Industry News

March 22, 2017


Employee Engagement Declines

Employee engagement declined for the first time since 2012, based on opinions of more than five million employees from around the world, says a report from Aon Hewitt, the talent, retirement, and health solutions business of Aon plc. In Canada, however, employee engagement improved, albeit slightly, driven by strong perceptions of career opportunities and compensation. Canada enjoyed a marginal increase to 70 per cent from 69 per cent in 2015. That is seven percentage points higher than the global average and six percentage points higher than the United States. “Part of the reason for higher Canadian engagement is the relative political and economic stability Canada experienced in 2016, at least compared to the U.S. and several other countries,” says Todd Mathers, a partner in talent, rewards, and performance at Aon Hewitt Canada. As confidence in the economic recovery grows, employees are feeling more optimistic about both their career prospects and their compensation – the two big drivers of higher engagement for Canada in our study. “Canada’s improvements are also related to leadership – specifically, companies focusing on leadership effectiveness among their people managers,” says Mathers. “There’s a strong link between employees’ engagement and the effectiveness of the leaders they report to and more and more Canadian organizations are recognizing the need for greater focus in this area.”

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Managers Think Equities Overvalued

A record number of money managers believe equities are overvalued, says the Bank of America Merrill Lynch monthly fund manager survey. A net 34 per cent of managers said equities are overvalued, the highest reading in 17 years and up from a net 26 per cent in February. It shows a net 81 per cent of investors identified the U.S. as the most overvalued region, up from a net 78 per cent last month, while a net 44 per cent and 23 per cent believe emerging markets equities and eurozone equities, respectively, are undervalued, compared to 49 per cent and 24 per cent last month. A net 32 per cent of money managers think the U.S. dollar is overvalued, the highest reading since June 2006, and up from a net 28 per cent in February.

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Telehealth Adds To Cost

While consultations with doctors by phone or video conference appear to be catching on, a study suggests that although telehealth services may boost access to a physician, they don’t necessarily reduce healthcare spending, contrary to assertions by telehealth companies. The study in Health Affairs shows that telehealth prompts patients to seek care for minor illnesses that otherwise would not have induced them to visit a doctor’s office. It says the convenience of telehealth appeals to patients and the notion that it costs less than an in-office visit make it attractive to employers and health plans. Well over a million virtual visits were reported in 2015, but the research found that only 12 per cent of telemedicine visits replaced an in-person provider visit, while 88 per cent represented new demand.

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Empire Partners With Symbility

The Empire Life Insurance Company will provide stop loss insurance to Symbility Health Inc.’s third-party administrator partners, effective April 1. Stop loss insurance is purchased by employers who self-fund their employee benefit health plans and do not want to assume 100 per cent of the liability for plan’s claims.

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Meldrum Horne Joins Network

GroupHEALTH Benefit Solutions is increasing its advisor partner network by joining with Meldrum Horne & Associates. The new relationship allows Meldrum Horne to expand its portfolio by offering GroupHEALTH products and services. It also will further expand GroupHEALTH’s presence in the central Canadian market. Situated in Ottawa, ON, Meldrum Horne & Associates provides independent, private, and confidential advisory services to clients across Canada. The GroupHEALTH family of companies has offices in Vancouver and Surrey, BC; Calgary and Edmonton, AB; and Etobicoke, Woodbridge, and Barrie, ON. It insures more than 3,900 client organizations across Canada in both the public and private sectors.

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Workers Stressed By Retirement

Many American workers today are feeling stressed about retirement and are not taking steps to prepare for it, says the ‘2017 Retirement Confidence Survey: Many Workers Lack Retirement Confidence and Feel Stressed About Retirement Preparations’ by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates. And those feeling stressed have lower levels of retirement confidence and are less likely to feel financially secure, says the survey. The 27th annual version of survey finds that three in 10 workers report that they feel mentally or emotionally stressed about preparing for retirement. In addition, another three in 10 say that they worry about their personal finances while at work. Half of these workers believe they would be more productive at work if they didn’t spend time worrying. Among all workers, about half say that retirement planning (52 per cent), financial planning (49 per cent), or healthcare planning (47 per cent) programs would be helpful in increasing their productivity.

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Hedge Fund Liquidations Rise

The rate of hedge fund liquidations in 2016 was at the highest level in eight years as the pace of hedge fund launches fell to its lowest over the same time span, says Hedge Fund Research. Hedge fund closures numbered 1,057 in 2016, up eight per cent from 979 in 2015 and the largest since 2008 when 1,471 hedge funds were closed. There were 729 new hedge funds launched last year, down 25 per cent from 968 in 2015, representing the slowest growth rate since 2008 when only 659 new funds were set up.

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Steffy Joins Sun Life

Clark Steffy is director, institutional business development and relationship management covering Ontario and Atlantic Canada, at Sun Life Global Investments. Most recently, he was regional vice-president, sales, Ontario, Atlantic, and western Canada, at Industrial Alliance. Prior to that, he was a senior account manager at Manulife Financial.

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Responsible Investing Examined

Alison Schneider, director of responsible investing for Alberta Investment Management Corporation (AIMCo), will share the various approaches including AIMCo’s five pillars approach, at the CPBI Alberta NorthResponsible Investing: Where Do We Start and Why?’ session. It takes place April 19 in Edmonton, AB. For information, visit Responsible Investing

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March 21, 2017


OPB Beats Benchmark

The Ontario Pension Board (OPB), administrator of Ontario’s Public Service Pension Plan, ended 2016 with an annual investment return of 8.1 per cent, a value add of 1.5 per cent over its benchmark. The return helped the plan end the year with an estimated funded status of 97 per cent. Net investment income during the year amounted to $1.75 billion and net assets grew to $24.4 billion at year end. OPB continued its strategy of shifting assets from public to private markets in 2016, increasing its gross exposure by approximately $831.6 million. This included increasing its infrastructure portfolio by 6.1 per cent, private equity portfolio by 68.5 per cent, and real estate portfolio by 6.8 per cent. Overall, public market investments, which include public market equity, fixed income, and cash, returned seven per cent for the year, while overall private markets investments consisting of real estate, private equity, and infrastructure, returned 11.1 per cent.

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Precarious Work Bad For Health

Precarious work is bad for one’s mental and physical health, says a survey of nearly 5,000 Ontario workers by the Ontario Federation of Labour (OFL). Almost one-third of survey respondents cite mental and physical health issues as impacts of precarious work. Young people (18 to 34 years), precarious workers, and women are more likely to experience mental health distress. “We need to consider the whole picture when it comes to employment, instead of just businesses’ bottom line,” says Chris Buckley, OFL’s president. “I think that’s what business critics are missing, when we talk about changing the employment laws to make improvements for workers. Precarious work makes people sick – period.”

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ESG Exposures Reveal Security Risk

Information about a company’s environmental, social, and governance (ESG) behaviour may reveal how risky a security is on a statistical basis, says AQR. Its management paper – ‘Assessing Risk through Environmental, Social and Governance Exposures’ – shows a strong positive relationship between companies’ ESG exposures and the statistical risk of their equity. Stocks with poor ESG exposures tend to have higher total and specific risk and higher betas, both contemporaneously and as far as five years into the future. This may be evidence that ESG information may play a role in investment portfolios that goes beyond the ethical considerations and may inform investors about the riskiness of the securities in a way that is complementary to what is captured by traditional statistical risk models.

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Nagy Joins Mercer

Suzanne Nagy is a drug consulting leader on Mercer Canada’s health team. She has over 25 years of leadership experience in the specialty pharmacy sector, most recently with Bayshore Healthcare where she helped to establish the organization’s specialty drug patient support programs and pharmacy business.

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Adding Alternatives Examined

The AIMA Canada Sales Practices Committee is presenting ‘Investing in Alternatives and Hedge Funds: Adding alternatives to your book/portfolio. This workshop is for institutional investors and investment advisors and their teams who are looking at or already investing in alternative strategies or alternative asset funds. It features an introduction to the Canadian industry followed by a panel discussion that will look at the benefits and challenges of hedge funds, how to source and perform manager due diligence, and how to position alternative strategies and asset classes with different client segments. It takes place May 4 in Toronto, ON. For information, visit Adding Alternatives

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March 20, 2017


Plan Would Transform Federal Pensions

Keith Ambachtsheer and Jim Leech have a proposal to transform federal employee workplace pension plans into transparent, sustainable partnerships between Ottawa and its employees. To bring about this change, Ambachtsheer, director emeritus of the International Centre for Pension Management at the Rotman School of Management, University of Toronto; and Leech, chancellor of Queen’s University and former CEO of the Ontario Teachers’ Pension Plan; say Ottawa must accept the need for careful oversight and modern risk management tools since affordable, income-for-life pension plans involve considerable taxpayer-supported risks. The lack of clear funding and investment policies and processes and clear, logical, consolidated reporting of financial information negatively impacts Ottawa’s responsibility of equal fair treatment of current and future plan-members and taxpayers. In contrast, provincial governments have been actively facilitating the transition to pension plans jointly-sponsored by provinces and their agencies, with various forms of risk sharing. Giving management and labour joint fiduciary responsibilities would produce more cost-effective and fair pension plans. Importantly, it would give federal workers a meaningful role in the stewardship of their financial future and pre-empt any unilateral move by a future government to far inferior defined contribution plans, they say in a memo to Bill Morneau, Canada’s finance minister.

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Caisse Acquires Insurance Brokerage

The Caisse de dépôt et placement du Québec (CDPQ) and KKR, along with USI employees, have acquired USI Insurance Services (USI), a U.S. insurance brokerage and consulting firm. It was acquired from Onex Corporation. It operates out of 140 local offices throughout the United States, delivering property and casualty, employee benefits, personal risk, and retirement solutions.

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Hedge Funds Recover From Losses

The Preqin All-Strategies Hedge Fund benchmark recorded returns of 1.18 per cent in February, building on the 1.43 per cent gains seen the previous month. This contrasts with the losses that hedge funds incurred in February 2016. The industry has now recorded 11 months of positive gains in the past year and 12-month performance has consequently risen to 13.63 per cent, the highest level since May 2013 (+13.76 per cent). Most leading hedge fund strategies returned positive figures in February, with event driven strategies (+1.46 per cent) and equity strategies (+1.54 per cent) funds once again posting the strongest gains.

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Sankey Has New Role

Robert Sankey (CFA) is executive vice-president and chief operating officer at Burgundy Asset Management Ltd. He joined the firm in May 2005 to focus on performance measurement and firm-wide compliance initiatives. In February 2007, he joined the investment team and has since worked as an analyst focusing on fixed income securities, Canadian equities, and emerging markets equities. He was appointed a vice-president of the firm in May 2011.

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Session Looks At Plan Management

A CPBI Southern Alberta region session will look at ‘Drug Plan Management.’ Margaret Wurzer, senior manager, benefits and product development, at Alberta Blue Cross, will focus on drug plan management, specifically the opioid crisis and use of prescription narcotics, as well as maximum allowable cost pricing as an innovative cost management strategy.  It takes place April 19 in Calgary, AB. For information, visit Plan Management

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March 17, 2017


Mental Health ‘Right Thing To Do’

Ninety-one per cent of the organizations implemented the National Standard of Canada for Psychological Health and Safety in the Workplace because it is ‘the right thing to do,’ says the Mental Health Commission of Canada (MHCC)’s ‘Case Study Research Project’ that tracked 40 Canadian organizations from various industries and sectors as they successfully implemented it. A global first, the standard is a ‘made-in-Canada’ set of guidelines, tools, and resources to help employers promote mental health and prevent psychological harm at work. The study found other reasons included ‘to protect the psychological health of employees’ (84 per cent) and ‘increase employee engagement’ (72 per cent). “Today, we aren’t just saying mental health at work matters,” says Michael Wilson, MHCC board chair. “We see the results from 40 dedicated organizations from across Canada who rolled up their sleeves and led by example. They have helped put mental health and wellness at the heart of their organizations. Through their efforts, a shift is happening on Bay Street and on Main Street. From small, independently owned businesses to the telecommunications giant Bell Canada, we now have a blueprint for successful implementation of the world’s first workplace psychological health and safety standard.” In Canada alone, mental health problems and illnesses account for more than one-third of disability claims and two-thirds of disability costs.

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Online Members More Informed Consumers

Employees who enroll in benefits through online marketplaces, also known as exchanges, are more informed healthcare consumers, says a report from Liazon, operator of the Bright Choices Exchange and several private label benefits marketplaces in the U.S. The ‘Liazon 2017 Employee Survey Report: Health Care Consumerism in a Marketplace Environment’ reveals that the marketplace environment produces savvier and more satisfied healthcare consumers. Survey respondents reported they valued several aspects of their benefits marketplace including online education and decision support tools, transparent pricing, and expanded offerings as well as the ability to control their own benefits selections as opposed to having their employers select for them.

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CPP Adds To Student Housing

The Canada Pension Plan Investment Board (CPPIB), GIC, and the Scion Group LLC through their student housing joint venture entity, Scion Student Communities LP, has acquired three U.S. student housing portfolios. These portfolios comprise of six Class-A properties located primarily in the southern U.S.; 11 Class-A properties in premier university markets across the U.S.; and 12 legacy Scion-owned and operated communities situated in leading campus markets across the U.S. Since its inception in January 2016, the joint venture has completed US$2.9 billion of investments, including the acquisition of University House Communities Group and its 19 properties in June 2016. CPPIB and GIC each own a 45 per cent interest in the three portfolios and Scion owns the remaining 10 per cent.

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Robinson Joins Willis Towers Watson

Jan Robinson is a senior benefits consultant at Willis Towers Watson. Most recently, she was a managing principal for Ontario health and benefits consulting at Morneau Shepell, a firm she joined in April of 2006 as a senior benefits consultant. Prior to that, she was with Blewett & Associates and Creative Benefits Solutions.

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Marijuana In Workplace Discussed

A panel of experts will offer perspectives on occupational health and safety as well as legal and employee benefits considerations for employers at CPBI Atlantic’s ‘Marijuana in the Workplace.’ The panel for the session in Halifax, NS, on April 12 is Matthew Burnstein, an MD; Rick Dunlop, of Stewart McKelvey; and Theresa Rose, of Medavie Blue Cross. In St. John’s, NL, on April 27, the panel is Alex Boucher, of Mercer; Harold Smith, of Stewart McKelvey; and Rose. Information on the Halifax session is at Halifax Marijuana. For St. John’s, visit St. John’s Marijuana

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March 16, 2017


Maternity Leave Needs Further Reforms

As the federal government considers extending maternity and parental leave benefits from the current 50 weeks to 18 months, a study from the Institute for Research on Public Policy says that without additional reforms to ensure more equitable access to longer leave, the proposed changes will not benefit low income families. ‘Parental Benefits in Canada: Which Way Forward?’ says although the current EI maternity and parental benefits system appears to meet the needs of many families, there are in fact significant gaps, especially for low income families and parents in part-time work, contract work, or self-employment. Jennifer Robson, an assistant professor at Carleton University and author of the study, says Quebec’s system does a far better job of covering parents, while the federal system excludes more than one in five new moms who worked before adopting or giving birth. “Non-standard employment is here to stay and, unless rules are updated, we may see fewer parents covered for parental benefits,” she says. The proposed reforms would let parents spread their current EI benefits over 18 months instead of one year. She notes, however, that the offer of either 50 weeks of non-consecutive benefits or continuous benefits at a lower rate keeps longer leave out of reach for many families. To support families that most need help, the author argues that the reform package must also include a more responsive and inclusive eligibility test, targeted income support for low- and modest-income families, and better co-ordination of EI parental leave benefits and income-tested child benefits.

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Entitlement To Benefits Important Consideration

An employee’s entitlement to benefits, such as bonus or incentive plan payments, following the termination of his or her employment is an important consideration that should be addressed at the commencement of the employment relationship, says a DLA Piper ‘Newsletter.’ It says employment agreements and plan documents frequently contain provisions directed at limiting a dismissed employee’s entitlements. However, recent court decisions from the Alberta and Ontario courts of appeal highlight the importance of having clearly worded provisions in employment agreements and plan documents in order to limit or eliminate such entitlements. These decisions confirm that the starting point when determining whether provisions in employment agreement or plan documents limit an employee’s entitlements following termination is that an employee is entitled to receive the compensation package he or she would have received had his or her employment continued during the reasonable notice period. In other words, courts generally include all of the compensation and benefits that the employee would have earned during the notice period. However, this can be limited or eliminated with proper language that was brought to the employee’s attention and formed part of the employee’s contract of employment. Employers should carefully consider the terms of the employment agreements and plan documents they utilize to ensure the provisions used contain appropriate language if they intend to limit or eliminate the benefits an employee is entitled to after dismissal without cause.

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Rate Hike Poses Questions

Investors need to ask three key questions in the wake of the U.S. Fed’s interest rate hike, says Nigel Green, founder and CEO of deVere Group. “This rate rise by the world’s defacto central bank confirms that we’re in a new era of higher inflation and higher interest rates. Investors will now need to position themselves accordingly,” he says. However, while rates are beginning to normalize, it may take a couple of years or so to get there and when they do the global economy will look very different to how it does today. Investors now need to determine if their portfolios are truly diversified; if they are prepared for dollar swings; and if they are prepared for inflation. “Investors who answer these questions honestly and then take affirmative action will find that they do not need to accept lower returns in this new era of higher rates and inflation,” he says.

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Ontario Adopts PRPP Regulation

The Ontario government has adopted a regulation that will allow Ontario to join the Multilateral Agreement Respecting Pooled Registered Pension Plans and Voluntary Retirement Savings Plans, says a Morneau Shepell ‘News and Views. Effective March 31, Ontario will join British Columbia, Nova Scotia, Quebec, Saskatchewan and the federal government in signing the agreement. It will permit pooled registered pension plans (PRPP) to be registered only with the federal Office of the Superintendent of Financial Institutions (OSFI) in order to be effective across all jurisdictions that have signed the agreement. The process for registering and administering a PRPP that is also a Quebec voluntary retirement savings plan (VRSP) will be simplified as well. The adoption of the agreement was the final regulatory step required to allow financial institutions to offer PRPPs in Ontario.

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CI Launches Global Real Estate Fund

CI Institutional Asset Management, a division of CI Investments Inc., has launched a global real estate fund in association with CBRE Global Investment Partners. Through the CI Global Private Real Estate Fund, high net worth investors and smaller Canadian institutions can now gain exposure to CBRE Global Investment Partners Global Alpha Fund, an open-ended fund with direct investments in over 1,900 properties in North America, Europe, and the Asia-Pacific region. “Investing in a global portfolio of private real estate offers many benefits, including attractive returns, diversification, low or negative correlation to stock and bond markets, a potential inflation hedge, and stable income,” says Neal Kerr, president of CI Institutional Asset Management.

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Caisse Invests In Datamars

The Caisse de dépôt et placement du Québec (CDPQ) has invested in Datamars, a global company based in Switzerland whose technology is used to identify and track livestock, companion animals, and textiles. CDPQ will become the company’s largest shareholder, alongside Datamars’ senior management and Columna Capital. Operating in an industry driven by fundamental trends, such as increasing global concerns regarding food safety, Datamars offers strong growth opportunities and is well-aligned with CDPQ’s long-term investment strategy.

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McBride Joins WE CAUS

Crystal McBride is a client development manager at WE CAUS Consulting and Benefits. Most recently, she was a client development manager at BCCA Employee Benefits Trust and bClear Benefits. Prior to that, she was the integrated solutions client manager with PPI Advisory. 

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Impact Of Ageing Examined

Kevin Dougherty, president of Sun Life Financial Canada; Jim Keohane, president and CEO of HOOPP; and Michael Latimer, president and CEO of OMERS; will discuss the impact and challenges the ageing of Canada’s population will have on nearly every industry in Canada at the National Institute on Ageing’s Ageing and the Economy.’ It takes place May 1 in Toronto, ON. For information, visit Ageing And Economy

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