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March 3, 2021

WOMEN RETIRE WITH LESS

Women retire 30 per cent less wealthy than men and must work two years longer to be retirement-ready, says the 2nd annual ‘Mercer Retirement Readiness Barometer.’ It found that not only do women enter retirement with lower retirement savings than men, they also must work longer to achieve retirement readiness. In an analysis of group retirement income plan account balances, it found that recently retired women have, on average, an account balance that is approximately $30,000 lower than their male counterparts. With men retiring with an average account balance of approximately $100,000, this represents a savings gap of 30 per cent. This is largely due to a lower overall savings rate. The research on savings rates shows that women, on average, experience a savings rate gap of nearly one per cent. All else equal, this savings rate gap means that women need to work two years longer than men to be ready for retirement. But all else is not equal, it says. While individual circumstances vary, there are universal headwinds at play such as a persistent gender pay gap and a much greater likelihood of experiencing interruptions during a woman’s career, a phenomenon that has been particularly acute throughout the COVID-19 pandemic.

March 3, 2021

COMMUTED VALUES NEEDS FULSOME REVIEW

A fulsome review should be completed prior to a temporary solution being finalized, says the Pension Investment Association of Canada (PIAC) in its comments on the Actuarial Standards Board’s notice of intent on ‘Determination of Pension Commuted Values in Economic Environments Where Bond Yields are Negative.’ It is against instituting a general or permanent change during the current period of abnormal circumstances. As well, seeing as recent changes to commuted values were just made on December 1, 2020, it says constant changes to the standards may have a negative impact on the public’s perception of the Canadian Institute of Actuaries, the Actuarial Standards Board, and the pension industry overall. As the ASB (Actuarial Standards Board) continues its analysis, it is important that it recognizes that the changes proposed in both options will create a burden for plan administrators because of the need to update pension administration systems, processes, and communications. For instance, if a change is adopted that includes negative rate inputs, the effective date will need to provide enough runway to allow for systems to be appropriately updated and for system testing to occur. Some systems may not even have the ability to perform these calculations which can become a major issue. Systems that rely on third-party providers for changes will face the most difficulty with the tight turnaround time as their providers likely have previous obligations.

March 3, 2021

COVID RESPONSE DEBT CONCERNS HR PROFESSIONALS

CPHR Canada, the national association representing the human resources profession, says the overall economic responses of the Canadian federal and provincial governments compare favourably with those of other developed countries, if measured both in terms of dollars spent and as a percentage of GDP. But, its ‘Briefing Note – Economic Responses to COVID – 19,’ says Canada has recorded the highest increase in its total debt to GDP ratio among all the advanced economies reflecting massive support programs and liquidity injections by the Canadian federal and provincial governments. This may not be an enviable position as ultimately these massive debts must be reduced over time. It wants the country’s governments to begin planning how to eventually recover from these massive debts. With the end of the pandemic not necessarily in immediate sight (given delays in vaccine distribution and new variants, all potentially requiring even more stimulus before any return to normal), a fiscal plan is of ultimate importance. The survey of its members’ show concern about decreased revenues; increased cost of operations and challenges in recruiting and staffing; the need for mental health support programs; the availability of reliable, affordable fast internet; and online training programs. Overall, it believes that social distancing, flexible work schedules, working from home, and outsourcing will be the new normal in the post-pandemic world.

March 3, 2021

ESG THEMES KEY DRIVER OF ASSET GROWTH

ESG-themed investments saw strong performance and an influx of flows in 2020 and are expected to be a key driver of organic asset growth for money managers in 2021, says a report by Moody’s Investors Service. ‘Funds & Asset Management – US: ESG investment outperformance overcomes investor hesitancy, a key barrier to growth’ says inflows into environmental, social, and governance (ESG) strategies grew 140 per cent in 2020 from 2019. ESG-themed investments saw $80.5 billion in global net inflows in the third quarter, up 14 per cent from the previous quarter. Sustainable fund AuM (assets under management) reached a record high of $1.23 trillion as of September 30. “The experience of 2020 will help remove investors’ worry that ESG investing means giving up returns, which has been a widespread barrier to growth in ESG products,” says Stephen Tu, a vice-president and senior credit officer at Moody’s. For 2021, its forecasts show that ESG investment strategies will provide significant growth for traditional asset managers. Not only has the sector seen positive inflows in recent years, but “investors and asset managers now have a keener focus on ESG investment themes, ESG data, and the incorporation of ESG considerations in investment analysis and product construction,” says the report.

March 3, 2021

APP MANAGES BENEFITS

Desjardins has launched Omni mobile app, which gives employees a simple and user-friendly way to manage their group benefits and retirement savings plans. Available for iOS and Android devices, it combines the ‘Claim 360’ and ‘Your way’ apps to streamline the user experience. Group retirement savings plan members can enroll and contribute to their plan, change their investment instructions, choose their beneficiaries, and set their retirement savings goals. Group benefits plan members can use the app to submit claim