October 2 Benefits and Pensions Monitor Daily News Alerts

ESG Experiences Steady Growth

Ninety per cent of institutional investors believe environmental, social and governance (ESG) integrated portfolios are likely to perform as well or better than non-ESG integrated portfolios, says a global survey by RBC Global Asset Management (RBC GAM). ‘Responsible Investing: Charting a Sustainable Advantage’ reveals that adoption of responsible investing – including ESG integration, impact investing, and engagement by asset owners – is growing steadily as the focus of institutional investors moves from ‘whether to’ to ‘how to’ implement a responsible investment approach. Its research reveals that ESG-based investing has established a solid position alongside other fundamental investment approaches. Moreover, there is a growing interest in applying ESG principles to diverse asset classes, including fixed income and infrastructure. "This new data confirms that the majority of institutional investors and consultants have either adopted ESG principles or are actively looking at how to do so," says Judy Cotte, vice-president and head of corporate governance and responsible investment at RBC Global Asset Management. "Importantly, many institutional asset owners now believe they have a duty to consider a responsible investing approach. This ongoing shift has significant implications for how large institutional asset pools are allocated, as well as the advice and service provided by consultants and asset managers."

Solvency Position Hits 18-year High

The solvency position of Canadian defined benefit pension plans reached its highest level since November 2000 at the end of the third quarter of 2018. The ‘Mercer Pension Health Index,’ which represents the solvency ratio of a hypothetical plan, stood at 112 per cent on September 28 up from 107 per cent on June 29 and 106 per cent at the beginning of the year. The median solvency ratio of the pension plans of Mercer clients was at 102 per cent on September 28 up from 99 per cent at June 29 and 97 per cent at the end of 2017. More than 60 per cent of Canadian pension plans are now fully funded and less than five per cent of plans are below 80 per cent funded on a solvency basis. The funded position of pension plans was boosted in the third quarter by a late surge of 20 basis points in long-term interest rates during the last few weeks of September. A 100 basis point increase in interest rates typically results in a decrease of 10 per cent to 15 per cent in pension liabilities. Strength in the U.S. and international equity markets provided a further boost, although the Canadian equity markets continued to lag. The dramatic improvement in funded positions since the 2016 U.S. election and the fundamental changes to funding rules in Ontario and Québec have caused many plan sponsors to revisit their risk management strategy. Some plan sponsors, particularly those that are not fully funded and that remain open to new members, feel emboldened by the new funding rules to maintain or even increase investment risk. On the other hand, this seems like a particularly opportune time for sponsors of closed and frozen defined benefit plans to take risk off the table, either by changing the asset mix or through risk transfers.

Healthy Workplace Month Starts

Monday was the official start of the 2018 ‘Canada's Healthy Workplace Month,’ presented by Great-West Life and managed by Excellence Canada. Now in its 18th year, October is a month of celebration, exploration, and new beginnings. A ‘Healthy Workplace’ might be a place where employees feel respected, safe, and supported by their employer and co-workers; clearly understand their responsibilities and are empowered to make decisions; and combine hard work and fun with their colleagues. "Study after study has shown that senior leaders are prioritizing the mental and physical health of their employees because it is the right thing to do, even more so than the proven benefits to organizational outcomes," says Allan Ebedes, president and CEO of Excellence Canada." Doing things for the right reasons also creates trust in leadership and increases employee engagement. Visit www.healthyworkplacemonth.ca to access campaign planning tools, activities, and information about best practices shared by organizations that want to foster healthier, happier, and more engaged workforces. Organizations can share their success stories by submitting them to the Showcase. Not only will they receive a certificate, their stories will be featured online throughout 2019.

Digitization Expected From Healthcare Providers

With people paying for their coffees by scanning their phones, getting their subway passes automatically topped up whenever the balance dips below a set amount, and depositing cheques by taking pictures on apps, they are used to convenience and immediacy in their daily lives, and expect the same from their healthcare providers, says Telus Health. And responding to patients’ changing needs isn’t new to healthcare providers, so it’s not surprising many are addressing patients’ desires for digitization and convenience. Examples include chiropractors who offer posture tips on their Twitter feeds, optometrists who allow patients to order more contact lenses by text, and dentists who bill insurers directly, so patients only pay the deductible. While direct billing has traditionally only been offered by pharmacists and dentists, it’s now available for extended healthcare providers as well. Paradoxically, patients who aren’t tech-savvy may benefit most from direct billing. If patients normally mail in paper claims, they’re waiting several days to be reimbursed. Plus, if postal workers ever go on strike, those days can stretch into weeks. On the other hand, those whose healthcare provider submits claims on their behalf don’t have to worry about postal disruptions affecting their bank accounts. But even though two-thirds of healthcare providers are set up for direct billing, many don’t offer it to all patients, often because they aren’t asked to do so. Having healthcare providers bill directly frees up time for both patients and insurers, says Telus. It can also lower provider expenses. Accepting credit card payments is convenient for patients, but can get expensive for businesses since they owe transaction fees to the credit card company. By billing insurers directly, providers receive lower payments by credit card and, therefore, owe less to the credit card companies. And that’s a win for everyone, it says.

NAFTA Resolution Restores Cohesion

The resolution of the NAFTA replacement restores economic and political cohesion in North America, says Dec Mullarkey, managing director in the investment strategy group at Sun Life Investment Management. “Overnight, Canada agreed to join the U.S. and Mexico in an NAFTA revamp. The updated trilateral agreement will be known as USMCA (U.S.-Mexico-Canada agreement). The deal includes greater access to Canada’s dairy market which was a critical holdup. In return, Canada receives assurance that its current level of car production will be exempt from potential auto tariffs that the U.S. has threatened to impose. Canada was also able to retain the existing trade settlement dispute mechanism, a tool it has used in the lumber dispute and something the U.S. looked to water down,” he says. The U.S. has also agreed to begin bilateral trade talks with Japan. This comes on the heels of efforts in late July to de-escalate trade tension with the EU and to work on improving differences. One negative in the negotiations is that the steel and aluminum tariffs remain in place. While several months ago the U.S. had a multipronged attack on its trading partners with NAFTA, Europe, Japan, and China all under siege, now it can refocus on China. However, progress to date with its G-7 allies is not a reliable template for what might work with China. While negotiation success so far has focused on relatively routine issues like content rules and market access, the spat with China is more complicated involving intellectual property rights, supporting national companies, and the push to own the new economy. This will be a protracted struggle between the world’s two largest economies, he says. With the other trade spats under control, the U.S. now at least has the support of allies that share many of the same concerns with China’s behaviour.

Employees Would Use ‘Rainy Day’ Savings

Seven in 10 U.S. employees would likely participate in an employer-based rainy-day savings program, says a national survey of employees by the AARP Public Policy Institute. The ‘Saving at Work for a Rainy Day’ report indicated that saving more and reducing financial stress are the top reasons employees would participate. The most common reason for not participating is that employees already save on their own, says the survey. The program was explained as an employee-specified amount of money to be deducted from each pay cheque and deposited into a special savings account. The employee is free to take the money out of the savings account at any time without paying a penalty. There are no fees and the account information is private.

GWL Realty Finalizes Amazon Lease

GWL Realty Advisors has finalized a lease agreement with Amazon for the online retailer’s newest Metro Vancouver, BC, fulfillment facility. Amazon will occupy 450,000 square feet within Delta iPort, a new industrial park being developed by GWL Realty Advisors on behalf of project owner, the Healthcare of Ontario Pension Plan (HOOPP), on lands leased from the Tsawwassen First Nation (TFN). The agreement with Amazon is for the first phase of the 57-acre Delta iPort industrial park. When complete, the campus will offer nearly one million square feet of modern distribution space across two separate buildings. Delta iPort has been tailored to the rapidly evolving and increasingly complex logistics and eCommerce markets. Given Delta iPort’s close proximity to Deltaport and major arterials, the site will provide Amazon with a critical logistics solution for the Vancouver market.

ETFs Reach New High

Assets invested in actively managed ETFs and ETPs listed globally reached a new high of US$104 billion, following net inflows of US$2.86 billion and market moves during August, says ETFGI. Actively managed ETFs/ETPs in the U.S. and Canada attracted the greatest net inflows, while actively managed ETFs/ETPs in Europe saw net outflows. This is the 43rd consecutive month of net inflows into actively managed ETFs/ETPs listed globally. 

Bisante Has New Role

Anita Bisante (CRHA) is manager ? human resources at CN Investment Division (CNID). She joined the organization 2014 as a specialist – human resources from Souvenir Avanti where she held a similar position.

Sanofi Survey Discussed

Two CPBI Saskatchewan Region sessions will discuss the ‘Sanofi Canada Healthcare Survey.’ Art W. Babcock (MBA, CEBS), a member of the health and benefits practice at Aon, will discuss the survey which, since 1998, has proven to be a valuable tool for health benefit administrators making decisions about the kind of health coverage their plans will provide. It takes place October 17 in Saskatoon, SK. For information, visit Saskatoon Sanofi. The Regina session takes place October 18. Information is at Regina Sanofi

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