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February 2, 2021

BIDEN ELECTION MAKES ESG ‘ULTIMATE MEGATREND

U.S. President Joe Biden’s expected regulatory changes will push environmental, social, and governance (ESG) investing “to become the ultimate megatrend,” says Nigel Green, chief executive and founder of deVere Group. The Biden administration is “going to usher in an era of serious momentum for responsible and sustainable investing. “This is not just because of the likely tougher approach to the use of fossil fuels and his campaign’s vow to take swift action to tackle the climate emergency. “It is also because of the expected appointment of Gary Gensler to lead the SEC (Securities And Exchange Commission), who is likely to heavily reform and broaden ESG investing and corporate disclosure rules in the U.S. Should the SEC push ahead with beefing-up green investment rules, as is expected, it will close the transatlantic gap that has emerged in recent years as the European watchdogs pushed ahead with increased stricter ESG investing and disclosure regulations.” Green previously called ESG investing as a “megatrend” of the decade. “But the tag ‘megatrend’ would now seem somewhat underplayed if the U.S. moves towards ESG-related regulatory reforms and comes into line with Europe. It will become the ultimate investment megatrend should this happen.”

February 2, 2021

MEDIAN RETURN IMPROVES

The median return of the BNY Mellon Canadian Master Trust Universe was +5.55 per cent for the fourth quarter of 2020. This marks an improvement in investment returns from the third quarter and consecutive positive median returns following the strong market rebound experienced in the second quarter. The year-to-date median return as of December 31, 2020, was +9.96 per cent, while the median 10-year annualized return was +8.32 per cent. “We continued to see positive returns through the end of 2020, despite the tremendous challenges and uncertainty experienced during the year stemming from the COVID-19 pandemic. Canadian plan sponsors posted positive results for the final quarter of the year and for the year-to-date,” says Catherine Thrasher, head of strategic client solutions and global risk solutions for CIBC Mellon and BNY Mellon. “Canadian plans have been resilient with higher positive performance results for the fourth quarter compared to last quarter, led again by equities in all major markets.”

February 2, 2021

FERTILITY BENEFITS CAMPAIGN LAUNCHED

Two fertility patient groups, Conceivable Dreams and Fertility Matters Canada, have launched a campaign to encourage employers to improve fertility benefits and raise awareness on the current state of fertility support across Canada. Given the number of Canadian couples facing fertility challenges has doubled over the last 40 years and the high costs of treatment and drugs, ‘Fertility Benefits Matter’ hopes to put a spotlight on this issue. In Canada, the average cost of one round of IVF (in-vitro fertilization) is approximately $20,000 and surrogacy costs upwards of $80,000. Their review of employer benefits plans in Canada found that the majority of Canadian employers did not provide fertility benefits. Of those that did provide benefits, only five per cent provided coverage for both fertility drugs and other fertility costs such as IVF procedures and testing. As well, more than 85 per cent of these benefits plans had lifetime maximums in place for fertility drugs, ranging from $2,400 to $18,000 with a median of $3,250 per lifetime.

February 2, 2021

CONSUMERS MORE WILLING TO SHARE HEALTH DATA

The number of consumers willing to share significant data on their health and other lifestyle-related habits with their insurer to reduce premiums has grown over the past two years, says a report from Accenture, However, their trust in insurers to look after that data has fallen. Its ‘Global Insurance Consumer Study’ shows at a time when insurers are launching tech-driven partnerships to improve customer wellness, approximately seven out of 10 consumers (67 per cent) say they would share significant data on their health, exercise, and driving habits in exchange for lower prices from their insurers, compared with 59 per cent two years ago. In addition, six in 10 of consumers say they would also share significant data for personalized services to prevent injury and loss ‒ up from 48 per cent in the 2019 report. But while consumers are more willing to share personal data, their concerns about intrusiveness and its impact on premiums has grown and their confidence in their insurers’ ability to look after their data has diminished. For instance, just under 37 per cent of consumers say they significantly trust insurers to look after their data, down from 45 per cent in the 2019 report. The report also finds that insurers will need to re-evaluate the role of human workers, particularly as COVID-19 has drastically accelerated the industry’s adoption of digital insurance services. For instance, the number of respondents over the age of 55 who said they would like the internet chat and video insurance claim process to replace the traditional in-office claim process increased, up from 49 per cent to 66 per cent.

February 2, 2021

INVESTOR CONFIDENCE REMAINS POSITIVE

Global investor confidence has remained positive, says the State Street Global Investors confidence index. Despite a decline in January driven by North American sentiment, Asian investors saw increased risk appetite, keeping the index above 100. International investors registered a reading of 100.7 – a decline of 3.8 points from December’s revised reading of 104.5. As the index remained above 100, it means global investors overall are buying more risk assets than selling. Marvin Loh, senior macro strategist at State Street Global Markets, says, “Vaccine rollouts and the prospect of additional stimulus in the U.S. provided a supportive backdrop for risk to start the year. However, increases in the number of new COVID cases and uneven vaccination rollout efforts have hindered further gains, with regional changes reflecting these differences.”

February 2, 2021

INVESTMENT FOCUSES ON DECARBONIZATION

A syndicate led by the Caisse de dépôt et placement du Québec (CDPQ) has invested in the first close of the MKB Partners Fund II, LP. The specialized fund will invest in late venture and early growth-stage companies focused on the decarbonization and electrification of energy and transportation. It will partner with management teams using technology and business model innovations to accelerate the energy transition.

February 2, 2021

MCLEOD JOINS OMERS

Lori McLeod is vice-president, strategic communications, at OMERS. Most recently, she was director of external communications for the Ontario Teachers’ Pension Plan.

February 1, 2021

LEVERAGING DATA KEEPS WELLNESS SUSTAINABLE

As the pandemic continues and affects employees in various ways, employers are looking for ways to address their workforce needs while keeping their wellness program costs sustainable. Leveraging data to gain a clearer picture of employers’ benefits spend, as well as employees’ evolving needs, can be a part of the solution, says a Telus ‘Health Benefits Hub.’ A properly designed, data-driven wellness strategy can help employers to personalize their offerings and allocate resources more efficiently. This can improve their wellness programs overall, lead to higher participation, and help drive better health outcomes. Designing and managing a great wellness program first requires employers and plan sponsors to understand the factors and health risks that impact employees’ personal lives and productivity at work. And research is increasingly indicating that “knowing your numbers” may lead to an improvement in health risks in employees. A wellness program can become more data-driven and provide an accurate picture of workforce wellness by collecting and analyzing information from sources such as claims and demographic  data, employee feedback, biometric screening tests, and health risk assessment questionnaires. This can help provide an accurate picture of workforce wellness and pinpoint the areas where companies should allocate more or less resources – whether it be for stress relief, lifestyle habits such as smoking cessation, mental well-being, or even financial health. Program participation rates, clinical outcomes, and healthcare utilization (including adherence measures) can also help to guide the design of wellness benefits and initiatives. If used consistently and regularly, this insight can help the employer optimize their wellness program through more customized offerings and targeted resources. It can allow employers to better plan for future program initiatives and continue to improve employee health and well-being. In the long run, this customization can lead to improved health outcomes, better employee engagement, and result in reduced losses due to employee absenteeism.

February 1, 2021

DB PLANS END YEAR IN POSITIVE TERRITORY

Canadian defined benefit pension plans ended the year in positive territory against a backdrop of radical uncertainty, says the RBC Investor & Treasury Services ‘All Plan Universe’ survey. Retirement assets returned 9.2 per cent overall in 2020 and 5.4 per cent in the final quarter of the year. “It’s been a tumultuous time for the markets, but we’re seeing positive returns for a third consecutive quarter,” says David Linds, managing director and head of asset servicing, Canada. “The successful development of multiple COVID-19 vaccines was a contributing factor, as were the anticipated government support packages and the conclusion of the U.S. elections.” However, “investor confidence may be tempered into 2021 as uncertainty surrounding the vaccine rollout, new virus strains, and other unknowns may place additional pressure on equity markets.”

February 1, 2021

ALLEGATION OF TAX DODGING MADE

Canadian long term care home operator Revera appears to use aggressive tax avoidance schemes in the UK, says the Public Service Alliance of Canada, citing a report from the Centre for International Corporate Tax Accountability and Research (CICTAR). ‘Tax Dodging by a Canadian Crown Corporation: Revera Living Making a Killing’ shows how its UK care homes generate large revenues, but appear to shift profits offshore, raising major concerns in the UK and Canada. Revera is entirely owned by the Public Sector Pension Investment Board (PSP Investments). Tax dodging in the UK would violate its endorsed responsible investment principles, says Public Service Alliance.

February 1, 2021

CHANGING WORKPLACES REQUIRE NEW BENEFIT APPROACHES

Even before COVID-19 hit, Canadian workplaces were changing prompting employers to seek benefits plan to satisfy the needs of their employees. So while the work-from-home model has introduced a variety of changes both in the workplace and in the culture at large, new approaches to employee benefits were evolving. In ‘Employee Benefits 2021: Seven Trends To Watch’ at the Benefits and Pensions Monitor website, Robert Taylor and J.P. Girard, executive vice-presidents at Hub International, examine some of the trends that are developing.

February 1, 2021

INVESTOR CONFIDENCE MAINTAINED IN MULTI-SUITE RESIDENTIAL

For 2021, the Morguard Corporation forecasts investors will continue to approach investments with caution while monitoring the national economic recovery. The 23rd annual edition of its ‘2021 Canadian Economic Outlook and Market Fundamentals Report,’ reveals despite the uncertainty surrounding the effects of COVID-19, investor confidence in the multi-suite residential segment was maintained in 2020, resulting in the segment’s healthy investment activity levels following the trend seen over the past several years. Over $3.9 billion in transaction volume was reported during the first six months of 2020, comparable to the record-high $4 billion in sales tallied in the first six months of 2019. The retail segment continued to adapt to industry change and COVID-19-related restrictions in 2020. New shopping dynamics and lockdowns across the country in the fall of 2020 led to additional brick-and-mortar store closures, adding to the upward vacancy trajectory. Going forward, managing to increase vacancy and adapting to tenants’ changing needs will continue to represent key challenges for landlords. Retail redevelopment, changes to the tenant mix, the introduction of more service retail, and the consideration of alternative uses are expected to continue in 2021.

February 1, 2021

CO-OPERATORS PROVIDES VIRTUAL CARE

The Co-operators will provide virtual healthcare services to its group benefits clients across Canada, available 24 hours per day, seven days per week in both official languages. The remote services will be offered through an agreement with EQ Care, which was recently acquired by TELUS Health. Using a mobile application, plan members will get convenient access to a virtual healthcare ecosystem which will help them navigate to the care pathway that is most appropriate whenever it’s needed.

February 1, 2021

LUEDEY MERGES WITH STERLING

Luedey Consultants Inc. will merge with Sterling Capital Brokers. The combined company becomes one of the largest independent employee-owned benefit consulting firms in Canada. Founded in 2002 by Bill Luedey, Luedey is a boutique benefit consulting firm with more than 70 clients in Atlantic Canada including both privately owned, public sector employers, and several union building trades. Sterling was founded in 2014 and is one of Ontario’s largest independent benefit consulting firms that specializes in servicing high-growth small-to-medium size businesses.

February 1, 2021

PENSIONS BENEFITS ACT EXPLAINED

CPBI Saskatchewan will provide an explanation of the Pension Benefits Act, 1992 and the Pension Benefits Regulations, 1993. March 17, Holly Ballan, of the Financial and Consumer Affairs Authority (FCAA), will provide an overview of the pensions division of the FCAA, the act, and the regulations. Topics will include the regulatory environment, different plan types, minimum standards, multi-jurisdictional plans, unlocking and termination, and retirement options. Information is at http://www.cpbi-icra.ca/Events/Details/Saskatchewan/2021/03-17-An-Explanation-of-The-Pension-Benefits-Act-1

January 29, 2021

PRESSURE MOUNTS TO ADOPT CLIMATE RISK REPORTING

Amid growing calls from regulators, financial standard organizations, and institutional investors, Canadian corporations face pressure to adopt transparent climate risk reporting, says a report from the C.D. Howe Institute. But first, they need greater clarity on the metrics and standards involved. In ‘Duty to Protect: Corporate Directors and Climate-Related Financial Risk,’ author Janis Sarra, a professor of law at the University of British Columbia and principal co-investigator for the Canada Climate Law Initiative, says Canada needs to clarify and adopt mandatory uniform reporting on climate metrics and finance, so that corporate officers and directors can offer investors information that is transparent, comparable year over year, and comparable between companies in a sector. “The UK and New Zealand governments have already announced mandatory disclosure of climate-related risks for companies and financial institutions, as have the EU member states,” says Sarra, “and with U.S. President (Joe) Biden moving on all fronts of climate action, Canada risks falling behind.” Corporate directors have the legal and fiduciary duty to act in the best interests of their company as they develop strategies to address climate-related financial risks to their business. However, clarifying and adopting mandatory uniform reporting on climate metrics and finance would benefit both corporate officers and investors. She says directors could benefit from a common taxonomy – a set of metrics and definitions.

January 29, 2021

ASSET TRANSFER GUIDANCE FINALIZED

The Financial Service Regulatory Authority (FSRA) has published final guidance describing how it will exercise its discretion and may provide consent to an asset transfer under the Pension Benefits Act (PBA). ‘Supervisory Approach to Defined Benefit Asset Transfers under the PBA’ is in response to the sector’s request that FSRA focuses on asset transfers as a key priority to improve regulatory efficiency and effectiveness. The guidance provides plan administrators, sponsors, and members with increased predictability and transparency; protects the rights of plan members; and supports member-focused communications, enabling members to better understand the impact of the transaction on their past and future benefits. FSRA has also finalized its process for providing its consent to compliant asset transfer applications. Plans will be responsible for providing early communications to their members to allow concerns to be raised with FSRA in a timely manner. When providing consent to an asset transfer transaction, FSRA will issue a letter of consent in most cases, rather than issuing a Notice of Intended Decision (NOID) followed by an order/consent. The 10-day notice period announced on October 22, 2020, will no longer be required.

January 29, 2021

ATA TAKES PROVINCE TO COURT

The Alberta Teachers’ Association (ATA) says it will take the government to court over a ministerial order signed last month that they say gives teachers less control over their pensions. In December, the province signed a ministerial order allowing the government-owned Alberta Investment Management Corporation (AIMCo) to reject any changes proposed by the Alberta Teachers’ Retirement Fund (ATRF). That order went into effect on January 1.

January 29, 2021

CANADIANS RETHINK RETIREMENT

The pandemic has caused Canadians to rethink their retirement, says Scotiabank’s ‘2021 Retail Investor Sentiment Survey.’ The majority of Canadians who have not yet retired are worried they are not saving enough for retirement (72 per cent), one-third (32 per cent) say they won’t be able to retire when they had planned because of the pandemic, and 28 per cent report they won’t be able to pay off their debt before retirement. However, 67 per cent still see an opportunity in the current market environment and one in five Canadian investors (20 per cent) report having increased confidence in the financial markets since the COVID-19 vaccine approval. Despite the optimism, many investors remain cautious with 33 per cent saying they are holding off on investing entirely right now due to the uncertainty they feel caused by the pandemic.

January 29, 2021

PORTFOLIO MANAGER MOVE DEFERRED

The Ontario Capital Markets Modernization Taskforce will defer consideration of whether to move the regulation of portfolio managers away from the Canadian Securities Administrators (CSA) to a self-regulatory organization (SRO), says PMAC. Its final report makes 74 recommendations to strengthen and modernize Ontario’s capital markets regulatory framework. A decision on moving the regulation of portfolio managers away from the CSA to an SRO has been put off until such time as changes to the SRO structure have been implemented and the utility and desirability of a change in the regulation of portfolio managers has been revisited. Katie Walmsley, PMAC’s president, says, “We strongly believe the current regulation of portfolio managers by the Ontario Securities Commission and other Canadian Securities Administrators is effective and it is in the public interest to maintain direct regulation of these registrants versus delegating to a self-regulatory organization. This recommendation, along with the others noted in the final report, shows that the