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June 8, 2021

BMO EARNS RIA AWARDS

BMO Global Asset Management’s ‘MyESG Campaign: Aligning Beliefs and Investments’ is the winner in the ‘Market Education (Institutional Investors & Financial Institutions)’ category in the Responsible Investment Association’s ‘2021 leadership awards. The awards recognize the contributions of RIA members in advancing responsible investment (RI) in Canada. It also earned the award for stewardship by institutional investors)’ for its ‘Diversity and inclusion (D&I) engagement in Canada: moving beyond gender’ project. The integration for institutional investors award was earned by the British Columbia Investment Management Corporation (BCI) ‘BCI’s ESG Risk and Opportunities Framework’ project while the SHARE (Shareholder Association for Research & Education) and Atkinson Foundation project ‘Valuing Decent Work’ was winner in the service leadership by service providers)’ category. The awards were launched in 2020.

June 8, 2021

INSTITUTIONAL USE OF OCIO GROWS

More institutional investors are looking to access outsourced chief investment officer (OCIO) investment solutions as they continue to grapple with market volatility and try to achieve investment goals in a prolonged low real interest environment. As a result, assets managed by Mercer’s investment solutions and OCIO (outsourced chief investment officer) reached $390 billion as of March 31. Originally developed to support the asset management needs of defined benefit pension funds, services have gained traction among other asset owners including endowments, foundations, insurers, wealth managers, not-for-profit healthcare organizations, and defined contribution asset pools. Almost 50 per cent of growth over the last year came from non-defined benefit pension assets.

June 8, 2021

CDPQ INCREASES STAKE IN ENERGIR

The Caisse de dépôt et placement du Québec (CDPQ) has increased in its majority interest in Énergir through the acquisition of Enbridge’s 38.9 per cent interest in Noverco Inc. by Trencap L.P. Following this transaction led by CDPQ, Trencap will own 100 per cent of Noverco, which owns 100 per cent of Énergir. CDPQ currently owns 64.74 per cent of Trencap, alongside minority limited partners. With assets of over $8 billion and 530,000 customers across Québec and the northeastern United States, Énergir is a diversified energy business, with half of its assets now involved in the production and distribution of electricity and renewable energies and in providing energy services. The main distributor of natural gas in Québec, Énergir also produces electricity in the province from wind power through joint-venture companies.

June 8, 2021

EUROPE EMERGES FROM LOCKDOWNS

European retail sales, U.S. jobs, and inflation, are just a few of the things Kristina Hooper will be watching closely in June. Invesco’s chief global market strategist says Europe is emerging from lockdowns, so its economic progress will be gauged. It is encouraging to see that the ‘ifo Business Climate Index’ for Germany rose from 96.6 in April to 99.2 in May ‒ the highest level since May 2019 ‒ showing German companies are not only pleased with their current situation, but are optimistic about the future. In addition, Google mobility data indicates that the eurozone is moving toward a more normal environment with increasing foot traffic at retail stores and restaurants. However, she will want to see confirmation in retail sales as well as the Eurozone Service Purchasing Managers’ Index (PMI). In the U.S., the April jobs report was very disappointing and the whispers suggest that May’s jobs report may be a flop as well. Official expectations are for approximately 600,000 non-farm payrolls created as the U.S. economy continues to recover and Americans are becoming increasingly willing to return to work. Interestingly, last week the Dallas Fed put out a research note arguing that the labour market is already tighter than most economists believe, she says. Their argument was based on the view that while there are still 8.5 million fewer people employed now than before the pandemic, the Dallas Fed expects less than half of those to return to employment, with many others having chosen to retire. As well, there are several different kinds of inflation expectations: consumer and business expectations, economists’ forecasts, and inflation expectations extrapolated from financial instruments. Consumer inflation expectations used to be of low importance because they have been relatively low for years. However, things have changed in recent months and U.S. consumers seem very aware of high prices now. It should matter to the Fed if consumer inflation expectations remain higher ‒ one key rationale for keeping rates low has been that “inflation expectations are well-anchored” ‒ so “we will want to follow this closely,” she says. While she has no crystal ball, a correction is always a possibility, especially given the advances the stock market has made in the last year. But, the potential for a correction this summer should not change anything investors with a long time horizon are doing.

June 8, 2021

DE RANGO HAS NEW ROLE

Sergio De Rango is vice-president, institutional business development, at CIBC Asset Management (CIBC AM). He has over 20 years of experience serving the institutional asset management industry covering a broad range of asset classes.

June 8, 2021

DRUG TRENDS DISCUSSED

‘Drug Trends and More: A Discussion on Improving Value on Drug Spend with Industry Leaders’ is the focus of a Benefits Breakfast Club session. Jeff Boutillier, general manager, pharmacy, and chief clinical officer with Express Scripts Canada, will explore the ‘2021 Express Scripts Prescription Drug Trends’ report, focusing on some specific disease trends, the impact of COVID-19, and new innovations in detecting nonadherence trends. Then, a panel of Boutillier; Mike McClenahan, managing partner of Benefits By Design (now part of People Corporation); Paul Henricks, associate director, data innovation and insights, at PDCI Market Access; and Mike Cavanagh, pharmacist/owner, Pharmasave Kawartha Lakes Pharmacy, and co-chair of the Pharmacy and Health Insurance Steering Coalition (PHISC); will explore the impact of compliance and adherence, step therapy, and plan maximums and pooling limits, as well as other industry trends to manage drug spend without compromising quality care. It takes place June 17. Information is at https://www.connexhc.com/product/bbc-webinar-national-and-regional-drug-trends/?mc_cid=f7270a65e5&mc_eid=7e402198d2

June 8, 2021

COMMUTED VALUE INTEREST RATE ASSUMPTIONS

The interest assumptions required to calculate commuted values and marriage breakdown values for an event which occurs in any month up to and including June 2021 are now available at www.an-actual-actuary.com. An Excel spreadsheet on the website contains nine worksheets:

  • Commuted Values February 2011 CIA

  • Marital Breakdown: CSOP 4300 ‒ January 2012

  • Ontario (Bill 133) Prior Rates – Rates for Ontario Marital Breakdown with valuation date prior to January 1, 2012

  • Annuity Proxy for Solvency Calculations for Non-Indexed Fully-Indexed Pensions

  • Minimum Interest on Employee Required Contributions

  • HISTORICAL Marital Breakdown: CSOP 4300 ‒ May 2009 (Now Frozen)

  • HISTORICAL: Commuted Values ‒ 2009 Basis (Now Frozen)

  • HISTORICAL: Commuted Values ‒ 2005 Basis (Now Frozen)

  • HISTORICAL: Commuted Values ‒ 1993 Basis (Now Frozen)

You can use this spreadsheet to compare the interest rates which you may have calculated and/or you can download the spreadsheet to your own computer. Another actuary has already provided a peer review of the updated rates in this spreadsheet and determined that he/she agrees with the results.

June 7, 2021

CLIMATE CHANGE TO INCREASE HEALTH COSTS

Climate change will worsen health inequities and significantly increase costs to Canada’s health system and economy without targeted government action, says a report from the Canadian Institute for Climate Choices. ‘The Health Costs of Climate Change: How Canada Can Adapt, Prepare, and Save Lives’ finds that climate change represents a significant public health threat that will disproportionately harm those most vulnerable. Assessing a range of possible impacts under both low- and high-emissions scenarios, the report finds that the impacts of climate change could cost Canada’s healthcare system billions of dollars and reduce economic activity by tens of billions of dollars over the coming decades. Adding the value of lost quality of life and premature death, the societal costs of climate change impacts on health will amount to hundreds of billions of dollars. It concludes that responding effectively to climate-related health threats will require Canadian policy-makers to expand their focus beyond considering climate and health policy in isolation. Threats to health from climate include an increase the average number of dangerously hot days from 75 to 100 days each year, on average, by later this century. As temperatures increase, ground-level ozone (a component of urban smog) is projected to worsen under all scenarios. Towards the end of the century, the report estimates that ground-level ozone could cause over a quarter of a million people per decade to be hospitalized or die prematurely, with an annual cost of about $250 billion. Under the high-emissions scenario, climate change will lead to a projected loss of 128 million hours of work annually by the end of the century due to heat impacts on productivity. This is the equivalent of 62,000 full-time jobs lost, or $14.8 billion per year in lost productivity. In addition to the estimated damages, the costs of health-related climate impacts that are difficult to measure today may far exceed those considered in this report. Climate change is likely to impact people’s mental health, lead to ecosystem changes, and negatively impact cultures and ways of life. These losses may not be on balance sheets or in government budgets, but to overlook them risks ignoring some of the most critical impacts of climate change on health and well-being, it says.

June 7, 2021

EARLY BENEFITS PROTECTED FAMILIES

Early benefits in Canada were intended to protect the families of employees against a catastrophic such as a loss of earnings due to disability or the death of the husband who was typically the breadwinner, says Lizann Reitmeier, health practice leader at Buck. She told the Toronto Chapter of the International Society of Certified Employee Benefit Specialists’ ‘Fundamentals of Group Benefit Plans 2021’ session on ‘Ancillary Benefits’ this was “to keep the widow and her six children from showing up at the door” of the company. As time went on, benefits were extended to provide a tax effective compensation method. Most employees do pay tax on their employer’s contribution to the plan, but paying income tax on the contribution is a lot less than paying the contribution “so it’s so a bit of a win win” as the premium is tax deductible for employers. “It’s a way to enhance compensation, without actually giving people money that attracts tax,” she said. This was became more popular in the 1970s when inflation was rampant and there was a lot of programs around to limit the rate of inflation. For example, wage controls meant employers could not give employees significant wage increases, “but what they could do was expand benefits and this is actually when benefits plans became quite common in Canada,” she said. Today, benefit plans are under pressure from increasing costs, due to changing tax to improving technology and the aging population. “Costs are weighing down many employer plans,” she said.

June 7, 2021

VALUE CAPTURES ATTENTION

Value stocks have captured investor attention this year with the Russell 1000 Value Index recording an 11.26 per cent total return, far outpacing the 0.94 per cent gain of the Russell 1000 Growth Index as of March 31, 2021. But, Martin Romo, equity portfolio manager at Capital Group, wonders if the tilt toward value-oriented shares will prove to be a lasting one. In a target rich environment, there are opportunities to invest in fast growing companies as well as classic cyclical companies, he says.

June 7, 2021

DAMAGE FROM FINANCIAL STRESS BEING RECOGNIZED

For employers, the damage caused by financial stress in their workforces is finally getting attention, says Alyssa Hariton, an associate partner for LifeWorks Inc. In the article ‘Helping Employees Achieve Financial Well-Being In The Digital Age,’ she says the link between employees’ financial health, their productivity, and an organization’s bottom line is now well documented. Employers are starting to recognize that they play a critical role, and have a vital interest, in the financial well-being of their employees.

June 7, 2021

COREY BECOMES EXECUTIVE DIRECTOR

Shannan Corey is executive director at the Saskatchewan Pension Plan. Most recently, she was president and CEO of Corey HR Consulting. Prior to that, she was director, total rewards, at Federated Co-operatives

June 7, 2021

LOWE’S COS SETTLES 401(K) LAWSUIT

Lowe’s Cos has settled a lawsuit filed by a participant in its 401(k) plan who alleged the company and its administrative committee breached their fiduciary duties in the plan’s offering of an investment option. The settlement provides for a $12.5 million settlement fund from which participant class members are entitled to distributions. The suit alleged that Lowe’s, its administrative committee, and investment consultant Aon Hewitt Investment Consulting (now Aon Investments USA) had breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 by offering the fund. Aon was accused of a conflict of interest in recommending a proprietary fund for the plan, charging it improperly, and did so to further its own financial interests instead of the interests of the plan’s participants, said the original lawsuit. No settlement has been reached with Aon.

June 7, 2021

BENEFIT TRENDS EXAMINED

Dr. Dorian Lo, president of Express Scripts Canada, and Barbara A. Martinez, national practice leader, drug solutions, at Canada Life, the featured speakers the Benefits and Pensions Monitor Meetings & Events webinar ‘Benefit Trends & Insights.’ Lo will discuss ‘Prescription Drug Trends and Mental Health Claims: Stem the Tide’ where he will provide insight into mental health prescription drug trends and outline solutions that could help stem the tide of the growing mental health challenge by improving the care provided. Martinez will  focus on ‘Drug expenditure trends in group insurance plans and how market dynamics impact the drug plan bottom line.’ This will include a look at biosimilar drugs and provide insight into strategies that allow biosimilars to help manage drug plan spending in group insurance plans. It takes place June 10. Information is at https://register.gotowebinar.com/register/4153797014730228492

June 4, 2021

BIOSIMILAR INITIATIVE IMPACTS DRUG PLANS

British Columbia’s biosimilars initiative has had a profound impact on private drug plans, says a Telus ‘Health Benefits Hub.’ By the end of 2020, biosimilars’ share of costs among biologic reference drugs had more than quadrupled to 69 per cent for private plans. This is a significant increase from 15 per cent in May 2019 when the government first announced its program. Its health claims data for private drug plans suggests sizable savings, given that biosimilars are priced 20 per cent to 50 per cent lower than the reference biologic. “Even though it is a policy that applies only to public plan claims, it appears that private plans are following suit,” says Shawn O’Brien, principal, data enablement and HBM product, TELUS Health. The province’s pharmacare program likely motivated private drug plans to adopt their own switching policies to avoid having to take on the full cost of a reference biologic for patients who turn to their private plan for coverage. Changes in prescribing behaviour is another important factor behind biosimilars’ growing share of the private claims for biologics. “The public initiative in B.C. has influenced physician prescribing habits for all patients and we can likely expect the same result in other provinces as other public payers implement switching policies,” he says.

June 4, 2021

GROUP INSURANCE MUST BE INCIDENTAL

Group insurance must be incidental to the group, says Maria Covone, group underwriting consultant, group underwriting, Sun Life, to ensure there is no exposure to anti-selection. She told the Toronto Chapter of the International Society of Certified Employee Benefit Specialists (ISCEBS) ‘Group Underwriting 101’ session at its ‘Fundamentals of Group Benefit Plans 2021’ that this means is a group cannot come together, solely for the purpose of securing group insurance ‒ there must be another purpose to the group. “If we agreed to allow groups to come together for the sole purpose of securing group insurance, we would be exposing ourselves to anti selection. Basically, the success of a group plan depends on having a good mixture of healthy and some not-so-healthy plan members,: she said. If the group is organized mainly for the purpose of obtaining the insurance, the poor risk individuals tend to seek membership, whereas the healthier persons ‒ because they don’t feel that there’s a risk and a need for the insurance ‒ won’t join the group. As well, to ensure that there is an ongoing acceptable spread of risk, a regular inflow of new and younger members and a regular outflow of older members is needed. Any turnover within a 10 to 20 per cent range is conducive to predictable experience in managing costs. If the turnover is too high, future costs cannot be predicted.

June 4, 2021

BCI MAKES PROGRESS ON CLIMATE

The British Columbia Investment Management Corporation (BCI) ‘2020 ESG Annual Report’ demonstrates the progress it has made on achieving the goals of its climate action plan. Over the past six years, it has transformed into an active, in-house asset manager and increased the capabilities of its internal team. Its longstanding commitment to ESG has also evolved into a co-ordinated and consistent approach that integrates ESG across the corporation. Activities to achieve its climate action plan goals include expanding its carbon footprint reporting to include all asset classes; growing its measured exposure to climate-related investment opportunities to $3 billion; introducing updated proxy voting guidelines raising its expectations on addressing climate change risk and disclosure; and leading or co-leading on engagement with four North American companies in the oil and gas and mining industries as part of the Climate Action 100+ initiative.

June 4, 2021

SUPPORT REDUCES MSDS

Amazon employees now have access to a program providing them with scientifically proven physical and mental activities, wellness exercises, and healthy eating support. ‘WorkingWell in Canada’ is designed to help them recharge, reenergize, and ultimately reduce the risk of injury. The program is part of the company’s investment of more than $300 million into safety projects across North America in 2021. The program was developed in collaboration with employees from within its operations. Aspects of WorkingWell were piloted in the U.S. in 2019 and the program has since expanded to 350 select sites in North America and Europe. By the end of 2021, it will expand further to cover all of its operations network in the U.S. and Canada, with the aim of cutting recordable incident rates by 50 per cent by 2025. Similar to other jobs of this kind, about 40 per cent of work-related injuries at Amazon are musculoskeletal disorders (MSDs), which include sprains or strains caused by repetitive motions, and they’re more likely to occur among newer employees, many of whom might be working in a physical role for the first time. Pilots of the program have reduced these injuries and have had a positive impact on regular day-to-day activities for employees outside of work. Along with other company initiatives focused on early MSD prevention, it has helped decrease MSD-related injuries by 32 per cent from 2019 to 2020, it says.

June 4, 2021

VIGILANTE INVESTORS COULD BE BURNED

Many vigilante investors who are being pulled into the social media frenzy to buy stocks could end up “financially burned,” says Nigel Green, the chief executive and founder of deVere Group. His comment comes after shares of AMC jumped almost 40 per cent l