November 19 Benefits and Pensions Monitor Daily News Alerts

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Investors Only Understand Passive Fees

Nearly two-thirds (63 per cent) of investors claim to know the difference between active and passive investing, the findings of a survey by Natixis Investment Managers suggest some may be hearing only part of the active-passive dialogue that focuses on fees. Nine out of 10 (94 per cent) investors consider fees an important consideration when they are selecting investments and 53 per cent recognize that passive investments, such as index funds, tend to have lower fees. Meanwhile, 55 per cent of investors also believe that index funds are less risky than other investments and 62 per cent of investors think index funds can help to minimize losses. The findings suggest that a large percentage of investors may be confusing lower fees with greater value. Even while some might praise the virtues of passive investments, respondents’ preferences tend to favour active management. Seven in 10 investors (74 per cent) say they prefer an expert to find the best investment opportunities in the market and 79 per cent say it’s important to beat the benchmark. “Our survey shows that investors are inclined to prefer active investment strategies, but their quest to lower investment costs may be setting unrealistic expectations for what passive investments can actually deliver,” says Abe Goenka, CEO at Natixis Investment Managers Canada. “Investors are caught in conflict and need help understanding a more nuanced argument for each approach.”

OMERS Plan Changes Rejected

Together with its labour allies, OPSEU says it has made significant progress in efforts to protect the pensions of thousands of its members with four of the six proposed changes to the  OMERS plan rejected. The changes were part of the OMERS Sponsors Corporation Board of Directors Comprehensive Plan Review. Proposals to replace inflation protection with conditional indexation; integrate the pension formula with the year's additional maximum pensionable earnings (YAMPE); change normal and early retirement; and require mandatory participation for non-full-time employees (optional for low-salary employees). The board voted in favour of removing the 35-year credited service cap and allowing paramedics to negotiate their normal retirement age at 60.

FSCO Updating Surplus Policies

The Financial Services Commission of Ontario (FSCO) is in the process of updating its surplus policies based on changes to the Pension Benefits Act that became effective July 1, 2012, says a Morneau Shepell ‘News & Views.’ The surplus policies set out its expectations respecting applications for the payment of surplus to employers. It outlines the process for applying to the Superintendent of Financial Services for consent for the payment of surplus to an employer on a pension plan wind up. Employer withdrawals from an ongoing pension plan will be the subject of a future FSCO policy. It will replace two pre-existing policies that set out rules for surplus withdrawal on full and partial wind-ups. The draft policy will apply to surplus withdrawal on both full and partial wind-ups. There are three possible bases for the payment of surplus to an employer on a plan wind-up: the pension plan terms authorize payment to the employer; written agreement between the employer, members, and others entitled to payments from the pension plan; and a court order. The new surplus withdrawal rules provide a statement that an employer will not generally file a surplus application until payment of the basic benefits has been approved by the superintendent. Under the current surplus policies, it is stated that the superintendent will not complete his consideration of the surplus application until he has approved payment of the basic benefits. The administrator of the plan must also disclose if buy-out annuities were previously purchased as members who were subject to buy-out annuities retain their rights to surplus pursuant to the new buy-out annuity rules. If the application is made on the basis of the pension plan terms authorizing payment to the employer, a historical analysis of the plan documentation is required.

Workplace Weight Programs May Be Detrimental

Workplace health promotion programs that encourage employees to take responsibility for their own weight may have detrimental effects for employees with obesity, says a study in ‘Frontiers in Psychology.’ These range from feeling increasingly responsible for their weight, but perceiving they have less control over it, to increased workplace weight stigma and discrimination. Ironically, these effects could even lead to increased obesity and decreased wellbeing. The study finds these pitfalls could be avoided through programs focusing on the employer’s responsibility to maintain employee health. The workplace can have a huge impact on health, including weight. For instance, a canteen where healthy food is scarce or expensive compared with unhealthy food is likely to lead to unhealthy choices. From this perspective, employers bear some responsibility for employee health and weight. In response to the high prevalence of obesity, employers are increasingly implementing workplace health promotion programs. However, many such programs highlight employee responsibility for obesity and ignore employer responsibilities. Previous studies examining the effectiveness of workplace health promotion programs (many of which are employee-focused) have reported negligible or modest effects on employee weight. The study is at Weight Programs

Canada Lags With Acute Beds

Canada is ahead of only countries like Mexico when it comes to have acute beds per thousand of people. Dr. Howard Ovens, chief medical strategy officer of the Sinai Health System and medical health advisor to the Mount Sinai Foundation, told the ‘Ending Hallway Medicine: Achievable Mission or Mirage?’ at its ‘Professional Advisors Luncheon’ that the situation is worse in Ontario where there are only 2.4 acute beds per thousand compared to 3.4 in the rest of the country. As well, Ontario spends just $1,400 per person on healthcare funding with only Quebec spending as little. However, as a percentage of the economy, healthcare funding while declining is doing quite well and the money is being spent very efficiently. And despite gains made starting in 2008 when the first financial incentives to improve access/flow were introduced, that situation is starting to deteriorate. That approach to deal with hospital overcrowding saw hospitals that reduced patient crowding get extra funds. This prevented hospitals from reducing spending by cutting back on services. Hospitals have made large gains in eliminating overcrowding by adding scheduled surgical capacity on weekends and evenings and carefully matching schedules to emergency workloads. They are also building in seasonal emergency patterns. However, hospital crowding is an international problem. Improvement would need significant process improvements and substantial investment. In the meantime, prohibiting putting patients in hallways would just make things worse.

Equitable Simplifies Onboarding

Equitable Life of Canada has introduced a secure, fully online plan member enrolment experience, simplifying the onboarding process for both plan administrators and plan members. Available for both traditional and myFlex Benefits groups, the tool offers a more secure and efficient alternative to traditional paper enrolment. Employees will be able to enroll in their benefits plan in just minutes from their computer or mobile device. The online enrolment tool also lessens the effort for plan administrators to complete a group’s enrolment. It reduces errors and rework that can occur due to spelling mistakes or missing information on paper forms. The new tool also reminds users before the enrolment period expires, resulting in fewer late applicants.

Owens Gets New Role

Paul Owens is acting assistant deputy minister of financial sector regulation and policy (FSRP) and superintendent of pensions, insurance, and financial institutions for Alberta. He has been with FSRP since January 2012 as the deputy superintendent of pensions and brings over 30 years of executive leadership experience to the role. Haripaul Pannu is acting deputy superintendent of pensions. He had been with FSRP for the past five years as the senior manager, risk management, and most recently as senior manager, pension policy.

Communicating Total Rewards Examined

Communicating Total Reward programs to employees is not new, however, the modalities of communication are continually changing. In ‘Diligence & Dazzle: Total Rewards Communication,’ the CPBI Southern Alberta Region will examine combining the due diligence of communicating benefits, retirement, and compensation with innovation and creativity. Speakers are Brent Perdue, manager, compensation, at Encana Corporation; and Dylan Snowdon and Lauren Barteluk, lawyers and associates at Carbert Waite LLP. It takes place December 13 in Calgary, AB. For information, visit Total Rewards Communication