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October 26, 2016

Target Benefit Plan Legislation Tabled

The federal government has tabled legislation which will allow federally regulated employers to create both single employer and multi-employer target benefit plans and to purchase annuities as a full discharge of the plan’s obligations under the ‘Pension Benefits Standards Act, 1985 (PBSA)’ in a non-windup situation, says a Blakes’ ‘Bulletin.’ While many details are still to be determined by regulations that are not yet available, the bill would not allow existing registered plans (defined benefit or defined contribution) that are not a target benefit plan to be subsequently registered as a target benefit plan. This means target benefit plans must be established as new plans. The transfer of benefits under an existing DC or DB plan to a target benefit plan will only be permitted where the individual member or former member or union (assuming the union has the requisite authority) consents. Upcoming regulations will detail how the assets and liabilities are to be transferred. It would also allow the purchase of an immediate or deferred life annuity in full discharge of a plan’s obligations under the PBSA if the plan authorizes the purchase of the life annuity in satisfaction of the obligation, the life annuity is of a kind prescribed by the regulations, and the life annuity provides the former member with payments to which the member would otherwise have been entitled.

Leverage Doesn’t Add Risk

Adding leverage to an alternative investment fund does not necessarily increase the risk, says a study by the Alternative Investment Management Association (AIMA) and the CAIA Association. ‘Made to Measure: Understanding the use of leverage in alternative investment funds’ suggests that there is no direct relationship between hedge fund leverage and the volatility and downside risk of fund performance. For example, funds that typically have the highest leverage ratios of all hedge funds – those using relative value or arbitrage strategies – have lower volatility on average and have suffered smaller losses during crises and other periods of market stress over the last 20 years. Equally, funds that typically employ lower leverage, such as long/short equity funds, have experienced marginally higher volatility and drawdowns since 1996. The authors say this suggests that a fund’s risk profile is influenced more by the nature of the underlying investments than the use of leverage alone.

Solvency Slips Again

In the third quarter of 2016, diversified pooled fund managers posted a median return of 4.4 per cent before management fees, says Morneau Shepell’s ‘Performance Universe of Pension Managers' Pooled Funds.’ Diversified pooled fund managers posted a median return of 4.4 per cent before management fees. The median year-to-date return was 6.8 per cent. However, "on a solvency basis, despite good market advances, pension fund financial positions declined slightly. Since the start of the year, the solvency ratio of the average pension plan has fallen by about 2.2 per cent," says Jean Bergeron, the partner responsible for Morneau Shepell's Asset and Risk Management Consulting team. Canadian equities had strong growth again, with the S&P TSX Index posting 5.5 per cent for the quarter and 15.8 per cent since the beginning of the year. Global equities also had high returns for the quarter, with the MSCI World Index posting 6.1 per cent. Managers obtained a median return of 1.4 per cent on bonds (Universe mandate) which was 0.2 per cent above the benchmark index. During the same period, long-term bonds posted a return of 2.4 per cent, while the return for medium-term bonds was 0.9 per cent and for short-term bonds 0.5 per cent. High-yield bonds posted 5.7 per cent, while real return bonds provided a 1.9 per cent return.

GWL Realty Earns ‘Green Star’

GWL Realty Advisors has achieved a ‘Green Star’ ranking for a second consecutive year from the Global Real Estate Sustainability Benchmark (GRESB) survey. It improved its position from the top 15 per cent of 707 global participants in 2015 to the top 10 per cent of 759 global participants in 2016. The company also scored well above the global average and the average for its North American peer group in each of the assessed categories. GRESB is a global benchmark used by institutional investors to help understand real estate companies' environmental, social, and governance activities and the sustainability performance of their portfolios.

Sun Life Launches Private Fixed Income Fund

Sun Life Institutional Investments (Canada) Inc., a Sun Life Investment Management company, has launched a fund offering in Canada focused on short-term private fixed income for institutional investors. The ‘Short Term Private Fixed Income Plus Fund’ provides access to its proprietary capabilities in private fixed income and commercial mortgages. The fund was created with input from clients and designed to address near-term market need for higher yielding investment returns over more traditional asset classes. The fund seeks to achieve total return by providing income while preserving capital through investing primarily in a diverse portfolio of short-term private and public fixed income and floating rate assets.

Sustainable Prosperity Changes Name

Sustainable Prosperity has changed its name to the Smart Prosperity Institute, effective immediately. The institute will continue to be a Canadian source of research and policy insights for a stronger, cleaner economy. Based at the University of Ottawa, it will renew its efforts to generate world-class, policy-relevant research for the media, federal, and provincial/territorial governments, the private sector, the civil society, and the public at large on policy and market solutions for a stronger, cleaner economy. Current and forthcoming work from the think tank includes the annual state of the market report on green bonds in Canada.

BC Pension Receives ‘Gold’ Recognition

BC Pension Corporation is a recipient of Excellence Canada’s ‘Canada Awards for Excellence.’ The professional pension service provider achieved gold level recognition in the ‘Excellence, Innovation and Wellness (EIW)’ program. “This recognition from Excellence Canada is a result of our efforts over many years and our shared commitment to develop, strengthen, and improve the corporation,” says Laura Nashman, BC Pension Corporation’s CEO. “This award reflects the ongoing success of our ‘From 12 to 21’ strategic plan, our maturity on key organizational systems and processes, and our forward-thinking, positive culture.”

Green Bonds Have Strong Quarter

Global green bonds volume had the strongest quarterly issuance yet of US$26.1 billion for the three months ended September 30, says Moody's Investors Services. This means the amount for all of 2016 could rise to over US$80 billion. It says that the continued growth in green bond issuance indicates an acceleration in the momentum of a trend to acknowledge and address climate change that is also echoed in the speed with which the Paris Agreement on climate change went into force. Renewable energy and energy efficiency remain the most popular projects for green bond issuers, but clean transportation, waste management, and clean water gained ground in the third quarter.

CPPIB Invests In Raffles

The Canada Pension Plan Investment Board (CPPIB) is investing $375 million in CapitaLand’s Raffles City China Investment Partners III (RCCIP III). The vehicle, CapitaLand’s third private investment fund in China, is targeting multi-use developments in gateway cities in China. CPPIB’s investment represents a 25 per cent stake in the vehicle, which has been backed by investors from Asia, North America, and the Middle East.

Measuring Disability Management Examined

The importance of measuring the results of disability management programs will be examined at the CPBI Southern Alberta Region’s ‘Calculating the ROI of Disability Management Programs.’ Dr. Liz R. Scott, principal and CEO of Organizational Solutions Inc., will discuss the importance of measuring the results of disability management programs and how to establish a baseline for the collection of data to support these programs. It takes place November 9 in Calgary, AB. For information, visit Disability Management

October 25, 2016

Work Needed In Canada

Dramatically aging populations, declining birth rates, and a lack of robust retirement systems will see many countries struggle under the burden of providing adequate pensions to their senior citizens without drastic action, says the ‘Melbourne Mercer Global Pension Index (MMGPI),’ which warned governments across the globe to take immediate action. Canada’s position in the ranking remains strong in 8th place. However, there is work to be done to achieve the coveted ‘A Grade,’ only ever held by Denmark and Netherlands. Dr. David Knox, author of the report and a senior partner at Mercer, says the impact of longer life expectancies, combined by global declining birth rates, is much more significant than has been recognized by many governments and communities. “It is a political imperative that all countries, regardless of their size, and current standing on the MMGPI, implement the necessary policy changes to withstand future challenges presented by the globally aging population,” he says. Scott Clausen, a partner in Mercer’s retirement business in Toronto, ON, says “While Canada’s retirement system continues to be one of the stronger retirement systems in the world, there remains a majority of Canadians in the private sector without access to workplace pension plans.” However, he noted the report has not yet recognized the plan to expand the Canada Pension Plan which will help increase retirement benefits for those without an employer-sponsored pension. “While Canada will be affected by the aging of its population, we are in a position to face this challenge,” says Clausen.

Platform Launched In Quebec

Dialogue has launched its integrated healthcare platform in Quebec. The virtual platform will be offered exclusively as an employer benefit and will include a complete set of adapted services as well as a personalized team of health and wellness professionals. The platform helps employers seeking to reduce employee absenteeism and increase staff productivity.

Smart Beta Portfolios Expected To Rise

Smart beta portfolio allocations by European investors are expected to rise to 20 per cent in the next three years – almost double the current allocation, says an Inveco Powershares report. It says 95 per cent of investors in Germany, Italy, Switzerland, and the UK are considering smart beta to access European equities. ‘A tool for provision and control’ shows just over half of the investors already used smart beta to access European equities, followed by U.S. large-cap equities, with 43 per cent employing it. As well, although only 10 per cent of investors use smart beta for investing in high yield corporate bonds, a further 46 per cent would consider it.

Genus Adds Pair

Stephanie Tsui is director of Asian wealth and Grant Conroy is an associate portfolio manager at Genus Capital Management Inc. Tsui was the former director of ultra-high net worth investment solutions, Asia Pacific, at Credit Suisse. Conroy brings more than 17 years of equity and financial markets experience that he gained with Goldman Sachs in London, England, to this position.

Chan Joins Stem

Joseph Chan is a vice-president in the benefits and total rewards practice at Stem Capital Inc. He has worked in the industry for 18 years in both Canada and Asia. Most recently, he was at Walmart Canada where he was director of total rewards.

Hunter On Literacy Panel

Mitzie Hunter, Ontario’s minister of education; Bharat Masrani, group president and chief executive officer at TD Bank Group; and Jane Rooney, the federal financial literacy leader; will make up the panel at the Economic Club of Canada’s ‘5th Annual Financial Literacy Breakfast.’ It takes place November 10 in Toronto, ON. For information, visit Literacy Panel

October 24, 2016

U.S. Mortality Improvement Slows

The U.S. Society of Actuaries (SOA) annually-updated mortality improvement scale for pension plans, MP-2016 suggests U.S. mortality continues to improve, but at a slower average rate of improvement than previous years, which may decrease pension plan obligations slightly. For example, the life expectancy for a 65-year-old male declined to 85.8 years, compared to 86.2 years using the 2015 scale. Additionally, the life expectancy for a 65-year-old female is now 87.8 years, compared to 88.2 years based on the previous scale. Based on the SOA’s preliminary estimates, MP-2016 may reduce a pension plan’s current liabilities by 1.5 per cent to two per cent, depending on the individual characteristics of the plan.

Infrastructure Represents Opportunity

Investments in infrastructure represent an opportunity to kick start global growth and create a new asset class for investors in the years ahead, says a report from Citigroup Inc. Although investments in infrastructure represent a declining share of gross domestic product (GDP) spending, there's a desperate need for new building in emerging markets and much of the existing infrastructure in developed markets is aging and needs replacement, it says. The global need for infrastructure spending will amount to US$58.6 trillion over the next 15 years which represents an immense opportunity for private sector investment. However, global equity and credit markets have been hampered from meeting this need for a variety of reasons, including the lack of bankable projects, a mismatch of risk perceptions, and an immature, fragmented, and relatively disorganized industry. To overcome these obstacles, the report calls for making infrastructure a more accessible asset class, which allows investment to take place in a liquid, transparent market.

ETF Assets Unchanged

Assets invested in ETFs/ETPs listed in Canada are US$81.76 billion at the end of the third quarter, virtually unchanged from US$82.14 billion at the end of August, says ETFGI. Net flows gathered by ETFs/ETPs in September were US$491 million of net new assets gathered during the month marking the 23rd consecutive month of net inflows.

Westphal Heads Technology

Nicolas Westphal is head of technology at the Caisse de Depot et Placement du Quebec. He was director of corporate strategy and development at Intuit.

Chrispin Has New Role

Gregory Chrispin is executive vice-president of wealth management and life and health insurance for Desjardins Group. In this capacity, he will also assume the role of president and chief operating officer of Desjardins Financial Security. He joined the firm in 2010 and until now had been vice-president of investments in charge of all Desjardins Global Asset Management’s activities.

Building Checklist Explained

The Canadian Group Insurance Brokers’ ‘Building and Using a Plan Administrator Checklist’ mini-seminar is designed for those who specialize in employee benefits or that want to. Attendees will learn how to create a checklist to utilize when new cases are installed, train new plan administrators, and conduct client renewals. Information reviewed will include taxation, privacy, administration, and HR issues. It takes place December 7 in Markham, ON. For information, visit

October 21, 2016

Rise In Volatility Expected

Investment managers anticipate a rise in market volatility as the U.S. presidential election approaches and many expect to modify their portfolios based on the election results, says a Northern Trust Asset Management survey. It found managers view the U.S. economy and corporate earnings as stable and expect the Federal Reserve to increase rates prior to the end of this calendar year. However, the managers highlighted two concerns in this quarter’s survey: Fed policy and the U.S elections. On the economy, 63 per cent of managers expect U.S. gross domestic product (GDP) growth to remain the same over the next six months, up from 49 per cent with that view in the prior quarter. Those who expect accelerating growth fell to 29 per cent, from 42 per cent previously. As well, 71 per cent expect a Fed rate increase prior to the end of the calendar year. Managers ranked a change in U.S. monetary policy as the top risk to global equity markets, with a rise in interest rates ranked second, U.S. corporate earnings third, and the U.S. presidential election fourth. Expectations of market volatility are at near-record levels, with 78 per cent of managers predicting an increase in volatility over the next six months and 89 per cent expecting the approach of the U.S. elections on November 8 to generate an increase in market volatility. They believe a victory by Republican presidential candidate Donald Trump would have the most impact, followed by the Democrats winning a majority of seats in the U.S. House of Representatives, and Hillary Clinton being elected as president.

AIMCo Independence Reaffirmed

AIMCo is reaffirming that the Alberta government has honoured its investment decision-making independence, which includes investment decisions it makes as a part of the Heritage Fund’s additional allocation to Alberta-based businesses. The statement comes in response to an October 18 article in the National Post. In a government press release highlighting some of AIMCo’s recent Alberta investments, the government, with AIMCo’s guidance, referenced facts and details that had already been included in AIMCo’s own original press releases for the investments. Unfortunately, and without intent, this guidance resulted in some of the wording in the press release being unclear regarding the use of proceeds of AIMCo’s investment. This lack of clarity was unintentional and is regrettable, it says, and AIMCo’s mandate is unwavering in its commitment to maximize investment return on behalf of its clients and it has full accountability and decision-making authority for its investment decisions.

MetLife Rebranding Means Snoopy Out

Snoopy and the Peanuts gang are being jettisoned as MetLife rebrands itself ahead of a move to spin off its U.S. individual life insurance business next year. It has long featured the cartoon characters in print, television, and online ads and pays between $10 million and $15 million annually in licensing fees. It intends to spin off its individual life insurance unit to focus on providing businesses with employee life, dental, and other insurance, as well as pension plans and annuities.

Technology Creates Advantages

Hedge fund managers are innovating and increasing their investment in technology to create new competitive advantages and to address regulatory and operational issues, says a study by KPMG International, the Alternative Investment Management Association (AIMA), and the Managed Funds Association (MFA). ‘Transformative Change: How innovation and technology are shaping an industry’ found an overwhelming percentage of hedge fund managers, 90 per cent, say they are investing in technology today to improve controls and compliance, with an almost equal number, 88 per cent, identifying efficiency objectives as a top reason.“This new survey underlines how the alternative investment industry continues to invest in technology across the entire fund management organization,” says Jack Inglis, AIMA’s CEO. “Investment in new technologies will help to keep the industry ahead of the competition over the long term, delivering consistent and positive risk-adjusted returns for investors while continuing to address the ever-increasing regulatory burden.”

Caisse Adds To Holdings In India

The Caisse de dépôt et placement du Québec (CDPQ) will invest over US$155 million to acquire a sizeable minority stake in TVS LSL, a privately held subsidiary of TVS Logistics Services Ltd., the India-based multi-national third-party logistics service provider. Following this transaction, existing investors Goldman Sachs and KKR will fully exit their investments in TVS LSL. CDPQ will purchase most of their joint stake, while TVS family members and management will acquire the remainder. Beyond this equity investment, CDPQ is ready to commit significant additional capital to finance transformative acquisitions and support the expansion of TVS LSL in India and globally. TVS LSL has a significant presence in the UK and in the U.S.

CPPIB Enters Second Chongqing Venture

The Canada Pension Plan Investment Board (CPPIB) and Longfor Properties Co. Ltd are entering into a second joint venture to invest in the Chongqing West Paradise Walk shopping centre in China. CPPIB will commit approximately C$193 million for a 49 per cent interest in the property. West Paradise Walk is a six-level shopping mall built in 2008. The mall currently maintains high customer traffic and occupancy rates with tenants including major local and international retail chains.

Charette, Filion Move To Bâtirente

Louise Charette is chief investment officer and Eric Filion is chief operating officer at Bâtirente. An economist by training, Charette has a broad investment management experience, particularly in the area of pension funds. Filion was a vice-president, product development, marketing, and investment strategy, group retirement savings, for a major Québec financial institution.

Programs Targeted To Population

‘What Does Your Population Need? Targeting Benefit Programs to Your Population’ will be examined at a Benefits Breakfast Club event. Speakers will include Dr. Alain Sotto, occupational medical consultant for the Toronto Transit Commission and director and senior medical consultant for the Medcan Wellness Clinic; and Lori Casselman, chief health officer at LEAGUE Inc. Sotto will review trends in the incidence and management of diabetes, obesity, and metabolic syndrome in working populations, including how best to target effective workplace interventions. Casselman will discuss opportunities for integrated health management and how benefit plan design, wellness, disease, and disability management services can result in improved employee health outcomes. A third presenter will discuss the untapped potential for benefit plan design to target the most common health issues in employee populations to improve employee health outcomes and benefit costs over the long term. It takes place November 3 in Cambridge, ON. For information, visit

October 20, 2016

Millennials Offer Benefits

Nearly half (45 per cent) of the businesses run by millennials offer wellness programs as part of their group benefits offering, says the ‘2016 Manulife Small Business Research Report.’ It found just 22 per cent of small business companies run by baby boomers offer group wellness programs. The same phenomenon is observed with group pension plans ‒ 44 per cent of millennial business owners have set up a group pension plan for their employees compared to 20 per cent of baby boomer owners. "Our research shows a connection between the investment in the health and wealth of employees and their level of engagement and productivity," says Donna Carbell, senior vice-president, group benefits, at Manulife. "Millennials understand what attracts and retains millennials and they are definitely going to scoop up the best talent by implementing benefits programs as soon as possible."

Revised Guide Posted

The Office the Superintendent of Financial Institutions (OSFI) has posted a revised ‘Instruction Guide for the Preparation of Actuarial Reports for Defined Benefit Pension Plans.’ It sets out the reporting requirements of actuarial reports filed with OSFI for private pension plans with defined benefit provisions. In this version, the maximum going concern discount rate is modified to six per cent; the quality of fixed income investments to be used in the establishment of a replicating portfolio is defined; additional disclosure is required with respect to termination expenses; and clarifications on required contributions for funding designated plans are provided. The revisions apply to actuarial reports with a valuation date on and after October 31, 2016.

Loyalty Helps Career

Three-quarters of Canadians (74 per cent) believe it is helpful for their career to stay loyal to one employer, says a survey from Monster Canada. However, it found on average four-in-10 Canadians have had at least four employers since graduation. Canadians are mostly split on the ideal length of time to stay at one employer. Nearly half of respondents (49 per cent) believe that 10 years or less is the right amount. On the other hand, four-in-10 (39 per cent) say staying for more than 10 years is ideal. More than half of millennials (57 per cent) believe that the appropriate length of time at one employer is six years or less. While, more than half (51 per cent) of those aged 55 to 64 believe that the perfect length of time is more than 10 years.

Investors Flock To Safety Of Cash

Global investors flocking toward the safety of cash have pushed the average global allocation back up to equal the highest allocation of the past 15 years, says the Bank of America Merrill Lynch's monthly fund manager survey. The average cash allocation jumped to 5.8 per cent in October from 5.5 per cent the previous month. The other two times the average cash allocation was that high was in July following the UK's vote to leave the European Union and in the fall of 2001. For 20 per cent, the biggest tail risk is seen to be a potential European Union breakup. The other most commonly cited tail risks were a bond market crash (18 per cent), a Republican victory in the U.S. presidential race (17 per cent), and U.S. inflation (12 per cent).

Beaudoin Now Global Leader

René Beaudoin is global health delivery leader, as part of the services and the retirement, health and benefits leadership teams, at Mercer Services Global Health Delivery. He brings a 25-year track record of growth and extensive client and business leadership experience. He is a technologist and operational expert with knowledge of various plans, including defined benefit, defined contribution, health and welfare, disability, and employee assistance programs.

Riis Leads Project Delivery

Kristina Riis is vice-president, project delivery, at the Ontario Teachers' Pension Plan (Ontario Teachers'. She has more than 15 years of experience in strategic planning, business unit development, project management, change management, and process engineering.

Insights Offered On CPP Expansion

Dave Mulyk, senior manager, public sector pension policy, in the financial sector regulation and policy division with the Alberta Treasury Board and Finance, is the featured speaker at the CPBI Northern Alberta Region’s ‘Insight on CPP Expansion’ session. Attendees will gain some insight around some of the key policy considerations facing decision-makers and what the decision to expand CPP may mean for existing registered pension plans. It takes place November 16 in Edmonton, AB. For information, visit CPP Expansion

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