And it’s not just productivity at work that employers need to worry about. “Mental illness is one of the commonest forms of illness and hits people during their early and productive [working] years,” says Dr. David Goldbloom, a professor of psychiatry at the University of Toronto, who spoke at the Group Insurance and Pharmaceutical Committee seminar in Toronto last month. And, he adds, mental illness carries a double burden: the symptoms and the stigma. “If your mind is broken, people treat you differently.”
One side of that burden is also reflected in the Staying@Work survey: only 20% of respondents said that addressing mental health stigma is a priority, and a mere 15% conduct mental health risk assessments.
With any luck, the Mental Health Commission of Canada (created as a result of the Standing Senate Committee on Social Affairs, Science and Technology’s recommendation in its national report on mental illness in May 2006) may help to bring mental illness to the forefront. One of the commission’s tasks includes conducting a 10-year anti-stigma campaign.
But where stigma is a burden for employees, cost—and the bottom line—is a burden for employers. According to Staying@Work, mental health issues accounted for 72% and 82%, respectively, of long- and short-term disability claims. Joseph Ricciuti, Canadian healthcare practice leader, with Watson Wyatt, says the average Canadian company pays up to $10 million each year in lost productivity because of health-related matters. “Unless organizations, and society in general, start doing a better job [of] addressing the major causes of time away from work,” he says, “these hidden costs will only get worse.”
Briefly ABCP Deadline Missed The investors committee for thirdparty structured asset-backed commercial paper (ABCP) has missed its Dec. 14 deadline to come up with a restructuring plan. The deadline has now been extended until Jan. 31, 2008. The restructuring aims to replace the ABCP with notes having a maturity similar to that of the underlying assets and will address the margin call requirements of some trusts. Surplus Case Lost The Ontario Superior Court of Justice has ruled that public service, RCM P and Canadian Forces employees aren’t entitled to the surplus in their pension plans. Justice Anotine Lotbiniere Panet rejected the unions’ claims that they had an interest in the estimated $30.2 billion surplus and that the federal government breached a contract with them by amortizing the surplus. He also rejected claims that certain provisions of The Public Service Pension Investment Board Act violated their rights under the Charter of Rights and Freedoms. N.S. Pension Legislation Reviewed Nova Scotia’s government has introduced an amendment to ensure that all pension plans are fully funded when a company leaves the province or winds down its pension plan. It also plans to review its pension benefits legislation through an advisory panel aiming to make recommendations to the government in the fall of 2008. |
Why the CPP is not an SWF
As some governments around the world consider legislation preventing sovereign wealth funds (SWFs) from investing in sensitive infrastructure, such as airports and bridges, the Canada Pension Plan Investment Board (CPPIB) is taking steps to ensure that it doesn’t fall victim to any protectionist measures.
Gail Cook-Bennett, chair of the CPPIB , is concerned that some pension plans, such as the CPP, may be lumped into the SWF group because they are national funds. She has been proactively spreading the message that the CPPIB isn’t an SWF . “While we do have the word ‘Canada’ in our name, the CPP…is neither a sovereign entity nor a sovereign fund,” she said, in a speech to the Organisation for Economic Co-operation and Development in Paris in December 2007.
There are several reasons why the CPP is not an SWF , according to Cook- Bennett. One, its assets are contributed by employees and employers directly—not by the government. Two, the CPP doesn’t receive any tax revenues or top-ups. Three, the assets are distinctly separate from government assets. And four, by law the CPP “operates at arm’s length from government”: it doesn’t submit its investment strategy, business plans, compensation policies and pay levels for government approval, and it doesn’t have government officials on the board.
Although they’ve been around for many years, SWF s have recently emerged as direct investors and have acquired international assets in industries such as telecommunications and energy. They’re also growing considerably. According to Deutsche Bank, SWF s currently hold US$3 trillion in assets and could grow to US$5 trillion in five years, and to US$10 trillion in 10 years.
Despite this considerable growth, SWF s should not ignore the concerns of policy-makers, regulators and governments, Cook-Bennett said, during a recent interview with Benefits Canada. “The problem [with SWF s], in international policymaking terms, is that some of them lack clarity of objectives. And certainly, that gives rise potentially to fear as to what they’re about—whether they’re truly commercially driven organizations or if they’re somehow operating strategically [or] politically in what could be sensitive industries.” She added that SWF s should define their objectives and increase their transparency in order to respond to any concerns these parties may have about their motives.
While the CPPIB hasn’t faced any investment restrictions yet as a result of being confused with an SWF, Cook-Bennett says there is a real danger that it could. “That would really inhibit us from operating in the interests of our 17 million contributors and beneficiaries, because what we’re trying to do on their behalf is to diversify our investments both by geography, and also into new asset classes such as infrastructure, private equity and real estate. And it’s those types of investments that could potentially get caught in blunt protectionist measures.”
— by Don Bisch and Brooke Smith
Letter Re: Recommendation to the OECP Regarding Supplemental P lans, Nov. 2007 We don’t need yet another [pension] structure. What we need is mandatory use of existing defined benefit (DB) and defined contribution (DC) plans across all sectors of the economy. Under the current non-mandatory system, businesses offering pension programs to employees, and the covered employees making contributions, also pay toward the retirement cost of people not covered via Old Age Security (OAS) and related supplements for low-income earners. Canadians who adequately prepared for retirement with the assistance of an employer pension plan often face lower or no OAS benefits and subsidize those who did not prepare. OAS is funded out of general tax revenue—a cost borne by all employers and employees alike. We would all be better off funding mandatory pension programs and taking full advantage of the existing contribution limits. Another way to improve the lot of those not covered by private pensions would be to expand the benefits and contributions under the Canada Pension Plan. This would be cost-effective and universal across the economy, and the costs are equally shared by all employers and employees. Finally, how about having a single pension regulator in Canada and more employer-friendly rules? The British North America Act burdens us with multiple sets of provincial pension acts that lack harmony and offer no practical added value over what could be achieved under a single national pension act and regulator. Flaws in the current multi-jurisdiction legislation discouraging employers from using DB pension plans, or to even offer DC pension programs, are well documented. We need to return to common sense rules that encourage the broad use of practical pension programs. The legislation of the last 25 years has not resulted in expanded pension coverage and improved pensions at retirement. If pension legislation does not encourage the use of pension plans, one must ask if it is serving any real purpose in an economy. Bob Milner, senior vice-president, sales, Standard Life Investments Inc. |
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