Frontlines

The Canadian Federation of Nurses Unions (CFNU) is the latest group to urge premiers to work with Ottawa to create a universal pharmacare plan with a national drug formulary.

Although the premiers agreed to establish such a program in 2004, no steps have yet been taken. “Ten years later, we haven’t made much progress,” says Linda Silas, CFNU president. “Yes, we are doing bulk buying for an X number of drugs,” but that still doesn’t fully address the fact that one in 10 Canadians currently cannot afford to fill a prescription, she explains.

“We believe your prescription medications are all part of your treatment and all part of you being healthier,” Silas says, noting that it makes no sense to exclude drugs from a universal healthcare plan.

A universal drug insurance plan would be beneficial for employers, too, given that a major issue they’re facing is the rising cost of drug plans, she adds. Canada is the only country in the Organisation for Economic Co-operation and Development that offers universal public healthcare without a pharmacare plan. Many in the academic community also see universal pharmacare as a solution to the current system. “When it comes to prescription drugs, Canada’s current system is plagued by massive waste, massive costs and plenty of people unable to afford their drugs,” Marc-André Gagnon, an assistant professor with the School of Public Policy & Administration at Carleton University, wrote in a recent National Post column.

“Universal pharmacare does not mean an ‘open bar’ for everybody; it means leveraging buying power and using market forces in order to contain drug costs, achieve sustainability and improve the health outcomes of the population.” Canada’s life and health insurance companies are yet another entity that agrees that the current regime needs to be replaced by a government-run universal plan.

But pharmacare has its critics, too. They argue that it won’t improve access to medication for all Canadians. Rather, they say, the disappearance of private insurance plans would limit patients’ choices because public plans cover fewer new drugs approved by Health Canada than private plans do.

Senior fraudulently collects CPP and OAS for years

A retired resident of Leamington, Ont., recently pleaded guilty to collecting Canada Pension Plan and old age security (OAS) benefits for over 14 years.

The 78-year-old woman was claiming the funds on behalf of her husband, even though he had passed away in the late 1990s, according to the RCMP.

The woman, identified by The Windsor Star as Eveline Rice, must now pay restitution of more than $150,000 to the Receiver General of Canada. She also received a 12-month conditional sentence order and 12-month probation.

Initially, she was charged with three counts of fraud over $5,000 and three counts of uttering forged documents. Rice pleaded guilty to just one count of fraud; the other five charges were withdrawn. She had been the subject of a two-year investigation by the RCMP.

“The Canadian public contributes to these government programs and trusts that they will be there in their retirement years,” says Inspector Serge Cote, officer in charge of the Windsor RCMP detachment, explaining that fraudulent activity hurts all taxpayers.

Pension plans see flat returns in Q2

Canadian DB pension assets remained unchanged during the second quarter of 2013, as a June spike in interest rates erased advances in April and May.

A survey from RBC Investor & Treasury Services shows that DB pensions returned 0% for the quarter ending June 30, keeping year-to-date results at 4.5%.

“Market volatility returned in June, following the Fed’s statements regarding its commitment to quantitative easing,” says Scott MacDonald, the company’s head of pension segment development. “While all DB plans benefit from rising long-term bond yields as pension liabilities are reduced, those with risk mitigating liability-driven investment strategies were the hardest hit during the quarter.” Bonds had their largest three-month decline since 1994, losing 2.5% in the quarter and 1.7% over six months.

The worst-performing asset class in Q2 was Canadian equities, with the S&P/TSX Composite Index falling by 5.7% and wiping out its first quarter gain of 4.4%.

Pensions’ foreign equity investments underperformed the MSCI World Index (CAD) by 0.4%, reversing a trend of positive returns for the past two quarters. The MSCI World Index fell 3.2% in Canadian dollars compared with 4.3% in local currency.

“The weakening of the Canadian dollar lessened the impact of falling foreign equities on Canadian DB plans, but the continuing downward pressure on stock prices is eroding the gains of plans seeking higher returns from equities,” MacDonald explains.

Lives get longer, but retirement savings fall short

As longevity increases and employer-sponsored pension plans become scarcer, many Canadians harbour a false sense of security that they are prepared for a long retirement—when, in fact, they’re not—and few know how much money they will need to save.

Sixty-two percent of non-retired respondents are generally confident that they have planned well for retirement, according to a BlackRock Canada survey. But only 59% actually have a financial plan. And fewer than half of Canadians who have saved less than $100,000 for retirement have a plan—although, arguably, they are the group that needs a plan most.

Only 15% of future retirees are very informed about how much they will need to save annually to meet their retirement goals.

The study also shows that 18% of Canadians don’t put any retirement money aside on a monthly basis, and 11% don’t know what they save. The biggest barriers to saving more are living paycheque to paycheque, decreases in income and the cost of education, according to the survey.

These alarming numbers coincide with a decline in workplace pension plans. Nearly two in five future retirees have no access to a company plan, including one-quarter of currently employed investors. At the same time, Canadians are living longer than ever.

One thing that employers can do to help their staff prepare better for longer golden years is to make enrollment in their pension plans mandatory, says Noel Archard, head of BlackRock Canada.

Along with the government and the financial industry, employers can also provide more financial education, he adds.

This month in numbers

18% of Canadians don’t put any retirement money aside on a monthly basis—mainly because they’re living paycheque to paycheque — BlackRock Canada survey

19% of global pension fund assets are currently invested in alternatives, compared with 5% in 1997 — Towers Watson Global Alternatives Survey

45% of Canadian institutional funds expect to increase allocations to exchange-traded funds by 2014 — 2013 Greenwich Associates study

56% of Canadian investors know their investment profile, which identifies their risk tolerance and financial goals — 2013 BMO Nesbitt Burns Savviest Investor Index

$513,600,000: the amount of equity funding that the Ontario Teachers’ Pension Plan will provide to the Hudson’s Bay Company to support the retailer’s planned acquisition of Saks

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