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BPM Lastest Issue

BPM Lastest Issue

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February 9, 2022

POSSIBILITY OF CORRECTION HIGH

The possibility is high for a 10 per cent correction in the first half of 2022, with inflation as a key determinant of the market cycle moving through 2022, says Picton Mahoney Asset Management’s ‘Q1 2022 Investment Review and Outlook. It says in 2020 and 2021, developed countries moved to support displaced workers with massive wage replacement subsidies, many of which are set to end in 2022. This ‘fiscal cliff’ will be a source of near-term weakness for economies driven by elevated levels of government spending. Last year saw the fastest pace of inflation since June 1982, with December’s U.S. Consumer Price Index (CPI) up seven per cent compared to the long-term average of two to three per cent. Concerns that the Fed was behind the curve in containing inflation are rising, however, as supply chain issues are resolved, Omicron cases decline, and employee absences wane, prices of goods are expected to stabilize. As well, there is a ‘debt trap.’ Global debt has ballooned, making the economy particularly sensitive to rising rates. This could limit the extent to which the Fed can implement interest rate increases.

February 9, 2022

SALARY INCREASES ANTICIPATED

Salary increases are anticipated across all sectors and organization types, which differs from last year in which increases were more sector specific, says Darcy Clark, principal, compensation, at Normandin Beaudry. Its ‘Salary Increase Flash Survey’ shows salary freezes for 2022 are planned by less than half a percent of the polled organizations, as compared to three per cent reported by the initial survey conducted in summer 2021. This shift showcases the speed at which the market is changing. “We are now seeing that the labour shortage is impacting all sectors across Canada, thereby putting pressure on employers to increase salaries in order to retain talent,” says Clark. The inflation rate, which in 2021 reached a high not seen in a long time, is one of the elements that led 50 per cent of the organizations surveyed to revise their 2022 salary increase budgets. More specifically, the average budget in Canada rose from 2.9 per cent from the initial survey conducted in summer 2021 to 3.4 per cent by late 2021. Beyond the traditional salary increase budget, 40 per cent of respondents have earmarked 1.2 per cent in additional funds, on average. This increase varies relative to company size, for example, it is 2.9 per cent for organizations with less than 100 employees and 0.7 per cent for those with more than 5,000 employees.

February 9, 2022

MEMBERS CAN EARN FULL PENSION SERVICE

OPSEU Pension Plan members can now earn full pension service if they temporarily reduce their working hours. These changes were made to support members who participate in flexible working arrangements so they can maximize their pension. Members who enter into a ‘temporary part-time work arrangement’ on or after February 1 will continue making pension contributions based on their regular work hours so they earn full pension service and employers will match their contributions. Members can also choose to make pension contributions for only the reduced hours they work and apply to buy back the pension service for the hours they did not work after the arrangement ends. A special 24-month buyback window is available for members who were on a temporary part-time work arrangement that occurred before February 1. If members apply to buy back pension service for a past arrangement before the 24-month buyback window closes on January 31, 2024, their employer will match their contributions.

February 9, 2022

ALLOCATIONS TO DIGITAL ASSETS INCREASE DRAMATICALLY

Institutional investors and wealth managers have dramatically increased their allocation to cryptocurrencies and digital assets over the past 12 months, says research from Nickel Digital Asset Management. The survey of professional investors from the U.S., UK, Germany, France, and the UAE reveals 94 per cent increased their allocation to crypto and digital assets over the past 12 months, with one in four (25 per cent) increasing it by over 100 per cent. Just over nine out of 10 (94 per cent) plan to invest more in crypto and digital assets over the next year, with 29 per cent expecting to at least double their allocation. Most have tiny levels of exposure to crypto and digital assets as they are ‘testing’ the market in terms of how it works, its infrastructure, and liquidity. They are funding the increase in their allocation to crypto and digital assets from real estate, selling other crypto and digital asset investments, and selling commodity holdings.

February 9, 2022

LACK OF REGULATORY GUIDANCE CONCERNS CRYPTO INDUSTRY

Inconsistent and unaligned cross-border regulatory guidance is the top regulatory concern for the crypto and digital asset industry, says by a survey for Global Digital Finance (GDF). ‘Digital Money and Nextgen Market Infrastructure: Macro And Regulatory Headwinds Prevail’ found 45 per cent of members chose inconsistent or unaligned cross-border regulatory guidance with 42 per cent highlighting a lack of clarity on regulatory perimeter and 33 per cent Travel Rule compliance as their top regulatory concerns for 2022. Conduct regulators in GDF’s Regulator Only Forum chose stablecoins, DeFi, and data reporting as their priority areas for 2022 compared with the wider GDF membership who prioritized DeFi, digital custody, KYC/AML, and crypto and digital asset derivatives as their top focus.

February 9, 2022

OIKAWA HAS NEW ROLE

Glen Oikawa is Calgary, AB, office leader, client relationship partner, and west leader, retirement and financial solutions, at LifeWorks. He joined the firm in 2020 from Aon Hewitt where he was a partner.

February 9, 2022

FUNDING CHANGES EXAMINED

CPBI Manitoba will provide an ‘Overview of Funding Changes Arising from Manitoba Bill 8.’ Jared Mickall, wealth leader for the Winnipeg office at Mercer, will provide an overview of the funding changes and how they apply to different types of plans. It takes place February 23. Information is at https://www.cpbi-icra.ca/Events/Details/Manitoba/2022/02-23-Overview-of-Funding-Changes-Arising-from

February 8, 2022

ASSET OWNERS SEEK GREATER FLEXIBILITY

Driven by increased operational risk and servicing requirements, Canadian asset owners are looking to build greater flexibility and control into their operating model, says the asset owner transformation survey by the ValueExchange, with the support of RBC Investor & Treasury Services, the Milestone Group, Citisoft, and Adapa Advisory. It shows over 40 per cent of asset owners are using Excel for their asset allocations, 40 per cent are turning to software vendors as their partners in change, and 73 per cent of asset owners see restructuring as a key step in their transformation. The duration of the average transformation project is 17 months.

February 8, 2022

HEALTH SPENDING RISES 2.2 PER CENT

Health spending in Canada is expected to reach $308 billion for 2021 – a growth of 2.2 per cent, says an Eckler ‘GroupNews.’ It says the report on ‘National Health Expenditure Trends, 2021’ from the Canadian Institute for Health Information (CIHI) shows while growth in spending averaged four per cent per year from 2015 to 2019, total expenditure grew by almost 13 per cent in 2020 due to COVID-19 spending. Total average spending on healthcare per person in 2021 is expected to be $8,019 per person with wide regional variations from $9,585 in Newfoundland and Labrador to $7,773 in Ontario. Hospitals (25 per cent), drugs (14 per cent), and physicians (13 per cent) represented the three largest health spending categories accounting for 52 per cent of the total health spending in Canada in 2021. COVID-19 response funding is expected to account for seven per cent. Of the total health expenditures for 2021, the government pays for approximately 75 per cent while the private sector accounts for the remaining 25 per cent. However, health spending increases are expected to stabilize to be more in line with pre-pandemic levels.

February 8, 2022

SASKATCHEWAN INCREASES CONTRIBUTION LIMIT

The Saskatchewan Pension Plan has increased the contribution limit for 2022 to $7,000. The plan is designed to be flexible for businesses of all sizes and individuals of all income levels and offers a consistent eight per cent historical rate of return. With the recent contribution limit increase to $7,000 per year, it is an increasingly attractive option for employers and employees alike. “In a world where we pay monthly subscription fees for everything from television shows to dinner, retirement investing would benefit from a change in mindset,” says Shannon Corey, its executive director. “A pension plan is an investment in a stable future. Isn’t that worth subscribing to?” The original mandate of the plan when it was created 36 years ago was to make pensions affordable and accessible to all people within Saskatchewan, not just those that worked for big business or government.

February 8, 2022

FLEXIBILITY, MENTAL HEALTH SUPPORT TOP PRIORITIES

Flexible working hours, free at-home testing kits, safe re-opening of schools, and mental health supports are among the top priorities for Canadians at this stage of the COVID-19 pandemic, says a ‘Prosperity Project’ poll by Pollara Strategic Insights. It shows that women are almost twice as likely as men to cite emotional support from family (35 per cent and 19 per cent, respectively) and mental health support from government (30 per cent versus 17 per cent) as important needs. As for top priorities from employers, working Canadians say flexible hours (31 per cent), increased number of sick days (31 per cent), hazard pay for essential workers (27 per cent), flexible working locations (22 per cent), and opportunities to take time off work without losing their position (21 per cent) are priority needs.

February 8, 2022

JOINT VENTURE INVESTS IN EUROPEAN HOSPITALITY

The Public Sector Pension Investment Board has formed a joint venture with Eurazeo to invest in European hospitality properties. Eurazeo’s includes private equity, venture capital, private debt, real estate, and infrastructure. The new partnership will have “a strong sustainability component” that focuses on water consumption, energy usage, and carbon emissions to support climate action. PSP Investments and Eurazeo are investing equally in the joint venture which will target properties with value potential from upgrades and related measures. PSP Investments manages the pension assets of Canadian federal public service workers, Canadian Forces, Reserve Forces, and the Royal Canadian Mounted Police.

February 8, 2022

CREDIT CHECK EXAMINED

‘Credit Check: The Role of Multi-Asset Credit in a Challenging Interest Rate Environment’ will be examined at an ACPM session. PH&N Institutional’s Karen Kerr, vice-president and institutional portfolio manager, and Jeffrey Roberts, institutional portfolio manager, will explore how a multi-asset credit approach affords portfolio managers greater flexibility to use a range of credit and liquidity strategies. It takes place February 10. Information is at https://www.acpm.com/events/webinars/webinar-(february-10,-2022)

February 7, 2022

BENEFITS EXAMINED FOR WORKERS WITHOUT COVERAGE

The Ontario government wants to design a benefits plan for workers who change jobs. It says millions of people working in retail, the gig economy, and hospitality have limited-to-no benefits coverage. They want to provide these workers with benefits such as health, dental, and vision care. It will create an advisory panel to recommend a system. Most workers in Ontario with full-time, permanent jobs have this coverage. In comparison, less than a quarter of those who work part-time or in precarious jobs have similar benefits. Independent contractors, low-wage workers, newcomers, younger workers, and racialized people are also less likely to have workplace benefits. The advisory panel will look at how benefits could reside with the worker and will provide recommendations on how best to administer the new program. Establishing this panel was recommended in the Ontario Workforce Recovery Advisory Committee’s final report.

February 7, 2022

BANKS EXPECTED TO HIKE RATES

As a result of rising prices this year, AIMCo expects central banks around the world to begin raising their benchmark interest rates. With the highest price increases seen in decades, central banks will use interest rates to make spending and borrowing more expensive in order to slow the significant price increases, it says. In addition, the Bank of Canada and other central banks around the world have begun to, or signaled that they will, remove the accommodative bias of their monetary policies, like tapering quantitative easing (QE) to control inflationary pressures. In Canada and in the U.S., many analysts expect three to five interest rate hikes this year. This will make lending more expensive and could negatively affect household spending and home-buying. However, in Canada, the economy is expected to perform well mainly due to strong household spending due to increased household savings rates and recovering labour markets. Canadian exports and overall trade activity are also anticipated to remain robust, helping the national economy grow. In 2022, Canada’s economy is expected to grow between 3.5 per cent and 4.5 per cent.

February 7, 2022

TRADITIONAL PRIVATE ALLOCATIONS EXPANDING

Institutional investors with existing allocations to private markets are looking to expand from traditional private equity into growth and venture capital, says ‘Seeking Future Returns’ from Cerulli Associates and Russell Investments. “The current investing environment is characterized by complexity and shrinking opportunity,” says James Tamposi, associate director, Cerulli Associates. “With rates at all-time lows and valuations at all-time highs, institutional investors are faced with a complex decision of where to deploy their portfolios. Private investments offer an avenue through which investors can, to an extent, maintain return targets.” In parallel, asset managers anticipate that mandates will change. The research shows 80 per cent of asset managers expect increased demand for private equity mandates and 75 per cent expect demand for other private investment mandates. Current income (92 per cent), diversification (85 per cent), growth/enhanced returns (77 per cent), and volatility dampening (54 per cent) are the top objectives managers of private investment strategies are seeking.

February 7, 2022

CANADIAN ETFS START STRONG

Canadian exchange-traded funds (ETFs) started 2022 with totaling $5 billion in inflows for January. National Bank stats show investors favoured equity ETFs with inflows of $4.6 billion (90 per cent of the total) while fixed income accounted for $98 million (27 per cent), pulling back from the previous month’s demand for safety assets. National Bank economists noted a rotation from growth to value, with technology sector ETFs posting a rare month of outflows while financials and energy sector funds were in demand.

February 7, 2022

BELANGER JOINS TELUS

Martin Bélanger is vice-president, health benefits management, at TELUS Health. He brings a wealth of experience to the role, most notably having been responsible for P&L for the group benefits and retirement solutions business at iA Financial Group. Most recently, he was a senior partner at Levio, leading business advisory and digital transformation consultation initiatives.

February 7, 2022

CO-ORDINATED EFFORTS NEEDED FOR RETURN TO WORK

Success with disability management is measured in a few different ways depending on the stakeholder, but the main objective to all of them is the return to work of the employee. At the CPBI Pacific’s ‘Disability Management 101,’ Monica Herrera, client partner, specialized services (clinical), health and safety, at Fraser Health Authority will explain how it requires a co-ordinated effort by a series of stakeholders to be successful. It takes place February 10. Information is at https://www.cpbi-icra.ca/Events/Details/Pacific/2022/02-10-Disability-Management-101

February 4, 2022

UNDERSTANDING EMPLOYEES IMPROVES TOTAL REWARDS

A good start to get the maximum out of a total rewards program is by understanding what employees like and dislike, says Darcy Clark, principal, compensation, at Normandin Beaudry. Speaking at its ‘Salary Increase Flash Survey’ session, organizations need to squeeze the maximum value out of all elements of their total rewards program. This makes realizing what they understand and value within their current program important. One way this can be done is by using engagement surveys “and you can do that internally. It doesn’t have to be a huge cost driver to check the understanding of what employees value.” But it is also understanding what employees