Base Salaries Expected To Rise

Employers in Canada are expecting base salaries to rise by an average of 2.7 per cent in 2020, says Morneau Shepell’s 2020 ‘Salary Projection Survey.’ This is an increase from the actual 2.6 per cent average increase in 2019. The forecast includes increases in salary structure, length of service, cost of living and merit pay, and excludes salary freezes and promotional adjustments. The expected 2.7 per cent increase is higher than the projected rate of inflation for the year. In July, the Bank of Canada noted that consumer price index inflation is expected to rise to about two per cent by the end of 2020. When looking at economic growth, the Bank of Canada projects the Canadian economy will grow by just 1.4 per cent in 2019. “While the Canadian economy is projected to see slowed growth in the coming year, we’re expecting to see continued wage increases as a result of the tightening labour market,” says Anand Parsan, vice-president, compensation consulting practice. “Employers are optimistic about the anticipated growth in 2020. We have seen a steady rise in projected base salary increases over the past few years, with actual numbers equal to or above our forecast since 2017.”

Solvency Positions Decline

As bond yields declined and asset returns stalled in response to global economic uncertainty, the solvency positions of Canadian defined benefit pension plans declined slightly in the third quarter, says Aon’s latest median solvency ratio survey. While overall solvency remains high, the decline in yields and murky economic picture should be seen as a “warning sign” for pension plan sponsors, it says. “Bond yields continued to fall in the third quarter and the risk that equity returns are going to follow them is become more and more clear,” says Erwan Pirou, chief investment officer for Aon’s delegated investment solutions in Canada. “Economic uncertainty seems to have set in to financial markets, which means we don’t foresee a sustainable rebound in yields anytime soon. That’s increasing plan liabilities at the same time that the return horizon for equities is looking murky.” While plan sponsors are increasingly turning to alternative investments in search of yield and diversification, they need to consider every means to take risk off the table, including hedging strategies.

UTAM Supports CIA Statement

UTAM (University of Toronto Asset Management) wholeheartedly lends its support to ‘Time to Act: Facing the Risks of a Changing Climate,’ a public statement released by the Canadian Institute of Actuaries (CIA). The statement calls on governments, business leaders, and investors to take immediate action towards meeting the Paris Agreement target of limiting increases in global average temperature to well below 2°C above pre-industrial levels. To help manage the financial impacts associated with climate risks, Canada’s actuaries call on the federal government to oversee the development of national data collection and closure related to the financial impacts of climate-related events such as floods, windstorms, and wildfires; all levels of government to require all entities to implement financial disclosure of climate-related risks and opportunities under the Task Force on Climate-related Financial Disclosures (TCFD) by 2021 and for corporate entities to adopt the TCFD framework voluntarily as soon as possible; and investors and business leaders to include environmental, social ,and governance (ESG) factors in their decision-making. Daren Smith, UTAM’s president and CIO, says “Canada’s actuaries have a unique perspective on climate risks and impacts and their insights can meaningfully contribute to the evaluation of proposed climate change solutions.”

Liquid Alt Assets Grow

CAASA (Canadian Association of Alternative Strategies & Assets) data shows at least $5.1 billion in liquid alts at present. How much of that is seeding by mutual funds (which is allowed in the new rules) and how much is real/investor buying will be more obvious in time, it says, but it’s a sizeable amount compared to the estimated $25 billion that is in Canadian onshore, offering memorandum hedge funds. A number of traditional mutual funds, as well as larger and smaller hedge fund managers will be issuing new product over the next few months.

Mental Health Experts Gather

The Rotman School of Management is bringing together hundreds of senior business leaders, mental health advocates, medical professionals, students, academics, and industry representatives to raise awareness and discuss the impact of mental health on the Canadian economy. The conference will highlight the resources and supports currently available, focus on solutions that are working at home and abroad, identify challenges and opportunities for improvements, and find new ways to design innovative policies and workplace best practices in order to manage the growing burden of mental health. It takes place November 26 in Toronto, ON. For information, visit Mental Health