district’ positioning. The vision involves refreshing and strengthening the tenant mix and investment in the customer experience to develop a long-term, sustainable retail business. It is the first new shopping centre in Brussels in over 30 years and provides a modern retail format designed to suit the city’s international and cosmopolitan population. It was awarded the best new large shopping centre development in 2018 by ICSC Europe. Docks Bruxsel was developed by Equilis and TPF and opened in 2016. Portus Retail will act as asset manager to implement the strategic marketing program and a proactive leasing campaign.

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Thomas Leads SHARE

Kevin Thomas is executive director of the Shareholder Association for Research & Education (SHARE), starting June 1. He is currently the organization’s director of shareholder engagement, leading its investor engagement and policy programs.

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Delegated Model Examined

‘Delegated Investment Model ‒ A Strong and Growing Trend’ is the focus of a CPBI Alberta North session. Robert Leblanc, an associate partner at Aon Hewitt Investment Management, will cover the potential benefits of this approach. These include enhanced governance, timeliness of decision-making, and better risk management. He will also dispel some myths and misconceptions related to the delegated model. It takes place May 23 in Edmonton, AB. For information, visit Delegated Model

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