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

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.

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.

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.”

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.

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.

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.

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

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