Frontlines

Mike Sullivan, president, Cubic Health:
“In July 2012, Canada’s premiers announced their intent to introduce a tender process for key generic drugs enabling provinces to bulk buy, thereby lowering generic drug prices. The target date is April 1, 2013. This development could well push continued downward pressure on generic prices and encourage more plans to adopt designs that drive higher levels of generic drug utilization. But a lack of provisions to penalize manufacturers for back orders put our drug supply at risk. Drug shortages in 2012 arising from production issues at Sandoz Canada’s Quebec manufacturing facility demonstrated the risk of single-source manufacturers of key products. Improperly executed tenders could lead to more drug shortages, which could disrupt private plans across Canada.”

Paul Litner, partner, Osler, Hoskin & Harcourt LLP:
“In the past, governments have responded to underfunded DB plans by amending legislation to provide forms of solvency relief (e.g., permitting letters of credit, temporarily extending amortization periods). We expect that DB sponsors in 2013 will seek relief through de-risking solutions, some of which may require further legislative amendments. Some plan sponsors mitigate risk through investment strategies such as liability driven investing. Others pursue conversion to DC, target benefit and jointly sponsored pension plans. There are also options that involve eliminating plan liability risks through commuted value transfers or buyout or buy-in annuities. Legal challenges in implementing these strategies will likely influence the pension landscape in 2013.”

Ian Markham, Canadian retirement innovation leader, Towers Watson:
“The U.S. fiscal cliff crisis and eurozone developments will influence both investment markets and interest rates significantly, thereby affecting DB pension plan funded ratios, the pace of DB pension plan de-risking and DC pension plan replacement ratios. Also, probable elections in B.C. and Ontario will renew debate around the best resolution—pooled retirement pension plans or CPP changes—to the problem of pension coverage in Canada. An increasing number of provincial governments will promote target benefit plans and, in particular, the transitional rules from traditional plans. And the realization that responsibility for financial literacy belongs equally to governments, employers (whether plan sponsors or not) and unions will continue to build.”

Advisory Board 2013
As the leading source of pension and benefits information for decision-makers in Canadian workplaces, the Benefits Canada editorial team works hard to make sure we’re knowledgeable and up to date on the issues, trends and regulatory updates that matter to our readers. To do this, we turn to some of the brightest and best-connected minds in the industry for help.

We would like to extend a sincere thank you to the members of our benefits and pension/ investment editorial advisory boards. Their mandate is to provide ongoing thought leadership on the developments shaping the industry to help guide our magazine, website and conference content. They do this through scheduled board meetings and informal conversations throughout the year. They also judge nominations for Benefits Canada’s awards, moderate at our events, write timely columns and features. Their insight is invaluable to us.

Thank you all for everything you do!

Canadians uneasy about investing
Emotion, lack of knowledge and financial stress affect the investment decisions of many Canadians, according to new research from BMO.

The BMO Psychology of Investing Report, produced by Pollara, indicates that 40% of respondents say emotion plays a role in their investing decisions. Specifically, nearly 60% say they have invested on impulse at least once.

Additionally, 44% say they lack confidence needed to invest. Just 25% indicate they research carefully before making investment decisions, while 35% admit that they aren’t familiar with the companies in which they invest.

“While we’re only human, wise investing means more than simply following your heart,” says Serge Pépin, vice-president, investment strategy, with BMO Asset Management. “It’s critical not only to take the time to understand the market environment before making any financial moves but also to ensure you’re in the right frame of mind to make such decisions.”

The study also found that 41% believe they are not investing enough. While 83% indicate they want to pay off debts before investing, 79% don’t invest because they fear losing the money in their investments, and 76% say they find investing too complicated.

Canadians want to relax
Canadians want more paid time off, and they’d take that benefit over more money. So says a Mercer global study involving more than 10,000 employees in 10 countries.

Asked what benefit they’d most prefer from their employer, a majority of Canadians responding to the study Making Smart Benefit Choices chose extra paid vacation days. Employee respondents from all other global markets selected a salary increase as their first choice (it ranked second among Canadians).

According to Brian Lindenberg, senior partner in Mercer’s health and benefits business, these results underscore a key challenge for employers: making employees understand the value of benefits that may not immediately impact their lives but will prove important over the longer term.

“Canadian employees have shown that they value more time off and increased pay in the current stress-filled economic environment, which is understandable. But there are other benefits that have the potential to create more income protection through health benefits and income replacement through retirement and savings vehicles,” he says. “This challenge puts even more pressure on employers to deeply understand and communicate the value of various benefits to their employees so they can make smart choices.”

The survey also asked employees to rank which benefits they would be willing to pay for themselves—those known as voluntary or flexible benefits. Responses varied by market. In Canada, where most health benefits are covered by governments or are already part of basic workplace coverage, insurance options such as car and home coverage topped the list.

Get a PDF of this article.