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July 20, 2022

PENSION DIFFERENCES NOT REFLECTED

Initiatives that appear to be moving towards a one-size-fits-all approach for risk management across the diverse areas that OSFI regulates has the potential to not accurately, nor fully reflect, the many legal and other differences between banks, insurance companies, and pension plans, says the Association of Canadian Management (ACPM). Its input on the Ontario Superintendent of Financial Institutions (OSFI) plan to expand the scope of Guideline E-23 beyond federally regulated deposit taking institutions to also include federally regulated insurance companies and federally regulated pension plans says each of these areas has, and is subject to, very different legal and legislative regimes; structures and frameworks through which they operate; legal duties/standard of care; and focus (e.g., consumer products versus employee compensation). Given this, a single policy framework for all would not be appropriate, unless it fully appreciates, and clearly reflects, the very different regulatory needs and structure of each area. However, comprehensive policies (even if properly reflective of different regulatory needs etc.) would likely be unwieldy and not user-friendly for those institutions seeking to comply with the guidance. It recommends that OSFI pursue separate policies/guidance for each of the areas it regulates to better ensure that the many differences between the areas it regulates are respected and properly reflected in its policies and guidance.

July 20, 2022

SOCIETY BENEFITS FROM PENSIONS

All of Canadian society is a beneficiary of a widely accessible pension system, says Derek W. Dobson, CEO and plan manager of the CAAT Pension Plan. Sharing the tangible economic benefits and tangential social benefits of pensions that improve the lives of all Canadians – as workers, as taxpayers, and as future retirees – expands the avenues that businesses can take to build a more sustainable future, he says. Yet, the vast majority of Canadians are not saving enough for retirement and are at risk of outliving their savings. Most Canadians save for retirement without fully knowing the true cost of healthcare and living comfortably in retirement. Citing a study by the Canadian Public Pension Leadership Council, he says on average, 70 per cent of Canadians are worried that they aren’t saving enough for retirement and 62 per cent are concerned they will outlive their retirement savings. As well, workers who depend on CPP/QPP (Canada/Quebec Pension Plan) and OAS (Old Age Security) to supply their retirement income often don’t realize until they have already entered retirement that these programs are meant to cover basic living expenses only, not the quality of life that many may wish or expect to live in retirement. Now, amid market uncertainty, geopolitical risks, and rising living and healthcare costs, the outlook is even more concerning for those without a secure and sustainable retirement income plan with cost-of-living adjustments. In fact, in the pension industry, the commitment to look after these larger responsibilities falls under responsible or sustainable Investing initiatives, which outline the integration of environmental, social, and governance (ESG) factors into investment decision making. As ESG increasingly becomes a household term, employers can enhance their social contributions, or ‘S’ pillar of ESG, by recognizing the social value of offering their employees sustainable retirement savings programs.