Annuities Legislation Limits Access

The Pension Investment Association of Canada (PIAC) strongly supports the introduction of variable payment life annuities (VPLAs) and advanced life deferred annuities (ALDAs) into the realm of registered accounts, saying it believes they have the potential to meaningfully improve the options available for managing longevity risk for Canadians who save for retirement outside of traditional defined benefit plans. However, it says, in comments to the federal ministry of finance on its draft budget legislation in this area, its main concern from a policy perspective is that the budget legislation appears narrowly drafted to limit VPLA access to a registered pension plan context. PIAC has a broad membership of large and small plans so while the in-plan solution will be of potential interest to its members with large defined contribution pension plans, it is unlikely companies sponsoring smaller DC plans will be able to establish and administer an in-plan VPLA. However, but they may be interested in establishing programs with third-party providers who can serve as aggregators of smaller pools. This model is more likely to succeed if there is a broader scope of permitted aggregation structures beyond the PRPP, which is the only other structure permitted outside of a registered pension plan based on the draft legislation. It says the PRPP model has failed to gain meaningful traction in the Canadian market, notwithstanding the potential merits of the model, and is not permitted in all Canadian jurisdictions. As drafted, it believes the legislation will preclude meaningful take-up by companies sponsoring smaller DC plans and make it very difficult for third party providers to design scalable products for individuals saving through RRSPs.

Political Turmoil Concerns Investors

Global institutional investors are increasingly concerned over how ongoing political turmoil will affect portfolio performance over the next 12 months, says a study by Schroders. It found over half of investors believe that events such as Brexit and the ongoing trade war between the US and China will have a negative impact on their investments. In 2017, just over 30 per cent of investors expressed this as the main concern for portfolio performance, while last year 44 per cent said they feared the impact of geopolitical chaos. The global economic slowdown also came high on the list of major worries ‒ with 32 per cent of investors saying it was likely to affect their portfolio performance compared to 27 per cent a year ago, the study found. The survey also found that investors were less concerned over how higher interest rates would affect portfolio performance with 55 per cent citing it was an issue, compared to 64 per cent last year. Other factors such as monetary policy tapering, regulation, and the risk of cyber-attacks have also fallen in importance over the last 12 months.

Managers Realizing Role Of Big Data

Faced with fee compression, rising costs, compliance burdens, and shifting investor demographics, Canadian asset managers are quickly coming to realize the role big data and advanced analytics can play in their operations, says a KPMG in Canada report. Nearly half (48 per cent) now view data and analytics (D&A) as the industry’s most significant opportunity to understand their clients and retain business, up 18 per cent from last year. “In an era of digital revolutions, crowded markets, and regulation creep, now is not the time for complacency,” says James Loewen, partner and national sector lead for asset management at KPMG in Canada. “If you’re a retail fund manager, it’s getting harder to compete, so you have to innovate either your product lineup or technology to be able to survive.” ‘It’s decision time’ says the asset management industry in Canada has been slow to adopt big data despite the real and actionable insights other industries are already using to their competitive advantage, the report says. Traditionally, D&A investments were focused on achieving back office cost and process efficiencies. Today, as digital transformation blurs the lines between the front office and the back office, companies are leveraging data and advanced analytics to mine client data, unlock market insights, and design informed investment strategies.

Lack Of Opportunities Hurts RI

Almost half (46 per cent) of European professional investors say a lack of responsible investing (RI) opportunities will prevent the sector from becoming mainstream, says a survey by NN Investment Partners (NNIP). It also found that 44 per cent of respondents felt there was a lack of research and information surrounding RI, while half believed that risk within RI was more difficult to manage than within traditional investments. It shows that asset managers needed to increase their efforts to improve the visibility of their responsible investing approach and expand the range of RI opportunities available to investors. Managers also have to improve transparency when reporting environmental, social, and governance (ESG) criteria.

Biosimilar Switch Policy Missing Critical Inputs

British Columbia Pharmacare’s non-medical switch policy for biosimilar drugs is missing critical inputs from the patient and healthcare practitioner communities, And considering that it did not consult patient organizations, this is not surprising, says Crohn’s and Colitis Canada. The province will switch patients using certain biologic drugs Remicade to biosimilar versions within a six-month timeframe. This will affect approximately 1,700 British Columbians (including children), though this number does not include those in B.C. currently under compassionate use funded by the manufacturer who will also be affected. “The gap between this policy and patients’ needs and concerns in particular is massive,” says Mina Mawani, president and CEO of Crohn’s and Colitis Canada. Its position is that a non-medical switch is not in the best interest of patients. This should be a decision made by a physician and patient together. Crohn’s and Colitis Canada questions the B.C. decision when other viable options are available that do not affect patients currently well-managed on biologic treatment. “Cost savings do not have to be on the backs of vulnerable patients,” says Mawani. “Some payers have found a way to both promote the uptake of biosimilars and also access savings from updated pricing of biologic treatment. The precedent has been set: this is patient-centred care – a non-medical switch is not necessary for the purpose of sustainability of healthcare in Canada.”

Schwartz Featured At Dinner

The CFA Society Toronto’s ‘2019 Investment Dinner’ will feature a fireside chat with Gerry Schwartz, chairman, founder, and chief executive officer of Onex Corporation. It takes place November 7 in Toronto, ON. For information, visit Fireside Chat