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July 3, 2020


Solvency Ratio Improves

The ‘Mercer Pension Health Index’ increased from 93 per cent at the end of March to 101 per cent at the end of June. The median solvency ratio of the pension plans of its clients was at 91 per cent on June 30, up from 84 per cent on March 31. During the second quarter, funded positions of DB plans recovered slightly less than half the losses they incurred in the first quarter. The improvement was fueled by double-digit second quarter returns across all equity markets, but restrained by declines in long bond yields which boosted liabilities. “While the last few months have been painful, most defined benefit plans have emerged from the depths of the crisis in reasonably strong shape,” says Manuel Monteiro, partner and leader of Mercer Canada’s financial strategy group. Measured across the backdrop of the 20+ years since January 1, 2000, funded positions have been higher than they are today, less than 30 per cent of the time.

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Enhanced Drug Access Needed

British Columbia needs to bring down prescription drug costs through bulk buying and enhanced access to high cost medicines, says the Canadian Life and Health Insurance Association (CLHIA). In its ‘2021 Provincial Budget Submission,’ it says while the people who live in British Columbia have universal access to medications, the industry does recognize that the system across the country could be improved. It believes that by working collaboratively with federal, provincial, and territorial governments the system can be improved from coast to coast to coast. The Canadian life and health insurance industry strongly supports the Patented Medicine Prices Review Board (PMPRB) reforms which were to be implemented on July 1, but which have been delayed until January 2021 due to COVID-19. It is crucial that the federal government move ahead with these reforms to achieve affordability for consumers. As well, federal, provincial, and territorial governments and private insurers should work together to develop a standard list of medicines that all Canadians can access regardless of where they live or whether they have workplace benefits.

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Infrastructure Sectors Impacted Differently

Different infrastructure sectors have been impacted very differently by the COVID-19 pandemic lockdowns in terms of future cash flows but also risk premia and interest rate movements. This means the impact of Covid-19 on unlisted infrastructure portfolios on different investors can only be understood from a benchmark-relative perspective, says the EDHECinfra study ‘Infrastructure investors should abandon absolute return benchmarks: Lessons from the Covid-19 lockdowns.’ It says in aggregate, the impact for a diversified infrastructure investor is negative but numerous sectors performed better on a relative basis. As well, different peer groups were impacted differently by Covid-19, with asset managers underperforming the market in the first quarter of 2020 by almost 300bp but also outperforming over longer periods. Asset owners, however, have on average been in line with the market return in the quarter, but performed less well than asset managers over time. Using a benchmark-relative approach, large asset managers were found to generate almost double the alpha of asset owners, but also to be more exposed to the kind of ‘merchant’ transport infrastructure that suffered the most from the Covid-19 lockdowns. “We wanted to show that with absolute return benchmarks, it’s impossible to make sense of the impact of Covid-19,” says Frederic Blanc-Brude, director of EDHECinfra and a co-author of the study. “While there are large negative returns this year in infrastructure, it still makes sense to try and understand which portfolios and investors perform better.”

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Less than Quarter Get Work From Home Confirmation

Less than quarter (22 per cent) of Canadians working from home during the COVID-19 pandemic have received confirmation that their working arrangements will permanently be more flexible, says a survey by VMWare. It found only 17 per cent say plans to return to the office have been clearly communicated by their employer. As well, it found almost one-fifth of new remote workers want to work exclusively in an office environment in the future, while 59 per cent would prefer to work from home more often than they did before or exclusively. “Canadians want more choice and flexibility in how they work post COVID-19. The evolution in their thinking is outpacing that of employers – they want to know that flexible working is here to stay,” says Sean Forkan, vice-president and country manager at VMware Canada. Nearly half (49 per cent) of the respondents say they never worked from home before the COVID-19 pandemic. Almost two-thirds (62 per cent) do not think employees should be expected to work full-time in an office because the pandemic has shown remote work is possible.

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InfraRed Acquisition Complete

Sun Life Financial Inc. has completed its majority stake acquisition of InfraRed Capital Partners. Headquartered in London, UK, InfraRed is a global infrastructure and real estate manager. It advises institutional and pooled fund clients on approximately US$12 billion in assets under management, as of March 31. It will be part of SLC Management, Sun Life’s alternatives asset management business. The acquisition will broaden its investment solutions for institutional clients to include infrastructure equity and advance sustainable investment options.

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Commuted Value 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 July 2020 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 per cent 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)
You can use this spreadsheet to compare the interest rates which you may have calculated and/or you can download the spreadsheet to your own computer. Another actuary has already provided a peer review of the updated rates in this spreadsheet and determined that he/she agrees with the results.

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July 2, 2020


Bond Market Liquidity Concerns Investors

One concern firmly on the radar of respondents to Invesco’s third annual ‘Global Fixed Income Study’ was bond market liquidity. It says while regulations that followed the global financial crisis such as Dodd-Frank were seen as adding stability to the financial system, they have also led to banks holding less inventory on their balance sheets and playing a reduced role as market makers. The slack has been picked up by customer-to-customer platforms managed through intermediaries, such as ETFs and credit portfolio trading. However, this model had previously not been tested by significant market stress, with questions arising over the difference between the liquidity of ETFs and their individual constituents. Volatility arising from COVID-19 has led to regular price discounts between fixed income ETFs and their component securities. But by facilitating continued trading during a period of significant uncertainty, ETFs have acted as a key source of price discovery and played an important role in keeping markets moving. As such, this model can be said to have passed its first significant test. Conducted before the onset of the COVID-19 crisis, it reveals how investors within the fixed income asset class were positioned in the lead-up to the market turmoil arising from the pandemic. Although the continued widespread use of unconventional monetary policy and low levels of inflation meant that for many the cycle was seen as hard to compare to those of previous decades, the study reveals an underlying increase in risk aversion among respondents as they anticipated that a record run in fixed income markets might be coming to an end.

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Medicine Launches Fall

Canada has long been considered a top global jurisdiction for new medicine launches. However, a report by Life Sciences Ontario (LSO) shows that new medicine launches in Canada fell dramatically in 2019. It shows that Canada has been a top destination for new medicine launches over the past 20 years and has steadily improved its global standing over time. Up until 2018, Canada was gradually getting faster and more extensive access to therapies relative to other countries. However, the research shows a sharp decline in the number of new drug launches in Canada in 2019 ‒ from 22 in 2018 to just 13 in 2019 ‒ despite the overall number of global launches rising during the year. In the last quarter of 2019, there was only one new drug launch in Canada. This report substantiates concerns raised by Canadian and global life sciences leaders that the federal government’s new price controls for patented medicines in Canada would delay medicine launches in Canada. “This new research shows that Canadian patients have been benefiting over recent years from new treatments being made available in Canada almost as quickly as anywhere else in the world, but that we are throwing away this advantage in a short-sighted attempt to lower drug prices at unreasonably low levels,” says Jason Field, president and CEO of Life Sciences Ontario. The report shows that among 37 new therapies launched globally in 2018, 21 were not launched in Canada. The majority of the medicines not commercialized in Canada were for rare diseases and cancer.

 

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Unethical Behaviour Could Rise

Almost half of investment managers in Canada believe the Covid-19 crisis will lead to unethical behaviour in the investment management industry, says a global survey from the CFA Institute. It found that 45 per cent of Canadian CFA members were worried about an increase in unethical behaviour in the wake of the pandemic, while 26 per cent were not. Twenty-nine per cent were neutral on whether Covid-19 would lead to a surge in misconduct. More than half of Canadian respondents said conduct regulation should not be relaxed to encourage trading and liquidity and 71 per cent said regulators should consult the industry on how to respond to the pandemic.

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Healthcare In Revolutionary Change Mode

The uptick in electronic storage of medical records, convenient online patient portals, and innovative applications of data to help pinpoint outbreaks and expose drug-resistant diseases put healthcare is now in the revolutionary change mode, says Harry Glorikian, a global business expert and co-author with healthcare writer Malorye Allison Branca of ‘MoneyBall Medicine: Thriving in the New Data-Driven Healthcare Market.’ “We have entered a rapidly evolving era of medicine that values data-driven approaches and prioritizes evidence-based care and the best is yet to come,” he says. Data and technology are already impacting drug development, precision medicine, and how patients with rare diseases are diagnosed and treated. As well, digital devices and artificial intelligence are helping doctors do their jobs faster and with greater accuracy.

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Benefits Advisors Get Mental Health Program

Pillcheck PGx has launched a program for benefits advisors in the mental health area. The program builds on the introduction of Pillcheck pharmacogenetics by many insurers seeking to impact the frequency and duration of short- and long-term disability claims. This secure service is available to plans and benefit advisors on a subscription basis or as a private purchase. Pillcheck combines DNA analysis with an online medication review by pharmacists.

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Cirque Soliel Gets Safety Net

TPG, Fosun, and Caisse de dépôt et placement du Québec (Caisse) have partnered with Investissement Québec and submitted a proposal to acquire substantially all of Cirque du Soleil Entertainment Group’s assets. Pending approval from the Superior Court of Québec (Commercial Division), the consortium is expected to serve as the primary bidder in Cirque du Soleil’s Court-supervised restructuring and sale. The proposed purchase agreement will provide Cirque du Soleil with capital and resources to stabilize and rebuild its business for the future.

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June 30, 2020


Target Benefit Regulations Lack Consistency

Regulations for target-benefit pension plans have been developed across the country in several jurisdictions and without consistency, says Barry Gros, a retired actuary and chair of the pension board for the University of British Columbia Staff Pension Plan in a C.D. Howe Intelligence Memo. The fundamental challenge for target benefit pension plans is to provide a reasonable targeted pension to members given fixed contributions going into the plan. The fundamental challenge for a traditional defined benefit pension plan is to determine the level of contributions to provide the promised benefit. Each faces very different challenges and has a very different focus. The approach now in place in several jurisdictions is to impose a universal provision for adverse deviation on target benefit pension plans, which has little recognition of the risks inherent in any particular plan and is prone to creating systemic intergenerational inequity. This approach seems to totally ignore the fundamental nature of target benefit pension plans and seems to try to convert them to defined benefit through the back door. As well, there is nothing in the current regulatory framework that reviews the process under which target benefit pension plans determine a reasonable pension. Many pension jurisdictions have recently completed a review of funding regulations for traditional DB pension plans and implemented significant changes. The timing is right for these jurisdictions to review fully their regulations for target benefit pension plans, says Gros.

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Near Retirees Impacted By COVID

Data shows Canadians near and in retirement are more negatively impacted by COVID-19 than during the great financial crisis(GFC), says Fidelity Investments Canada’s ‘Retirement 20/20’ annual survey. In its 15th anniversary, this year’s report shows 40 per cent of pre-retirees have a negative outlook on their life in retirement ‒ the highest rate of negative retirement perception amongst surveyed Canadians since 2014. As well, 40 per cent of survey respondents indicated their salary or earnings had decreased due to the global pandemic. Amongst those negatively impacted by COVID-19, 50 per cent are reducing the amount of money they are able to save, as well as the amount they are able to invest, in comparison to last year. However, 80 per cent of pre-retirees and 92 per cent of retirees with a written financial plan felt positive about their (future) life in retirement and of those who indicated they had a written financial plan, 85 per cent also indicated they had worked with a financial advisor to build it. Financial advisors remain the most popular and trusted source of advice.

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Investors Must Work Collectively

The second chief executive officers (CEO) council of the Investor Leadership Network (ILN) has emphasized the need for investors to work collectively to promote progress on the COVID-19 pandemic and groundswell of support for social justice and equality around the world. It also reiterated its commitment to contribute to a fairer and more equitable economy. The CEOs of the global investment firm members of ILN ‒ which includes AIMCo, CDPQ, CPP Investments, OMERS, Ontario Teachers’ Pension Plan, OPTrust, and PSP Investments ‒ will also set individual, measurable goals to support greater gender representation in senior leadership positions and investment-related roles within their respective organizations, as a follow up action to last year’s discussion and part of their broader diversity and inclusion efforts.

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Work And Life Balanced

More than three-quarters (77 per cent) of Canadian workers feel they have effectively balanced work life and home life as they stay home amid the COVID-19 pandemic, says a survey by ServiceNow. Almost two-thirds (62 per cent) also say they prefer working from home rather than their usual workstation. And 81 per cent expect their employer to allow them to work from home in the future for up to 12 days per month while 89 per cent would like to be able to work from home for up to 14 days per month. The top benefits of working from home are saving time by not commuting, saving more money, having more time for personal projects or hobbies, being able to cook at home more, and having fewer distractions during the workday. The top challenges employees are facing while working from home are feeling disconnected or alone, technology issues, the time spent working, a lack of a functional workspace at home, having more distractions during the workday, and having difficulty balancing work and personal responsibilities.

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RIA Membership Grows

Total membership grew from 310 to 399 during 2019 – a growth rate of 28.7 per cent, says the RIA’s ‘2019 Annual Report.’ It summarizes the organization’s progress along its strategic priorities for achieving the overarching goal of the Responsible Investment Association (RIA) which is driving the adoption of responsible investing (RI) in Canada’s retail and institutional markets. Membership grew across both organizational and individual segments. It finished 2019 with 271 individual members, up from 210 a year prior, and organizational membership grew from 100 to 128 over the same period. It says its annual conference is Canada’s flagship event on responsible investment and continues to attract ever-larger audiences. In 2019, it hosted a record 580 attendees at its conference in Montréal, QC, up 31.8 per cent from the previous record of 440 in Toronto, ON, a year earlier.

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League Offers Personalized Care

League Inc.is now offering employers personalized care teams. The expanded virtual care capabilities will be integrated within its platform and will enable employees to connect with a multi-disciplinary team of health experts and get real-time support for provider, clinical, and benefit inquiries all in one place. The virtual care team will be composed of care navigators, registered nurses, and benefits and claims experts, each with knowledge of the employee’s health, insurance coverage, and available employer-sponsored programs. With this insight, the team will be able to offer personalized advice and direct the individual to the most appropriate resources in real time. Employees will be able to access care teams through real-time chat, eMail, and telephone. In the future, the teams may expand to include pharmacists, dietitians, social workers, and health coaches.

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June 29, 2020


Bond Yields Drop As Population Ages

A joint publication by the CIA and the Society of Actuaries and the Institute and Faculty of Actuaries (UK) ‘proves’ that as a population ages, bond yields decline, says Joseph Nunes, co-founder and executive chairman of Actuarial Solutions Inc. ‘The Connection between Population Structure and Bond Yields’ gives an important signal that as the population ages bond yields may not go upward and if they do it may well be an anemic climb. In Canada, there has been 30+ years of declining bond yields and with the baby boom ending back in 1964, the last 30 years has seen a continuous aging of the population. The CIA’s 2019 paper ‘Retire Later for Greater Benefits: Updating Today’s Retirement Programs for Tomorrow’s Retirement Realities’ exposed the reality that lower investment income and longer lives will drive workers to stay on the job longer before they will be able to afford retirement. However, correlation does not necessarily mean causation, he says. Still, the more obvious answer that fewer children and an aging population drives lower bond yields. “This makes complete sense when you think about the fact that older savers are advised to transition their savings from equities to bonds and those buying target date funds and annuities are transitioned automatically,” says Nunes. Imagining how this story will progress going forward, he points to Japan, a population older than Canada, which saw interest rates go negative in 2016. This may, in turn, drive novice investors to risky equities and “the big worry here is that it’s not just the novice investors that are taking risks that cannot be afforded but it’s also our collective pension funds. I worry that taxpayers and the lowly worker will pay the price if the super-well-compensated investment gurus blow up our savings,” he says.

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Small Businesses Paid Full Cost

Small owner-managed businesses ravaged by Covid-19 are subsidizing big insurance companies during this pandemic and don’t even know it, says Robert J. Crowder, the founder and president of the Benefits Trust. In many cases, they have been paying for several months the full cost for employee health and benefits plans while all or most services are no longer provided. And if they are now starting to get a reduction in premiums, it’s not enough. Since mid-March, dentists and other professional healthcare providers such as chiropractors, physiotherapists, and massage therapists have been shut down, with the exception of emergency treatments. But small businesses continued to pay full benefits premiums while their employees didn’t use these services. The numbers tell the tale, he says. During the coronavirus pandemic, three-quarters of Canada’s 600,000 small businesses have employee benefits plans and over the past three months they paid out approximately $1.6 billion in premiums for benefits coverage at a time when virtually no services were provided. Using claims data since the pandemic began (representing thousands of Canadian small businesses), it is clear that the number of claims for health and dental services is down 50 per cent with some components of benefits plans, such as dental visits, down as much as 95 per cent. Most small businesses paid full premium for their benefits plans in March, April, and May, and only in June did some start to see any credit from large insurers, some of which are now offering future credits to mitigate lower numbers of claims.

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CLHIA Wants Premium Eliminated

The Canadian Life and Health Insurance Association (CLHIA) is calling on British Columbia to reduce and eventually eliminate the premium tax on life and health insurance premiums. In its ‘2021 Provincial Budget Submission,’ it says it is essential to keep business taxes low to ensure a competitive tax environment that attracts investment, creates jobs, and moves the provincial economy forward. The insurance premium tax was established in the early years of the last century before the introduction of corporate income taxes. With public healthcare costs, including long-term care costs, and the need for disability insurance protection rising significantly, there are serious adverse implications from the continued application of premium taxes in the 21st century. The imposition of premium tax impedes employers’ and individual’s capacity to obtain additional insurance coverage by directly increasing its cost. In 2018, the industry collected and paid over $120 million in premium taxes to British Columbia, an amount that otherwise could have provided enhanced coverage and benefits to insured workers and their families.

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Return To Steady Jobs Hard To Predict

With thousands of Canadians laid off from work due to the COVID-19 pandemic, it’s hard to predict who will return to steady jobs and when. Yet, a study from the Institute for Research on Public Policy (IRPP) on long-term trends in permanent layoffs from 1978 to 2016 reveals that the Canadian labour market has been remarkably resilient, even through multiple economic downturns and a period marked by globalization and profound demographic, technological, and environmental changes. “Despite numerous changes in the economic environment over the past four decades, the likelihood of Canadian workers losing their job has not increased overall and the likelihood of laid-off workers finding new jobs has not decreased,” say the authors of the study, Statistics Canada analysts René Morissette and Theresa Hanqing Qiu. If anything, the likelihood of losing one’s job has trended downward for many groups of workers. From 2010 to 2016, permanent layoff rates among employees aged 25 to 64 averaged 6.6 per cent, down from the 8.3 per cent average from 1978 to 1980. Some categories of displaced workers are more adversely affected by job loss than others, however. Consistent with previous research, the study finds that employees who hold degrees, those employed in larger firms, or who have long job tenure (that is, those who have been with the same employer for six or more years) are significantly less likely to lose their jobs. Once they lose their jobs, however, long-tenured workers have more difficulty getting re-employed and they experience higher than average drops in pay. Even five years after being laid off, many are unlikely to have regained their previous level of earnings. Importantly, and contrary to the impression one might get from media headlines, the study ‒ ‘Turbulence or Steady Course? Permanent Layoffs in Canada, 1978-2016’ ‒ finds that the majority of job losses that occurred since 1994 did not result from mass layoffs (when firms with 50 or more employees lay off at least 10 per cent of their workers). Also, those displaced in non-mass layoffs were less likely than those who lost their jobs in mass layoffs to be re-employed in the short and long term.

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Employers Making Workplace Safe

As millions of workers begin returning to their workplaces, a majority of U.S. employers are moving to ensure their safety and wellbeing, says a Willis Towers Watson COVID-19 employer pulse survey. Atop the list of initiatives are screening workers on re-entry, providing personal protective equipment (PPE), and reconfiguring workspaces. However, only about one-third have a documented plan to address a potential second wave of the virus even though nearly 40 per cent of companies identified workplace safety as a top priority in June, compared with 27 per cent in a survey conducted in April. Most employers (71 per cent) have developed workplace safety and employee safety policies to prepare for the return of employees. Companies are protecting their employees by reconfiguring work areas to maintain six feet of distance (56 per cent), providing PPE such as masks to employees (76 per cent), and staggering shift changes and breaks (57 per cent). More than half of companies will use employee questionnaires and thermal scanning to screen the workforce on re-entry. Nearly three in four companies (73 per cent) will require masks in public locations and 24 per cent will require masks at all times; however, only one in six (18 per cent) plans to test employees for acute infection before they return to work. While only one in three (32 per cent) has developed a plan for subsequent waves, an additional 50 per cent of respondents plan to develop such a plan. Employers are also giving special consideration to at-risk employees who are older or have a medical condition and whose jobs cannot be done remotely.

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Frank Joins Ontario Teachers’

Karen Frank is senior managing director, equities, for the Ontario Teachers’ Pension Plan Board (Ontario Teachers’). Based in its London, UK, office, her career includes more than 25 years of experience in investment banking and private equity. She joins the pension plan from Barclays PLC, where she was CEO of Barclays Private Bank since 2016.

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ESG ETFs See Inflows

Environmental, social, and governance (ESG) ETFs and ETPs listed globally gathered net inflows of US$4.33 billion during May, says ETFGI, bringing year-to-date net inflows to US$28.53 billion which is significantly more than the US$7.19 billion gathered at this point last year. Total assets invested in ESG ETFs and ETPs increased by 10.4 per cent from US$74.03 billion at the end of April 2020 to reach a new record of US$82 billion at the end of May.

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June 26, 2020


Mental Health Issues Will Accompany Return To Work

“The need for mental health resources has never been greater than it is today,” says Lori Casselman, president and chief revenue officer of Wello, a national telemedicine and virtual care business. Speaking at the Benefits and Pensions Monitor Meeting & Events webinar, ‘Return to work plan: focus on employees’ mental health,’ she said her company has seen an enormous amount of demand for virtual healthcare services over the last three to four months. “We’re seeing symptoms of sadness, depression, and anxiety as the top conditions next to questions related to COVID-19 specifically.” Casselman said employers will need to manage around those anxieties and stressors as they gear up for the next wave and the return to the workplace. “It is important for organizations to look at the resources they have in place and what they do not have in place. What do they need to adapt or source to meet the particular needs that are apparent now as a result of these changes?” Unfortunately, the majority (60 per cent) of people that say they are dealing with mental health issues due to COVID-19 are not seeking any type of support. Employers should be proactive, speak up, and call attention to the fact that these issues are present and look for resources that can help manage symptoms. Resources can consist of EAP/EAFP programs, mindfulness/meditation and resilience building apps, health and fitness coaching, behaviour therapies, and virtual healthcare. Most importantly, employers need to acknowledge that the situation is not ‘normal.’ They should increase and enhance communications and show empathy for unique personal scenarios. The key is to focus on early intervention and prevention, said Casselman.

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Retirement Savings At Risk

The Ontario Teachers’ Pension Plan (OTPP) is putting the retirement savings of thousands of working and retired teachers at risk by investing in fossil fuel infrastructure in the midst of a worsening climate crisis and a volatile disruption to global energy markets, says Shift Action for Pension Wealth and Planet Health. Ontario Teachers’ has joined a consortium purchasing a 49 per cent stake in the state-owned Abu Dhabi National Oil Company’s fossil gas pipeline network. It exposes the pension savings of thousands of Ontario teachers to climate-related financial risk, says Shift Action. It also undermines global action to address the climate crisis by locking in polluting infrastructure for decades to come and contradicts the pension fund’s own commitments to align its portfolio with a safe climate. Shift Action for Pension Wealth and Planet Health is an initiative supported by charitable foundations that works to protect pensions and the climate.

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SC Board Makes Pandemic Changes

The OMERS Sponsors Corporation Board (SC Board) has approved amendments to the OMERS Primary Pension Plan (Plan) as a result of 2020 plan review process. Michael Rolland, CEO of the SC Board, says the changes will support members who have been impacted by the COVID pandemic. It is extending the deadline to complete a leave purchase by one year for members who return from a leave of absence in 2020 or 2021. It also reduces or eliminates the 36-month employment requirement for purchases of periods of reduced pay. This change is effective immediately, but will only be implemented if and when the employment requirement under the Income Tax Regulations is amended. Members will also be allowed to purchase credited service for periods of absence due to temporary layoff that were initiated in 2020 or 2021. The service can be purchased at two times contributions. As well, it is removing the current eligibility requirement for non-full-time employees to join the plan. They can now elect to join the plan at any time. Enrolment would take effect on the first day of the month after the employee’s election is received and would remain in place as long as the member continues working with their current employer. Finally, the SC Board now has the option, based on its annual assessment of the plan’s health and viability, to reduce future inflation increases on benefits earned after December 31, 2022. This means for retirees, the benefits earned on or before December 31, 2022, will be granted full indexation. Benefits earned on or after January 1, 2023, will be subject to shared risk Indexing.

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Market Rebound Will Determine Fundamentals

How rapidly markets rebound in the next couple of months are “very important” in determining what the fundamentals will look like for the next 12 months, says Andrew Jackson, head of fixed income and lead portfolio manager at Federated Hermes. Speaking at its ‘Thinking Globally about High Yield Exposures,’ he said when the financial crisis from the COVID-19 pandemic started to emerge, it felt very much like “we would blow through equity very, very rapidly.” The issue was around solvency liquidity in many of the corporates. Looking forward, he said while equities look quite challenged, many companies have solved the solvency issue and central banks, governments, and regulators have done an outstanding job of dealing with that first issue. Fraser Lundie, head of Hermes credit and lead portfolio manager, said the market performance of global high yield has been somewhat skewed by the fact that coming into this crisis, there were in abnormally expensive conditions in terms of the credit spreads. That expensiveness was a starting point and was one of the reasons the drawdown period through March was pretty significant not just in the U.S. and Europe, but globally across high yields and other return seeking fixed income. Here again, central banks and governments through fiscal measures provided “a bridge through at least the first instances of this crisis,” he said.

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Need For Guidance Increases

A combination of unprecedented market volatility and complex new rules involving contributions, withdrawals, and tax implications has exposed an increased need for participant guidance and advice from retirement plan providers, says J.D. Power. Its ‘2020 U.S. Retirement Plan Participant Satisfaction Study’ suggests few providers are successfully addressing these issues. Just 27 per cent of those surveyed have accessed professional financial advice related to their plan. Nearly three in 10 (29 per cent) were either unaware of whether such advice was available or perceived that it was not available to them. Nearly one-fourth (22 per cent) of retirement plan participants said they’ve had no interaction with their provider during the past 12 months. However, the frequency of interaction is directly correlated to participant satisfaction. Overall satisfaction scores increase 44 points (on a 1,000-point scale) when participants say they’ve had one to four interactions per year with their retirement plan provider.

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Prudent Rebalancing Must Be Maintained

It is vital for investors to maintain a prudent rebalancing approach regardless of the market’s current behaviour, says research from T. Rowe Price. Its analysis of historical and simulated equity market downturns found that, the vast majority of the time, maintaining an investment policy’s rebalancing rule led to better returns compared with a passive strategy of allowing portfolio exposures to drift with market movements. Although it says there is no “silver bullet” rebalancing rule due to the multiple considerations that need to be addressed when designing and maintaining rebalancing policies, there are certain rebalancing methods that potentially outperformed others during specific types of market downturns. However, it is impossible for investors to know the type of downturn they are experiencing as it occurs. Hypothetical rebalanced portfolios would have outperformed a hypothetical non‑rebalanced portfolio in the vast majority of the historical 10‑year rolling periods covered in the research. Two of the rebalancing methods were calendar‑based and two relied on exposure bands.

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Sana Gets Financing

The Canada Pension Plan Investment Board and the Public Sector Pension Investment Board are among investors in the initial financing tranches of Sana Biotechnology, Inc. Proceeds from the financing will be used to advance discovery and development within the company’s core platforms, including gene delivery, immunology, stem cell biology, and gene modification and control.

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