Curbing Costs Top Priority

Curbing the cost of healthcare and increasing its affordability remain the top priorities for almost all employers (93 per cent) over the next three years, says the 24th annual ‘Best Practices in Health Care Employer Survey’ by Willis Towers Watson. Yet nearly two in three (63 per cent) employers see healthcare affordability as the most difficult challenge to tackle over that same period. Employers expect healthcare cost increases of 4.9 per cent in 2020 compared with four per cent in 2019. Despite this cost increase, 95 per cent of employees are very confident their organization will continue to sponsor healthcare benefits to active employees in five years. Moreover, employers’ longer-term commitment to sponsoring these benefits 10 years from now hit 74 per cent, the highest level in the past decade. The rising cost of healthcare puts financial pressure not only on employers, but also their employees. In fact 89 per cent of employers believe rising healthcare costs are a significant source of financial stress for their employees. “Relentless healthcare price increases continue to crowd out other benefits, making affordability a challenge for many workers,” says Julie Stone, managing director of Willis Towers Watson’s specialty practices within its health and benefits business. “In a full-employment economy, employers feel the pressure to offer competitive benefits and can’t compromise on employee affordability. With employers and employees seeing no end in sight, many companies are getting creative and tapping into overlooked strategies to shrink the total bill.”

Spending Declines With Age

Household spending decreases with age, says the Employee Benefit Research Institute (EBRI). Its health and retirement study and the consumption and activities survey for older Americans looked at spending between the ages of 50 to 64, 65 to 74 and 75 and older, between 2005 and 2017. It says that a common approach to planning for retirement is to assume that people should spend a certain level of pre-retirement income for every year throughout retirement. “However, evidence from actual retiree spending patterns challenges this assumption,” says ‘How Do Retirees’ Spending Patterns Change Over Time?’ It found that the spending patterns of early versus late retirees differed dramatically. The reason for this, EBRI says, is that when a person first retires, they have time for hobbies, which could be expensive like golf and for socializing which includes eating out at restaurants. Once a person has been retired for 15 years or more, they begin to cut back on their spending, due to inflation eating into their savings. The average household expenses for those 50 to 64 were $55,000 in 2005. In that same year, they were $43,000 for those 65 to 74, which was 22 per cent less. For those 75 and older, total household expenditures were $33,000 or 23 per cent less than the 65 to 74 age cohort and 40 per cent less than the 50 to 64 age cohort. This pattern was consistent across all survey years. EBRI says this research also suggests that retirees are adept at adjusting their consumption as needed in order to fit their circumstances, such as reducing spending in times of a market downturn or recession. Indeed, those ages 75 or older were spending on average a third less than those ages 50 to 64.

Scotiabank Adds Personal Days

Scotiabank is adding two additional paid personal days for eligible Canadian employees in support of mental health and broader wellbeing. Eligible employees in Canada, beginning on January 1, will have access to five paid personal days with the flexibility to take them as they see fit, in addition to their current sick time and vacation entitlements. “Research also tells us increased flexibility and paid personal time off are correlated to reduced absenteeism and increased productivity and engagement,” says Dominic Cole-Morgan, senior vice-president, total rewards. In addition, Scotiabank provides Canadian employees and their families with $3,000 a year in mental health coverage, to use for services such as psychologists, psychotherapists, family therapists, and marriage counselors, at no cost to the employee.

GE Freezes Plan

General Electric Co is freezing the pension plan for about 20,000 U.S. employees with salaried benefits. The action includes supplementary pension benefits for about 700 employees in the country. The moves are expected to reduce its pension deficit by about $5 billion to $8 billion and net debt between $4 billion and $6 billion.

Outlook Calls For Slowdown

The Barclays Research ‘Global Outlook’ baseline call is for a slowdown and weaker growth, not an outright recession. It cites several reasons for this. Services the world over are still expanding. Global labour markets are in decent shape, even if job growth has slowed, and consumption should continue to support the world economy. The lack of inflation pressures has let central banks pivot quickly to easing. But a recession is not necessary for a material downshift in earnings. For example, S&P500 earnings disappointed materially in 2015 due to global weakness even as the U.S. avoided a recession. Moreover, downside risks have become more prominent in recent months. U.S.-China trade tensions could worsen again, as has repeatedly occurred, and tensions in the Middle East could reach boiling point after the attacks in Saudi Arabia. The preponderance of risks seems weighed towards the downside and the risk-on and bond sell-off in September provide a decent entry point for a more conservative portfolio allocation.

Medavie Launches ‘Connected Care’

Medavie Blue Cross has launched ‘Connected Care,’ a digital health platform that gives plan members greater flexibility and access to innovative offerings, virtual healthcare services, and additional self-service options to help them get more from their benefit plan. Available through the mobile app and online through the Medavie Blue Cross member services site, it creates accessible virtual opportunities to connect directly with Canadian doctors through a newly-formed partnership with Maple, a Canadian virtual care provider. Members will also be able to order personalized pharmacogenetic testing and engage a professional for Internet-enabled cognitive behavioural therapy (iCBT). It allows access to virtual healthcare services, including 24/7 on-demand access to doctors by secure text or video for advice, diagnosis, and prescriptions at a preferred price; pharmacogenetic testing; and digital therapy.

Fremont Joins Bennett Jones

Jordan Fremont is a partner on the pensions and benefits team at Bennett Jones LLP. He is the past chairman of the Canadian Pension and Benefits Institute, a member of the Board of Directors of the Pension Office of the Anglican Church of Canada, and a member of the board of trustees for the Anglican Church of Canada’s pension and benefits plans.

Future Of Pharmacare Examined

The future of pharmacare will be one of the topics examined at the CGIB (Canadian Group Insurance Brokers) November seminar. Marilee Mark, of Marilee Mark Consulting, will reflect on the election outcome and stimulate discussion on the potential impact for insurers, advisors, and sponsors of benefit plans. Jim Bullock, an expert witness, will share some of the stories and risks that he’s seen in lawsuits involving a licensed life insurance agent. Dave Patriarche, of Mainstay Insurance Brokerage Inc., explains where insurers could put their clients and employees at substantial financial risk. It takes place November 6 in Vaughan, ON. For information, visit Pharmacare Future

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 October 2019 are now available at 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)
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.