Industry News

June 8, 2017


ESG Always Was Fiduciary Matter

ESG (environmental, social, and governance) is not becoming a fiduciary matter, it always has been, says Randy Bauslaugh, national practice leader, pensions and employee benefits, at McCarthy Tétrault. In the ‘Translating ESG Into Sustainable Value’ session at Canadian Pension & Benefits Institute (CPBI) ‘FORUM 2017,’ he said if you are a fiduciary, you can not only take ESG into account, “you must.” James Twiss, managing director, Americas, at First State Investments, said integrating ESG into the investment process is an integral part of it. Just like analyzing company financials in making an investment, its approach to ESG must be considered. Engagement is another important part of ESG. Value can be captured by engaging with companies over ESG. In fact, his firm will invest in companies with poor consideration of ESG just to capture the value gained by engaging them. Jean Lavigueur, an associate, investment strategy and risk, at the Ontario Teachers’ Pension Plan, said the research indicates portfolios with ESG considerations will outperform and in worst case scenarios there is the no change in performance, but risk is reduced.

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Workplace Health About Prevention

Workplace health is all about prevention, says Vivien Brown, vice-president, medical affairs, with Medisys. Speaking at the company’s ‘Employee Health and Wellness’ presentation, she said when one person gets sick, it can have a domino effect. And prevention is now more important than ever because this is the first generation that will not live longer than its parents. With an aging population and an increase in chronic health problems like hypertension, diabetes, and obesity on the rise, employers need to take action. “We can’t help getting older,” she said, “but we can change lifestyle and prevent many of these illnesses. The eight leading causes of death are all preventable.” The way things are going now, 44 per cent of the population will be living with diabetes or prediabetes by 2025. The cost of diabetes to the Canadian economy will increase 25 per cent in seven years. Obesity is a trigger for other diseases and is also becoming more prevalent. She said it doesn’t matter what diet or fitness regime one follows, it’s adherence that will make a difference. Medisys, a provider of employee health and wellness services, has a three step philosophy to tackle these health issues. The first step is to assess – identify major concerns within the employee population and define key performance indicators (KPIs). The second step is to monitor – a physician will interpret the results and then monitor employee’s health changes and progress over time. They will determine the key focus areas for employee health services to address the issues. The final step is improve – deliver measurable wellness outcomes and drive employee engagement and participation in wellness programming.

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OPTrust Takes Major Step

OPTrust has taken a major step in its plan to internalize public market asset management of approximately 40 to 50 per cent of the fund’s $19 billion in assets over time with the launch of its in-house trading floor and its first internal trade. Over the past two years, it has been implementing a member-driven investing (MDI) strategy with a singular focus to increase the likelihood of plan certainty by balancing the objectives of sustainability and stability to better align the plan’s outcomes with members’ needs. Internalizing facets of public market assets supports this strategy through the ability to execute trades and to customize investment solutions with enhanced liquidity. “The move to internalization provides us with direct access to the markets and greater insight into changing conditions to customize our investment strategies in a more agile way,” says Hugh O’Reilly, OPTrust president and CEO. “Internalization is a natural evolution for OPTrust and a key enabler of our MDI strategy to achieve purposeful risk allocation and deliver on our promise to members.”

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Loss Of DB Will Be Felt

The loss of defined benefit pension plans will be felt a decade from now, says Blair Richards, CEO of the Halifax Port ILA/HEA Pension Plans. Taking part in a panel discussion on plan sponsor views on the future of employee benefits with Glenn Anderson, staff officer, benefits, at the Manitoba Teachers’ Society; Kim Siddall, associate vice-president at Aon Hewitt; and Tyler Smith, senior consultant at Coughlin & Associates; at the Canadian Pension & Benefits Institute (CPBI) ‘FORUM 2017,’ he said when defined contribution pension plans first showed up, no-one knew what they would provide in retirement savings. However, the idea of giving investment decisions to the people least qualified to make them was mistake, he said. In fact, there are large successful DB plans in Canada that benefit from having their assets professionally managed. Unfortunately, he said DB is no longer seen as a competitive advantage because there is too much focus on cost. Anderson said the creation of DC did not address adequacy of retirement savings, it only provided cost certainty for employers. When no DB plans are left, he said, the cost of supporting retirees will shift to social services with a resulting increased tax burden on working Canadians.

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Longer Maternity Leave Will Impact Brokers

The new optional 18-month maternity leave the Liberals ushered in with the 2017 federal budget will have an impact on brokers and insurers, says Dave Patriarche, ‎president of Mainstay Insurance and founder of the Canadian Group Insurance Brokers (CGIB). Parents can opt to take 18 months of parental leave, but they must stretch out their Employment Insurance (EI) benefits so they get 33 per cent of average weekly earnings for 18 months rather than 55 per cent of earnings for 12 months. At the CGIB June session, Patriarche said he wondered if the Employment Standards Act (ESA) would be amended and, if not, will insurers extend benefits to 18 months without amendment? Also, when the EI benefit is reduced, more employees could choose to opt out of benefits when they have to share the cost, thereby raising liability concerns. Brokers and insurers should also be aware of their clients (employers) that provide benefit top-ups, he said. Pre-existing long-term disability claims are reset for those returning from maternity leave with half of insurers ‒ “we need a Canadian Life and Health Insurance Association (CLHIA) standard for this.” In Alberta, employees returning from maternity or parental leave must be reinstated in the same or a comparable position with earning and other benefits at least equal to those received when leave began. Different providers have different protocols concerning LTD pre-ex at this time.

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Millennials Face Serious Problem

Millennials face a serious problem ‒ pensions, says Mark Yamada, president and CEO of Pur Investing. Speaking at the ‘Robo Advice: Uber Comes To Financial Services’ session at the Canadian Pension & Benefits Institute (CPBI) ‘Forum 2017,’ he said by the time they are ready to retire in 2050, the number of workers per retiree will have dropped to two to one from seven to one in 1966. As well, the traditional influences on offering pension plans are disappearing. Union membership is down to 10 per cent, small businesses which are less likely to offer plans are experiencing most of the growth in Canada, and Millennials aren’t staying in one job for too long. They face a serious pension problem, he said. However, baby boomers who are retiring now are also being challenged. The entire generation on which the entire financial services industry was built is being orphaned, he said, as brokers do not want their business. Brokers base their business on growing assets while retirees will at some point start drawing theirs down.

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Beneplan Navigates Financial Sources

The Beneplan Compassionate Drug Assistance Program, created and operated by Beneplan Inc., will help patients navigate sources of financial assistance to significantly reduce medical costs. By providing members with complimentary access to a drug advocate, the goal of the program is to identify sources of funding and gaps in coverage. The drug advocates tailor their approach to each member’s individual circumstances and liaises with various sources of financial assistance to ensure excess costs are eliminated.

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Subscription Phase On Private Equity Fund Ends

Union Investment has successfully completed the subscription phase of the private equity fund of funds PE-Invest 3. The fund will focus on private equity funds specializing in small- and mid-caps in the U.S. and Europe. It will also invest in Asian companies, venture capital, and turnaround equity stories. PE-Invest 3’s goal is to achieve attractive, risk-weighted, and long-term returns at lower volatility than on the equity markets. The fund plans to invest in 15 to 20 funds, which, in turn, are expected to hold stakes in more than 300 target companies. With PE-Invest 3, Union Investment and Unigestion continue the series of private equity funds for institutional investors which started in 2005.

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Aarssen Has New Role

Brady Aarssen is assistant vice-president, distribution strategy – group customer, at Great-West Life. He joined the company in April of 2008 as senior account manager, employee benefits. After spending three years with Green Shield Canada as an account manager, he returned to Great-West Life in 2014 as regional manager, employee benefits.

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Investment Solutions For MEPPs Examined

‘Investment Solutions and Other Risk Optimization Strategies for MEPPs/TBPs’ will be examined at a PBI Actuarial Consultants Ltd. seminar. The event, for multi-employer and target benefit pension plan trustees and administrators, will look at achieving a higher return/benefit for the same level of risk, maintaining the same level of benefits with lower risk, and optimizing risk to the benefit of your members. It takes place June 27 in Toronto, ON. For an invitation, eMail events@pbiactuarial.ca

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June 7, 2017


Money Lost When Buying ‘Garbage’

Businesses and investors don’t want to lose money because that is what risk really is, says Henry Hudek, vice-president, business development, at Cardinal Capital Management. In the ‘EMT vs. Behaviour: How Theory Fails’ at the Canadian Pension & Benefits Institute’s ‘FORUM 2017,’ he said the top way to lose money is buying “garbage.” These are bets by investors on companies the investor hopes will perform. In fact, this is actually speculating, he said. Instead, they should be looking for companies which are profitable, have good balance sheets, are in industries that will survive, and have a sustained competitive advantage. However, in Canada, there are only a few companies that meet these requirements so those who are buying the index are speculating in a lot of companies. They should to look at the intrinsic value of a company and its free cash flow. If the market is charging above the intrinsic value, the stock should be avoided. If it is above the market, it is an asset to buy or hold. As well, market return is a zero sum game where there is a loser for every winner. This means the average manager will not beat the index, but there are active managers who do so consistently by looking for companies who are where they should be in a logical market.

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Technology Advances Are Helping Mental Health

Change is coming faster and faster for mental health with some saying mental health will be cured by 2050, says Richard Heinzl, global medical director at WorldCare International Inc. He told the ‘Future Solutions for Mental Health in the Workplace’ session at the Benefits and Pensions Monitor Meeting & Events session ‘The Realities of Workplace Mental Health’ that the attitude towards mental health has changed a lot over the years. Centuries ago people with mental health disorders were consider possessed; 150 years ago they were segregated; and they were institutionalized around World War II when the first drugs for mental health were introduced. But change is exponential in this field, said Heinzl. While today these illnesses are treated mostly with pills and therapy, there are exciting possibilities coming down the line, with all types of new technologies. He cited artificial intelligence (AI) as one example. AI is able detect suicidal thinking, psychoses, and ADHD just by following a conversation. Robots are also starting to play a role in Japan, working with people with autism. Other exciting advancements and technologies that could help mental health include big data, DNA, nanotechnology, and the sequencing of human genomes. “There has been an explosion of drugs [for psychiatric conditions] due to genome testing, which builds real hope.” FMRI (functional magnetic resonance imaging) machines – a new type of MRI – are now available to look at blood flow. Technology advances double and then double again, said Heinzl. “The possibilities are staggering. We need to use everything at our disposal now and the futuristic ones will come.”

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Adverse Drug Reactions Leading Cause Of Death

Adverse drug reactions are the fourth leading cause of death in North America and treating these costs over $13 billion, says Robert Fraser, president and CCO of Molecular You. As well, he told the ‘Implementing Precision Health Into Practice’ session at the Canadian Pension & Benefits Institute’s ‘Forum 2017’ that currently more than 50 per cent of drugs don’t work for individuals they are prescribed for and 35 per cent prescriptions are likely inappropriate. Pharmacogenetics will lead to better outcomes, reduced adverse drug reactions, and cost efficiencies and there are opportunities to implement this in primary care. However, the system cannot rely on physicians for this as there is way too much information piled on them. Precision health management using pharmacogenetics will allow the healthcare system to get better at preventing disease because there will be more information. As well, it is more patient-centric and creates dialogues and relationships with physicians who become more than providers. And since it can identify chronic disease before its onset and progression, it can reduce health system costs and reduce the increases in the costs of employer sponsored benefit and drug plans.

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Employers Have Access To Free Tools

There are free tools available to employers to help with addressing psychological health issues in the workplace, says Laura Pratt, national practice leader, organizational health, with the Great-West Life Assurance Company (GWL). At the Benefits and Pensions Monitor Meeting & Events session ‘The Realities of Workplace Mental Health,’ she said GWL research shows that mental health disorders are the second leading disabling condition for short-term disability claims in 2016 and the top condition for long-term disability. “And there is an upward trend in mental health disorders in both STD and LTD.” These mental health disorders include conditions such as burnout, anxiety, depression, and adjustment reactions. In 2007, GWL launched a free website to help employees deal with mental health issues in the workplace. “This is a major tool in your toolkit for human resource executives and a resource for every level of management.” Employers need to build a team of employees that are more resilient to everyday stressors and serious incidents so these don’t damage their mental health. The GWL website tools addresses building stronger teams and supporting effective team leaders and provides a guide and activities for this development. It also covers training and awareness and offers printable resources, research, presentations and reports, and all of the sources and information are Canadian. The tool is available at Mental Health Tools

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CAP Balances Delay Retirement For Women

More women are seeking to delay retirement because their Capital Accumulation Plan (CAP) balances are 40 per cent lower than their male co-workers, says Jillian Kennedy, a partner in Mercer’s Wealth Business. Speaking at the Canadian Pension & Benefits Institute (CPBI) ‘Forum 2017’ on ‘DC Plan Trends ‒ Building Diversity into your DC Plan,’ she said women have a smaller pool of assets to draw from because of gaps in employment due to leaves for maternity and to care for aging parents and because they are often paid less. Compounding this is that they may have to depend on that pool longer because they may live longer. To start to remedy this, employers should first evaluate the gaps in pay and retirement savings and then evaluate the impact of their pension system on female employees. Kennedy said this is an ideal time to do this as part of the evaluation of the impact of the enhanced Canada Pension Plan on their plan. They must also encourage pay equity and opportunity and target engagement. Finally, they should facilitate leave opportunities and raise awareness about the gender gap in retirement savings.

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Addressing Mental Health Can Reduce Benefit Costs

Companies can reduce benefits costs by enhancing the workplace environment and addressing mental health, says Renee Couture, a pension and benefits consultant at UC Consulting. Speaking at the Benefits and Pensions Monitor Meeting & Events session ‘The Realities of Workplace Mental Health,’ she said the costs of providing health and disability benefits can become unmanageable if employers don’t proactively manage the workplace and invest in prevention and wellness. “The first step in good health is to address mental health,” she said. For example, anxiety and burnout can lead to substance abuse and mental health problems can lead to employees not taking care of themselves, which all leads to more expensive health problems. People who are anxious or stressed will also have an impact on the workplace environment causing productivity loss and absenteeism. Couture suggested employers create a proactive wellness plan that is optimal but competitive. They should start by reviewing the current situation and making a case to the c-suite to focus on a healthy environment. Then they need to create a solution that delivers on promises and adapts to changes. Quick fixes are not enough, “if you’re costs are escalating or not manageable, you will need to make big changes.” Finally, employers can capitalize on the strength of happy employees and take advantage of the opportunities available through technology.

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Average Couple Has Three Funding Goals

The average couple has three goals when it comes to funding their retirement, says Don Ezra, of Don Ezra Consulting. He described the average couple in the ‘Longevity Risk: Addressing A Global Challenge, How To Offset The Financial Implications’ session at the Canadian Pension & Benefits Institute ‘FORUM 2017’ as those who have enough for the basics of life, but not enough for the “autumn.” As a result, they have three competing goals, but can’t hit their targets on all of these goals because their retirement is less than 100 per cent funded. Their first goal is they want to be able to survive in retirement keeping in mind they can’t add any more assets by, for example, returning to work. And if they are not going to have enough money once in retirement, they want some warning. These means they also want some growth assets to totally fund their retirement. Finally, the want longevity protection as the single biggest fear of retirees is running out of money. As a result, they need enough investment instruments to meet their goals. For safety, they may want to invest money invested in short-term fixed income to generate income if there is a market downturn to allow them to wait out a market recovery without tapping into the growth assets. Growth comes from equity type assets and to address longevity risk they may want to buy a preferred annuity that kicks in after they reach a certain age. Unfortunately, preferred annuities and longevity insurance are not readily available in Canada and he finds this a mystery. “You would think large defined contributions plans would get together and form them,” said Ezra.

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Slow Bull Markets Hurt Solvency

As the bull market in equities slowed and bond yields fell, the financial health of Canadian defined benefit pension plans deteriorated in May, says Aon’s median solvency ratio survey. “Despite the slowdown in equity markets and declining interest rates, Canadian pension plans remain in a relatively strong financial position,” says Ian Struthers, investment consulting practice director at Aon Hewitt. “With a glimpse of how quickly pension plan health can worsen, plan sponsors should be taking the opportunity to consider how to lock in gains made over the past several months and protect against downside risk. Hedging strategies, portfolio diversification, plan de-risking – all of these and more should be under consideration for Canadian pension plan sponsors now.” As of June 1, 2017, the Aon’s median solvency ratio stood at 95.3 per cent, declining 1.8 per cent from its May 1, 2017 level of 97.1 per cent. Of surveyed plans, 36.8 per cent were more than fully funded as of June 1, down almost four percentage points from May 1 (40.4 per cent). As equity performance flat-lined and bond prices increased, the gross pension asset return for May was 0.7 per cent.

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HSBC Launches Connection Hub

HSBC Commercial Banking has launched the HSBC Connections Hub; a digital platform designed to enable business customers to leverage HSBC’s global network to connect with buyers and sellers around the world. Businesses in Canada, Mainland China, Hong Kong, India, Mexico, Singapore, the UK, and the U.S. can now sign up to the multi-lingual hub for free. The service will be available to customers in France in the coming weeks and additional countries and territories will be added in the second half of the year. Users create a business profile to represent their brand, including company information, products or services, location(s), and business interests. A matching engine then highlights potential buyers and sellers in other markets. Alternatively, customers can search and view the profiles of specific businesses using variables such as location, industry, and products or services.

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Three Join CPBI Hall

Kevin Press, Joan Fitch, and Bruce Powers have been named to the Canadian Pension & Benefits Institute (CPBI) Hall of Fame. The hall recognizes and honours CPBI members, past and present, who have given their time and energy to the institute. Press joined the CPBI in 1999 and in 2002 was elected chair of the CPBI Ontario regional council. In 2004, he was appointed as Ontario representative on the national board of directors and was elected chairman in 2009. He spearheaded the efforts in rebranding the national conference into the ‘CPBI FORUM’ and in 2013 chaired the first ‘FORUM’ outside of Canada. Fitch joined CPBI in 1983 and became chair of the Alberta region council in 1987. She became the first woman chair of CPBI (then known as the Canadian Pension Conference) in 1990. Under her, it was renamed, adopted a new logo, and embraced a new strategic direction and mission. Powers was one of three founding members of the CPBI. He was present at its first meeting in 1960.

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Men Discuss Mental Health

Hansell Consulting Group will present the first annual ‘Men’s Breakfast for Mental Health.’ It is an opportunity to discuss, learn, and share on what is being called a silent crisis: men’s mental health. It takes place June 13 in Burlington, ON. For information, visit Men’s Mental Health

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June Interest Rate Assumptions

The interest assumptions required to calculate commuted values and marriage breakdown values for an event which occurs in any month up to and including June 2017 are now available at www.an-actual-actuary.com. An Excel spreadsheet on the website contains nine worksheets:

  • Commuted Values ‒ February 2011 CIA
  • Marital Breakdown ‒ CSOP 4300, January 2012
  • Ontario (Bill 133) Prior Rates – Rates for Ontario Marital Breakdown with valuation date prior to January 1, 2012
  • Annuity Proxy for Solvency Calculations for Non-Indexed & Fully-Indexed Pensions
  • Minimum Interest on Employee Required Contributions
  • HISTORICAL Marital Breakdown ‒ CSOP 4300, May 2009 (Now Frozen)
  • HISTORICAL Commuted Values ‒ 2009 Basis (Now Frozen) • HISTORICAL Commuted Values ‒ 2005 Basis (Now Frozen)
  • HISTORICAL Commuted Values ‒ 1993 Basis (Now Frozen)

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June 6, 2017


Sun Life Offers Virtual Therapy

Sun Life Assurance Company of Canada is piloting a new approach to expand access to mental healthcare for plan members with the launch of a virtual cognitive behavioural therapy (CBT) program. Offered in partnership with the University of Regina, this online therapy option will lead to faster and easier access to CBT. “In an era where mental health claims represent almost 30 per cent of disability claims, it’s more important than ever to explore new ways of delivering effective therapy faster to those who need it,” says Dr. Marie-Hélène Pelletier, assistant vice-president, workplace health, group benefits, Sun Life Financial Canada. “We live in an increasingly digital world. Offering virtual CBT provides a new and innovative way to reach our plan members and provide flexible solutions, especially to those living in remote areas where access to qualified care may be limited.” Clients on an approved disability claim, with mild to moderate anxiety or depression, will be given the choice to receive therapy virtually.

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Case Strengthens For Wellness

Continued increases in productivity and decreases in absenteeism strengthen the case for workplace wellness programs, says the International Foundation of Employee Benefit Plans. Its ‘Workplace Wellness 2017 Survey Report’ found 75 per cent of employers offer wellness initiatives primarily to improve overall worker health and well-being. Only one in four employers said the main reason for offering wellness initiatives is to control/reduce health-related costs. “Employers are realizing that wellness is not just about cutting healthcare costs because wellness is not only about physical health,” says Julie Stich, associate vice-president of content at the foundation. “Embracing the broad definition of wellness has led to a tremendous impact on organizational health and worker productivity and happiness.” Among employers offering and measuring their wellness efforts, more than half have found a decrease in absenteeism, 63 per cent are experiencing financial sustainability and growth in the organization, 66 per cent reported increased productivity, and 67 per cent said employees are more satisfied.

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Mental Health Centre Celebrates 10 Years

The Great-West Life Centre for Mental Health in the Workplace is celebrating its 10th anniversary. Its key achievements since 2007 include developing resources to support the mental health and productivity of employees, working with many other stakeholders to establish the National Standard of Canada for Psychological Health and Safety in the Workplace, and its ongoing efforts in promoting adoption of the standard by employers across the country. The standard is among the first employer guidelines of their kind worldwide and forms the basis of an International Organization for Standardization (ISO) proposal, making Canada an international leader in psychological health and safety. This year, the centre commissioned surveys mapping the evolution of workplace mental health issues since 2007. Key findings show the number of Canadians who say their workplace is psychologically unhealthy or unsafe (10 per cent) has been cut in half, down from 20 per cent in 2009. More working Canadians (79 per cent) say they know about mental health conditions like depression, up from 66 per cent in 2007. Later this year, the centre will release a book documenting the history of and achievements in workplace mental health policy in Canada since 2007.

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Scotia Launches Absolute Return Fund

Scotia Institutional Asset Management has launched the Scotia Institutional Credit Absolute Return Fund. The fund is designed to maximize absolute returns over a complete market cycle through investment in diversified long and short positions, investing primarily in North American fixed income and credit markets while seeking to mitigate volatility and interest rate risk. It will be managed in a flexible manner using investment strategies and instruments beyond the reach of a traditional mutual fund, with the goal of generating absolute returns in excess of 90-day Treasury Bills in Canada.

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North American Market Performance Muted

Twenty-six of the 44 Morningstar Canada Fund Indices increased during May, including four indices that increased by more than two per cent. North American stock markets had muted performance during the month of May and currency movements were minimal. As a result, funds that focus on overseas equity typically outperformed those that target Canadian or U.S. stocks. The best performer was the one that tracks funds in the Greater China equity category, which increased 3.2 per cent. The second-best-performing fund category was European equity with a 2.9 per cent increase. As was the case in April, the worst performers in May were fund indices that track sector-specific categories ‒ energy equity, natural resources equity, and financial services equity. Fixed income funds were mostly positive in May, with increases for seven of the eight categories ranging from 0.1 per cent for Canadian short term fixed income to 1.7 per cent for the Canadian long-term fixed income fund index.

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Prysko Joins Aon Hewitt

Brenda Prysko (FCIA, FSA) is a partner in the retirement practice of Aon Hewitt Canada. She has more than 30 years of experience as a retirement consultant and actuary, with extensive experience within the public sector pension arena. She will be based in Calgary, AB.

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Session Looks At Fiduciary Duty

‘Fiduciary Duty as an Ingredient of the Pension Mélange’ is the topic of a CPBI Southern Alberta session. Greg Harding, a partner, and Taylor Woolsey, an associate, at Field Law, will use a series of case law illustrations to show when and why a fiduciary duty can arise, some practical applications of such a duty, and the potential consequences of non-application of a fiduciary duty. It takes place June 15 in Calgary, AB. For information, visit Fiduciary Duty

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June 5, 2017


Automatic Plans Improve Outcomes

Automatic savings plans produce better investment outcomes for investors, says research from Morningstar. Its ‘Mind the Gap 2017’ study found that during the five-year period through December 31, 2016, investor returns across the globe varied from stated returns, on average, by a range of -1.4 per cent to 0.53 per cent per year. However, investors achieved better outcomes when using systematic investment programs and invested in lower-cost funds. “Steady investment contributions to savings plans and automatic rebalancing proved to be key in generating positive investor returns in countries including Australia, South Korea, and the United States,” says Russel Kinnel, chair of Morningstar’s North America ratings committee and editor of Morningstar FundInvestor.

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Investors Interested In RI

The vast majority of Canadian investors are interested in responsible investments (RI) that incorporate environmental, social, and governance (ESG) issues, says a report from the Responsible Investment Association (RIA). As well, they would be more likely to choose responsible investments if their financial advisor suggested suitable RI options for them. Sponsored by OceanRock Investments Inc., it found while 77 per cent of investors are interested in RI, a staggering 73 per cent know very little or nothing about it. These results highlight the ‘RI awareness gap’ ‒ a significant gap between investor interest versus knowledge about RI. Investors also said they would be more likely to choose responsible investments if they were more confident in their performance. The report shows 82 per cent of investors would like to dedicate a portion of their portfolio to RI; 52 per cent would like more than half of their portfolio allocated to RI; and 77 per cent agree that companies with good ESG practices are better long-term investments. The report can be found here.

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Finances Stress Out Employees

Fifty-six per cent of employees are stressed out over their financial situation, says the Bank of America Merrill Lynch, and this is causing people to spend a median of two hours a week, or 100 hours a year, parsing over their finances while at work. Millennials spend an average of four hours a week on their personal finances; Gen X, two hours; and Baby Boomers one hour. Among the 56 per cent who say they are financially stressed, 53 per cent of them say it is interfering with their ability to perform their job. Bank of America Merrill Lynch believes the solution to this is for employers to offer formal financial wellness programs, so that their employees can get their financial houses in order.

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Real Estate Fund Launched

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.

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Hawton Joins Sustainalytics

Gary Hawton is senior director, institutional relations, Canada for Sustainalytics. In 2000, he became the founding CEO of Meritas SRI Funds and served for 10 years into a merger with OceanRock Investment Management, a wholly-owned subsidiary of Qtrade Financial Group. He served as president of OceanRock until last year.

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Medical Marijuana Explained

The Employee Assistance Program Association of Toronto (EAPAT) will look at ‘Medical Marijuana in the Workplace.’ Amanda Daley, vice-president, medical, at Canopy Growth Corporation, will review the definition of medical marijuana, its clinical applications, and what it can do for patients. The presentation will include a summary of Health Canada’s Medical Marijuana Regulations and highlight the impact of those regulations on healthcare professionals, the employer, the worker, and safety in the workplace. He will also discuss the anticipated impact on the medical cannabis system if recreational marijuana becomes legal. It takes place June 9 in Toronto, ON. For information, visit Medical Marijuana

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June 2, 2017


Gender Issue For Investors

Canadian investors will no longer tolerate gender pay discrimination and want more gender diversity on corporate boards,” says Fred Pinto, CEO of OceanRock Investments and vice-president, head of wealth and asset management with Qtrade Financial Group. A survey sponsored by OceanRock for the Responsible Investment Association (RIA) shows 92 per cent of investors believe women and men should receive equal pay for equal work. As well, 76 per cent believe companies should be required to disclose how much they pay women compared to men and 55 per cent would be willing to sell their investments if they learned that a company they are invested in does not pay men and women equally for equal work and another 25 per cent would consider selling. Pinto says Canada has a dismal record when it comes to gender parity in corporate leadership. He pointed out that data collected by securities regulators shows that women hold only 12 per cent of seats on corporate boards in Canada, and 45 per cent of publicly traded companies have all-male boards. “Having more women on boards and in senior management is not only about gender equity; it also makes good business sense,” he says. “A diversity of views from independent directors is a check against group-think and improves corporate governance. It’s good for the company and, as we see in the latest RIA research, it’s what investors want.” The report can be found here

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PSAC Campaigns Against Bill C-27

In response to Bill C-27, the Public Service Alliance of Canada (PSAC) has launched a campaign on pensions and retirement security, which includes a video, website, and an online action for PSAC members to participate in. “Bill C-27 poses a serious threat to defined benefit pension plans and is not a path towards building stronger retirement security for Canadians.” says Robyn Benson, national president of PSAC. The bill creates a structure that allows for single employer target benefit plans and a process for converting member entitlements in defined benefit  plans into target benefits. While Prime Minister Justin Trudeau has said that DB plans that workers and retirees have already paid into should not be retroactively changed into target benefit plans, PSAC alleges this is what Bill C-27 will do.

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PST Plans Delayed

Saskatchewan is extending the effective date to start charging provincial sales tax (PST) on insurance premiums paid on life, accident, and health insurance plans, says an Eckler ‘GroupNews.’ In its 2017-18 budget, it announced plans to impose the PST on or after July 1. However, to give the insurance industry additional time to implement the changes, the new effective date is August 1. It has also clarified that the PST will now be applied to self-insured group arrangements or administrative services only arrangements.

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Chronic Illness Requires Health Culture

Most businesses operate in a reactive way toward employee health. But continuing to do so, without becoming more involved in prevention and active management, means they’re bearing – and will continue to bear – tremendous costs with chronic illness, says Shaun Francis, CEO at Medcan. In the article ‘Building Your Organization’s Health Culture’ at the Benefits and Pensions Monitor website, he says that’s where “creating a fertile health and wellness culture comes in.”

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U.S. CFOs Face Decisions

CFOs and sponsors now face new decisions and obligations related to three areas that are at least partially prescribed by IRS guidance: minimum contribution requirements, premiums that must be paid to the Pension Benefit Guaranty Corporation (PBGC), and lump-sum distributions to vested former employees, says a report from Cambridge Associates. ‘Thought Mortality was Dead?’ says by 2016, financial executives of organizations with defined benefit plans had largely modified their financial statements to reflect mortality assumptions that the Society of Actuaries released in 2014. The upshot was a four per cent to eight per cent drop in reported funded status since the new assumptions revealed that participants would require benefit payments for two to three years longer, on average, than previously believed. However, the Internal Revenue Service delayed its implementation of the new mortality tables until at least 2018. As a result, CFOs and sponsors may have to increase contributions to their plans as the funded status used to determine the level of minimum required contributions will decline. Some plans that are already in a weakened position may feel compelled to make even greater near-term contributions to avoid regulatory consequences of funding levels dropping below critical threshold levels. As well, lump-sum distributions may become key topics of discussion and decision-making. For sponsors that were already considering offering lump sums to their terminated vested participants over the next few years, the remainder of 2017 offers a rare window in which the value of the lump sum required to be paid will be lower than next year, when the IRS actually adopts the new mortality tables.

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Financial Engineering Addresses Scalability

Financial engineering can be used to address the “tough engineering problems” posed by the scalability requirements, says the EDHEC-Risk Institute. In ‘Mass Customisation versus Mass Production in Retirement Investment Management: Addressing a Tough Engineering Problem,’ it analyzes how the retirement investing problem can be formally framed within the context of dynamic portfolio choice theory. While, it is hardly feasible to launch a customized dynamic allocation strategy for each investor and the challenge is to address the needs of a large number of investors through a limited number of funds, it suggests extending portfolio insurance and dynamic core-satellite techniques to the retirement investing context. The solutions make use of a goal-hedging portfolio, which is intended to replicate the value of a deferred annuity, and a performance-seeking portfolio, the objective of which is to efficiently harvest risk premia in order to deliver long-term performance. The allocation to these two building blocks is a function of the risk budget, defined as the difference between the current portfolio value and a suitably chosen floor.

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Hebert Becomes Associate Partner

Paul Hebert is an associate partner in the retirement practice at Aon Hewitt. Based in the Saskatoon, SK, office, he has 27 years of experience, including the last 19 years at Aon. He specializes in the design and implementation of retirement arrangements for organizations and executives and has experience in accounting for pension and other benefit plan costs under Canadian and international accounting standards.

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Insights On Government Shared

Grahma Thompson, a journalist and political commentator, will share his insights on politics in Alberta at the CPBI Northern Alberta’s ‘Alberta’s NDP Government Two Years In: The End of the Beginning or the Beginning of the End?’ It takes place June 21 in Edmonton, AB. For information, visit Two Years In

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Boom Or Bust Examined

Trump Boom or Trump Bust?’ will be discussed at an AIMA Canada, CFA Montréal, and IFSID Institute event. Panelists Marko Papic, chief of political strategy at BCS; Yanick Desnoyers, deputy chief economist at the Caisse de dépôt et placement du Québec; Pablo Calderini, CIO of Graham Capital; and Chen Zhao, former co-head of macro-research at Brandywine Global Investment Management; will look at the challenges ahead for the institutional investing community. It takes place June 27 in Montreal, QC. For information, visit Trump Impact

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