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Daily News Alerts

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June 22, 2021

SOLVENCY PROTECTS DB PLAN MEMBERS

The Canadian Life and Health Insurance Association (CLHIA) believes that requiring defined benefit pension plans to fund at a 100 per cent solvency ratio protects members’ benefits and their long-term sustainability. In its submission on Saskatchewan’s ‘Consultation on a Review of the Pension Funding Framework for Single Employer Defined Benefit Plans in the Private Sector and Other Complementary Reform Measures Applicable to all Defined Benefit Plans,’ it says solvency funding adds rigour to pension plan financing through its funding calculation, and through clear, unbiased rules for the methods and assumptions used by plan sponsors. Any new solvency funding rules that do not require plan sponsors to make special payment contributions to fund the pension plan to a 100 per cent solvency ratio will result in additional risk for plan members in the event of a plan sponsor insolvency. A strong funding ratio is the best assurance of benefit security. The recent Sears Canada Inc. DB pension plan insolvency highlights the risk of solvency underfunding. Terminal funding is only needed when a pension plan ceases to be a going concern (usually as a result of its plan sponsor becoming insolvent), but at that time, it is unlikely that the plan sponsor will be able to top-up a solvency deficit. The result is a shortfall in assets when they are needed the most – leading to a reduction in plan members’ promised benefits. Moving away from a solvency funding regime discourages plan sponsors from prudently managing risk and could jeopardize members’ benefit security. The volatility that plan sponsors are struggling with under the current solvency funding regime can be effectively managed using LDI (liability driven investing) strategies.

June 22, 2021

ACPM WANTS ONGOING UNCLAIMEDS INCLUDED

The Atlantic Regional Council (ARC) of the Association for Canadian Pension Management (ACPM) wants New Brunswick to make unclaimed entitlements from ongoing pension plans eligible for transfer to the unclaimed property fund at the option of the plan administrator under certain situations such as an unlocatable terminated member. In its response to New Brunswick’s ‘Financial and Consumer Services Commission (FCNB) Unclaimed Property Consultation,’ it says it is in favour of the proposed rule for the province’s new unclaimed property program, with one exception. In addition to entitlements in a wound‐up pension plan, unclaimed entitlements from ongoing pension plans should be made eligible for transfer to the unclaimed property fund, at the option of the plan administrator. At this time, the main issue in connection to unclaimed property relates to plans for which a wind‐up report has been approved. The commission may want to consider additional accommodation for ongoing pension plans at a future date, it says. In situations where the plan administrator is unable to locate a terminated member, assuming a reasonable search effort, the ACPM says allowing the plan administrator to transfer those assets to the unclaimed property fund will reduce the administrative effort on the part of the plan administrator.

June 22, 2021

CANADIAN WORKERS HAVE HIGHEST STRESS LEVELS

U.S. and Canadian workers experienced the highest daily stress levels in the world, increasing their daily stress levels by eight percentage points during the pandemic to 57 per cent, compared with 43 per cent globally. Despite these high stress levels, U.S. and Canadian employee engagement levels rose by two percentage points to 34 per cent regionally compared with 20 per cent globally during the pandemic, says Gallup’s ‘State of the Global Workplace’ report. Globally, employee engagement decreased by two percentage points from 2019 to 2020 and the workforce reported higher worry, stress, anger, and sadness in 2020 than in the previous year. Western Europe has the lowest employee engagement levels globally compared with the United States and Canada. It estimates that low employee engagement costs the global economy $8.1 trillion. “The trends among U.S. and Canadian workers are similar with slight increases in employee engagement, but also increases in daily stress. Though they found themselves even more involved in their work, increased daily stress may put them at high risk of burnout,” says Jim Harter, its chief workplace scientist.

June 22, 2021

LIFE INSURERS MAKING ENVIRONMENT A PRIORITY

Despite a relatively low vulnerability to climate risk, Canadian life insurers are increasingly making understanding and tackling environmental risk a priority, as evidenced by their support for major global environmental frameworks and green initiatives, says a DBRS Morningstar commentary. While progress on the asset management front is more challenging, significant steps have been taken to reduce the environmental impact of operations, including a focus on carbon neutrality and reducing the intensity and absolute value of greenhouse gas emissions. As well, they have issued green and sustainability bonds, increased their commitments to renewable energy investments, and introduced more environmental, social, and governance (ESG)-related product offerings through their asset management subsidiaries.

June 22, 2021

NDRIO JOINS DBPLUS

New Digital Research Infrastructure Organization (NDRIO) has joined CAAT’s DBplus to provide its growing employee team with a pension plan that delivers predictable lifetime retirement income with inflation protection, early retirement features, and survivor benefits. Since its launch in 2019, more than 80 employers have chosen the DBplus pension plan design to provide peace of mind to their employees.

June 22, 2021

GLP EXPANDING SCOPE

GLP is expanding the size and scope of GLP Continental Europe Development Partners I. With its partners Canada Pension Plan Investment Board (CPP Investments) through its wholly owned subsidiary, CPP Investment Board Europe S.à r.l., and QuadReal Property Group, it will expand the investment capacity of GLP CDP I. CPP Investments has a 45 per cent share. GLP CDP I was established in 2018 to develop modern logistics assets in Continental Europe including Germany, France, Italy, Spain, and the Netherlands.

June 22, 2021

MUELLER JOINS BAYNES & WHITE

Brittany Mueller is a benefits specialist at Baynes & White. Previously, she was a service consultant at Mosey & Mosey Benefit Plan Consultants.

June 22, 2021

VISION CARE PLANS EXAMINED

Dr. Aaron Patel, an optometrist and chair of the Canadian Association of Optometrists (CAO) insurance industry working group will provide insights into best practices in optometry, fraud prevention techniques, and designing a vision care plan to reduce the risk of fraud the Canadian Association of Optometrists and Connex Health Consulting ‘Keeping An Eye on Fraud’ session. It takes place July 6. Information is at https://www.connexhc.com/product/keeping-an-eye-on-fraud/?mc_cid=a8def76d7e&mc_eid=7e402198d2

June 21, 2021

SEC REGULATION NEEDED FOR CLIMATE CHANGE PRODUCTS

Regulatory action from the U.S. Securities and Exchange Commission (SEC) is needed to ensure information on climate change products is consistent, comparable, and reliable, says the Pension Investment Association of Canada (PIAC) on the SEC consideration of climate change disclosures. Specifically, it says investors need information that allows them to understand the financial implications of climate change on a company’s business model, how management and the board is overseeing this risk, and that allows them to assess how companies are measuring and monitoring their Scope 1, 2, and 3 emissions. However, where companies do not disclose data, investors must rely on estimates and proxies provided by various vendors with a differing methodology. This is a costly and time-consuming endeavour that yields inaccurate results. It agrees with SASB’s (now the Value Reporting Foundation) statement in its submission to the commission that recent market developments create a necessity for regulatory action. As such, PIAC supports disclosure rules that would mandate enhanced disclosure of not just climate risk, but of ESG (environmental, social, and governance) factors more broadly.

June 21, 2021

VIRTUAL CARE USE EXPLODES DURING PANDEMIC

Before the COVID-19 pandemic in Canada, less than 40 per cent of Canadians could get a same day appointment with their physician. In fact, 20 per cent of Canadians has to wait seven days or more to see their doctor, says Dr. Marc Robin, medical director of Dialogue. As well, going to doctor’s appointment represents a time commitment of at least four hours or half a day of work, he told the ‘Why virtual care is the future of health benefits’ session at the ‘Canadian Pension & Benefits Institute’s ‘Forum 2021.’ Prior to the pandemic, approximately four per cent of patient physicians were available through video visit. The acceptance and adoption of virtual care by Canadians now is evident as 74 per cent of Canadians had virtual consultations and the great majority (58 per cent) of those consultations were done through video. Looking ahead, smartphones are part of the future, he said. They provide fast, easy, and timely access to virtual video consultations. Patients can be provided with detailed instructions and follow up to help with navigation of the healthcare system. Virtual platforms offer a “really powerful tool” to integrate many aspects of holistic well-being that could prevent disease in the first place. And the extension of virtual care will be enhanced through remote examination tools like stethoscopes that can be used to listen to the lungs and heart.

June 21, 2021

BÂTIRENTE PLANS AMBITIOUS COMMITMENT TO CLIMATE

“Despite the storm that shook the world in 2020, Bâtirente continued to move forward as a responsible corporation and announced our ambitious climate commitment in the fall,” says Daniel Simard, its CEO. Speaking at its ‘Annual General Meeting (AGM),’ he said this commitment aims to reduce climate-related risks in investment decisions and to invest in the transition to a just economy in which significant efforts are made for environmental solutions. In 2020, the value of its impact investments reached $145 million and 100 per cent of assets are now entrusted to businesses that are signatories of the Principles for Responsible Investment (PRI) and that integrate environmental, social, and governance (ESG) criteria into their management processes.

June 21, 2021

LAPP MOVES TO IMMEDIATE VESTING

Local Authorities Pension Plan (LAPP) members in Alberta will no longer have to wait to be eligible for a lifetime pension at retirement. The LAPP sponsor board has decided to move to immediate vesting effective January 1, 2022. The change means that members who join the plan on or after January 1, 2022, will be immediately entitled to pension benefits from the date they join LAPP. When a member is vested, it means they are entitled to a lifetime pension at retirement. Currently, members are vested once they have two or more years of LAPP membership or service (including purchased prior service). Alberta moved to immediate vesting in September 2014 for private sector defined benefit plans, and now public sector workers in LAPP will have the same benefit protection.

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