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November 23, 2021

REMOVAL OF DC REQUIREMENTS NEEDS REVISION

Ontario’s regulation draft which removes certain requirements for administrators of defined contribution pension plans should be revised so that the changes also apply to the DC component of pension plans that have both a DB and DC component, where the DC component is a member-directed plan, says the Pension Investment Association of Canada (PIAC) in its comments to the Pension Policy Branch of the ministry of finance. The regulation would remove the requirement for administrators of member-directed DC plans to establish a Statement of Investment Policies and Procedures (SIPP) and remove the requirement for administrators of DC plans to file an audited annual financial statement, while providing the chief executive officer (CEO) of FSRA (Financial Services Regulatory Authority of Ontario) with the authority to require an administrator of a DC plan to prepare and file an audited annual financial statement. DC pension plan administrators would continue to file unaudited annual financial statements. However, the proposal does not capture all member-directed DC plans. The regulation as drafted is specific to pension plans that only have a member-directed DC component (i.e., all benefits provided under the plan are defined contribution benefits), but does not capture member-directed DC components of pension plans that have both a DB and DC component.

November 23, 2021

EMPLOYEES HESITATE TO REPORT HARASSMENT

Safety, stigma, fear of reprisal, or termination are reasons many Canadian employees hesitate to report harassment and violence, says a survey from the Woman Abuse Council of Toronto (WomanACT). Released in advance of ‘16 Days of Activism against Gender-Based Violence,’ it shows employees would be hesitant to report an unsafe or uncomfortable experience in the workplace with safety topping the list as one third of employees reported they would hesitate to report an incident. Women were significantly more likely to be hesitant (41 per cent) than men (25 per cent). “The sad reality is that one in three women will experience violence in their lifetime,” says Harmy Mendoza, executive director of WomanACT. “Violence against women often extends beyond the home and, when it does, it can extend into the workplace. Domestic violence and sexual harassment affect organizations of all sizes across all sectors.” ‘16 Days of Activism against Gender-Based Violence’ is a global UN campaign calling for an end to violence against women and girls. It starts November 25, the ‘International Day of the Elimination of Violence Against Women’ and finishes on ‘Human Rights Day,’ December 10.

November 23, 2021

ADVANCED ECONOMIES TO LEAD WAY

Growth is likely to be strong in 2022, with advanced economies leading the way as China slows considerably, says Barclay’s ‘Macro Outlook.’ Its view is inflation should gradually decelerate and longer bond yields stay anchored. A positive surprise may come from medical treatments that end COVID’s pandemic phase and allow a full reopening. It expects the world economy to grow at six per cent this year and 4.4 per cent in 2022. While growth is slowing next year, it is strong by the standards of the past decade and far above 2019’s three per cent. Advanced economies will likely lead the way, with the U.S. in particular already pulling out of its COVID-induced third quarter weakness. As supply chain constraints eventually fade, a production ‘catch-up’ cycle could be another support for Western economies. In contrast, China is slowing considerably with expected 2022 GDP growth of just 4.7 per cent in 2022, after 7.8 per cent year over year in 2021. China’s ‘zero tolerance’ approach to COVID means lockdowns will continue to hurt activity. The slowdown in the property sector is also a major drag, with the housing market hit by weak demand, funding stresses, and falling investment.

November 23, 2021

ESG GROWTH EXPECTED IN SMALLER COMPANIES

Professional investors in the UK expect significant growth in the number of smaller companies issuing environmental, social, and governance (ESG) and sustainability reports as pressure builds from new and existing shareholders, says research from investment holding company MBH Corporation. Its study among professional investors who specialize in small and micro-cap investments found 58 per cent expect the number of smaller companies issuing reports to increase over the next three years with 29 per cent predicting a dramatic increase. It also found that 76 per cent of professional investors believe smaller companies are often overlooked by investors with an ESG mandate, mainly because of the lack of reporting and analyzing of smaller firms. Smaller companies are coming under pressure to focus more on ESG with 76 per cent of investors saying the pressure comes from potential new shareholders while 70 per cent say existing shareholders want more ESG focus and 44 per cent believe customers and business partners want an increased focus.

November 23, 2021

FINANCIAL WELLNESS OFFERING ENHANCED

iA Financial Group is enhancing its financial wellness offering with the addition of intuitive tools for its group savings and retirement plan members. The ‘Financial Wellness Zone’ brings together information, tips, and tools that use plain language to help members improve their knowledge of the four pillars of personal finance: making a budget, protecting their finances, setting financial goals, and planning their retirement. The ‘Financial Wellness Assessment’ measures plan members’ financial health and, for each personal financial pillar, provides an action plan and personalized resources based on their level of awareness, their knowledge, and their financial habits. The action plan evolves as members reach their goals to help them move towards better financial health. It also allows members to progress at their own pace according to their preferences.

November 23, 2021

MORNINGSTAR EXPANDS SUSTAINABILITY RATING

Morningstar, Inc. has expanded coverage of its sustainability rating for funds by embedding country risk ratings from Sustainalytics. The move makes the rating available across more than 85,000 funds worldwide, including new coverage for approximately 25,000 multi-asset and fixed income funds, that span both corporate investments and investments in countries, such as sovereign debt. Incorporating country risk ratings advance the sustainability rating framework from a single sustainability score to a modular approach.

November 23, 2021

AIMCO INVOLVED IN DEFENSIVE INFRASTRUCTURE

The Alberta Investment Management Company (AIMCo) has made a commitment to the second close of the Keppel-Pierfront Private Capital Fund. The fund provides loans to companies with defensive infrastructure-like business models, across a wide range of real asset sectors in Asia Pacific, including renewable and other core infrastructure, energy, transportation, telecommunications, social infrastructure, and logistics. It is jointly sponsored by Clifford Capital Holdings, a specialist financing and distribution platform for real assets globally across the debt capital structure, and Keppel Capital. Both companies are headquartered in Singapore.

November 23, 2021

PENSION-STYLE INVESTING EXAMINED

The ‘First National Conference on Pensions for Canadian Controlled Private Corporations’ will feature Dan Kelly, president and CEO of the Canadian Federation of Independent Business, as keynote speaker. Topics at the INTEGRIS Pension Management event include pension-style investing, use of personal pension plans and retirement compensation arrangements. It takes place November 30. Information is at https://www.knowledgebureau.com/site/conference/pension-conference?utm_source=INTEGRIS+Pension+Management+Corporation&utm_campaign=c7a64233e0-EMAIL_CAMPAIGN_2020_09_02_08_22_COPY_01&utm_medium=email&utm_term=0_c2d23d7b74-c7a64233e0-341567561

November 22, 2021

SKEPTICISM GROWS OVER ESG DISCLOSURE

There is a sharp rise in skepticism and increased scrutiny by Canadian institutional investors of environmental, social, and governance (ESG) initiatives and related disclosure by Canadian issuers, says research by Edelman Smithfield in Canada highlights. The Canadian findings of the fifth annual ‘Edelman Trust Barometer Special Report: Institutional Investors’ show while the majority of Canadian investors surveyed continue to believe that companies that deliver strong ESG performance deserve a premium valuation, the majority question the accuracy of the ESG disclosure they examine, have doubts about companies’ ability to achieve their stated ESG commitments, and are pushing for mandatory and standardized ESG disclosure requirements. David Ryan, managing director of Edelman Smithfield, says, “Over the last several years, the story around ESG has largely focused on investors rewarding companies that led the way with their ESG initiatives. In 2021, investors began looking at ESG through a much more critical lens, with many expressing a lack of confidence in companies’ ability to deliver on their ESG or net-zero commitments. The tone has shifted from interest and appreciation to skepticism and a notable lack of trust in the ESG story.” It found that 72 per cent of Canadian institutional investors do not trust companies to achieve their stated sustainability, ESG, and DEI commitments. Further, three in four Canadian investors admitted to now scrutinizing corporate disclosure looking for incidents of greenwashing or specific examples of companies failing to deliver on their ESG promises.

November 22, 2021

HEALTH AND SAFETY OVERRIDES PRIVACY

A Quebec arbitrator has decided the health and safety objectives associated with the workplace vaccination requirement override employees’ right to privacy and physical integrity, says a Fasken ‘HR Space.’ A Quebec union challenged the right of employers to collect the vaccination status of their employees on the basis that such collection interfered with employees’ right to privacy under the ‘Charter of Human Rights and Freedoms.’ The union’s position was such an intrusion was not justified since clients did not have any legitimate health and safety objective. The arbitrator decided that employers’ clients are entitled to impose a vaccination requirement on their employees and subcontractors because of their obligation to take all necessary, humane, and reasonable measures to protect the health and safety of workers in their establishment. The vaccination requirement adopted by the clients and applicable to its employees and subcontractors is justified in order to reduce the risks of spreading COVID-19. The arbitrator also considered that since an unvaccinated employee represents a risk to himself (since he is potentially exposed to COVID-19 and to the most serious effects of the disease) as well as to other employees when he is in the workplace (since he is a more significant vector of transmission than a vaccinated employee), he is, in principle, in breach of his obligations under the OHSA (Occupational Health and Safety Act. Although a vaccination requirement may infringe on the privacy and physical integrity of the affected employees, the arbitrator said this infringement is justified under the charter. Indeed, the charter specifically provides that the rights and freedoms of an individual may be limited on the basis of public order and the general well-being of the citizens of Quebec, which is the case in a global pandemic situation. The “prejudice” or “inconvenience” that may be suffered by unvaccinated employees in the workplace weighs much more heavily on the “general well-being” of other people who frequent the same place and who, while being vaccinated, may be infected by the virus and suffer, as well as those around them than it does for employees who will be called upon to disclose a part of their private life, namely their vaccination status.

November 22, 2021

HIGH PRICES TOPICAL FOR EVERYONE

High inflation has been front and centre with the U.S. Consumer Price Index (CPI), reaching 6.2 per cent year over year in October and 0.9 per cent month over month ‒ with both figures ahead of forecasts. These, says Sandy Liang, head of fixed income and partner at Purpose Investments, “are big numbers not seen in more than 30 years.” Higher prices are now topical for everyone, he says, not just for investment professionals, but with every trip to the gas pump, supermarket, or sporting goods store a potentially disheartening experience for those on fixed salaries. As investors forge ahead into the new year, he says they need to consider that the worst of the inflation problem may be at hand this Christmas season, but it doesn’t mean it’s safe to go back in the traditional fixed income water as bond yields for government and investment-grade corporate debt are still close to all-time low levels with interest rate risk close to all-time highs. However, he says the odds of a recession in the next 12 to 18 months are low.

November 22, 2021

UK CONSULTANTS RELEASE ESG-RELATED METRICS

A group of UK investment consultants working has come up with a list of environmental, social, and governance (ESG)-related metrics for all public equity and public credit asset managers to report on, or work towards being able to report on, as soon as possible. The Investment Consultants Sustainability Working Group (ICSWG) says the list is based on metrics that institutional investors were increasingly seeking to collect from asset managers. The list, if adopted, would enable investors to make decisions based on a set of simple, clear, and consistent metrics across the whole range of investment products. The 12 metrics on the list include those already required under the Task Force on Climate-related Financial Disclosures (TCFD) framework, such as absolute carbon emissions and carbon footprint, as well as social and governance metrics such as the independence of boards and violators of the UN Global Compact Principles. By covering the metrics in one guidance document, it hopes to help managers focus their efforts to produce appropriate data and ultimately support investors in obtaining the desired level of transparency.

November 22, 2021

DIGITAL ASSET SOLUTION LAUNCHED

Fidelity Clearing Canada ULC has launched an institutional digital asset service. It offers a digital currency trading and custody solution dedicated for institutional investors, including mutual funds and exchange-traded funds. With digital asset valuations reaching all-time highs and an increasing interest in alternatives, Canadian institutional investors are driving the demand to trade this emerging asset class on a reliable and secure platform. Portfolio managers, dealers, mutual funds, exchange-traded funds, investment funds, and other qualified institutional investors are now eligible to access the institutional digital asset trading and custody solution.

November 22, 2021

PARTNERSHIP WITH FEDERATED HERMES EXTENDED

The Canada Pension Plan Investment Board (CPP Investments) has extended its partnership with Federated Hermes through a new UK real estate development venture. It is investing £56 million to become a joint-venture partner on the development of One Centenary Way at Paradise Birmingham alongside Federated Hermes which is investing on behalf of the BT Pension Scheme. The joint venture will fund the development of a 13-storey mixed-use development with office space, ground floor retail, and other public spaces.

November 22, 2021

TDFS EXAMINED

CPBI Pacific will examine ‘Target Date Funds in Canada: how they work, why they’re evolving, and their impact on retirement outcomes.’ Christine Tan, a portfolio manager, and James Wells, director, institutional business development and client relationships, at Sun Life Global Investments will provide an overview of the investment process of a Canadian-based TDF manager, highlighting the decisions and trade-offs that are continually being made in the pursuit of a TDFs ultimate objective – providing Canadians with a sustainable income during their retirement. It takes place November 24. Information is at https://www.cpbi-icra.ca/Events/Details/Pacific/2021/11-24-Target-Date-Funds-in-Canada-how-they-work

November 19, 2021

COURT REJECTS PENSION PRESERVATION ORDER

A British Columbia Court of Appeal has struck down a regulatory order that froze the retirement accounts of a man ordered to pay millions in penalties and disgorgement in connection with a fraudulent investment club scheme. The preservation order was obtained against Earle Douglas Pasquill who owes the regulator $36.7 million in unpaid monetary sanctions. The order prevented Pasquill from withdrawing or transferring funds from two life income fund (LIF) accounts, which represented $644,951 in assets. In its ruling, the court found that the regulator’s order violated provisions of pension legislation that protect pension benefits from being seized. The commission had granted the order under recent legislative changes designed to beef up its collection powers, including allowing the regulator to ‘preserve’ property in registered accounts. The court also ruled that the commission does not have the authority to enforce judgments for funds that are derived from pension funds. Pasquill and a business partner were found to have fraudulently raised more than $21 million in 2008 by selling securities to nearly 700 investors without telling them about “severe cash flow problems.”

November 19, 2021

AIMCO POSTS POSITIVE RETURN

AIMCo earned a total fund return of 1.7 per cent net of all fees ‒ measuring a composite of its clients’ portfolios ‒ surpassing an aggregate benchmark of 0.8 per cent. Total client assets under management were $130.1 billion at the end of the quarter. As of September 30, it had a year-to-date total fund return of 9.2 per cent, more than double its benchmark of 4.5 per cent. In particular, its balanced fund has earned a return of 10 per cent year-to-date. “Momentum remained positive in the third quarter with $1.2 billion in value-add driven by the strong performance of public equities,” says Dale MacMaster, its chief investment officer. “We have capitalized on robust economic activity and global earnings growth which have buoyed share prices and enabled us to deliver solid, above-benchmark performance for our clients.”

November 19, 2021

TFSA LIMIT UNCHANGED

The TFSA (tax-free savings account) contribution limit for 2022 will remain at $6,000. It has held at this rate since 2019. With this dollar limit announcement, the total contribution room available in 2022 for someone who has never contributed since its introduction in 2009 is $81,500. The annual TFSA dollar limit is indexed to inflation and rounded to the nearest $500. The Canada Revenue Agency’s indexation increase for 2022 is 2.4 per cent.

November 19, 2021

CONFIDENCE REMAINS STRONG ON COMMERCIAL REAL ESTATE

Despite decreased returns in 2020, institutional investor confidence in commercial real estate remains strong, reaching a nine-year high in 2021, says Hodes Weill & Associates and Cornell University’s Baker Program in Real Estate’s ninth annual ‘Institutional Real Estate Allocations Monitor.’ Pensions, sovereign wealth funds, insurance companies, and other institutions continue to look to real estate as an important portfolio diversifier, hedge against inflation, and source of stable income. Actual returns declined significantly in 2020 from 8.5 per cent to 5.9 per cent, owing to a decline in property valuations resulting from vacancies, cash flow risks, and uncertainty related to the COVID-19 pandemic. However, the vast majority of institutions are viewing this decline as an episodic event and remain optimistic for 2021 as valuation metrics climb to all-time highs. Target allocations to real estate increased for the eighth straight year to 10.7 per cent in 2021 – up 10 basis points from 2020 – implying the potential for an additional $80 to $120 billion of capital allocations to real estate in the coming years.