September 11 Benefits and Pensions Monitor Daily News Alerts

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COVID Impact On Real Estate Concerning

Interest rates remaining low to help support the economy is great for borrowers and not so great for savers and pensions are savers, says Barbara Zvan, president and chief executive officer, of the University Pension Plan in Ontario. Taking part in the ACPM (Association of Canadian Pension Management) roundtable on ‘What Keeps Us Up at Night? Public Pension Leaders’ View from the Top’ with Chuck Bruce, chief executive officer, Newfoundland and Labrador’s Provident10 plan, and Chris Brown, president and chief executive officer of Alberta’s LAPP Corporation, she said the current rate environment has her thinking through the different asset classes with the second and third order effects from COVID remaining to be seen. Using real estate ? a “pretty traditional” asset class for pensions with many invested office and retail space ? as an example, she said the potential impact of COVID could be significant. “If you think of a Toronto downtown company, those organizations will now start doing more and more remote working and may not need space,” she said. This will impact the valuations going forward and possible growth prospects. In retail, people are more and more used to the internet shopping which may impact it. These will take time to work through, but definitely are “top of mind” and has her thinking about new asset classes going forward and what segments of some of the traditional asset classes to focus in on. While there's risk in understanding where things are going or potentially opportunity, “the sooner we begin to understand the longer term impacts of COVID on various asset classes, our portfolio, the better we'll be able to make those decisions on how to restructure that,” said Brown. There are so many challenges ? real estate and the instability south of the border and the impact that will have on the equity markets, potentially. However, there are some short term issues plan are going to need to manage through. Still, since pension plans are long-term investors, they need to keep focused on those longer term objectives. It's both a challenge and an opportunity to be working to fit all these pieces together, he said. Like Alberta, Newfoundland and Labrador are largely dependent on oil, said Bruce. So the impact of lower oil prices on the economy is a concern. However, as a jointly sponsored pension plan where members and employers equally share in any surplus or deficit, the joint sponsorship agreement and funding policy do set out a roadmap to managing a downturn. Still, he said, there were a lot of smiles around the table when the preliminary results for 2019 for the plan came out. At that time, prior to COVID, the question was whether things would get flush by the end of 2019. No-one felt that it would be in August of 2020, “so with things almost back to what they were in 2019, it's a little surreal,” he said.

Organizations Enhance Healthcare

In response to the COVID-19 pandemic, many Canadian organizations are making enhancements to their healthcare and wellbeing programs, though rising drug costs are affecting budgets, say surveys by Willis Towers. They found that more than half of employers (53 per cent) are enhancing wellbeing programs, while 27 per cent plan to make changes to improve health benefits. This comes at a time when drug costs, the main driver of plan sponsor healthcare costs, have trended up 2.4 per cent over the past year and the cost of pooling protection to mitigate the risk of high-cost drugs continues to increase. Supporting physical and emotional health is a top priority for most employers as 57 per cent believe COVID-19 will have a moderate to large negative impact on employee wellbeing. In response, nearly half (45 per cent) are offering or expanding access to virtual mental health services, while 60 per cent expect mental health services and stress management to be one of the organization’s most important benefit priorities over the next six months. In addition, 34 per cent are increasing access to telemedicine, with an additional 40 per cent planning or considering doing so. Maintaining physical health is also important with 70 per cent of employers offering new easy-to-implement technology-enabled solutions, such as virtual workouts, to support employees who work from home. Another 13 per cent are planning or considering these solutions. More than half (58 per cent) are promoting healthy nutrition and weight management for at-home employees, while 18 per cent are planning or considering adding programs in this area.

For details on these stories, visit www.bpmmagazine.com

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