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February 5, 2018


Compression Drives Income Return Down

Standing real estate investments in Canada returned 6.7 per cent in 2017, says Simon Fairchild, executive director of MSCI. Speaking at the ‘REALPAC/MSCI Canada Real Estate Investment Forum,’ he revealed the annual results of the ‘2017 REALPAC/IPD Canada Quarterly Property Index.’ He said this was made up of 4.8 per cent income return and 1.8 per cent capital growth. However, there was continued cap rate compression which drove income return down to an all-time low from 4.9 in 2016. The results show global convergence continued and Canadian returns have weakened compared to other markets. It marks the third straight year Canada has lagged global performance and he said this may be due in part to oil prices. Still, direct real estate was a better investment than bonds. Returns have averaged eight per cent a year over the past decade, double the return of stocks and bonds. Returns for residential and industrial were 10.3 per cent and 10.2 per cent respectively. Office space returned 6.2 per cent while retail was at 5.3 per cent. However, in Canada, it is more a case of where assets are, not sectors, he said. Assets in Toronto, ON, returned 10.4 per cent while in Vancouver, BC, where things did slow, the return was 9.3 per cent. All other areas across the country returned less than seven per cent with Calgary, AB, showing a decline on 0.3 per cent.

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Results Positive For Seventh Straight Month

The median return of the BNY Mellon Canadian Master Trust Universe, a BNY Mellon Global Risk Solutions fund-level tracking service, was +4.29 per cent for the fourth quarter of 2017, marking the seventh straight quarter of positive results. The one-year return of +9.83 per cent was above the Canadian Master Trust Universe’s 10-year annualized return of +6.68 per cent and also marks the seventh consecutive quarter of positive one-year performance. The top performing asset class in the fourth quarter was U.S. equity with a median return of +6.65 per cent. International equity was the best performing asset class over the one-year time horizon (+20.01 per cent). The weakest performing asset class in the fourth quarter was real estate with a median return of +2.39 per cent and fixed income for the one-year time horizon with a median return of +3.27 per cent. During the quarter, 100 per cent of plans posted positive results.

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Beneficiaries Need Say On Sustainability

Pension funds should consult their beneficiaries on their sustainability preferences and reflect those in their investment decision-making – regardless of whether or not they are financially material, says the group advising the European Commission on sustainable finance. The High Level Expert Group (HLEG) says whether financially material or not, the preferences of clients, members, and beneficiaries shall be proactively sought and incorporated into investors’ investment decision-making and the demands that they, in turn, make on the asset managers and other participants with which they interact to deliver their obligations to clients. The implication is that the recommendations should apply to investment consultants as well as pension funds. It sets out a number of priority recommendations or actions including a call for the pension fund industry is to explore initiatives to improve ESG integration and reporting above what is currently required in regulation.

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Health Insurance Extremely Important

U.S. workers say health insurance is extremely important when considering whether to stay in or choose a new job, says an EBRI/Greenwald & Associates Health and Workplace Benefits Survey. This compares to only 42 per cent who report that a retirement savings plan is extremely important. While confidence in the health system is low, confidence in workers’ own health plans remains high: Workers tend to be more favourable about their own health plans than they are about the healthcare system overall. One-half of workers with health insurance coverage are extremely or very satisfied with their current health plan. Workers are generally confident that their employers or unions will continue to offer health insurance in the future. Nearly two-thirds (63 per cent) of workers report that they are extremely or very confident. Their dissatisfaction with health insurance is focused primarily on cost: just 22 per cent are extremely or very satisfied with the cost of their health insurance plan.

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Common Objectives Should Be Considered

As more defined benefit plans derisk and pursue a liability-driven investing (LDI) strategy, managers of insurance assets should consider their clients’ common investment objectives and potentially service both client types, says Cerulli Associates. “Life insurance companies and corporate DB plans pursuing LDI strategies share several similar investment objectives centered around achieving returns that allow them to meet long-term liabilities,” says James Tamposi, a research analyst at Cerulli. “This means that both institution types should implement strategies that persist across market cycles.” In addition, they both rely on strong credit fundamentals and have a common allocation to fixed income. The similar investment objectives between these institution types means that asset managers can leverage their current experience from servicing one client type to manage assets for the other. As more DB plans enter the LDI stage of investing, insurance asset managers should follow and begin to build capabilities in the space, it says.

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GWL Acquires Everwest

Great-West Life’s GWL Realty Advisors (GWLRA), through its U.S. subsidiary, has acquired the business of EverWest Real Estate Partners. This is described as a strategic move to build on GWLRA’s long-term strategy to establish a global investment platform to serve its investor clients. Headquartered in Denver, CO, EverWest has a 20-year foundation of real estate advisory experience through predecessor companies. It currently manages a real estate portfolio of office, industrial, and multi-residential assets in key U.S. markets.

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Investors Focus On Infrastructure Equity

Over half of major infrastructure investors, including asset owners, are focused solely on infrastructure equity investment, while a third seek both infrastructure equity and debt, says an EDHEC Infrastructure Institute (EDHECinfra) survey. It shows investors mostly chose to reject the geographic and sectoral categories typically used for capital markets benchmarks, preferring instead to understand their infrastructure exposures in terms of the level of economic development and investability of national markets. They also recognized the fundamental difference between infrastructure project financing and infrastructure ‘corporates’. Focusing on individual sectors was not considered a structuring aspect of the asset class, instead, most asset owners asked for ‘broad sector’ indices and sub-indices using `business model’ filters rather than industrial ones.

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Ninepoint Launches Funds

Ninepoint Partners LP has launched the Sprott International Small Cap Fund and the Sprott Concentrated Canadian Equity Fund. Both funds complement its diversified offerings for investors and will be available for purchase at the beginning of March. The international small cap fund will invest in a diverse range of sectors and industry groups across the globe, limiting currency and industry specific risks. The fund will be sub-advised by Global Alpha Capital Management, an affiliate of Connor, Clark and Lunn Financial Group. The concentrated Canadian equity fund will focus on a concentrated portfolio of select Canadian companies and will be sub-advised by Scheer, Rowlett & Associates, an affiliate of Connor, Clark and Lunn Financial Group. It will work to uncover value by utilizing a comprehensive investment process that includes value screens, discount verification, profit sustainability analysis, and security valuation.

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Chinese Equity Performs Best

Twenty-four of the 44 Morningstar Canada Fund Indices increased during January, with nine of them increasing by two per cent or more, while 18 of the 20 losing indices decreased by 1.6 per cent or less. The best performer was the one that tracks the Greater China equity category, which followed up its chart-topping 35.9 per cent increase in 2017 with an 8.7 per cent increase in January. While currency effects detracted from returns during the month, stock markets in Hong Kong, Shanghai, and Taiwan posted solid gains of 9.9 per cent, 5.3 per cent, and 4.3 per cent, respectively. Fund indices that track the Asia Pacific ex-Japan equity and Asia Pacific equity categories, which were among the top performers in 2017, also continued their winning streak in January, increasing 3.5 per cent and 3.3 per cent, respectively. In the United States, the S&P 500 Index posted a total return of 5.7 per cent, but the U.S. dollar depreciated by two per cent against its Canadian counterpart, resulting in an increase of 3.6 per cent for the U.S. Equity Fund Index. This was the third-best result among indices in January. Domestic equity funds were among the worst-performing equity categories for the month, as the energy sector continued to impede the Canadian market. The Morningstar Canadian Equity Fund Index had the worst result among all diversified equity categories with a 1.4 per cent decrease, matching the total return of the S&P/TSX Composite Index.

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Waldock Joins McCarthy Tétrault

Deron Waldock is a partner, pensions, benefits and executive compensation, at McCarthy Tétrault. Most recently, he was a partner and national legal consulting practice lead at Aon Hewitt. He has also been with Blake, Cassels & Graydon; Bennett Jones; and Osler, Hoskin & Harcourt.

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Hockey Game Featured At Networking Event

The CPBI Ontario Region’s London Chapter is taking in an Ontario Hockey League game as its winter networking event. Attendees at ‘London Knights Night’ will see the local team take on the Guelph Storm. In addition to an evening of sport and networking, attendees get a seat in a premium suite for the game, appetizers, a complimentary beverage, contests, draws and more. It takes place March 7 in London, ON. For information, visit Knights Night

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February 2, 2018


Employers Face Two Accommodation Issues With Marijuana

If marijuana use is a problem in a workplace now, it will continue to be one when its recreational use is legalized this July, says Jay Rosenthal, co-founder and president of the Business of Cannabis. In the ‘Clearing the Haze: The Impacts of Marijuana in the Workplace’ session at the HRPA’s ‘2018 Annual Conference & Tradeshow,’ he said that marijuana is currently estimated to be a $6 billion industry in Canada and most of it is illegal. Employers will face two duties to accommodate, he said. The first is the duty to accommodate an employee is suffering from an addiction. However, benefit plan sponsors will also face a duty to accommodate those using medical marijuana. He urged employers to be as ready as possible, but said these will be evolutionary, not revolutionary. J. Scott Allinson, vice-president of public affairs at the HRPA, said their surveys show plan sponsors are not ready for the change in law with workplace safety topping the list. However, he said at this time the government seems to be focusing on legal aspects and taxes with employer concerns about safety, disciplinary procedures, and decreased work performance last on the government list of issues to address. Kim Slade, director of emerging markets and commercialization at the Public Services Health & Safety Association, said alcohol and drugs have similar effects on mental and physical abilities. Given this, employers can probably have policies in place on marijuana use similar to their existing policies on alcohol use in the workplace. There are three policy types that can be put in place. An employer who can prove that workplace safety is a bona fide occupational requirement could have a zero tolerance policy in place. A per se law policy would set an upper limit of impairment and test for that. A two-tier approach could be used when there are safety and non-safety sensitive jobs in a workplace, but these need to be defined in the policy. In any event, she said employers should seek legal counsel when developing policies related to medical and recreational use of marijuana in the workplace.

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Companies Partner On Healthcare

Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. are partnering on ways to address healthcare for their U.S. employees. The aim is improving employee satisfaction and reducing costs. They will pursue this through an independent company that is free from profit-making incentives and constraints. The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality, and transparent healthcare at a reasonable cost.

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ESC Awarded HICPS Contract

Health Canada has awarded the Health Information and Claims Processing Services (HICPS) contract to Express Scripts Canada (ESC). The contract will see it provide a broad range of services including the processing of tens of millions of pharmacy, dental, vision, mental health and medical supplies, and equipment claims for the Indigenous People of Canada. The five-year contract includes renewal options that can total up to 11 years.

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Alberta Blue Cross Cuts Dental Costs

Alberta Blue Cross will reduce rates on group benefit plans for thousands of Alberta employers in conjunction with recent dental fee guide changes. Its employer group benefit plans that reference usual and customary dental fees have been aligned with the new Alberta Dental Association and College dental fee guide and now reference the fees contained in that guide. As a result, employers whose plans follow the guide are expected to experience a reduction in claims costs for many common and highly utilized dental procedures. For those employers whose insured plans reference the dental fee guide, Alberta Blue Cross will provide an immediate rate reduction to the dental benefit rate of 6.5 per cent, effective March 1, 2018, which groups will see on their March bill. It will also be lowering the renewal inflation factor for groups renewing throughout the rest of 2018. The fee guide was introduced by the association under pressure from the Alberta government to reduce dental costs which continue to be the highest in Canada. Alberta Blue Cross administers group benefit plans for over 5,700 employers across the province with employees across the country ranging in size from small businesses right up to Alberta’s largest employers. It pays in excess of $430 million annually to dental providers on behalf of its customers.

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Canadian Employees Less Loyal

Canadian employees are less loyal to their employers than their global counterparts and more than three-in-five Canadians have ‘wandering eyes,’ says an ‘Evolution of Work’ study by the ADP Research Institute. It showed that only 57 per cent of Canadian employees feel loyal to their employer – well below the global average (70 per cent), and while only one-in-five (20 per cent) are actively looking for new employment opportunities, an additional 43 per cent would be open to a new job. However, this lack of loyalty isn’t for lack of effort. The majority of Canadian employees (75 per cent) understand how they contribute to the success of their company and nearly as many (71 per cent) want to play an important role in their company. But while eager, they feel undervalued. Only half said the work that they do is purposeful (51 per cent) or valued (47 per cent) – a substantial disconnect from employers, who were more optimistic that employees feel purposeful (65 per cent) and valued (63 per cent) within the organization. “It’s clear there’s a substantial disconnect between the employee experience and expectations, and the employer’s perception … a disconnect that poses a risk for employers in losing talent and leads employees to look for other job opportunities,” says Virginia Brailey, vice-president, marketing and strategy, at ADP Canada.

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Acquisition Of Historic Terminal Closes

Oxford Properties Group and the Canada Pension Plan Investment Board (CPPIB) have closed on the acquisition of a portion of New York City’s historic St. John’s Terminal site from Westbrook Partners and Atlas Capital Group. Oxford will own a 52.5 per cent interest and manage the development on behalf of the Oxford-CPPIB partnership. CPPIB will own the remaining 47.5 per cent interest. The 3.25-acre site features 600 feet of Hudson River frontage in the Hudson Square submarket of Midtown South. The existing St. John’s Terminal structure, built in 1934 as the rail freight terminus to the High Line, features soaring ceiling heights and over-sized floorplates. 

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Blessing Kicks Off Construction

DeBartolo Development, OPTrust, and the department of Hawaiian Home Lands (DHHL) will kick off construction of a new phase of Ka Makana Ali‘I with a blessing. The Grove at Ka Makana Ali‘i is focused on creating a gathering place to promote healthy living in the West O‘ahu community. The 109,000-square-foot space will be home to a variety of healthy lifestyle retailers, restaurants, and services. Ka Makana Ali‘i opened in 2016 and now features more than 125 retailers, eateries, state-of-the-art theatres, and the state’s first Hampton Inn & Suites by Hilton on property. Construction is set to begin in February and is anticipated to be completed in 2019.

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Caisse Acquires Alvest Stake

The Caisse de dépôt et placement du Québec (CDPQ) and Ardian, an independent private investment company, have completed the acquisition of a significant stake in Alvest, a global provider for the development, production, distribution, and support of airport ground support equipment (GSE). Its customers, including passenger airlines, cargo airlines, ground handlers, and airport authorities, will benefit from this investment through its enhanced capacity to bring new and innovative solutions to the market. The investment will also contribute to Alvest’s efforts to continue building its global footprint.

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Belhi Joins Toronto

Hatem Belhi is director, pension, payroll, and employee benefits, at the City of Toronto. He joins the city from the Ontario Ministry of Consumer and Government Services where he was director, pay and benefits support branch (shared services). He joined the province from Manulife Financial in April of 2012.

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Panel Discusses Wellness

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

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February 1, 2018


Sponsors Waiting To See On Marijuana

There are a number of reasons why plan sponsors are not providing coverage of medical marijuana in their benefits plan, says Lucian Schulte, senior vice-president and leader of the analytics team at Aon Risk Solutions health and benefits practice. Taking part in its panel discussion ‘In the Weeds: Should your benefit plan cover medical marijuana?’, he said some employers will cover it under certain circumstances such as cancer patients dealing with nausea and vomiting from chemotherapy. In some of these cases, they are doing so through health spending accounts (HSAs). However, many are taking a wait-and-see approach as concerns exist over prescribing practices which vary across the country and product variability. For example, the recommendation is that the THC content ‒ which produces the euphoria ‒ should not exceed nine per cent. However, many products on the market exceed this. This make it difficult to ensure doctors are comfortable with the products they are prescribing. Cost is another consideration as annual costs can be near $10,000. If a sponsor attempts to introduce a maximum spend, this poses problems if other drugs in the plan have unlimited coverage. Shoppers/Loblaws came to its decision to cover medical marijuana after its own in-depth clinical assessment, said Jonathan Tafler, senior director of product and operations, employer health solutions, at Shoppers. It found a body of evidence that medical marijuana was equally or more effective relative to its cost than other medicines. It also hopes that by providing medical marijuana it could see a reduction in opioid use. He said a number of studies show there is a reduction in opioid use, by up to 30 per cent, if marijuana is offered as an alternative. He said they believe this is an option. Coverage started in April of 2017 and came with a maximum benefit of $1,500. It is part of the core drug plan, but is a pay and submit product. Covering it under a health spending account, a popular option for plan sponsors, was decided against because there is no way for sponsors to track what strains and dosages are being used. So far, claims volume has been a lot lower than expected, he said. This could be due to their conservative approach, but also a lag effect that often follows new coverage in plans as members have to learn about it. Christine Than, a senior drug solutions consultant at Aon Risk Solutions, said marijuana has been used for centuries for variety of reasons including medical. Proponents of its medicinal value say it is effective for everything from depression to Parkinson’s disease. However, she said there is little scientific evidence of its medicinal properties and most of the evidence is anecdotal. However, it is conceded that it can help with spasticity related to MS, chronic pain, and nausea and vomiting in cancer patients undergoing chemotherapy. As well, the federal department of veteran affairs covers it as a treatment for PTSD (post-traumatic stress disorder) and it now has more than 1,700 claimants. This lack of strong scientific study, however, is why the medical community is slow to accept it, she said.

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Co-operators Boosts Mental Health Benefit

The Co-operators increasing its employee mental health benefits coverage for employees to $5,000 per year per family member and also expanding the number of eligible practitioners beyond psychologists and social workers to include family therapists, clinical counsellors, and psychotherapists. “The facts are compelling,” says Rob Wesseling, president and CEO of The Co-operators. “We know that one in five Canadians will experience a psychological health problem or illness in any given year, making mental health the number one cause of disability in Canada. As an employer and group benefits provider, we see first-hand the impact mental illness is having on Canadians. The resulting absenteeism, disability costs, and loss of productivity impacts our economy by as much as $51 billion per year. Supporting mental health is the right thing to do.” Last year, it began a company-wide mental health initiative focused on its employees, clients, and the communities it serves. The company is researching innovative mental health solutions, which include internet-delivered cognitive behavioural therapy (ICBT) and mental health second opinion consultation services.

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Administrators Must Prepare For AMPs

As of January 1, the pension enforcement landscape in Ontario had a new category called administrative monetary penalties (AMPs), says Paul Migicovsky, associate with Hicks Morley. Speaking at the firm’s ‘Pension and Benefits 2018: Thriving in the Face of Change’ seminar, he said the goals of AMPs are to promote compliance with the Pension Benefits Act (PBA) and prevent a direct or indirect economic benefit from a contravention. AMPs come in two types, general and summary. General AMPs are for breaches of specified PBA requirements while summary AMPs address more procedural concerns such as late PBA filing-related matters. Migicovsky said plan administrators will need to review and perhaps revise existing policies to make sure they comply with the PBA and future amendments. On the horizon are amendments that will require all Ontario registered pension plans to implement governance and funding policies and content and frequency of reviews will be set by regulation. Policies will be documents that create and support a pension plan and will need to be filed with the superintendent, be available for review by members, and will have the potential for AMPs if not filed or filed late. Migicovsky said it is imperative for plans to make sure their governance structure is effective and that regulatory obligations are met.

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SWFs Increase Alternative Allocations

Sovereign wealth funds (SWFs) have increased their allocations to alternative investments as they search for higher yielding assets and diversification, says a PwC report. ‘The rising attractiveness of alternative asset classes for sovereign wealth funds’ expects that SWFs increase their investments in the alternatives sector including private equity, real estate, gold, and infrastructure. Alternatives now make up nearly a quarter of SWF portfolios and the proportion in fixed income has been falling. In 2016, they had 30 per cent invested in fixed income, a drop from a peak of 40 in 2013.

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Access To Treatment Would Benefit Economy

Ensuring that more Canadians living with depression have access to minimally adequate treatment would represent significant benefits for Canada’s economy and healthcare system, says a report from the Conference Board of Canada’s Canadian Alliance for Sustainable Health Care. ‘Absent Without Leaving: The Economic Impact of Early Optimized Treatment for Depression’ shows only half (53 per cent) of Canadians diagnosed with depression receive sufficient treatment. If this number was to rise to 75 per cent, more Canadians living with depression would be more productive at work, translating to approximately $2.6 billion annually in increased economic activity. More Canadians having access to minimally adequate treatment would also have a significant impact on healthcare costs. The report estimates around 700 fewer hospitalizations from people living with moderate and severe depression which would reduce healthcare system costs by about $5.7 million annually. “Depression can affect an individual’s health, well-being, and productivity due to being absent from work or performing with reduced functionality. Early diagnosis and treatment have the potential to reduce functional impairment and lower costs for the health care system and the economy,” says Greg Sutherland, its principal economist, health economics and policy.

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CPPIB Partners On Thomson Reuters Deal

A consortium led by Blackstone together with the Canada Pension Plan Investment Board and GIC, Singapore’s sovereign wealth fund, have partnered with Thomson Reuters for Thomson Reuters’ Financial & Risk (F&R) business. Under the partnership agreement, the consortium will own 55 per cent of the equity in a new corporation created to hold the F&R business and Thomson Reuters will retain a 45 per cent equity stake. Thomson Reuters F&R is a data and financial technology platform that provides information and data analytics, enables financial transactions, and connects communities of trading, investment, financial, and corporate professionals. It also provides regulatory and risk management solutions to help customers anticipate and manage risk and compliance.

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Girvan Has New Role

Christine Girvan is head of Canadian distribution for MFS investment Management. She has been director of sales since joining the firm in February of 2010. She has also held senior positions with ABN AMRO (now Fortis) Asset Management and Guardian Capital.

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Pension Law Session Examines Funding Shortfalls

The ‘Osgoode Certificate in Pension Law’ list of topics includes governance and risk management issues; difficulties in dealing with funding shortfalls; pension investment principles; and pension reform initiatives across the country. Attendees can do so in person or online. It takes place February 14 and 21, March 7 and 21, and April 4 and 11 in Toronto, ON. For information, visit Pension Certificate

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January 31, 2018


RBC Links LTD Claims To GDP

RBC Insurance predicts long-term disability (LTD) incidence rates will be 4.7 per cent higher compared to 2017, driven by a strengthening Canadian economy. Using a proprietary algorithm, it has discovered that new LTD claims are linked to GDP growth rates. As GDP accelerates and the economy grows, there is a corresponding increase in the incidence of LTD claims. Conversely, when the rate of GDP drops, so does the incidence of LTD claims. At the start of 2017, the model successfully predicted an increase in incidence for the year (relative to 2016) that was fairly close to the actual rate experienced. Understanding the correlation between GDP and LTD claims can help businesses manage costs related to claims, ensure adequate staffing during critical seasons, and help employees get support when they need it the most. John Carinci, vice-president and head of operations and client experience at RBC Insurance, says, “Businesses in Canada spent $7.5 billion for LTD coverage in 2016, which is the third largest cost to a group benefits plan after health and dental. Knowing that LTD rates are expected to rise is important information that businesses can use to help manage those costs, support their employees, and ensure their operations continue to run smoothly.”

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Organizations Create More Stress

Organizational stress is the highest source of stress for Canadian employees and is presenting strong correlations to employee retention, says Morneau Shepell. Its survey of employees and employers across Canada found a significant number of people managers (40 per cent) and employees (34 per cent) reported suffering from extreme levels of stress over the last six months, with both groups ranking workplace stress higher than personal stress. A number of factors are contributing to this growing trend in workplace stress, including workload and long hours, co-workers, and job responsibilities. When broken out by demographic, female employees are more likely to report being under higher levels of workplace stress than their male counterparts. On a personal level, both employees and managers cited financial issues, aging parents, and feelings of isolation as the main sources of stress. Stephen Liptrap, president and chief executive officer of Morneau Shepell, says, “In the last two years, both personal and workplace stress have increased by three per cent. This is particularly alarming as increasing workplace stress is contributing to heightened risk of employee retention in addition to the absence and disability risks we are aware of.” The survey found that many managers (20 per cent) and employees (18 per cent) with high workplace stress would be likely to leave their organization due to the situation.

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Financial Organizations Face Change

The established order is shifting rapidly and financial services organizations are facing change, and a range of accompanying risks, on an unprecedented scale, says Deloitte’s ‘Innovation in risk management: Canadian regulatory outlook for financial institutions in 2018.’ It examines the emerging issues facing Canadian financial institutions and how they will need to respond. Key topics include ensuring financial institutions have the right culture, conduct, and compliance to maintain public trust; payment modernization; how they cope with cyber risks; and ‘regtech,’ how they can leverage technology such as automation, artificial intelligence, and blockchain to increase their compliance capabilities, reassure the public and regulators, and help to contain costs. While the industry has traditionally managed core financial risks effectively, organizations must increasingly be alert for new areas of risk and embrace new and innovative methods by which they can stay ahead of the changing risk profile of their business model, it says. This can be a challenge when, given current market conditions, the drive to cut costs and improve the bottom line can put pressure on risk management resources. Despite these pressures, organizations must find a path to resilience, identifying ways to manage traditional emerging risks while doing more with less and driving competitiveness.

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Tool Calculates Cost Of Unhealthy Behaviour

Starting February 1, employers across Canada can use a free online tool to calculate the cost of employees’ unhealthy behaviours such as physical inactivity and smoking. To be launched by BestLifeRewarded Innovations and the Economic Club of Canada, the tool, at www.healthy-economics.com, also predicts the savings that would result from just a small reduction in a workforce’s health-risk factor profile ‒ information that could be used to make the financial case for wellness programming in the workplace. The tool was designed to serve as a customized report card as it takes into account the employer’s size, geography, and the approximate breakdown between male and female employees. For example, the tool says that a workforce of 600 in Ontario, of whom 60 per cent are male, currently generates more than $1.4 million annually in costs, based on prevalence rates for five health risk factors that commonly lead to chronic diseases ‒ tobacco smoking, excess weight, physical inactivity, low fruit and vegetable consumption, and use of alcohol. The tool then contrasts the costs of doing nothing against the savings to be gained by doing something to support healthier behaviours among employees.

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RI Funds Perform Strongly

Canadian responsible investment (RI) mutual funds performed strongly in the last quarter of 2017, with more than two-thirds outperforming the industry average in their respective fund classes, says the Responsible Investment Association (RIA). Using data provided by Fundata, its quarterly performance reviews of RI funds in Canada shows a significant majority of RI funds with a medium- to long-term track record outperformed their industry averages, highlighting the durable value of incorporating environmental, social, and governance factors into investment decisions. It says 60 per cent of funds with a three-year track record outperformed and almost 70 per cent with a five-year track record outperformed. In the Canadian equity fund class, the average return of RI funds outperformed the industry over the short-, medium-, and long-term. In the global equity fund class, approximately 70 per cent of RI funds outperformed in the three-month, one-year, three-year, and five-year periods. Approximately 70 per cent of Canadian fixed income RI funds outperformed the average fixed income fund over the three-, five-, and 10-year periods.

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Murray Appointed To UNEP FI

Anna Murray, vice-president of sustainability at Bentall Kennedy has been appointed to the Investment Committee of the United Nations Environment Programme Finance Initiative (UNEP FI). She will co-chair the property working group with a global mandate to drive adoption of sustainability in real estate investment and property management. The UNEP FI was created at the conclusion of the 1992 Earth Summit and now includes membership from more than 200 global financial institutions, including banks, insurers, and investors.

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Panel Discusses Workplace Wellness

The Economic Club of Canada is presenting a panel discussion of ‘Walking the Talk: Revolutionizing Workplace Wellness.’ The panel of Brad Henderson, president and chief executive officer of Sotheby’s International Realty Canada; Chris MacDonald, assistant vice-president, wellness, absence, and disability management services, group benefits and retirement solutions at Manulife; and Greg Frankson, an award-winning poet, author, and social advocate currently working as the engagement and outreach manager at the Whitby Chamber of Commerce; will delve into how unlocking a mentally healthier workforce can boost the bottom line while enhancing recruitment, retention, and organizational reputation. Louise Bradley, president and CEO of the Mental Health Commission of Canada will provide the opening remarks. It takes place February 26 in Toronto, ON. For information, visit Workplace Wellness

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Top Fixed Income Funds Of 2017

Using the Global Manager Research (GMR) database and the ‘Institutional Performance Report,’ GMR has identified the top Canadian fixed income performers of 2017 on a one-year annual return basis. The best performing short-term (one to 4.99 years) product was the PH&N high yield bond fund with a 6.87 per cent return. In the mid-term category (five to 9.99 years), the Scotia institutional high yield strategy topped the group with a 6.41 per cent return, while the highest return from a long-term (10+ years) strategy came from the TD Emerald 20+ strip bond portfolio at 13.11 per cent. The ‘Institutional Performance Report’ includes data on over 300 money managers in 19 distinct universes providing up to 10 years of historical performance results and key risk metrics. For a subscription to the report, click HERE.

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January 30, 2018


Drug Deal Reduces Generic Prices

The pan-Canadian Pharmaceutical Alliance (pCPA) and the Canadian Generic Pharmaceutical Association (CGPA) have jointly developed a new five-year initiative that will provide significant savings for all Canadians who use prescription generic drugs, participating public drug plans, and employee drug plans. As of April 1, the prices of nearly 70 of the most commonly prescribed drugs in Canada will be reduced by 25 per cent ‒ 40 per cent, resulting in overall discounts of up to 90 per cent off the price of their brand-name equivalents. These drugs include those used to treat high blood pressure, high cholesterol, and depression. More than 70 per cent of all prescriptions reimbursed under Canada’s public drug plans are generic drugs. This new initiative will not only provide savings to patients and increase the sustainability of drug plans, but will also improve pricing consistency across the country and help drug plans increase access to new drugs in Canada. A key component of this initiative is that tendering will not be pursued by the participating drug plans over the five-year term. Previous joint efforts between pCPA and CGPA have resulted in savings of over $1 billion to participating drug plans over the past five years.

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Economic Recovery Not Typical

Fixed income investors believe the global economy is on the path to recovery, but not via the typical normalization process that has historically occurred after an economic slump, says Invesco’s first-ever ‘Global Fixed Income Study.’ It found 58 per cent of investors believe this is taking place. As well, North American investors no longer fear that inflation will accelerate as a result of quantitative easing. Instead, the majority expects moderate growth and little inflation risk. “The big risk for investors is that they are underestimating inflation risk in a strong global economy,” says Rob Waldner, chief macro strategist at Invesco. There is a strong appetite for alternative credit such as bank loans and real-estate debt, it says, and on average, investors allocate 19 per cent of their fixed income portfolios to alternative credit strategies, with the largest appetite in North America at 26 per cent. Larger investors (those with assets under management greater than US$15 billion) typically have higher allocations to alternative credit than smaller investors, which are not able to exploit alternative credit strategies to the same extent as their larger peers. Alternative credit provides fixed income investors with the opportunity to diversify portfolios away from traditional return drivers, such as rates and term, towards alternative drivers, such as illiquidity and manager skill, as well as to pursue absolute return strategies unconstrained by traditional benchmarks.

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Employers Unprepared For Legal Marijuana

A full 71 per cent of employers are still not prepared for the legalization of marijuana, says a survey by the Human Resources Professionals Association (HRPA), the Business of Cannabis (BofC), and the Public Services Health & Safety Association (PSHSA). It shows the top concern for HR professionals is ensuring safe workplaces with 47.8 per cent citing this as their most pressing issue. Further clarity on best practices is also a concern as employers report they are seeking guidance, guidelines, and sample policies in order to best address the legalization of marijuana in their workplace. “Employers are simply not yet equipped with the knowledge and the resources they need to ensure that their workplaces are prepared for legalized marijuana. Balancing these legal changes with the imperative to provide a safe workplace for all is a challenging transition – and employers need the right tools for the job,” says Scott Allinson, vice-president of public affairs at the HRPA.

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SPP Contribution Room Grows

Participants in the Saskatchewan Pension Plan (SPP) will be eligible to contribute up to $6,000 per year, based on their available RRSP room.  “Providing tools for the people of Saskatchewan to save for their retirement is important to this government,” says Donna Harpauer, the province’s minister of finance. “Plan participants requested this change and we are responding.” The SPP is a voluntary defined contribution pension plan established by the government. It offers an alternative for small businesses that do not offer their own pension plans, provides cost effective professional investment management of retirement savings, and allows employees full portability of pension savings between employers. The regulation also allows for annual indexing of the maximum contribution which will change each year. The increase to the maximum contribution is effective immediately.

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OMERS Pushes Into Cryptocurrency

OMERS is creating a cryptocurrency business by investing in an Ethereum-focused public company. Ethereum Capital Inc. is launching a private placement co-led by Canaccord Genuity Corp. and CIBC Capital Markets to sell 20 million subscription receipts for $2.50 each. Its plan is to then amalgamate with publicly-listed shell company Movit Media Corp., with investors set to receive one share in Movit for each Ethereum Capital receipt after the offering’s anticipated closing date of February 16. The combined firm will be known as Ethereum Capital Corp. The strategy is to acquire Ether, the cryptocurrency native to the Ethereum digital platform, and by buying controlling stakes in Ethereum-based businesses. Ethereum is a token-based blockchain platform for building decentralized applications and facilitating transactions without an intermediary and Ether is the system’s unit of payment.

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Retirement Future Details Help DC Members Prepare

Defined contribution plan participants who have received a detailed view of their retirement future do a better job of preparing for it, says research by Empower Retirement. The recordkeeper found that income replacement scores for U.S. participants receiving a projected view of future monthly income were higher than the scores of participants who didn’t receive such a projection. For the former group, projected income replacement scores rose to 77.8 per cent from 68 per cent during a roughly six-year period from December 2010 to September 2016. Its annual national survey shows that projected income replacement rates remained relatively flat between 2013 and 2016, hovering each year between 58 per cent and 62 per cent.

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SSQ Offers Telemedicine Platform

SSQ Insurance is partnering with the Dialogue virtual platform to provide its employees and insured members with instant access to health professional services. The telemedicine platform allows users same-day access to health professionals via secure videoconference. The services offered through this virtual healthcare technology include consultations with general practitioners, live chats with nurses, and prescriptions and renewals as well as referrals to specialists. Some of its group insurance customers have already been referred to Dialogue and it is now paving the way for full integration with the Dialogue platform to be incorporated into its group insurance offering across Canada in the coming months.

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CPPIB Extends Longfor Partnership

The Canada Pension Plan Investment Board (CPPIB) and Longfor Properties have extended their partnership to develop mixed-use sites in Chengdu and Shanghai, China. The mixed-use development project in Chengdu, the capital of Sichuan province, is comprised of around 740,000 square metres for residential and commercial use. The Shanghai site is around 340,000 square metres is situated in South Minhang. The project will comprise retail and commercial components. CPPIB and Longfor first collaborated in 2014 with a mixed-use real estate project in Suzhou, which included the development of a Paradise Walk mall.

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Resilience Lowers Costs

‘Resilience: How to save money on group benefit plans’ is the focus of a CPBI Southern Alberta Region session. Caroline Kugelmass, the founder of Excel Benefit Consulting Inc., will look at some case studies which show how organizations such as the Alberta School Employee Benefit Plan, Sun Life, and NAV Canada further integrated resilience within their organizations including mental health peer support programs that not only allowed for a more resilient organization, but also impacted costs in terms of lowering disability claims. It takes place February 15 in Calgary, AB. For information, visit Resilience

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