November 12 Benefits and Pensions Monitor Daily News Alerts

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Management Needs To Know Why

Convincing management that benefits are important starts with explaining why, says Naomi Titleman, vice-president, talent, at Medcan. Speaking at its ‘LIVEWELL Toronto 2018’ on ‘Progressive benefits and the value of investment,’ she said escalating healthcare costs, chronic health conditions, rising absence costs, the aging population, and mental and stress problems are all examples of why they are important. However, the benefits most people signed up for are not the benefits needed today. Originally, benefits were structured for a family of four with two kids, good teeth, and who needed glasses. This no longer applies and maintaining this kind of coverage puts stress on the system and adds unnecessary cost, she said. Instead, well-being is becoming a business imperative and 61 per cent of companies are using this to improve productivity. These progressive companies are looking at VOI (value of investment) as well as ROI (return on investment) for benefits programs. Conventional ROI is measured through healthcare costs, sick days, and disability claims. VOI is measured through reduced healthcare costs, reduced sick days, and reduced disability claims, said Perry Hassen, director of analytics at Medcan. Every dollar spent on wellness saves $3.27 in healthcare costs and $2.73 in absentee costs, he said, and the average health cost for low risk employee is $3,490, whereas for high risk employees ‒ those with chronic conditions like diabetes ‒ that cost rises to $8,280. One way employers can find opportunities to improve employee well-being is by carrying out a thorough corporate health assessment.

CPP Fund Assets Grow

The Canada Pension Plan (CPP) fund ended its second quarter of fiscal 2019 on September 30, with net assets of $368.3 billion, compared to $366.6 billion at the end of the previous quarter. The $1.7 billion increase in assets for the quarter consisted of $2.3 billion in net income after all CPP Investment Board (CPPIB) costs, less $0.6 billion in net CPP cash outflows. The fund routinely receives more contributions than required to pay benefits during the first part of the calendar year, partially offset by benefit payments exceeding contributions in the final months. On an annual basis, contributions to the fund continue to exceed outflows. The investment portfolio achieved 10-year and five-year annualized net nominal returns of 9.1 per cent and 12.1 per cent, respectively, and 0.6 per cent for the quarter. Mark Machin, president and chief executive officer of the CPPIB, says “Foreign currency exchange rate declines relative to the Canadian dollar were the fund’s main headwind during the quarter, offsetting strong local currency performance.” CPPIB also continued to advance its preparations to accept, invest, and manage the additional CPP contributions set to begin flowing into the fund January 1, 2019.

Workplace Needs Activity

It is not just sitting, any prolonged static posture puts stress on the same tissues cumulatively and repetitively over time, says Dr. Andrew Miners, director of sports medicine, therapy and rehabilitation at Medcan. He talked about the importance of moving at its ‘LIVEWELL Toronto 2018.’ People sit a lot in the modern office, he said, but it’s not just sedentary work, it is also leisure where too much time is spent doing nothing. Sedentary behaviour has been linked to increased risks for chronic conditions such as diabetes and cardiovascular disease. And while the general guideline is that people need 150 minutes each week of moderate intensity, those with sedentary jobs and lifestyles actually need to do four to five times that so meeting targets for physical activity is not enough, people need to get more than minimum activity, he said. In this means environmental changes like adjustable, standing desks; organizational such as moving meetings; and individual such as the use of tracker apps are needed. Employers should urge employees to get up when they can and initiate walk and talk meetings. Exercise is medicine,” he said, and can be as simple as taking the stairs, walking or riding a bile to work, and parking further away from the building.

Europe Increasingly Attractive

Europe is increasingly attractive as an investment destination for global investors, says a survey by Invest Europe. Its ‘Global Investment Decision Makers Survey 2018’ shows that 91 per cent of U.S. and China investors cited Europe as more attractive than five years ago, compared with 71 per cent in the U.S. and 78 per cent of China investors in last year's survey. Among all global investors, 78 per cent expect increased investment in the region over the next five years as they become more positive on allocating to both the European Union and the UK following Brexit. Europe ranked above the U.S. and China for its highly skilled workforce, transport infrastructure, and regulatory climate. Europe also beat the U.S. as the leader on innovation and entrepreneurship, taxation levels, and access to global markets.

Overweight Medical Condition

Being overweight is a real medical condition and quite complex, says Dr. David Macklin, director of weight management at Medcan. Weight problems happen because humans are driven towards opportunities for dense calories which is really important in calorie deprived environments, he said at its ‘LIVEWELL Toronto 2018’ session on ‘Effective workplace behaviour change.’ There are incredible differences in individuals about weight gain. However, 60 per cent of weight is genetic. This explains why the same amount of calorie surplus creates more weight gain in some individuals. There is often evidence that some people are more sensitive to internal and external cues and less sensitive to cues they are satisfied when eating. It is an issue as excessive weight is associated with health risk factors including poor physical and mental health.

Managers Deploy Advanced Analytics

Advanced analytics are now being deployed by 85 per cent of asset managers and a further 55 per cent are working with alternative data. Yet only 10 per cent are generating substantial and sustainable value from these programs, says a report from Element22. It found that the majority of firms (55 per cent) are in the early stages of their advanced analytics projects while 10 per cent have only just started. Most asset managers invest heavily in the early stages of these and these levels then decline as the focus switches to areas of success. Those that go on to develop business confidence from their programs will typically increase their investment with a fortunate few attaining a return on investment. The study, which was sponsored by UBS Asset Management, found that the firms most aggressively pursuing these projects are investing between two to three per cent of annual revenue while those in the middle of their projects plan to increase investment by 240 per cent over the next three years. The vast majority (95 per cent) are using advanced analytics for alpha generation compared to 75 per cent for business operations and 70 per cent for client acquisition. The most popular form of advanced analytics is machine learning which is used by 90 per cent.

Corporations Changing From Bottom Up

Corporations are fed up and not waiting for top down changes from government, says Dr. James Aw, chief medical officer of Medcan. And they are going to start working from the bottom up to improve the health of their employees by engaging with health coaches and allying with other healthcare professionals to change behaviours, he told its ‘LIVEWELL Toronto 2018’ session on ‘The patient of the future: Can we deliver on the promise of precision prevention.’ This is due to big data and AI (artificial intelligence) which can revitalize primary care by determining what is relevant to patients. There is also a shift towards value based care ‒ increasing the value of healthcare by achieving better outcomes at lower cost.

Median Return Rises

The median return of the BNY Mellon Canadian Master Trust Universe was 0.42 per cent for the third quarter of 2018, marking the 10th straight quarter of positive results. The one-year median return was 7.37 per cent, while the median 10-year annualized return was 8.22 per cent. Equity segment returns were mixed the quarter, displaying both negative and positive performance. Canadian equity posted a quarterly median loss of 0.14 per cent, ahead of the S&P/TSX Composite Index which was down 0.57 per cent. The U.S. equity median quarterly return was strong at 4.69 per cent, but trailed the S&P 500 Index result of 5.84 per cent. Emerging markets equity posted a negative median return for the quarter of 3.02 per cent, slightly trailing the MSCI Emerging Markets Index which was down 2.67 per cent.

Sankey Becoming CEO

Robert Sankey will become CEO of Burgundy Asset Management, effective January 1. He has been with the firm for nearly 14 years. During this time, he has held positions in operations, performance measurement, and compliance. Previously, he worked at HSBC, CIBC Mellon, and Russell/Mellon Analytical Services.

DB Comeback Examined

The CPBI Ontario Ottawa Chapter will explore ‘Are DB plans making a comeback?’ The event will feature a 2018 legal update to review the changes in the pension and benefits area, a look at why CMHC closed its DC plan and reopened its DB plan, and a presentation on CAAT’s DBplus program. It takes place November 21 in Ottawa, ON. For information, visit DB Comeback