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September 17, 2018


Citigroup Agrees To Settle

Citigroup has agreed to pay nearly $13 million to settle charges by the Securities and Exchange Commission (SEC) that its Citigroup Global Markets subsidiary misled institutional users of its dark pool. The SEC order alleges that the Citigroup subsidiary and premium-priced dark pool Citi Match, operated by Citi Order Routing and Execution, misled users by assuring them that high-frequency traders were not allowed to trade in the dark pool, yet two of the most active users qualified as high-frequency traders and executed more than $9 billion of orders through the pool. “This representation was material because many market participants, particularly institutional firms, sought to avoid trading against HFT during the relevant period. CGMI charged users a relatively high commission rate for Citi Match executions ‒ generally targeted to be a penny per share for executions of orders placed using a direct connection into Citi Match ‒ based in part on the representation,” the order said. Citi Match was marketed exclusively to institutional customers, including mutual fund and retirement fund advisers.

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Digital Technologies Necessary For Successful Business

Epoch invests in companies like Kroger and Ocado that are ‘tech-friendly’ with offerings such as eCommerce, click-and-collect, and advanced inventory models, says William Priest, chief executive officer, co-chief information officer, and portfolio manager at Epoch. Speaking at the TD Asset Management ‘Investment Review Day 2018,’ he said the world is moving from atoms to bits, with disruptive technologies creating both opportunities and challenges for businesses. To stay competitive, businesses will have to have a model which allows them to facilitate digital technologies and the internet. The digital age is the second industrial revolution and digital technologies are growing exponentially. Today, information can be recombined and reused in all ways with cloud technology and this presents opportunities through data mining and cost reduction. Costs can be reduced by using technology to replace labour. For public companies, payout ratios will rise with decreased need for equity. Priest said companies like Amazon, Google, and Netflix have been very successful in “substituting bits for atoms.” In fact, the digital price index is markedly lower than the consumer price index and that’s “one of the reasons we haven’t seen the inflation everyone has expected.”

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ROI Provides Limited View Of Success

The conventional return on investment (ROI) standard of measure, in which dollars invested can be directly tied to cost savings, provides only a limited view of a financial wellness program’s success, says the last in a four-part series offered by MetLife. ‘Measuring the Value of Your Financial Wellness Investment’ shows increasingly, companies are using value of investment (VOI) to evaluate workplace health and financial wellness programs. A subset of ROI, VOI offers a more nuanced and accurate representation of the impact a program is having on employees and the company. VOI considers intangible outcomes, such as employee productivity, engagement, and overall job satisfaction, as well as costs associated with absenteeism, disability claims, and turnover.

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Panel Calls For Lower Contribution Rate

The UK’s Universities Superannuation Scheme (USS) should increase the total contribution rate to only 29.2 per cent to fund benefits, from the current 26 per cent, says independent assessment of the fund’s valuation by a panel set up by the University and College Union and Universities UK. Under the current proposal by USS, the contribution rate will increase to 36.6 per cent starting April 2020, based on the current valuation of the £60 billion pension fund for UK academic staff. The expert panel’s recommendations included a re-evaluation of the employers’ attitude toward risk in its investments, including the reliance on the plan sponsor to fund the deficit.

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People Opens Head Office

People Corporation has celebrated its head office grand opening in Winnipeg, MB. The company brought its Winnipeg talent together into a state-of-the-art 42,000 square foot facility. Strategically designed, the head office includes environmental and health-focused features such as sit-stand workspaces for every single employee, vending machines with healthy options, motion-responsive lighting, and even a car charging station. Departments were designed as neighbourhoods, each housing its own meeting rooms and environmentally-focused beverage stations that reduce waste and eliminate water bottles. The location was chosen because of the proximity of amenities allowing for employee wellbeing and convenience ‒ an outside sitting area, walking trails nearby, a gym next door, and plenty of restaurants and shopping are a few of the added benefits employees enjoy.

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Eagle Allies With Arabesque

Arabesque S-Ray, a data source for environmental, social, and governance (ESG) metrics, and Eagle Investment Systems LLC, a BNY Mellon company and provider of financial services technology, have formed a strategic alliance that will enable Eagle clients to access and incorporate Arabesque S-Ray sustainability data into their own investment platforms. Arabesque S-Ray is a tool that allows investors to monitor the sustainability performance of approximately 7,000 of the world’s largest corporations (over 90 per cent of the global market capitalization). By leveraging machine learning and big data, the technology systematically combines over 200 ESG metrics with news signals from over 50,000 sources across 15 languages enabling greater transparency into corporate behaviour and management.

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Blair Joins PSP

Francis Blair is managing director, distressed credit investment and rescue finance, private debt, at PSP Investments. Based in New York, he will help expand its current debt financing capability to include special situations. Previously, he was managing director at Solus Alternative Asset Management.

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Shulgan Has New Role

Mark Shulgan is managing director of the Ontario Municipal Employees Retirement System. Previously, he was a senior portfolio manager for thematic investing at the Canada Pension Plan Investment Board (CPPIB). He had started the board’s thematic investing group in 2014, with his team investing in public companies exposed to long-horizon structural growth.

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Building For Future Examined

The ‘2018 CPBI Atlantic Regional Conference’ will examine the theme ‘Building for the Future: The Challenge of Change.’ Sessions will include an examination of blockchain and cryptocurrencies, diabetes in the workplace, and ETFs in retirement plans. It takes place October 3 to 5 in Digby, NS. For information, visit CPBI Atlantic

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September 14, 2018


Retirement Becoming Redefined

What retirement will look like in 2050 will depend on what work will look like, says Bernard Morency, senior fellow at the CD Howe and Global Risk Institutes and an adjunct professor at HEC. In the plenary session ‘Fast Forward to 2050: Retirement Redefined’ at the ‘2018 ACPM National Conference,’ he said there are two forces at play ‒ automation and aging. Technology and AI (artificial intelligence) will have a major impact on the work environment and people’s careers by 2035. As a result, society and government will have to find ways to keep people at work longer. The keys to success are the adaptability of the work force and of employers. Workers will need to get into a lifeline learning mindset so they can reinvent and recreate themselves as the workplace changes. Employers will have to figure out how to support this. However, a welfare system will be needed to look after those who will be left behind. Still, the trend towards self-employment and contract work will continue which could accelerate, perhaps up to 50 per cent of employees. In this environment, people will not want to tie their savings to one goal ‒ “something people used to call: retirement,” he said. A more level playing field will be needed. He suggested giving people at age 65 a guaranteed minimum income (GMI) through OAS and GIS. At age 75, this GMI would be combined with C/QPP. And it could be paid for from the C/QPP reserves. Benefits paid out by 2050 from C/QPP will be around $280 million. However, the reserves for the base and supplementary funds will be around $4 trillion by then. Yves Carrière, a professor in the demography department at the Université de Montreal, said the impact of extending longevity could be very important. Demographers have different views on the future trend of life expectancy and longevity. Some argue that life expectancy at birth will reach 100 years for the cohort born in 2000. This much longer life expectancy than presently projected could have a significant impact on the number and proportion of seniors as well as the solvency of the retirement income system. However, there is trend towards later retirement due to lower private pension plan coverage This means an increase in the effective retirement age will likely continue. Still, there is a lot of uncertainty, he said. For example, some occupations may become obsolete due to technology. Some are predicting a sharp rise in unemployment with projections of 50 per cent unemployment considered optimistic. Finally, he asked what the impact will be if life expectancy reaches 150 years.

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Candriam Extends Exclusion Policy

Luxembourg-based asset manager Candriam will sell off all its assets in thermal coal and tobacco firms as well as manufacturers of chemical and biological weapons, in a further sign that the move towards taking environmental, social, and governance (ESG) factors is gathering pace within the investment industry. The fund manager says that it will extend the exclusion policy, which it has operated in its socially responsible strategies for the last 20 years, to its full range of active, smart beta, indexed, and alternative strategies. It aims to divest itself of the assets by the end of this year.

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Quebec Reviewing Multi-jurisdictional Agreement

Quebec is reviewing the 2016 multi-jurisdictional agreement on pension plans in light of the change of solvency rules in that province and elsewhere, says Stephane Gamache, acting director of the supplemental pension plans directorate at Retraite Quebec. At the ‘Special Breakfast with Retraite Quebec’ at the ‘ACPM 2018 Annual Conference,’ he said the current rules do not protect members of Quebec plans as well as they should. However, talks with other jurisdictions are not progressing as hoped. Quebec has an opportunity to withdraw from the agreement as of January 1 and will do so if it feels this is necessary as its role is to protect the interests of Quebeckers. “It’s not what we want to do as it would double the number of plans under our jurisdiction,” he said. However, it will if it feels this is in the best interests of plan members in the province. Sonia Potvin, public pension plan director at Retraite Quebec, said the retirement age is the major challenge because of the number of people who start collecting their government benefit at age 60 and continue to work is a growing concern as in recent years there has been a 12-fold increase in this practice. One solution, suspending pension benefits for those who return to work, is not very popular. And although Quebeckers have been told that delaying the collection of retirement benefits would increase their pension, they are not following this advice.

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Combating Climate Change Part Of Fiduciary Duty

Investing to combat climate change is part of the fiduciary duty of institutional investors, says former U.S. Vice-president Al Gore. Speaking at the Principles of Responsible Investing annual conference, he said that it is now clear from economic research and real-time performance that integrating environmental, social, and governance (ESG) factors into investing is in line with fiduciary duty and best practices. “The idea that the environment and the economy are in conflict is false. Decarbonizing goes hand-in-hand with improved economic performance,” said the co-founder of Generation Investment Management, a 14-year-old firm that specializes in equity investing with an ESG focus.

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Technology Reshaping Experience

Technology is reshaping the client experience, says Renée LaFlamme, executive vice-president, individual insurance, savings, and retirement, at iAFinancial Group. She told the ‘Two Sides to Every Bitcoin: The Opportunities and Risks of Advances in Technology’ at the ‘2018 ACPM Annual Conference’ that language recognition, machine learning, emotion detection, and intention detection are all available now, the industry just needs to make it happen to enhance the client experience. And members are ready for this. She cited statistics that show 73 per cent of Canadians would like to be able to complete tasks by speaking to a virtual assistant and 70 per cent of smartphone owners are interested in getting things done by speaking instead of typing or touching. And, by 2020, algorithms will positively alter the behaviour of billions of global workers with 30 per cent of web browsing sessions will be done without a screen. This mans the conversation is about to happen between man and technology which will be used to make technology more human to improve the client experience. Jean-François Allard, a partner in the technology risk consulting practice at KPMG, said with this comes the risk of more cybercrime. He said there are two types of cybercrime ‒ those where the technology is the target such as hacking for criminal purposes and distributed denial of service (DDoS) and incidents where the technology is the tool to perform ransomware or commit fraud and identity theft. All of these come down to the money they can leverage from crime because just as business has moved to the online channel, so have cybercriminals. There are five key reasons for the rise in cybercrime ‒ the digitalization of the economy; a significant dependence on critical IT infrastructures; the increased ability and ease of young people with technologies; the appearance in 2010 of a communication protocol called ‘TOR’ and anonymous exchanges on the Internet; and the appearance of the dark market. The role of boards of directors is critical to effective cybersecurity. They need to obtain and agree with answers to the three fundamental questions ‒ where the company is; its defensible position; and how to get there. “This shouldn’t be a debate about cybersecurity, but a business-led discussion about protecting corporate value,” he said. Boards need to understand the value of various data sets and whether appropriate resources are devoted to classifying and securing the most critical assets.

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Foreign Investment Grows

Foreign investments grew 5.1 per cent in the first quarter to $713.5 billion, accounting for 37.6 per cent of total holdings held by Canadian trusteed pension funds, says Statistics Canada. Foreign bond investments rose 10.9 per cent in the first quarter to $84.9 billion. This followed two consecutive quarters of declines. Foreign stock holdings posted a second consecutive quarterly rise, up 6.8 per cent to $356.8 billion. The market value of assets in trusteed pension funds totaled $1.9 trillion in the first quarter. Asset levels were up three per cent from the fourth quarter of 2017 and 5.7 per cent higher year over year. Pension fund revenue fell 30.4 per cent in the quarter to $42.4 billion. The decline was due, in part, to a 37.9 per cent drop in revenue from non-contributions. Profit on the sales of securities declined 48.6 per cent to $12.2 billion, while investment income decreased 24 per cent to $13.5 billion in the first quarter. Revenue from contributions also fell in the first quarter, down nine per cent to $14.5 billion. Expenditures declined 9.1 per cent to $22.2 billion. Pension payments, which accounted for over two-thirds of total expenditures, fell 3.5 per cent to $15.4 billion.

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Private Equity Funds Match Public Equities

Private equity funds have relatively been on the same pace with the bull market in public equities, says a PitchBook report. Using the Kaplan-Schoar public market equivalents method in which a value greater than one implies outperformance of the public index net of fees, it found that private equity funds raised in 2006 through 2015 just barely produced a public markets equivalent of more than one, indicating slight outperformance relative to the S&P 500 Total Return index. “Whereas an investor in PE two decades ago could essentially pick a GP at random and have a better than 75 per cent chance of ‘beating the market,’ for vintages since 2006 those odds are worse than a coin flip,” the study says. One reason is the stock market’s nine-year bull run. Overall, alternative investments ‒ which includes private equity, venture capital, private debt, real assets, fund of funds, and secondaries fund ‒ have provided an internal rate of return of 15.95 per cent for the year, 12.85 per cent for the five years, and 8.44 per cent for the 10 years ended December 31. By comparison, the S&P 500 index was up 13.6 per cent for the year, 13.69 per cent for the five years, and 9.06 per cent for the 10 year period.

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Sector Risk Explains Underperformance

Sector risk is the main explanation, with the market beta bias, for the underperformance of many factor strategies in the last three years, says a publication from ERI Scientific Beta. ‘Managing Sector Risk in Factor Investing’ focused on a comparison between standard smart factor indices and their sector-neutral counterparts. It found sector-neutrality adds value in terms of reducing tracking error and short-term underperformance with respect to the reference cap-weighted index. De facto, a large share of the underperformance attributed to factors in recent years actually relates to sector biases. Sector-neutrality nonetheless comes with costs in the form of higher volatility and lower factor intensity. Investors who wish to maximize the benefits of factor investing over the long term should, therefore, question the idea of protecting the short term through sector neutrality. It concludes that the choice of using the sector-risk-control option is a trade-off between investors’ aversion to short-term risks generated by sector risk and their willingness to harvest factor risk premia in the most efficient way to achieve the highest risk-adjusted performance over the long run.

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ETFs/ETPs Reach New High

ETFs and ETPs listed in Canada reached a new high of US$131 billion in assets, following net inflows and market moves of US$2.19 billion during August, says ETFGI. The 6.76 per cent increase in total assets marks the largest monthly change since March 2016. Equity ETFs/ETPs gathered the largest net inflows during August, while commodity ETFs/ETPs saw net outflows.

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La Française Acquires Veritas

La Française has acquired Veritas Investment GmbH and Veritas Institutional GmbH. Veritas Group has been operating successfully in the German market since 1991, initially from Frankfurt and more recently from Hamburg. The group has more than €7 billion in assets under management and, as an asset management boutique, focuses on portfolio management with innovative risk management for institutional and retail investors. La Française now becomes a significant local player in Germany, with €8 billion in assets under management.

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Assaf Joins IMCO

Sofia Assaf (CFA, FRM) is vice-president and head of client service at the Investment Management Company of Ontario(IMCO). She spent the last 13 years at Mercer Investments as, first, a principal and consultant, and, most recently, director of client consulting.

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Houlihan Heads Asset Servicing

Dan Houlihan is head of asset servicing, Americas, at Northern Trust. In this newly-created position, he will lead its business servicing institutional investors across the Americas, including corporations, public pensions, foundations, and endowments. He will also continue as regional head of global fund services, providing custody, fund administration, investor servicing, and middle office capabilities to asset managers. He joined the firm in 2008.

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Series Covers Starting Business

The Canadian Association of Alternative Strategies & Assets’Starting an Alternative Fund Series’ will offer seven sessions covering all areas of starting an alternative fund management business (hedge, liquid alternatives, private lending, real estate) in Canada. The first session examines starting a business. It starts September 25 in Toronto, ON. For information, visit Starting Business

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September 13, 2018


C-Suite Wants To Know Plans Work

Those in the C-Suite are not questioning the need to spend on pensions, they just want to know the ROI and if their plans are attracting and retaining people, says Maya Hourani, an actuary and total compensation professional. She told the ‘Boosting Canadian Employers’ Retirement Plan Offering’ session at the 2018 ACPM National Conference’ that every business leader is being asked to do more with less. However, it is not a question of using the dollars, just making sure every dollar is well-invested. That is why she said the industry has to stop focusing on saving defined benefit plans as they are a nightmare for the C-Suite and it is now too late in the game to save them. That leaves them with defined contribution plans which are favoured by CEOs and CFOs because they can check the box on providing a pension plan and are easy to understand by employees. However, changes still need to made to these plans as without new concepts, employers and employees will face another pension crisis in 25 years. The other area to address is private savings which, she said, could be encouraged by designing tax cuts for those who save for retirement. Euan Reid, of Eckler, outlined the elements of a great pension plan. He said there needs to be a stable system and then it must be affordable, understood and trusted, provide a safety net, and provide good income. However the stability and security of benefits is declining as provinces replace solvency funding requirements. And while members of DB and target benefits plans do provide a good retirement income and the enhancement of the CPP creates a better baseline, there is a big and growing gap in retirement income between those with pension plans and those without.

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NAFTA Agreement Important For Canada And U.S.

Getting a North American Free Trade Agreement (NAFTA) is material for Canada and for the U.S., says Frank McKenna, deputy chair at TD Bank Group and former Canadian ambassador to the U.S. Speaking at the TD Asset Management ‘Investment Review Day 2018,’ he said 40 per cent of Canada’s GDP and 76 per cent of its exports go to the U.S. As well, although the country is smaller than the U.S., it is one of their largest trading partners, thus it would be a win-win to establish a new agreement. “I think there will be a deal, it’s just a matter of time,” he said. “I’m just not sure we’ll get it through the current negotiations.” If not, this would put Canada in limbo and be bad for business confidence, he added. Such an unpredictable environment could be very volatile. U.S. President Trump has signed a deal with Mexico – which he calls the new NAFTA – but he is getting a lot of pushback on this and the tariffs he has imposed on a variety of countries including Canada, the European Union, China, and Mexico. “We could go into a perilous period between NAFTA and his substitute NAFTA.” NAFTA guides almost $1 trillion worth of trade and is one of the largest agreements in the world. McKenna said Canada may need to give some ground as it did for the (EU) Comprehensive Economic and Trade Agreement (CETA) and the Trans-Pacific Partnership. However, there are still layers of protection if NAFTA is repealed. For example, some say the Canada-United States Free Trade Agreement (FTA) is still in effect, “which would put us under the jurisdiction of the World Trade Organization.”

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Age 75 Deferment Should Be Allowed

Canada should allow retirees to defer government pension payments to age 75, says René Beaudry, a senior partner and total compensation consultant at Normandin Beaudry. In the ‘Decumulating the Accumulation – Changing CAP Behaviours’ session at the 2018 ACPM National Conference,’ he said the three main goals of saving for retirement are achieving security in retirement, maintaining the pre-retirement standard of living, and ensuring growth in their portfolios. Changing the age when pensions can be collected could see the benefits double, he said. However, retirees also want to ensure against longevity risks. The reason defined benefit plans work so well is that retirement funding is based on one in two retirees living to age 88 and only one in 10 reaching 97. However, the defined contribution pension plan member needs to save based on the chance they will live to 97 years of age. The belief DC could work as well as DB is a fundamental mistake, he said. A long retirement requires insurance, not saving which makes it puzzling why retirees don’t purchase annuities, he said. Wayne Miller, associate vice-president, strategic business development, at Sun Life Financial, said advisor bias could be part of the problem. Advisors are not leveraging all the tools of their trade if they are biased against annuities. However, the root causes of advisor bias include the belief that low interest rates mean low payouts so individuals should wait for rates to rise. The other fact is that the commission on these products is low compared to other investments and there is a negative impact to their assets under administration. Since they don’t make much commission, why would they suggest moving money into annuities, he asked. And, the industry is focused on assets under administration. If assets are used to purchase an annuity, they go off book which is perceived to be a bad thing. Yet, advisors actually do add value, he said. Canadians with advisors have 2.73 times more assets and save at twice the rate of those who don’t. Of those with advisors, 86 per cent say the advice is critical to reaching financial goals and they are more likely to have a financial plan. As well, advisors are the leading source of financial education.

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Study Sets Out Pharmacare Options

“Gaps in access under the current patchwork system seriously threaten the health of thousands of Canadians annually,” says Colleen M. Flood, author ‒ with Bryan Thomas and Patrick Fafard at the University of Ottawa and legal researcher Asad Ali Moten ‒ of a study by the Institute for Research on Public Policy on a national pharmacare framework. ‘Universal Pharmacare and Federalism: Policy Options for Canada outlines two options considered constitutionally viable. Under the first, provincial governments would delegate the power to administer drug insurance plans to an arm’s-length agency funded by the federal government. This process was used to establish Canadian Blood Services in the mid-1990s. The second option would be for the federal government to adopt legislation similar to the Canada Health Act and provide annual transfers for pharmacare to the provinces and territories. The funding would be contingent on compliance with universal coverage for a basket of essential drugs, with no copayments or deductibles; and decisions over what to include in the basket made by an arm’s-length body (or bodies).

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Uncertain Trade Outlook Hasn’t Dampened Economy

Canada’s uncertain trade backdrop has not had the dampening effect on the economy expected, says the ‘RBC Economic Outlook Report.’ Consumer spending and business sentiment remains high and there are signs of a modest firming in wage gains. It projects real GDP growth of 2.1 per cent in 2018 and slowing slightly to two per cent in 2019. Even with trade uncertainty reaching a near boiling-point, Canada’s trade gap with the U.S. narrowed in the second quarter, with exports surging as U.S. buyers got ahead of import tariffs. With tariffs being levied on both sides of the Canada-U.S. border, exports and imports are forecasted to rise at a significantly slower pace in the months ahead. Outside of Canada, the global economy is losing altitude, but recession is not on the horizon. Again, trade tensions are creating major turbulence. Despite this turbulence, RBC expects the global economy to post a strong gain in 2018 and to avoid a major downturn in 2019.

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Increased Retirement Age Would Help System

Canada should re-increase the national retirement age if it wants to make its retirement saving system better, says Benoit Hudson, a partner at Mercer. In the ‘Pensions and Public Policy: Canada’s Retirement System from a Global Perspective’ session with Robert Palacios, global lead for the pensions and social insurance group in the social protection and labor practice at the World Bank, at the ‘2018 ACPM National Conference,’ he said it was a mistake for the Justin Trudeau federal government to reverse an earlier decision to increase the age of eligibility for retirement benefits to 67. The Canadian system, like those elsewhere in the world, faces a number of challenges including a lack of access to pension savings for many, individuals who are more mobile and holding more jobs in their careers, government debt that is increasing in a low growth environment, inadequate savings rates, and low levels of financial literacy. The solutions, in addition to raising the retirement age, include making saving easier for everyone with technology, supporting financial literacy efforts (starting in school), introducing flexible draw down options for the decumulation of defined contribution pensions, and addressing longevity risk in a DC world. The Canadian system is being used as a model for pension systems elsewhere in the world and is among the more financially sustainable public pension systems, said Palacios. In terms of global systems, it spends less on pensions than the average OECD country and much less than the international benchmark given its stage of demographic aging. As a result, there is space for voluntary pensions which has led to a healthy diversification and accumulation of significant assets. The non-contributory universal pension and the modest CCP/QPP contributory pensions provide protection against poverty, but adequacy in terms of consumption smoothing is limited to those with voluntary private pensions and many workers don’t have private pensions. As well, changes to the nature of work may lead to a bigger role for the OAS/GIS and may require new ways to facilitate voluntary retirement savings, he said.

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Ratings Offer Distinct Risk Signal

With ESG (environmental, social, and governance) risk exposure facing specific companies and portfolios of companies, Sustainalytics’ ‘ESG Risk Ratings’ offer investors a distinct risk signal and deep insights into why certain ESG issues are considered material for a company and how well a company is managing those risks. The ratings provide a quantitative measure of unmanaged ESG risk and distinguish between five levels of risk: negligible, low, medium, high, and severe. Investors can use the ratings for ESG integration, investment analysis, index and fund creation, voting and engagement, and screening and benchmarking.

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Reformulary Signs Third Cannabis Provider

The Reformulary Group has signed Starseed as its third provider of medical cannabis for employer plans. It joins MedReleaf and Aphria on its cannabis formulary. These firms comply with its ‘Cannabis Standard‘ tool which provides guidelines for Canadians and physicians based on the best available evidence. These guidelines include lines of therapy, specific strains, form, grams per indication, mode of consumption, and quantity limits. The standard is intended to help Canadian employers navigate the process of covering medical cannabis in their benefit plans and support the development of a database that captures real-world, patient-reported outcomes based on established survey tools.

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Sun Life Puts Health First

Sun Life Financial Inc. is helping Canadians put their health first by providing a personalized wellness rewards program through the BestLifeRewarded platform. The platform tracks, measures, and rewards positive steps to reducing health risks and living a healthier life. Clients will start by completing a holistic health assessment that touches on the three main areas – financial, physical, and mental well-being. It then will guide individuals on their customized wellness journey using a personalized action plan that sets clients on the right path to improve their overall financial, physical, and mental health where they have the ability to track wellness activities, including nutrition, sleep patterns, and financial well-being. It also offers nudges and reminders for healthy behaviours such as staying active, drinking more water, and staying on track with monthly budgets. This is supported by contests, challenges, and daily actions to earn points towards rewards from Canada’s top retailers.

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Kimmet Heads HR

Pamela Kimmet is chief human resources officer at Manulife, effective October 1. She recently served as the chief human resources officer of Cardinal Health, a healthcare services and products company with 50,000 employees in nearly 60 countries around the world. She previously led the HR function at a number of global organizations, including Coca-Cola Enterprises, Bear, Stearns & Co., and Lucent Technologies.

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LeCavalier Joins Fiera

Donald LeCavalier is executive vice-president and global chief financial officer at Fiera Capital Corporation effective October 1. Most recently, he served as senior vice-president of finance and corporate affairs at TC Transcontinental. He has also led major strategic projects at Transat, Donohue, and SNC-Lavalin Group.

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Certificate Offered For Canadian Plans

The International Foundation of Employee Benefit Plans’ ‘Certificate in Canadian Benefit Plans’ is designed to provide a foundation in Canadian pensions and benefits, human resources, and compensation for those working with Canadian employees. Sessions will look at areas such as Canadian drug benefit practices, the Canadian retirement system, and pension reform. It takes place October 1 to 3 in Toronto, ON. For information, visit Benefit Certificate

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September 12, 2018


Sears Monitor Opposes Pensions Payout

A court-appointed monitor for the Sears Canada bankruptcy process opposes a proposal that would effectively allocate all the failed retailer’s remaining assets to the company’s underfunded pensions. FTI Consulting argued in a filing to Ontario Superior Court that the pension proposal should be dismissed due to legislation and case law. FTI is opposing the pension motion through its role as monitor in part because it doesn’t appear any of the other unsecured creditors is in a position to challenge it. These other creditors are primarily small businesses and individuals including former employees, retirees, contractors, vendors, and customers with warranty claims. A petition filed with the court in July by the pensioners claimed about 18,000 Sears retirees should have first claim on assets to reduce a roughly $260 million shortfall in their pension plans. However, Sears Canada had only about $158.3 million on hand plus a few properties that remain to be sold, meaning none of the company’s other unsecured creditors would receive anything if the pensioners get first priority. If the pension retiree motion fails, the remaining assets will be divided up proportionately among all classes of unsecured creditors.

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Global Investors Divest From Fossil Fuels

Global institutional investors with assets totaling $6.24 trillion have committed to divesting from fossil fuels, says a report from Arabella Advisors. The total represents the total assets of the institutional investors and not the amount divested. It is up from $52 billion four years ago and $5 trillion in 2016. In 2018, 985 institutions have reported fossil-fuel divestment plans, up from 688 institutions in 2016, and those institutions in 2018 span 37 countries. Among institutional investors divesting from fossil fuels, 29 per cent are faith-based organizations, 17 per cent are philanthropic foundations, and 15 per cent each are educational institutions, government institutions, and pension funds. Among pension funds, an additional 61 funds have committed to divestment since 2016, bringing the total to 144 in 2018.

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Public Expenditure Increase Slows

Public drug plan expenditures increased by an additional 1.9 per cent in 2016-17, following growth of 10.8 per cent in 2015-16, reaching a total of $10.7 billion, says the Patented Medicine Prices Review Board’s (PMPRB) ‘CompassRx’ report. The increase in public plan drug costs in 2016-17 was driven by a greater use of higher-cost drugs combined with reduced generic savings and a decline in the use of direct-acting antiviral (DAA) drugs for hepatitis C. Higher-cost drugs (other than DAAs) continue to be the most pronounced driver, pushing costs upward by 4.4 per cent in 2016-17. On average, the PMPRB’s National Prescription Drug Utilization Information System (NPDUIS) public drug plans paid 86 per cent of the total prescription costs for 266 million prescriptions dispensed to almost 6 million active beneficiaries in 2016/17. Excluding the DAA drugs, patented drugs, which represent the largest market segment, grew by 5.7 per cent. Drugs exceeding $10,000 in annual treatment costs grew by 17.2 per cent. These high-cost medicines were used by less than two per cent of public drug plan beneficiaries and accounted for almost 28 per cent of the total drug costs in 2016/17.

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RI Statement Requirement Removed

Trustees of UK defined contribution plans will not be required to prepare a separate statement on their participants’ views on responsible investment (RI). In response to a consultation, the government removed a proposed requirement for trustees and replaced it with an optional disclosure of their non-financial, social, and environmental policy. However, to clarify investment duties of trustees in charge of DC plans that are to apply starting October 1, 2019, the government said these trustees will need to declare and specify the investment horizon that is appropriate for their participants when disclosing policy on financially material considerations.

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Virtual Platform Relaunched

HumanaCare, a provider of employee and member health services, has completed the integration and re-launched TranQool, a virtual health platform. The platform is available through a number of partnerships to more than 1.3 million Canadians. Individuals and their families will be able to access counselling and therapy services virtually, from wherever is convenient for them.

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Tool Assesses Applicant Personality

Jobillico is partnering with Psychometrics Canada to provide Canadian businesses with an applicant assessment tool: the 5 Factor Personality Assessment. This psychometric assessment allows recruiters to see to what extent a candidate’s work behaviour fits the demands of the role. The assessment is a component of its vision on smart recruiting. The platform already included an applicant tracking system (ATS), candidate scoring, advanced search filters, and customizable candidate pre-screening questionnaires.

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Mak Chairs Pensions And Benefits Section

Sonia Mak, a partner and the leader of the pension and benefits group in Toronto, ON, office of Borden Ladner Gervais, is chair of the Canadian Bar Association’s pensions and benefits law section. She has been a member of the section’s executive since 2010 and has occupied different offices since 2015. The section is Canada’s leading association of pensions and benefits lawyers.

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Mackenzie Has New Position

Calum Mackenzie is practice director, Canada investment consulting, at Aon. He joined the company in 2007 and has served as a member of the global investment leadership team (GILT) and has been part of the Canadian leadership team for several years.

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Panel Discusses Pharmacare

Sessions at the CPBI Southern Alberta Region’s ‘Professional Development Day 2018’ will include a panel on national pharmacare with Jean-Michel Lavoie, assistant vice-president, group benefits, at Sun Life Financial; and Carrie McElroy, head of public affairs at Sanofi Canada and a member of the Conference Board of Canada’s National Pharmacare Initiative Steering Committee. Other sessions will take place on telehealth, big data, and the health and wellness benefits of sleep. It takes place October 24 in Calgary, AB. For information, visit Professional Development

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September 11, 2018


CAP Formalized

The British Columbia Investment Management Corporation (BCI) has formalized its climate action plan (CAP) and approach to the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) recommendations. It is also committed to align its reporting with the TCFD recommendations for asset managers and will apply those principles to its own disclosure going forward as it believes greater disclosure leads to improved transparency and helps investors make more informed investment decisions. It says climate change is a long-term, global issue and it must look beyond today in order to continue to meet its clients’ long-term financial obligations. Its motivation is driven by its clients’ interest in having a comprehensive understanding of their exposure to climate change risks and opportunities. It aims to increase internal awareness of the materiality of risks and opportunities with the goal of aligning with best practices among global investors.

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Workers Stressed About Preparing For Retirement

A significant percentage of workers across the board reported feeling stressed about preparing for retirement, says the Employee Benefit Research Institute (EBRI). In a special report analyzing data from its 2017 and 2018 retirement confidence surveys, it found, in particular, workers with lower incomes (64 per cent), those who have not calculated how much they will need to save for retirement (65 per cent), and those in fair or poor health (75 per cent) strongly or somewhat strongly agreed that preparing for retirement makes them feel stressed. Thirty per cent of workers overall reported worrying about finances at work. Debt was correlated with worrying; nearly three-quarters (71 per cent) of those who said debt was a major problem worried about finances at work, compared with just nine per cent of those who said debt was not a problem. In addition, more than half (55 per cent) of those who were not confident about living comfortably in retirement were worried about finances at work versus just seven per cent of those who were very confident, it found. Despite the correlation between debt and worrying about finances, a majority of workers thought workplace financial well-being programs would be either very or somewhat helpful in better preparing or saving for retirement, fewer than half of workers thought debt counseling or budgeting help would be helpful, and fewer than four in 10 (39 per cent) workers thought student loan debt assistance programs would be helpful in preparing for retirement. However, younger workers were much more likely to perceive these programs as being helpful than older workers.

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Performance Divergence Growing

Performance divergence is growing. Unigestion’s ‘Smoke on the Water’ study shows while the S&P 500 Index was up 2.8 per cent, the Eurostoxx50 index fell by 3.5 percent. In the foreign exchange market, moves have been divergent and significant as well: Swedish Krona declined by 3.7 per cent similar to Australian and New Zealand dollars, but the Euro and Canadian dollars were only down slightly, while the Swiss Franc was markedly stronger. Bonds also experienced large divergences: the U.S. 10-year bond yield declined from 2.96 per cent to 2.83 per cent, while at the same time UK 10-year bond yield rose from 1.33 per cent to 1.43 per cent. This situation can be explained by less synchronized global growth and the U.S. economy leadership; digital disruption as the contribution of the technology sector in the positive performance of global equity indices has been large and larger than their economic weight vis-à-vis value add to GDP; and momentum with the best performers moving higher and the worst ones lower. Historically, these periods of high dispersion and concentrated contributors are red flags and point to deteriorating fundamentals and divergent policy, it says.

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Top 100 Drive Activity

The top 100 largest private debt fund managers (by total capital raised in the last 10 years) drive the majority of activity in the industry, says Preqin. Although the top 100 managers represent just 15 per cent of the number of firms that have raised a fund in the last decade, they represent almost three-quarters (72 per cent) of capital raised in that period. The U.S. is home to the majority of top 100 managers, with 68 managers based in the country. The UK is the next largest hub, with 12 of the top 100 firms based there. Five of the largest 100 firms are based in Asia, despite the private debt industry in the region being relatively small. The top 100 have an estimated $186 billion of dry powder available to them – almost three-quarters of total private debt dry powder as at June 2018.

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Inflows More than Double

Canadian ETFs more than doubled in August, says a report from National Bank Financial (NBF) Inc. August saw an inflow of $2.8 billion more than double July’s $1.3 billion. The August inflows bring total assets under management (AUM) to close to $164 billion. Equity ETFs led the way during the month, with almost $1.9 billion in net flows, followed by fixed income funds with $835 million worth.

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Hub Acquires Clearwater

Hub International Limited has acquired Clearwater Insurance Group Inc. Headquartered in Toronto, ON, Clearwater delivers insurance solutions to clients through customized programs and proactive health services.

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Two Have New Roles

Joseph Chan is senior vice-president, leading Stem Capital’s consulting practice including benefits, retirement, total rewards, and HR technology and management consulting. Sevag Khoshian is director of sales and service, responsible for business development and client service.

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Duncan Joins Forstrong

Robert Duncan is senior vice-president, institutional strategy, at Forstrong Global Asset Management Inc. He is responsible for the development and implementation of its institutional strategy as it relates to strategic relationships with pensions, foundations, endowments, and other institutional clients and intermediaries. Previously, he was vice-president, iShares institutional business, at Blackrock Canada.  

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Conference Focuses On Soft Skills

The CFA Society Toronto will offer its inaugural soft skills-focused conference. It will provide an interactive platform on which to strengthen professional areas such as leadership, effective communication, negotiation skills, and how to effectively manage your career. Topics include thinking like an impromptu leader, effective communication and speaking skills, and how to market and brand yourself. It takes place October 2 in Toronto, ON. For information, visit Soft Skills

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