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December 7, 2020
EMPLOYERS TAKE HOLISTIC APPROACH TO WELLNESS
As employers look for ways to adapt their wellness offerings in the coming year, a number of trends are developing as Canadians forge their way through the pandemic and beyond, says a Telus ‘Health Benefits Hub.’ Leading the way is taking a holistic approach to employee wellness, it says. Plan sponsors and employers know that a happy, healthy workforce makes for more productive and engaged employees – and ultimately better business outcomes. With an increased focus on employee well-being, wellness strategies have come to endorse a broader definition of what “wellness” means. Now more than ever, employees turn to their employers to help provide solutions not only for their physical well-being, but in all aspects of their life. Employee wellness programs can reflect the interconnections between physical, nutritional, mental, social, financial, and even environmental health. As well, the focus is shifting to prevention rather than treatment. This year’s, the TELUS Health report found that 2019 had the biggest increase in average eligible costs for private drug plans over the past five years. One of the main contributing factors is the increase in the use of medication for mental health issues and a large number of claims for drugs treating depression. This coming year will likely see another increase in the costs of employer-provided health plans in Canada – which are set to rise by 7.2 per cent in 2021.To lower chronic disease rates and limit their impact on healthcare and benefits costs, employers and benefits providers are increasingly aiming to offer preventive benefits that boost workplace wellness, as opposed to focusing only on treatment.
December 7, 2020
CURRENT SYSTEM CAN REDUCE DRUG COSTS
The Canadian Life and Health Insurance Association (CLHIA) believes that meaningful reductions in prescription drug prices and improving access for all Albertans can be achieved by working within current system. In its comments in advance of the province’s 2021 budget, it says, for instance, specialty drugs, including those used to treat chronic and rare diseases, accounted for just two per cent of total prescription claims in 2019, but made up 33 per cent of the costs. High-cost drugs are a challenging and evolving class of prescription drugs. Their unique characteristics and high costs may require a separate strategy around coverage in order to ensure that Canadians have access. This may require, for example, by harmonizing catastrophic drug coverage across the country. Federal, provincial, and territorial governments need to work together, along with private insurers, to find the best way to increase access to high cost medications in a fiscally sustainable way. To ensure the residents of Alberta continue to have access to affordable prescription drugs, workplace and individual drug plans that currently provide millions of Albertans with comprehensive access to medicine need to be supported. As well, governments need to work with the industry to bring down costs through bulk-buying and enhanced access to high cost medicines.
December 7, 2020
SIMILAR DILIGENCE APPLIED TO BALANCING RISK/REWARD
Investors, across all generations, wealth segments, and account types demonstrate a similar diligence to balancing risk and reward, avoid common trading pitfalls, gravitate to broadly diversified funds, and maintain a long-term outlook, says Vanguard’s ‘How America Invests’ analysis of investor behaviour. Additionally, it uncovers emerging trends, such as the increasing prevalence of ETFs. Among the key insights is that investors take appropriate risk with balanced and diversified portfolios. The average asset-weighted portfolio consists of 65 per cent equities, 22 per cent fixed income, and 13 per cent cash. As well, millennials allocate 90 per cent of their portfolios to equities, but reduce their equity exposure commensurately with age, in alignment with the portfolio construction of its target-date funds. While younger investors have looked to position their portfolios for long-term growth, the typical boomer maintains a more conservative equity allocation of 66 per cent and the typical silent generation household has an equity allocation of 62 per cent. The majority of investors also ‘buy-and-hold.’ Those who do trade typically only trade twice and move about one-fifth of their assets. Most traders are either professionally advised or exhibit behaviour that is consistent with rebalancing.
December 7, 2020
VIRUS PROMPTS MOVE TO OCIO
Coronavirus pandemic-related challenges facing institutional investors this year have seen them, turn to OCIOs (outsourced chief investment officers), says Mercer Investments. Its OCIO assets under management rose to $321.4 billion as of September 30, up just over 10 per cent from $291 billion at the end of 2019. “We are seeing a direct correlation between the challenges of the pandemic and investors’ interest in our investment solutions,” says Rich Nuzum, its New York-based president, investments and retirement. Equity markets have recovered from sharp declines early this year, but interest rates remain near all-time lows, forcing many institutional investors to move out of their comfort zones as they position their portfolios to meet their long-term goals and many asset owners recognize that their governance capabilities have been stretched thin this year.
December 7, 2020
CROSS-BORDER ALLOCATIONS INCREASED
Continuing to diversify out of local-government instruments, Latin American pension funds increased their allocations to cross-border securities by 19 per cent in 2019, says Cerulli Associates. Total assets under management (AuM) for the four administradoras de fondos de pensiones (AFP/Afore) systems were $574 billion at the close of 2019. Including Brazil’s complementary pension system, which also had a positive year, total regional AuM stands at $1.05 trillion. Flows into the AFP/Afore pension managers in Chile, Mexico, Colombia, and Peru reflect a gradual upward trend that mimics increasing formality in labour markets and higher salaries. While cross-border mutual funds were the clear winners in 2019 ‒ adding $11.7 billion in total allocations to end the year at $87 billion ‒ exchange-traded funds (ETFs) are steadily accumulating assets