BPM 33.04

CRYPTOCURRENCIES AND PENSION PLANS IN 2023 Page 8

The Canadian Magazine Of Employee Pension Fund Investment And Benefits Plan Management

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ISSUE 33.04

Why a mental health strategy is critical

How to avoid classic TBP failures

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CONTENTS

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Features

3

Benefits and Pensions

MONITOR

UP CLOSE: GEORGE TURPIE

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CANADA LIFE

8

LEGAL

Is crypto ripe or rotten?

GREG WINFIELD

THE

ANNUAL REPORT & DIRECTORY

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HUMAN RESOURCES

The employee-employer relationship CHRIS LEE

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HEALTHCARE

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WELL-BEING

Support for workers with chronic conditions MONIQUE GIGNAC AND UYEN VU

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BENEFITS PROVIDERS

Insurers: exposing benefits fraud together JOANNE BRADLEY

BENEFITS PROVIDERS

QEX, financial wellness, and mental health FAIZAL MITHA

Directory listings

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WELLNESS

INVESTMENT

The art and science of distressed credit investing PARUL GARG

Wellness in five dimensions DESJARDINS INSURANCE

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DISABILITY

The challenge of mental health in the workplace LIANNE CLARKE

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OPINION

How to avoid classic TBP failures BARRY GROS

4 EDITOR’S VIEW

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EDITOR’S VIEW

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Time to Rethink Healthcare MONITOR Benefits and Pensions

BY Joe Hornyak, ASSOCIATE PUBLISHER joe.hornyak@keymedia.com

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mployers and benefits providers need to rethink what they’re doing about mental illness in the workplace because the business impact is going to become more real and the options to do something about it are growing scarcer.

That was the message from Adam Kelly, chief commercial officer at CloudMD, at the CPBI Ontario “Re-thinking mental-health absence and disability management” session.

Employers should care, he said, because there is limited support from the public health system when it comes to mental health, and chronic mental health issues such as depression and anxiety are major reasons for long-term disability. Half of the disability claims among younger employees aged 18 to 35 are related to mental health, and stress and burnout continue to drive employee turnover.

Currently, mental health is the numberone driver of disability in Canada in terms of the total number of claims and days lost to disability.

Pressure on workplaces This puts more pressure on workplaces, which are expected to do more with fewer people at a time when the competition for labour is fierce.

Of course, like all healthcare in Canada, there is a scarcity of people to help. “There are not enough trained people to serve the marketplace, and this was evident even before the pandemic,” Kelly said.

Altogether, it means “we need to rethink what we are doing because the traditional

model isn’t delivering on its promise. It is marked by poor quality of service, long wait times, a disconnected experience across public and private providers, and is transactional and product-focused, not client focused. You’re in your doctor’s office for five minutes. You come out with a drug therapy plan for six weeks and then you go back for an appointment,” said Kelly.

This short-term model of in-and-out is not satisfactory for people dealing with any healthcare issue, not just complex mental health conditions.

And it is going to get worse. The aging population will put more strain on healthcare, period, and labour shortages and increased demands to produce in the workplace will likely see more people struggling with their mental health.

Perhaps it is time to embrace a two-tier system of healthcare. We steadfastly hang onto our belief that our universal healthcare system is superior when numerous studies show that two-tier systems not only work elsewhere, they actually work better.

Let’s not forget that we do, in fact, have two-tier healthcare. Those who can afford it have access to private healthcare clinics or can travel abroad for the treatment they need. Critics of two-tier healthcare are unaware of the reality or choose to ignore it.

Of course, the easiest solution is to change the focus of the healthcare system from reactive to preventive. Simply, we need to stop waiting for people to show up at the hospital and move to keeping them from having to do so.

A KM Business Information Canada publication

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EDITORIAL ADVISORY BOARD

Randy Bauslaugh, Bauslaugh Pensions & Benefits Law Celine Chiovitti, OMERS Joe Connelly, Morneau Shepell Doug Crowe, RBC Tim Clarke, tc Health Consulting John Dynes, Cascadia Greg Hurst, Greg Hurst & Associates Neeraj Jain, Mawer Alain Malaket, InBenefits Mark Newton, Newton HR Law Robert Weston, Pharos Platforms

Editorial advisory board members meet informally and are consulted when appropriate to their areas of expertise, interest or jurisdiction. The members bear no responsibility for the contents of the magazine.

ADVERTISING SALES Michael Hughes michael.hughes@keymedia.com Doris Holinaty doris.holinaty@keymedia.com (416) 644-8740

Individual rights And it’s not a question of individual rights. We don’t allow people to ride in cars without a seatbelt or even play hockey anymore without a helmet. These are accepted methods of preventive healthcare.

So why should we stand back and let individuals eat themselves into a diagnosis of diabetes and the mental health issues that result from many chronic conditions?

There are mental ailments and chronic diseases on which lifestyle changes have no impact. But for those that can be prevented, why shouldn’t we be able to do whatever is necessary to force those changes on those who don’t seem to care?

KM Business Information Canada Ltd. 317 Adelaide Street West, Suite 910 Toronto, ON M5V 1P9 tel: +1 416 644 8740 www.keymedia.com Canada • USA • UK • Australia • NZ • Philippines Benefits & Pensions Monitor is part of an international family of B2B publications, websites and events for the finance and insurance industries

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PEOPLE

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Karuna

Rowe

Helleouet

Lafantaisie

Leewis-Nicholls

Fitzgerald

Shaw

Milne

Freitas

Gavieres

Munro Akilan Karuna (CFA) is a partner and head of institutional and strategic partnerships at Melbourne, AU-based global growth equity manager Munro Partners. He joined the organization in 2020 from CI Global Asset Management where he was vice-president of institutional investments.

UPP Karen Rowe is chief financial officer (CFA) at the University Pension Plan (UPP). Most recently, she was chief financial officer at CIBC Mellon. Prior to that, she was managing director, head of investment finance, at the Canada Pension Plan Investment Board.

CPBI Volunteers of the Year Melody Helleouet (CEBS) is the CPBI Pacific volunteer of the year. An account executive at Desjardins Insurance, she chairs multiple committees, is the vice chair of the region, and is the first to volunteer to help other committees and volunteers. Marcia Lafantaisie is the regional volunteer of the year for Manitoba. The region manager, communication and client services, for the Civil Service Superannuation Board, she has been a member of CPBI since 2013 and joined CPBI Manitoba regional council in 2017. She has participated in the membership committee, co-chairs the fundamentals committee, and is an active volunteer. E. Alice Leewis-Nicholls is the CPBI Southern Alberta volunteer of the year. A client relationship executive at Sun Life, she is currently vice-chair of the region. The award acknowledges her dedication, hard work, and the selfless service she has provided to the organization.

Manulife Colin Fitzgerald is global head of institutional at Manulife Investment Management. He joins the organization from Credit Suisse, where he was global head of distribution, asset management, responsible for expanding the company’s global distribution footprint. Prior to that, he was at Invesco, where he served as CEO of Invesco Asset Management Limited, head of EMEA distribution, and head of EMEA institutional. He also spent time as head of institutional for Fidelity and as global head of key accounts and consultants at Robeco.

SLC Fixed Income Candace Shaw is chief operating officer, SLC fixed income, at SLC Management. She brings over three decades of experience with SLC Management and the firm’s parent company, Sun Life, in leadership roles within private and public fixed income, portfolio management, and credit risk management. She will continue as deputy chief investment officer in addition to her new mandate as COO. Normandin Beaudry Tom Milne is a principal, Alex Freitas is a multimedia designer, and Dianne Gavieres is a consultant in the total rewards communication practice at Normandin Beaudry.

Milne was previously a creative director ‒ communication consulting at Eckler Ltd. Freitas was a multimedia designer at Eckler.

Gavieres was previously director of stakeholder communications at OMERS. TTC Ryan Downey is an investment analyst, public markets, at the TTC Pension Plan.

Most recently, he was an investment finance analyst at the CAAT Pension Plan.

Cidel Kate Nowak (CIM) is director, institutional sales, at Cidel Asset Management. Most recently, she was vice-president, private capital advisory, at Sera Global.

Ontario Teachers’ Daniella (Carrington) Vega is managing director ‒ pension risk at the Ontario Teachers’ Pension Plan. Her previous experience includes positions at Mercer, Fiera Capital, and Eckler Ltd. SHEPP Colette Wagner Erin Haresign is team lead at SHEPP (Saskatchewan Healthcare Employees’ Pension Plan). She has been with the organization since 2010 and was, most recently, senior pension officer.

Canada Life Ralph Castelli is associate manager, risk and compliance, at Canada Life. Most recently, he was assistant manager, group customer compliance.

Aon Michel Charron (CFA) is an associate partner, investment consulting at Aon. He has spent the last 13 years at PBI Actuarial Consultants, most recently as a senior investment consultant.

CWB Trust Darren Price is chief operating officer at CWB Trust Services. He joins the organization from Freetrade, a UK-based mobile investing platform, where he was responsible for establishing Canadian operations. Prior to that, he spent 20 years with Odlum Brown Ltd., most recently as vice-president of finance.

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BPM

UP CLOSE INDUSTRY LEADERSHIP IN FOCUS

GEORGE TURPIE senior vice-president, group retirement savings and investments, Canada Life

Canadians who joined defined contribution plans more than 20 years ago are now reaching retirement, and these savings might be their primary source of income in retirement, says George Turpie, senior vice-president, group retirement savings and investments at Canada Life. In an Up Close interview with Benefits and Pensions Monitor, he says the maturity of the market means that as more people rely on their defined-contribution plan savings for retirement income, the focus is shifting to decumulation as they look for ways to ensure their savings last their lifetimes.

What are some of the options for decumulation?

Registered retirement income funds [RRIFs], life income funds [LIFs], or some variation of a payment from a variable benefits arrangement are the most common options. The rules and regulations for these are very similar, although LIFs and variable benefits from pension plans are subject to maximum payments.

Plan members can also buy an annuity that pays a fixed amount for the rest of their lives, however long those lives are.

It’s a good option, although not a very popular one, because of the perceived cost of the annuity and the perceived value they provide.

Is the perception correct?

Some people are reluctant to purchase an annuity because they fear they’ll pass away early and their loved ones will miss out on getting a portion of their savings. It’s true that annuities transfer funds from people who live less-than-average lifespans to those who live longer than the average. This allows the product to guarantee a lifetime income.

However, it’s possible to purchase annuities with different levels of guarantees, such as 10 years of payments for a return of principal.

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The investments backing an annuity are also quite conservative. Investing in an annuity is essentially investing in a fixed-income instrument, and you’re not benefiting from the returns of a broad investment portfolio. This affects the amount of income that can be guaranteed.

With that said, annuities do have a valid place among decumulation options because they reduce income volatility by providing a fixed stream of payments.

The 2023 federal budget referred to using pooled registered pension plans [PRPPs] as a decumulation option. Does this fit into the spectrum of decumulation solutions?

Yes, it does, but there’s some background context that needs to be considered, and further legislative developments are still needed before PRPPs can be a strong, viable option for more Canadians.

Let’s go back to an earlier federal budget announcement for context. The 2021 federal budget created a framework for variable payment life annuities [VPLAs] to allow pension plans to offer these to their members. I’m quite an advocate for VPLAs because they will help members manage their longevity risk, but still have some investment flexibility, which is a limitation of an annuity.

Structurally, a VPLA is essentially a risk-sharing pool that shares longevity risk among members.

For it to be effective, a VPLA needs to have a significant number of members. However, when the VPLA legislation was created, it only allowed pension plans to offer them.

Due to this legislation, if a plan has a group registered retirement savings plan [group RRSP], it’s not able to create a VPLA because it’s not a pension plan. Even if a plan is a pension plan, it needs to be of a large enough size to have the critical mass required for effective risk pooling. Therefore, in current and practical terms, effective VPLAs are limited to very large pension plans.

Fast forward to the recent federal budget, and what the government may be suggesting is that the PRPP framework may now allow members from a group RRSP or smaller pension plans to roll into a PRPP. This could be done by allowing insurance companies, for example, to create a pooled VPLA that would be open to members from any pension plan and group RRSP. It will be important to see pension regulations for PRPPs and VPLAs develop further, as well as consider

the needs and perspectives of providers, plan sponsors, and members. For this to be effective, the regulations will need to be sufficiently flexible to allow providers to offer products that will be easy for members to use.

What is the biggest challenge to decumulation?

The biggest decumulation challenge is planning for the uncertainty – not only regarding future economic scenarios, but also uncertainty in terms of how long retirement lasts.

This uncertainty around the decumulation period makes it one of the most complex financial planning issues of our lives. Are you going to live another 10, 20, 30, or 40 years? That uncertainty in the time period can be very significant.

This raises the question of how you are going to stretch a lump sum of money over a period if you don’t know how long it’s going to be. If it’s 30 or 35 years, will it last?

The other big challenge is the uncertainty around the economic environment. We don’t know what’s going to happen with inflation leading up to and into retirement. We don’t know what’s going to happen with health care costs. We don’t know what’s going to happen with investment performance, returns, and volatility. So there are significant challenges in dealing with the uncertainty of investments and spending patterns.

How can plan members address the economic environment’s uncertainty with their decumulation options?

While it’s not possible to eliminate risks completely, you can mitigate and manage risks by using a mix of decumulation options.

For example, purchasing an annuity reduces the risk of income volatility. However, it may create other risks because you might be getting a fixed payment with no inflation protection.

Another example of decumulation options that help reduce risk are target date and target risk funds. They help members invest in risk-appropriate, well-diversified portfolios for an average person. However, members approaching retirement have different circumstances, so the one-size-fits-all landing spot of a target date or target risk fund may not be appropriate.

As decumulation solutions become more complex and people deal with high inflation, volatility, and longer life expectancy, they need innovative solutions and options to fit with varying circumstances to be suitable for each individual plan member.

At Canada Life, we’re very conscious of the many financial risks members are exposed to during retirement. That’s why we just launched a new decumulation product ‒ the Canada Life retirement funds. These funds are specifically designed to help members who are nearing or in retirement protect and grow their savings.

They do this through a unique mix of underlying components, which help guard against market volatility and inflation and still allow members

to participate in the benefits of rising markets.

For example, regarding inflation, these funds have specific sleeves that target investment strategies that move in step with inflation – things like real return bonds or real estate.

We built these products with a particular focus on lower-volatility investment selections, but they still offer exposure to equity markets and credit risk premiums to get the growth needed to help retirement savings last longer.

Will plan members be able to pick their risk profile?

The Canada Life retirement funds offer conservative, moderate, and balanced options. Each member is going to have different scenarios, expectations, and other investment assets.

They might have a defined benefit plan, they might have income properties, they might have other savings or other plans – or they might have none of those, and these funds will be their primary source of retirement income. With this product, each member can complete an investment personality questionnaire and find a fund that matches their risk tolerance and investment goals in retirement.

If you could wave a magic wand and solve the decumulation challenge, what would you wish for?

The decumulation challenge really starts before retirement. We know many members don’t feel the urgency or have motivation when it comes to making long-term investment decisions to save for retirement.

We know default features like auto enrolment, auto contributions, maximum contributions, and automatically escalating contributions improve participation and outcomes. These features help more members participate, contribute, and maximize their employer contribution match.

If members need to opt into a group plan to save for retirement, that can lead to suboptimal outcomes because of decision inertia – they haven’t got around to signing up yet. But if you can turn that around by requiring members to opt out, this can help ensure that members are getting the most out of their group plan and are able to retire well.

And post-retirement, I’m excited about the possibility and future of VPLAs that we discussed earlier.

Our people-first approach to wealth and wellbeing means we’re trying to create ways to deliver more meaningful outcomes for plan members through retirement. To do this, we need plan designs that better understand member decision-making and reduce complexities.

I think products like the Canada Life retirement funds help put us on the right path. But I know there is even more we can do. So I’m excited about the possibilities and commitments we’re making to help members retire well.

Canada Life and design are trademarks of The Canada Life Assurance Company

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Ripe or Rotten? Cryptocurrencies and Pension Plans in 2023

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BY: GREG WINFIELD

learly the last six months have not been the greatest for enticing pension plans or any other institutional investor to make any sort of leap to invest in, or adjacent to, cryptocurrencies. We have seen the bankruptcy of several crypto lending businesses, including some caught up in the bankruptcy of the crypto exchange FTX. These events have put a chill on the market and motivated governments and regulators to examine market participants more closely and tighten certain regulatory requirements or impose new disclosure obligations.1 Despite the negative sentiments arising from current events, the presence of digital assets, including cryptocurrencies, in the commercial world, and investments in them, are unlikely to go

away. The current chill on the market could also be seen as an opportunity for the public sector and larger private sector pension plans to take the time to learn more about digital assets, assess areas that present risk, and develop standards and techniques to manage these risks in order to be ready should opportunities in the digital asset space present themselves in the future. Moreover, familiarity with crypto and developing policies and practices with respect to same may prove useful in contexts distinct from the investment function.

What is crypto?

The greatest mystery of crypto is what it actually is. This seems to be a great barrier to undertaking a consideration of it as a possible asset class for pension plans. While a proper explanation can be

highly technical and, therefore, daunting, basically cryptocurrencies are based on the blockchain theory of a decentralized network. In a decentralized/distributed network, every “node” keeps a copy of the transaction ledger, and the entire network must agree on all transactions.

Key elements of this are: • Each entry on a blockchain ledger is an “address” where value can be stored.

• Each address has a public key known to all, and a private key known only to its owner.

• The private key is required to transfer value from one address to another.

• A blockchain-based digital asset, also known as a coin or token, is the software code that states the value held at a blockchain address.

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General risks associated with cryptocurrencies Whether you are a pension plan or not, there are a number of commercial risks to be aware of as one considers using or investing in cryptocurrencies. The main risks are: • custody risk – loss of assets due to theft, hacks, or loss of private keys2 • anti-money laundering/anti-terrorist financing and sanctions risk (i.e., due to the ability of parties to hide or fabricate their identities in cyberspace and the absence of an intermediary overseeing transactions) • securities regulatory risk • for non-tax-exempt entities, tax risk – how to track and tax crypto asset transactions • investment risk This article is primarily focused on consideration of investment risk as it applies to registered pension plans.

However, even for plans that are not likely to consider investments in the crypto space for a good many years, some level of understanding of these other risks can be useful in responding in a responsible, informed matter to a request for payment in cryptocurrencies from service providers or plan members.

General investment risk Similar to other novel asset classes, crypto presents issues in determining value, dealing with volatility of a nascent asset class, etc. These may be succinctly described thus: • unlike a conventional security, cryptocurrencies do not represent a payment obligation or participating interest in net assets of an issuer • difficult to value using traditional techniques and metrics • highly speculative • extremely volatile Turning the focus to registered pension plans Pension plan administrators (including pension committees) owe duties to the plan membership to properly administer and invest the pension fund. As part of

the investment function, it can certainly be argued that outright ignoring certain asset classes without any consideration for them is as imprudent as investing in an asset class of which the administrator has no understanding. Accordingly – and with an exception for smaller pension plans in which one can likely say that expending resources on asset classes that there is virtually no chance the pension fund will hold either directly or indirectly is discouraged – it may be time for larger private pension plans and the public-

THE GREATEST MYSTERY OF CRYPTO IS WHAT IT ACTUALLY IS. THIS SEEMS TO BE A GREAT BARRIER TO UNDERTAKING A CONSIDERATION OF IT AS A POSSIBLE ASSET CLASS FOR PENSION PLANS sector pension plans to make increasing efforts to better understand cryptocurrencies. Indeed, it may be that a pension plan may find itself investing in some form of pooled fund that itself has some dealings in crypto (e.g., one of that fund’s investments pays dividends in crypto); a service provider may desire payment in crypto; or even a plan member may request payment in crypto. The more one knows and appreciates before these issues come to light, the better prepared the administrator will be to address them with a cool head, either by making interim or preliminary policy calls or making one-off decisions in the heat of the moment.

As noted at the beginning of this article, news of substantial failures garners many headlines and presents especially cautionary tales. The recent failures of crypto lenders and exchanges are reminders of the investment risk inherent in new asset classes for even the most expert of investors. Still, if one sees good opportunities and takes care in decision-

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making, failures in some instances do not erase opportunities in others. After all, some companies in the auto, forestry, and steel industries make good investments despite high-profile failures in these industries. Ultimately, it comes down to understanding and managing risks appropriately in each individual circumstance.

Options for investing in the crypto “space” There are three broad ways to invest in cryptocurrencies or in the crypto space: directly, by investment in crypto itself or in ETFs that themselves deal in crypto; or indirectly, by investing in cryptolinked businesses, businesses that serve crypto, or businesses that accept crypto as payment.

There are also techniques for managing crypto risks. Investors can invest through a fund or managed account so as to avoid direct investment and all of the complications that can present (e.g., through publicly traded ETFs for Bitcoin, Ether, and soon, perhaps, other currencies or some hedge funds). Investors still need to carry out their due diligence and determine which, if any, regulatory regime (US-registered RIA/CPO, EU AIFM, MiFID-compliant, Canadian-registered PM/IFM) applies, and whether the applicable requirements are being met.

Determining how the manager mitigates crypto-specific risks, diversifies across counterparties and exchanges, and values crypto assets also needs to be assessed.

If you are contemplating direct investments in crypto, ensure you are aware of the relevant custody policies and procedures and have, or have access to, technical expertise to monitor the relevant blockchain networks and protocols.

Pension-plan-specific matters As plan administrators are investing a pension fund for the benefit of others (i.e., the plan members), it is incumbent on those undertaking the administration generally, and fund investment more specifically, to have an appreciation of how any proposed crypto or crypto-adjacent investments fit within the context of the total portfolio and relate to the liabilities of the plan. These considerations are relevant not just for crypto investments, of course, but for all pension plan investments. It is, however, a

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more complex and at least novel exercise with a new asset class.

Set out below is a road map for the sequence of steps a plan administrator may consider when investing in crypto or the crypto space.

The first step is to organize some expertise to understand crypto, the range of investment options, and how they might fit within the overall portfolio of the pension fund. In many cases, this would entail outsourcing to acquire the expertise, including obtaining legal advice on the key mitigation steps and developing related policies. This level of due diligence would include developing thoughts around the volatility and liquidity of the proposed investment. It may also entail an investigation into the possibility of investment funds or corporations in which the pension fund already invests (or may invest in future) using or investing in cryptocurrency themselves, and determining what commercial and other issues that may present to the pension plan. This means policies or approaches in connection with arising issues (e.g., whether distributions could be made to the plan in

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SIMILAR TO OTHER NOVEL ASSET CLASSES, CRYPTO PRESENTS ISSUES IN DETERMINING VALUE, DEALING WITH VOLATILITY OF A NASCENT ASSET CLASS, ETC. cryptocurrency and how the fund would deal with that) need to be developed.

If a “go” decision follows this, then turn to an examination of the plans’ statement of investment policies and procedures (SIPP). It is necessary for all fund investments to be made in compliance with the SIPP, and depending on whether a decision is made to invest directly in crypto, in an ETF, or in an adjacent business, there may be a need to modify the SIPP to permit or more clearly permit

investments in this space. Investments in ETFs or in an ownership interest in an entity that services the crypto space may well not require any changes, but it would probably be a good idea to at least tweak a SIPP to the extent that direct investments in crypto are contemplated. In that vein, the administrator may also need to come to its own view as to how to characterize crypto for purposes of the SIPP (e.g., is it a commodity, a security, or, despite other characterizations, a currency?). Finally, as every SIPP requires the inclusion of parameters for valuing assets, it will be necessary to assess whether the current language in the SIPP adequately covers the proposed crypto investment or that language needs to be revised.

At the time of making any actual investments, plan administrators need to ensure that there are clear minutes or other written memoranda outlining the decision-making process, due diligence, and reason for making the decision, as well as some idea of conditions that would lead to a decision to sell the investment. In a perfect world, the materials would indicate how each of the risk areas identified in the first

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Prudence is a process, not a result, and thus it is important to have a clear record of the decision-making in connection with investments, in particular those in any novel investment class for the plan. A further practical step may be to make any initial investment fairly modest relative to the size of the pension plan to see how that progresses and to take advantage of the inevitable learning that will occur in real time rather than in the theoretical due diligence phase, which is rarely capable of revealing all elements that will arise when an actual investment is made.

As with all plan investments, undertake constant review from time to time to assess whether the investment continues to make sense in the context of all of the pension fund’s assets and the plan’s liabilities.

Miscellaneous thoughts in an increasingly digital world As noted earlier, beyond the new investment space, there may be other areas of pension plan administration

where an administrator may encounter cryptocurrencies. While it may not be the most pressing issue, it may be worthwhile to ensure that, as new service contracts are entered into or refreshed or new investments in funds are made, some attention is paid to ensuring that by the terms of the contract or subscription agreement (or side letter), cryptocurrency issues are addressed, whether in a positive or a negative way. For example, it may be wise to place a little more focus on currency or payment clauses to make it clear, where desirable, that payment or distribution may only occur in the lawful currency of Canada or another jurisdiction. Do investment fund provisions that allow managers to make some distributions in-kind give rise to the possibility that this may include cryptocurrency?

What would a plan do if it found itself on the receiving end of Bitcoin?

Finally, it may be worthwhile thinking about how the plan would react to individual plan members seeking payment in cryptocurrency or, where transfers of assets in are permitted, seeking to transfer crypto-

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currency into the plan. Presumably, without the architecture to properly take custody of cryptocurrency, or simply because it would impose disproportionate costs on the plan, most plans would not entertain these requests. However, a little thought in this area would not hurt. Indeed, on the question of payment of pensions, absent unorthodox plan terms, it is far more likely than not that most plan administrators could safely take the position that the plan terms do not require it to pay pensions in anything other than Canadian dollars.

1. See, for example, Canadian Securities Administrators Staff Notice 21-332 (see https://www.osc.ca/sites/default/files/2023-02/csa_20230222_21332_crypto-trading-platforms-pre-reg-undertakings.pdf) as well as the announcement in the March 2023 Federal Budget that the government will require federally regulated pension funds to disclose their crypto-asset exposures to OSFI. 2. Crypto storage often involves the use of both a public key known to other participants in the network as well as a private key (like a PIN) known only to the owner. If this is lost the asset may be lost.

Greg Winfield is a counsel in the pensions, benefits, and executive compensation group at McCarthy Tetrault LLP.

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BENEFITS PROVIDERS

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Working Together, Insurers Expose Benefits Fraud

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BY: JOANNE BRADLEY

n one way or another, all Canadians pay for health and dental benefits fraud. In North America alone, it is estimated that hundreds of millions of healthcare dollars are lost to this kind of fraud every year. And that’s why Canada’s life and health insurers are working together to create new strategies and tools to detect, supress, and prevent health and dental benefits fraud.

A recent survey by Abacus Data found that 88 percent of those who have workplace benefits value their plans. A similar number – 84 percent – say their benefits plans have been very helpful (36 percent) or quite helpful (48 percent) in saving them money on medications, dental and vision care, and other health services.

But there’s another side to workplace

benefits. You’ve probably heard a story like this: Mary, a plan member, goes to a clinic for treatments that are covered by her workplace benefits plan. The clinic also offers laser skin treatments that she would love to have done, but that are too pricey and aren’t covered by her benefits. The clinic owner sees that Mary has a plan with lots of paramedical coverage. He offers to provide her with a gift certificate for complimentary laser skin treatments for every four paramedical treatments she receives. “Wow! What a great deal,” Mary thinks, and quickly schedules four more appointments to take advantage of the complimentary laser skin treatment.

No harm here, right? Wrong. Promotions like this that encourage plan members to use their benefits unnecessarily to obtain a gift or incentive lead to people abusing their plans.

Won’t notice To those who promote and perpetrate these kinds of scams, this is all harmless. They believe that everyone does it.

Your employer budgeted for you to use a certain amount in benefits, so what does it matter if some of what you claim isn’t 100 percent legitimate? You’re just getting back what you’re owed. Or people will think to themselves that these are huge insurance companies – they won’t notice unnecessary treatments and extra costs.

But these justifications overlook what’s really going on – which is benefits fraud.

Fraud costs Mary’s employer more by driving up claims costs, which could lead that employer to limit or cut benefits.

What’s more, Mary could end up losing her plan or her job. The clinic may also face consequences such as being delisted by an

BENEFITS PROVIDERS

www.bpmmagazine.com insurer or having a complaint filed with their professional association or college.

Regardless of how it gets rationalized, benefits fraud is a real crime with real consequences. You’ve seen the media reports. Every year in Canada, employees are fired, criminally charged, or face prison time for claiming things they shouldn’t from their company benefits plan. Practitioners lose their ability to bill insurers, are criminally charged, or lose their licence to practice.

On top of that, health benefits fraud and abuse cost employers and insurers millions of dollars each year. And these costs add up, putting real pressure on employers to ask whether they can continue to provide drug, dental, and supplementary health coverage to their employees. The consequences are serious and are not worth the risk.

To avoid detection, fraudsters are continually evolving their practices. One way is to spread fraudulent claims across many benefit plans and insurers. And while it may only be a very small number of providers defrauding health benefit plans, the impact on plan sustainability can be far-reaching.

All life and health insurers take antifraud management seriously. Each year individual companies make significant investments in technology, skilled staff, and education to prevent benefits fraud.

But now these companies that otherwise compete against each other in the marketplace are working together on industry-led strategies to leverage each other’s knowledge, expertise, and resources to reduce the time it takes to act on providers who are exploiting workplace health benefit plans.

Joint investigations Working through the Canadian Life and Health Insurance Association (CLHIA), insurers are collaborating on joint investigations into providers suspected of benefits fraud. Through these efforts, insurers are now better equipped to detect, prevent, and investigate those engaged in these schemes.

This new approach started with data pooling. As announced last year, insurers are now pooling claims data and using advanced artificial intelligence (AI) to identify potential fraud. This is giving insurers an edge in connecting the dots across a huge pool of anonymized claims data to identify patterns that can lead to

additional fraud investigations.

Privacy concerns are taken very seriously, and insurers have taken steps to ensure that confidential information remains private. To protect the privacy of individual claimants, claims data provided to the system is entirely anonymized and encrypted. Only publicly available infor-

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making a referral to professional colleges, associations, or law enforcement.

Going after provider fraud is just one part of what CLHIA and our member insurers are doing. We’re also expanding awareness of benefits fraud and abuse among the public as well as among legitimate healthcare providers.

Educate Canadians

AS ANNOUNCED LAST YEAR, INSURERS ARE NOW POOLING CLAIMS DATA AND USING ADVANCED ARTIFICIAL INTELLIGENCE (AI) TO IDENTIFY POTENTIAL FRAUD. THIS IS GIVING INSURERS AN EDGE

mation about health providers is included in the system. These practices meet the standards of relevant provincial and federal privacy legislation.

When the AI finds a suspicious pattern, an alert is generated that allows affected insurers to review the information on a case-by-case basis. At this point, if more than one insurer decides that the alert merits a further look, they can reach out and work together on a joint investigation, which is administered by the CLHIA. Actions following an investigation can include insurers choosing no longer to accept claims from a particular provider or clinic; informing plan sponsors that their plans may be subject to fraud or abuse; or

The CLHIA’s Fraud=Fraud website at www.fraudisfraud.ca educates Canadians about benefits fraud so they can recognize it, refuse it, and report it. Education plays a key role in preventing fraud by helping plan members and others to understand how benefit fraud affects them.

The information on the site also helps educate healthcare providers on how they can protect their patients and their practices from fraud. The site has tools and quizzes to test their knowledge about benefits plan fraud and its consequences.

All the measures insurers are taking together, from data pooling and joint investigations through to public and provider education, are meant to address misperceptions and misunderstandings as well as deliberate fraud. This allows providers, plan sponsors, and claimants to make the right decisions to keep workplace benefits sustainable for the 26 million Canadians who count on them.

Tackling benefits fraud today takes a coordinated approach. It takes providers who know and promote the proper use of health benefits in their practices. It takes insurers sharing information. And it takes public awareness so that individuals who suspect benefits fraud in their workplace can recognize and report it.

Joanne Bradley is vice-president, anti-fraud, Canadian Life and Health Insurance Association (CLHIA).

For more information about the work the CLHIA and its member insurers are doing to tackle benefits fraud, or to report suspected benefits fraud in the workplace, visit www.fraudisfraud.ca.

BENEFITS PROVIDERS DIRECTORY DIRECTORY LISTINGS GROUP BENEFITS

ALBERTA BLUE CROSS Tarick Fadel, director – analytics; 10009 108 St. NW, Edmonton, AB T5J 3C5 PH: 780-498-8469 Email: tfadel@ab.bluecross. ca Web: www.ab.bluecross.ca Products/Services: Group Health, Dental, Travel, Life, DI, Wellness, Virtual Health, EFAP, Second Opinion, Spending Accounts Net Premiums Group Life: $71.4M Group Health: $159.17M ASO: $1,190.9M

BENEVA David Borel, actuarial analyst; 2525 Boulevard Laurier, Quebec, QC G1V 4H6 PH: 418-650-3457 Email: davidborel@beneva. ca Web: www.beneva.ca Products/Services: Dental, Drug, Extended Health, LTD & STD, Life Insurance, AD&D, Flexible Benefits Plan, Critical Illness Insurance, Co-ordination of Benefits, Communication, Material, Drug & Dental Cards, Rehabilitation Services, Health & Wellness Program, Income Insurance, Early Intervention Program, Direct Deposit, In-house Medical Expertise, Telemedicine, Pharmacogenomics Net Premiums Group Life: $245.4M Group Health: $2,984.2M ASO: $112.1M

THE CANADA LIFE ASSURANCE COMPANY Derrick March, senior vice president, business development; 330 University Ave., Toronto, ON M5G 1R7 PH: 647-326-2885 Email: derrick.march@ canadalife.com Web: www.canadalife.com Products/Services: Dental, Drugs, Extended Health, Supplementary Hospital, Long-term Disability, Short-term Disability, AD&D, Life & Optional Life, Critical Illness, Flexible Benefit Plans, Employee Assistance Programs, Drug Cards, Rehabilitation Services, Communication Materials, Electronic

Enrolment, Preferred Provider Network, Medical Specialists, Assessment & Treatment Facilities, Out-of-Country Claims Net Premiums Group Life: $881.7M Group Health: $6,346.6M ASO: $3,926.9M

DESJARDINS INSURANCE Amy Ferguson, vice president, business development, group & business insurance; 95 St. Clair Ave. W., Toronto, ON M4V 1N7 PH: 416-926-2646 Email: amy.ferguson@ dfs.ca Web: www.desjardinslifeinsurance.com/en/ businesses/groupinsurance Products/Services: Life Insurance, AD&D, Extended Healthcare Insurance – Prescription Drugs, Vision Care, Travel Insurance & Assistance, Virtual Healthcare, Dental Care, Health Spending Account, Wellness Account, Healthy Weight Initiative, Gender Affirmation Coverage, Insurance for Expatriate Employees, Insurance for Temporary Residents, Drug Cards & Drug Management Programs (Patient Support Program for Specialty Drugs, Prior Authorization Drug List, Tiered plan with dynamic therapeutic formulary, Active Pharmacy, Preferred Provider Network, Medical Cannabis Option), Biosimilar Strategy. Short-Term Disability, Long-Term Disability, Disability Management Advisory Services, Critical Illness Insurance, Second Medical Opinion, Health & Wellness (Health Is Cool 360 platform, Employee & Employer Assistance Programs [including Digital Cognitive Behavioural Therapy], Health Assistance Service, Health PACT, Sleep Disorder Solutions), Pharmacogenetics in Disability Management. HR Outsourcing, Secure Sites for Plan Administrators & Plan Members, Mobile Applications for Plan Members (Omni), Transfer of Electronic Data, Flexible Benefits, Self-insured Benefits (ASO, BASO, Cost Plus) Net Premiums Group Life: $264.72M Group Health: $3,161.67M ASO: $366.23M

EQUITABLE LIFE OF CANADA Marc Avaria, senior vice president, group; 1 Westmount Rd. N., Box 1603 Stn Waterloo, ON N2J 4C7 PH: 519-904-8011 Fax: 519-883-7400 Email: MAvaria@equitable.ca Web: www.equitable.ca

Products/Services: Included in all plans – Mental Health Services; included as a voluntary add on – Employee Assistance Program, Paramedical Services, Dental Care, Vision Care, Fertility Benefits Coverage, Gender Affirmation Coverage, Financial Support Programs, A HCSA and/or Wellness Account. Coming later this year: Virtual Healthcare Service Net Premiums Group Life: $44.317M Group Health: $341.145M ASO: $137.93M

IA FINANCIAL GROUP Rick Holinshead, national vice president & growth leader, group benefits & retirement solutions; 522 University Ave., Toronto, ON M5G 1Y7 PH: 416-585-5743 Email: Roderick.

Holinshead@ia.ca Web: www.ia.ca Products/ Services: AD&D, Critical Illness, Dental Care, Early Intervention Program, Employee Assistance Program, Extended Health Care, Flexible Benefits Plans, Health Spending Accounts, Living Benefits, Long-Term Disability, Medical Navigation System, Paid-Up Life, Rehabilitation Services, ShortTerm Disability, Term Life, Travel Assistance / Trip Cancellation, Wellness Programs, Drugs Coverage & Drug Cards, Disability Management Consulting, WCB Services, Ergonomics Assessments, Absence Management Programs, Claims Assessment, Services for Salary Continuance Plans, EDI Rental, Cost Plus, Internet-based Administration Tool, Preferred Provider Network, Preferred Pharmacy, Telemedicine Net Premiums Group Life: $146.57M Group Health: $1,110.61M ASO: $33.65M

MANITOBA BLUE CROSS David Tompkins, director, sales; Box 1046 Stn Main, Winnipeg, MB R3C 2X7 PH: 204-784-6484 Fax: 204-786-5965 Email: David.Tompkins@mb.bluecross.ca Web: www.mb.bluecross.ca Products/Services: Health Products – AHSP, EHB, DNT, VIS, TRV, Rx; Life Products – Life Insurance, AD&D, WI, LTD & Critical Illness Net Premiums Group Life: $26.6M Group Health: $94.8M ASO: $232.2M

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BENEFITS PROVIDERS DIRECTORY DIRECTORY LISTINGS

MEDAVIE BLUE CROSS David Adams, senior vice president, insurance business; 644 Main St., Moncton, NB E1C 8L3 PH: 506-867-4720 Fax: 506-867-4651 Email: groupbenefits@medavie. bluecross.ca Web: www.medaviebc.ca Products/ Services: Fully Integrated Health, Disability & Pharmacy Benefit Carrier & All-in-One Insurer – Health Solutions Provider & Public Program Administrator of Federal & Provincial Government Health Programs; Full Group Insurance offerings including Life, Income Replacement, Extended Health, Dental, Travel, Health Spending and Personal Wellness Accounts, Cost Plus, Flex Benefit Plans, Employee & Family Assistance Programs, Medical Second Opinion, Preferred Provider Networks, Managing Chronic Disease, Group Assured Access, Inpatriate Benefits,

Protection Plus (Critical Illness, Accidental Death & Dismemberment), Benefits for Small Business, Virtual Physiotherapy, Pharmacogenetic Testing, Text Therapy, Digital Psychotherapy, Diabetes Care Program, Online Doctors, Disability & Drug Management Programs Net Premiums Group Life: $475.6M Group Health: $771.4M ASO: $41.8M

PACIFIC BLUE CROSS Nadeem Rajabali, senior vice president & chief sales officer; 4250 Canada Way, Burnaby, BC V5G 4W6 PH: 604-419-2000 Fax: 604-419-2163 Email: nrajabali@pac.bluecross. ca Web: www.pac.bluecross.ca Products/Services: Ambulance Services, Dental Accident, Vision Care, Psychology Benefits, Paramedical Services, Medical Equipment & Supplies, Out-of-Country

Travel Coverage), Dental, Individual Health, Individual Dental, Individual Travel, Employee Assistance Program, Second Medical Opinion, Health Spending Account Net Premiums Group Life: $55.2M Group Health: $274.5M ASO: $1,209M

SASKATCHEWAN BLUE CROSS Denise Frey, interim senior vice president & chief financial officer; 516 2nd Ave. N., Saskatoon, SK S7K 2C5 PH: 306-667-5417 Email: dfrey@sk.bluecross.ca Web: www.sk.bluecross.ca Products/Services: Health, Dental, Drugs, Travel, Drug Card, EFAP, Medical Second Opinion, Health Spending Account, Vision Care, ASO, Life Insurance, AD&D, WI, LTD, Critical Illness Net Premiums Group Life: $30.4M Group Health: $54.7M ASO: $47.3M

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BENEFITS PROVIDERS DIRECTORY DIRECTORY LISTINGS

SUN LIFE Sophie Ouellet, vice president, business development, group benefits; 1155 Metcalfe St., Montreal, QC H3B 2V9 PH: 514-8663967 Email: sophie.ouellet@sunlife.com Web: sunlife.ca Products/Services: Extended Health Care & Dental, Pharmaceutical Benefits, Travel Benefits, Vision, Drug Intervention Programs, Pay-direct & Deferred Drug Plans, Health Spending Accounts & Personal Spending Accounts, International Benefits, Voluntary Benefits (Mandatory & Optional Critical Illness, Optional Life & AD&D), Transition Services (Life, Critical Illness & Health & Dental for Group Plan Members exiting their employee group benefits plan), Organizational Health Consulting, Mental Health Solutions, Virtual Care, Absence & Disability Management Services (for Disability Benefit & Salary Continuance Programs), Employee Assistance Programs, Total Benefits (Integrated Benefits & Retirement Services) Net Premiums Group Life: $706.93M Group Health: $5,702.24M ASO: $6,161.78M

SUTTON SPECIAL RISK Chris Carr, senior vice president; 33 Yonge St., Ste. 400, Toronto, ON M5E 1G4 PH: 416-307-5622 Email: inquiries@suttonspecialrisk.com Web: www.suttonspecialrisk. com Products/Services: Group AD&D/Personal Accident, Critical Illness, Life, Disability; Temporary & Permanent Total Disability; Expatriate Benefits; Out of Country/Inpatriate Medical & Dental; Kidnap, Ransom & Extortion; War & Terrorism Risk; Professional Sports; Contingency

VUMI CANADA Gino Stirpe, vice president sales; 170 Attwell Dr., Ste. 690, Toronto, ON M9W 5Z5 PH: 800-879-4236 X1 Email: gstirpe@

vumigroup.com Web: www.vumicanada.com Products/Services: Prestige VIP is an innovative international private medical insurance plan, providing comprehensive medical services to Canadian individuals and corporate groups looking to expand their healthcare locally & worldwide. Minimum three employees group size, issued on guaranteed standard issue basis; 24-month waiting period on anything deemed pre-existing in nature.

GROUP RETIREMENT

CANADA LIFE Derrick March, senior vice president, business development, group customer; 330 University Ave., Toronto, ON M5G 1R8 PH: 416-552-3000 Email: derrick.march@canadalife.com Web: www.canadalife.com Products/ Services: Products – RPP/SPP, DPSP, EPSP, RRSP, RESP, PRPP, VRSP, TFSA, NRSP, Investment-Only, Group LIF, Group RRIF, Annuities, Deferred Salary Leave Plan, Employee Benefit Plan, Longevity Insurance. Services – CAP Recordkeeping; Customizable Communication Materials; Online Enrolment, Educational & Transactional Website for Members, Plan Sponsors & Advisors; Bilingual, Toll-Free Client Service Centre; Customizable Education Seminars & Videos; Sponsor Safeguards & Compliance Program; Third-Party Financial Planning Website & Seminars; Retirement Income Planning, Member Investment Selection Service; Personalized Member Statement Illustrations Net Premiums (as of December 21, 2022): Group Pension Premiums & Deposits: $7,422M Group Pension Assets: $67,381M

COMMON WEALTH Connor Bays, director, sales & partnerships; 77 King St. W., Ste. 2130, Box 74, Toronto, ON M5K 1E7 Products/Services: Innovative Products – Common Wealth is Canada’s fastest-growing group retirement platform. Winner of the Pensions & Investments

Innovation in Technology Award, it offers a digital experience with fast, easy setup and administration of group plans. Integrated Group RRSP, Group TFSA, DPSP, RRIF and highly flexible matching options. High-quality institutional investments from BlackRock & annuity options from Brookfield with modern recordkeeping technology. Members benefit from low fees for life, built-in personalized retirement planning that projects retirement income including government benefits, automatic investing, and a mobile app to track retirement readiness. Services – Online education, dedicated access to retirement specialists for sponsors and members, customizable enrolment materials, team education. Advisors – Full-service sales and marketing model, guided sponsor onboarding and transfers.

DESJARDINS INSURANCE Nadia Darwish, vice president, business development & client relationships, 95 St. Clair Ave. W., Toronto, ON M4V 1N7 PH: 416-926-2700 X5595019 Email: Nadia.

Darwish@dfs.ca Web: www.desjardinslifeinsurance.com Products/Services: Plan Member Education; Financial Planning; In-Plan Advice & Guidance; Plan Management Services; Investment Solutions; DC Plans; Group RRSPs; DPSPs; Non-Registered Plans; Simplified Pension Plans; Individual Pension Plans; Defined Benefits Plans; Investment-only Plans; Single Premium Annuities; TFSA, VRSP, & RIF/LIF/Annuities; Variable Benefits; Stock Plans; Supplemental Executive Retirement Plan; Delegated DC; Financial Wellness Centre; Retirement Simulator; Online Investment Advice, Online & Virtual Education Session; Onsite Education; Contribution Limit Monitoring: Online Contribution Rate management, Customer Service Center, Transactional & mobile secured Plan member Website: Personalized Member Communication; Secured Plan Sponsor Website; Online Sponsor Reports; Personalized Sponsor Dashboards; Electronic Data Exchange; Eligibility Management Net Premiums (as of December 21, 2022): Group Pension Premiums & Deposits: $4,277M Group Pension Assets: $23,576M

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BENEFITS PROVIDERS DIRECTORY DIRECTORY LISTINGS

iA FINANCIAL GROUP Rick Holinshead, national vice president & growth leader, group benefits & retirement solutions; 522 University Ave., Toronto, ON M5G 1Y7 PH: 416-585-5743 Email: Roderick.Holinshead@ia.ca Web: www.ia.ca Products/Services: Defined Contribution Plans, Registered Pension Plans, Simplified Pension Plans, Registered Retirement Savings Plan, Deferred Profit Sharing Plans, Tax-Free Savings Account, Defined Benefit Plans, Individual Pension Plans, Retirement Compensation Arrangements, Annuity Products, Insured or Guaranteed Annuities, Registered Retirement Income Funds, Life Income Funds, InvestmentOnly Services, Dynamic Asset Management, Pooled Funds & Guaranteed Investments, Life Cycle Portfolios, Customized Life Cycle Portfolios Net Premiums (as of December 21, 2022): Group Pension Premiums & Deposits: $2,827M Group Pension Assets: $19,629M

SUN LIFE FINANCIAL Ted Singeris, vice president, client relationships & business development, 1 York St., Toronto, ON M5J 0B6 PH: 416-408-7669 Email: ted.singeris@ sunlife.com Web: https://www.sunlife.ca/ workplace/en/group-retirement-services/ Products/Services: Products include Defined Contribution Pension Plan (DCPP), Group Registered Retirement Savings Plan (RRSP), Deferred Profit Sharing Plan (DPSP), Employee Profit Sharing Plan (EPSP), Employee Savings Plan (Non-Registered ESP), Retirement Income Products (RRIF/LIF, Annuities), Simplified Pension Plan (SPP), Tax-Free Savings Account (TFSA), Non-Registered Plans, Stock Plan, DB Investment-Only Plan (INVO), Sun Advantage (two combinations of savings products for small businesses only), Voluntary Retirement Savings Plan (VRSP) (Quebec), Tailored Solutions for DB Plan Risk Management.

Services include Group Retirement Income Solutions, Integrated Group Retirement Services & Group Benefits Access, Investment

Solutions (including Core Investment Platform & Sustainable Investing), Group Choices Plan for Transitioning Plan Members, 360 Plan Advice (In-Plan Investment Advice Service), Call Centre, My Sun Life Mobile App, Member Engagement Campaigns, Online Member Education & Financial Planning Tools & Services, Onsite Enrolment, Custom Education, Communication & Design Services, Pensioner Payroll Services & Online Reporting (including Planalytics) Net Premiums (as of December 21, 2022): Group Pension Premiums & Deposits: $14,945M Group Pension Assets: $119,544 M

CONSULTANTS

ACTUARIAL SOLUTIONS INC. Jason Vary, president; 466 Speers Rd., 3rd Floor, Oakville, ON L6K 3W9 PH: 905-257-2038 Fax: 519-979-4699 Email: Jason@ActuarialSolutionsInc.com Web: www.ActuarialSolutionsInc.com Other Offices: Lakeshore Professional Staff: 10 Services Group Benefit: DB Pension Plans, DC Pension Plans, Actuarial Services Record-Keeping and Third-Party Administration: DB Pension Plan Administration

AGA BENEFITS SOLUTIONS Ed Hofstede, vice president, consulting & client service; 235 Ardelt Ave., Ste. 1A, Kitchener, ON N2C 2M3 PH: 800-363-6217 Email: ed.hofstede@aga.ca Web: aga.ca Other Offices: Vancouver, Calgary, Markham, Montreal, Quebec Professional Staff: 260 Services Group Benefit: Group Benefit Plans, DC Pension Plans Healthcare: Drug Cost Management, Employer Assistance Program Record-Keeping and Third-Party Administration: Claims Adjudication, Claims Payment, Employee Assistance, Call Centre, Premium Billing & Collection, Healthcare Spending Account Administration

Celebrating 30 Years in Business

BAYNES & WHITE INC. Pam Martin, senior consultant, group benefits; June Smyth, senior actuary, pension/retirement; 20 Eglinton Ave. W., Ste. 1006, Toronto, ON M4R 1K8 PH: 416-863-9159 Fax: 416-863-9158 Email: info@ bayneswhite.com Web: www.bayneswhite.com Professional Staff: 4 Services Group Benefit: Group Benefit Plans, DB Pension Plans, DC Pension Plans, Actuarial Services, Administration Outsourcing Investments: Investment Consulting, Manager Search, Performance Measurement, Policy Development, Education & Communication, Risk Management, Transition Management Healthcare: Disability Management, Claims Management, Return To Work, Drug Cost Management, Employee Assistance Program Record-Keeping and ThirdParty Administration: Administrative Support, Premium Billing & Collection, Eligibility Verification, DB Pension Plan Administration, Healthcare Spending Account Administration Software and Technology: DB Pension

CLOUD MD Web: www.cloudmd.ca Other Offices: Across Canada Services Healthcare: Disability Management, Claims Management, Employee & Family Assistance Program (EFAP), Mental Health Services, Virtual Medical Care, Absence Management & Return to Work, Workers’ Compensation Claims Management, Occupational Health & Safety

COMPREHENSIVE BENEFIT SOLUTIONS LIMITED Diana O’Reilly, executive vice president; 2020 Winston Park Dr., Ste. 102, Oakville, ON L6H 6X7 PH: 905-896-2022 Fax: 905-896-2108 Email: benefits@compben.com Web: www.compben.com Professional Staff: 8

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BENEFITS PROVIDERS DIRECTORY DIRECTORY LISTINGS Services Group Benefit: Group Benefit Plans, DB Pension Plans, DC Pension Plans, Administration Outsourcing Healthcare: Disability Management, Claims Management, Return to Work, Drug Cost Management, Employee Assistance Program Record-Keeping and Third-Party Administration: Claims Adjudication, Administrative Support, Employee Assistance, Call Centre, Premium Billing & Collection, Eligibility Verification, Claims Advocacy Software and Technology: Benefits Administration

EXPRESS SCRIPTS CANADA Robert McIntosh, manager, marketing & communications; 5770 Hurontario St., Mississauga, ON L5R 3G5 Fax: 905-712-9986 Email: rmcintosh@express-scripts. com Web: www.express-scripts.ca Other Offices: Montreal, Toronto, Moncton, Winnipeg, Burnaby Professional Staff: 500 Services Group Benefit: Health Benefits Management Investments: Health Benefits Management Healthcare: Claims Management, Drug Cost Management, Health Benefit Management Record-Keeping and Third-Party Administration: Claims Adjudication, Claims Payment, Administrative Support, Call Centre Software and Technology: Benefits Administration, Health Claims Adjudication

HUB PROTEUS Ryan Kuruliak, president; 250 Ferrand Dr., Ste. 303, Toronto, ON M3C 3G8 PH: Direct Line – 416-619-8468 Office – 416-421-3557 Fax: 416-421-1348 Email: rkuruliak@proteusperformance.com Web: www.proteusperformance. com, hubinternational.com Services Group Benefit: DB Pension Plans, DC Pension Plans, Pension Governance, Investment Consulting, Administration/Actuarial Evaluation & Search, Executive Retirement Plans, Performance Reporting Investments: Investment Consulting, Manager Search, Performance Measurement, Asset Allocation, Portfolio Modelling, Attribution Analysis, Policy Development, Education & Communication, Risk Management, Transition Management, Pension Governance, Foundation

Governance, OCIO Search, Retirement Planning Workshops/Seminars, Administration Review & Search, Executive Retirement Plans, Investment Compliance, Performance Reporting RecordKeeping and Third-Party Administration: Recordkeeping & Third-Party Administration Search Software and Technology: Investment Management, Portfolio Style Analysis, Investment Manager Selection, Fund Reporting, DB Pension, DC Pension, Performance Reporting

J.J. MCATEER & ASSOCIATES INCORPORATED Susan Bird, president; 45 McIntosh Dr., Markham, ON L3R 8C7 PH: 905-946-8655 Fax: 905-946-2535 Email: Web: www.mcateer. sbird@mcateer.ca ca Other Offices: Edmonton Professional Staff: 70 Services Group Benefit: Group Benefit Plans, DB Pension Plans, DC Pension Plans, Actuarial Services, Administration Investments: Investment Outsourcing Consulting, Manager Search, Performance Measurement, Asset Allocation, Portfolio Modelling, Attribution Analysis, Compliance Investment, Policy Development, Education & Communication, Risk Management Healthcare: Disability Management, Claims Management, Return to Work, Drug Cost Management Record-Keeping and Third-Party Administration: Claims Adjudication, Claims Payment, Administrative Support, Employee Assistance, Premium Billing & Collection, Eligibility Verification, Claims Advocacy, DC Pension Plan Administration, DB Pension Plan Administration, Group RRSP Administration, Healthcare Spending Account Administration Software and Technology: Benefits Administration, Health Claims Adjudication, DB Pension, DC Pension

LESNIEWSKI MOORE CONSULTING GROUP INC. Mark A. Lesniewski, president & CEO; 1500, 205–5th Ave. SW, Calgary, AB T2P 2V7 PH: 403-228-9024 Fax: 833-345-0404 Email:

mark@lmcgroup.ca Web: www.lmcgroup.ca Other Offices: Toronto, Winnipeg Professional Staff: 17 Services Group Benefit: DB Pension Plans, DC Pension Plans, Actuarial Services, Retirement Compensation Arrangements (RCA), Insurance Valuations Record-Keeping and Third-Party Administration: DC Pension Plan Administration, DB Pension Plan Administration Software and Technology: DB Pension, DC Pension

PBI ACTUARIAL CONSULTANTS LTD. Riley St. Jacques, partner & senior consultant; Ste. 1070, One Bentall Centre, 505 Burrard St., Box 42, Vancouver, BC V7X 1M5 PH: 604-647-3206 Email: riley.stjacques@pbiactuarial.ca Web: pbiactuarial.ca Other Offices: Toronto, Montreal Services Group Benefit: Group Benefit Plans, DB Pension Plans, DC Pension Plans, Actuarial Services, Administration Outsourcing, Health & Welfare Plans, Member Communication Investments: Investment Consulting, Manager Search, Performance Measurement, Asset Allocation, Portfolio Modelling, Attribution Analysis, Compliance Investment, Policy Development, Education & Communication, Risk Management, Asset/liability Modelling, Portable Alpha Overlay Strategies, Alternative Assets Investment (Real Estate, Hedge Funds, Infrastructure) Healthcare: Funding & Claim Risk Analysis Record-Keeping and Third-Party Administration: Administrative Support, DC Pension Plan Administration, DB Pension Plan Administration, Record-Keeping Services, Benefit Calculations, One-on-One Member Meetings, Marriage Breakdown Calculations, Research & Advice regarding Pension Legislation, Government Filings, Educational Seminars, Annual Member Statements, Reconciliation of Expenses, Contributions, Hours Reported & Benefit Payments, Organization & Attendance at Trustee Meetings, Preparation of Meeting Minutes, Annual Member Meetings, Member Communication Software and Technology: DB Pension, DC Pension, Pension Benefit Calculation Tools, Web-based Pension Administration System, Member Portal, Member Education Websites, Member Education Videos

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BENEFITS PROVIDERS DIRECTORY DIRECTORY LISTINGS Pension & Benefits Case Management, Secure Document Transfer Portal

PENAD Matthew Price, president; 194 Weber St. E., Kitchener, ON N2H 1E4 PH: 519-743-9000 Fax: 519-743-8346 Email: info@penad.ca Web: penad.com Professional Staff: 30 Services Group Benefit: DB Pension Plans, DC Pension Plans, Administration Outsourcing Record-Keeping & Third-Party Administration: DC Pension Plan Administration, DB Pension Plan Administration Software and Technology: Benefits Administration, Health Claims Adjudication, Client Server Technology, DB Pension, DC Pension, Disability Claims Processing & Management, Premium Administration & Billing, Pension Payroll,

PEOPLE CORPORATION Marcel Regan, chief financial officer; 1403 Kenaston Blvd., Winnipeg, MB R3P 2T5 PH: 437-245-1476 Email: marcelo.regen@peoplecorporation. com Web: www.peoplecorporation.com Other Offices: Across Canada Professional Staff: 2,000+ Services Group Benefit: Group Benefit Plans, DB Pension Plans, DC Pension Plans, Actuarial Services, Administration Outsourcing, Wellness Solutions, Human Resources Services, Individual

Protection Investments: Investment Consulting, Manager Search, Performance Measurement, Asset Allocation, Portfolio Modelling, Attribution Analysis, Compliance Investment, Policy Development, Education & Communication, Risk Management Wellness Solutions, Human Resources Services, Investment Healthcare: Disability Management, Claims Management, Return To Work, Drug Cost Management, Employee Assistance Program RecordKeeping and Third-Party Administration: Claims Adjudication, Claims Payment, Administrative Support, Employee Assistance, Call Centre, Premium Billing & Collection, Eligibility Verification, Claims Advocacy, DC Pension Plan Administration, DB Pension Plan Administration, Group RRSP Administration, Healthcare Spending Account Administration

REXALL PHARMACY PARTNERS Darren Connolly, director, employer & payor partnerships; 2300 Meadowvale Blvd., 4th Floor, Mississauga, ON L5N 5P9 PH: 416-786-7502 Email: dconnolly@rexall.ca Web: www. rexall.ca/PPN Other Offices: Rexall operates 392 pharmacies in over 180 communities across Canada, including Rexall Direct, our online pharmacy providing direct-to-your-door prescription delivery. Professional Staff: 6,500 Services Healthcare: Claims Management, Drug Cost Management, In-Store & Online Prescription Services, Patient Focused Pharmacy Services, Virtual Pharmacist Services, Specialty Pharmacy Support, Compliance & Medication Adherence Support, Chronic Disease Management.

SECLONLOGIC INC. Matthew Price, president; 194 Weber St. E., Kitchener, ON N2H 1E4 PH: 519-743-9000 Fax: 519-743-8346 Email: info@seclonlogic.com Web: www.seclonlogic.com Professional Staff: 30 Services Group Benefit: DB Pension Plans, DC Pension Plans, Administration Outsourcing, Wellness Solutions Record-Keeping and Third-Party Administration: DC Pension Plan Administration, DB Pension Plan Administration Software and Technology: Benefits Administration, Client Server Technology, DB Pension, DC Pension, Disability Claims Management & Payment, Case Management Technology

Benefits and Pensions Monitor directories can be found at www.bpmmagazine.com

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SPONSORED FEATURE

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DESJARDINS INSURANCE | SPONSORED CONTENT

An Approach to Wellness in Five Dimensions

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ellness means different things to different people. Generally, however, when we think about overall wellness, it falls into three broad categories: physical, mental, and financial.

But do these three areas represent the totality of what constitutes “wellness”? Could there be more to it? These are some of the questions that Desjardins Insurance recently decided to explore with a detailed survey of 2,000 Canadians.1 And the findings confirmed Desjardins Insurance’s hunch.

While survey respondents cited physical, mental, and financial dimensions as key to their sense of well-being, two other significant factors emerged as well:

These findings have prompted Desjardins Insurance to change the way it views wellness, and will hopefully inspire employers to take a more comprehensive view of wellness as they adapt their strategies and solutions to further improve the lives of their employees.

What is wellness?

Before delving deeper into the survey’s findings, let’s consider what Desjardins Insurance means by five dimensions of wellness.

1. Physical: Good physical health, with no disease or disability that could negatively affect how a person lives or works.

2. Mental: The ability to overcome stress, deal with tension, and achieve self-realization.

3. Financial: The confidence that a person has in their ability to deal with day-today issues over the long term, plan for the future, and achieve their goals.

• the health and safety of the environment where they live and work;

4. Social: The existence of meaningful relationships, and connections and interactions with other individuals or the community.

• the social interactions they have with friends, family, and colleagues.

5. Environmental: The ability to live and work in a healthy and safe environment.

These five dimensions may appear to be very distinct categories, but it would be a mistake to think that their effects on wellness are isolated. As it turns out, they often overlap and blend together, with one dimension having cascading effects across the others.

For example, while study respondents agreed that the physical and mental dimensions contribute most to their overall wellness, they found that the other three areas all play a material role as well.

From that perspective, improvements in one area can be predicted to have a positive influence on the rest. What that means is that to truly address and improve wellness, all five dimensions have to be addressed holistically.

With that in mind, let’s look at what the survey tells us about Canadians today.

How Canadians are doing About three-quarters of Canadians report their state of wellness as good, giving it a rating of seven or more out of 10. However, less than a quarter describe it as very good (at least nine out of 10).

Canadians’ biggest worries are about money.

When asked which of 20 topics they were most worried about, inflation topped the list, followed by their personal financial situations.

SPONSORED CONTENT | DESJARDINS INSURANCE

And while Canadians overall report their wellness as moderately good, millennials are faring a little worse. Nearly three-quarters reported symptoms of burnout, and no fewer than 43 percent are thinking about leaving their current jobs within the next year.

Burnout and quiet quitting Millennials aren’t alone when it comes to burnout. Sixty-two percent of Canadian workers say they’ve experienced symptoms, and that number is even higher for specific groups. For female employees the number is 68 percent, and for members of the LGBTQ+ community, it’s 78 percent.

These numbers are cause for concern, especially when you consider that the same number of Canadian workers, 62 percent, also reported some form of quiet quitting to avoid burnout.

The millennials’ point of view Given the challenges millennials identified, it should come as no surprise that working conditions are a big deal for them. They want to work for organizations that contribute to their wellness, and they have high expectations.

But why focus on millennials? Because this generation already makes up a bigger share of the working population than Baby Boomers, and that percentage will only grow.2 But they’re a new type of worker. More than older generations, they want to be able to turn to their employer for help. And for them, it all starts with a healthy and inclusive work environment and flexible working conditions.

In fact, 70 percent of millennials believe that a work environment free from harassment and discrimination is essential to their wellness.

And 63 percent want their companies to offer benefits that promote an inclusive workplace.

Millennials value equity, diversity, and inclusion, and these values are the common thread of their engagement at work.

Reshaping workplace wellness strategies The survey provides a useful snapshot of what workplace wellness looks like today, and identifies emerging trends that will have an impact in the future. Responding to these trends will be key to ensuring employee wellness for years to come.

It also identifies areas where employers can

improve. Because millennials aren’t alone – 84 percent of Canadian workers believe their employers can play a role in the financial dimension of wellness, and 73 percent believe the same for the mental dimension. And about half of workers want their employers to play a part in the physical, social, and environmental dimensions of wellness.

As this study shows, wellness is made up of many interconnected elements. Employers would be well served by using a wide lens when considering employee wellness, as the evidence shows that environmental and social improvements can have a powerful impact on physical, mental, and financial wellness.

In support of this, no fewer than 96 percent of respondents said a positive environment in which to live, work, and study creates a greater sense of wellness overall. And 93 percent said forming lasting connections with other people had a similar influence on other aspects of their health.

Understanding this interconnectedness provides an opportunity for employers to adjust and expand their strategies. With a little care, employee wellness strategies can be tweaked and existing group benefits and retirement savings plans can be leveraged to enhance wellness across multiple dimensions: • flexible work hours, breaks and workcations; • a wellness fund that covers physical fitness expenses; • an allowance for telecommuting; • financial planning services.

A tailored range of benefits can improve morale and increase retention. The survey found that 78 percent of workers would remain with their companies for the long term if they were offered more benefits.

The relationship between benefits and overall wellness So, if benefits matter, it’s worth considering which types of benefits matter. Similarly, it’s worth examining which dimensions of wellness benefits can improve – and it isn’t always in the ways you’d expect.

While group insurance is intended to improve mental and physical wellness (and it does!), it actually affects financial wellness most of all. Similarly, group retirement savings are intended to improve financial wellness (and they do!), but this also has a major impact on social wellness, according to respondents.

These findings should remain top of mind when considering investments in wellness. The interconnectedness of the different areas of our lives means that our actions can reverberate in unexpected ways, and the benefits might be seen where you least expect them.

Conclusion The Desjardins Insurance study expanded the concept of wellness by showing that employee wellness is more than just physical, mental, and financial health. In addition to introducing new concepts of social and environmental wellness, it also underscored the intricate relationships among the various dimensions of wellness itself.

And this presents a great opportunity for employers. By tackling employee wellness from a five-dimensional perspective, employers can demonstrate that they care about the whole person—not just the “employee.” Because ultimately, while employees are increasingly seeking value and purpose at work, it’s just as important to them to feel valued themselves.

Workplace wellness is truly at a turning point, and employers have an opportunity to revisit their approach to transform their focus on wellness as a tool for success.

Desjardins InsuranceTM refers to Desjardins Financial Security Life Assurance Company.

Desjardins®, Desjardins InsuranceTM and related trademarks are trademarks of the Fédération des caisses Desjardins du Québec used under licence by Desjardins Financial Security Life Assurance Company.

200 Rue des Commandeurs, Lévis QC G6V 6R2 / 1-866-647-5013 www.desjardinslifeinsurance.com 1 Desjardins InsuranceTM, Quantitative Study of Overall Wellness

by Ad Hoc Research for Desjardins, December 2022. Survey of 2,000 respondents over 18 years of age, living in Canada, including both members and non-members of Desjardins.

2 A generational portrait of Canada’s aging population from the 2021 Census, Statistics Canada, 2022.

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DISABILITY

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Mental Health: An Occupational Health And Safety Challenge

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BY: LIANNE CLARKE

hen most people think of workers’ compensation, they think of physical injuries like slips, trips, falls, and repetitive strain injuries. This meant that, historically, occupational health and safety committees have focused on the physical workspace when considering accident and injury prevention.

In fact, post-traumatic stress disorder (PTSD) from witnessing or suffering a life-threatening or traumatic workplace event was one of the sole compensable psychological disorders covered by the various workers’ compensation boards across Canada. This situation changed when several boards amended their policies to include other forms of workplace psychological injury, including cumulative exposure to harassment and bullying.

This was a great start in addressing the psychological safety of workers through workplace practices and policies.

Whether work-related or not, mentalhealth disorders can significantly affect a company’s bottom line and be a key contributor to physical workplace injuries.

According to a study by OHS Canada in May 2021, work-related psychological injuries resulted in wage replacement and healthcare expenses that were 12 times higher than those for physical injuries. In

the study, nearly half of the workers with musculoskeletal conditions had a sustained return to work two to five months postinjury, compared to only 28 per cent of workers with work-related mental illness.

Employers struggle Many employers struggle with accommodating employees returning from a bout of mental illness, which often results in longer claim durations and a negative experience for the employee.

When workers are off with a physical injury suffered at work, they are at risk of developing a mental illness. The stress of being away from work, filling out forms, and going through treatment can become overwhelming for a worker, especially if their recovery is prolonged.

In addition, the longer someone is away from work, the more likely they are to feel anxious as the return-to-work date approaches. Canadian HR Reporter published study results from Occupational and Environmental Medicine in June 2020 that found 29 percent of participants with a physical work-related injury also had a serious mental illness. However, only 41 percent of those workers accessed mental health services during recovery. Employees who return to work without having received treatment for their mental illness may have trouble with concentration, leading to the

risk of further workplace accidents.

In 2021, there were 277,217 claims across Canada for workplace injury/ illness lost time (Association of Workers’ Compensation Boards of Canada). Mental disorders or syndromes only accounted for 7,495 (2.7 percent) of the claims. But how many of the estimated 103,798 claims resulting from falls, burns, cuts, or crush injuries might have been caused by workers struggling with concentration or fatigue due to untreated mental illness? Mental Health Research Canada found that in 2021, 35 percent of workers surveyed felt burned out.

According to Telus’s latest mental health index, 75 percent of those surveyed were at moderate-to-high mental-health risk. Poor mental health has an impact on concentration, sleep, productivity, emotional regulation, and judgement.

It can also lead to an increased risk of chronic disease, including diabetes, obesity, cardiovascular disease, musculoskeletal disorders, and cancer.

In October 2021, the Centre for Addiction and Mental Health (CAMH) reported the results of a study connecting mental illness with poor sleep quality ‒ the most extensive study of its kind. Data was collected from over 89,205 participants with a previous diagnosis of mental illness.

Up to 80 percent of people with mental health disorders have problems falling asleep, staying asleep, or waking up early.

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The reverse is also true. Those struggling with sleep disorders have a higher risk of developing mental illness. It’s well known that shift workers are more susceptible to poor sleep. Shift work is associated with considerable impacts on sleep, depressed mood and anxiety, substance use, impairments in cognition, lower quality of life, and even suicidal ideation, says one study.1 The Manufacturing Safety Alliance of BC found that workplace fatigue contributed to 13 percent of workplace accidents.

The bottom line is that mental illness is a complex condition affected by internal and external factors. When workers struggle with untreated mental illness, their risk of workplace injury is heightened.

So what can employers do to ensure workers are physically and psychologically supported?

Mental health strategy Creating a mental health strategy for the workplace is critical in ensuring workers’ psychological and physical health and safety. In 2013, the National standard for psychological health and safety was released.2 This guide was created to help employers identify psychosocial factors in the workplace. It offers prevention and health-promotion strategies to help protect and improve employees’ health. In addition to the standard, employers can support employee mental health in various ways.

Some options include: • managers’ mental health training for leaders and supervisors • education and awareness campaigns to help reduce the stigma associated with mental illness • identifying the impacts on employee mental health whenever changes are made to workplace practices and policies • making mental health a corporate commitment, included in the company mission, vision, and value statements • including employees in decisions that affect their jobs • reviewing employee benefit programs and considering a separate paramedical maximum for psychological health • providing access to mental health supports, including employee and family assistance programs, pharmacogenetic testing, and substance use management

• offering fatigue management programs Mental health is one part of an overall holistic workplace well-being strategy.

Given the connection between psychological and physical health, employers need to create a culture of health and well-being to truly support workers.

Building a culture of well-being starts at the top. The C-suite must prioritize employee health, allocate resources and budget, and weave wellness into the company’s DNA. Business practices, policies, corporate communications, benefit programs, and physical workspaces and environments should continually be reviewed through a lens of employee health.

To get started, make employee health a metric on your corporate scorecard. Results from employee engagement surveys each quarter can gauge employee workplace satisfaction and sense of belonging.

Utilization and trend data from workers’ compensation claims, employee and family assistance programs (EFAP), group benefits programs (drug, paramedical, disability), and employee engagement surveys can provide insights into employees’ health, including incidences of chronic conditions like mental illness, diabetes, and cardiovascular disease. You can also measure results from customer satisfaction surveys.

Empathetic leaders can help employees feel connected. The 2021 McKinsey and Company review of their Great attrition survey found that 51 percent of respondents left their jobs because of a lack of connection with their workplace and manager.3 Additionally, a new study by the Workforce Institute at UKG found that 69 percent of people said their managers had a greater impact on their mental health than their doctor (51 percent) or therapist (41 percent), and were on par with their partners.4 To retain talent and improve employee engagement, leaders should try to connect with employees on a deeper level, demonstrating empathy and vulnerability. Being present and taking the time to walk around the office and connect with employees can help build those connections.

Ask employees what they need.

Understanding what employees want and need concerning their well-being starts by asking them directly. Too many companies launch programs without surveying employees to determine what they truly want or need.

Offer choice and flexibility. Consider

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providing some choice and autonomy regarding scheduling, which projects or lines employees work on, and whom they work with.

Communicate health and well-being information appropriately. Create a unique name and brand for your well-being program and include it in all communication. You can also conduct an inventory, summarizing existing offerings that employees may not remember are available. This could consist of paramedical benefits that cover mental health and nutritional coaching, or treatments that assist employees struggling with obesity or fertility.

Make it easy for employees to find support by using a central hub to house information. This could be the company intranet or a digital well-being app. When communicating well-being initiatives and programming, ensure you use multiple communication channels beyond email, including employee town halls, one-on-one meetings, team meetings, and posters.

Recognize employees with recognition and rewards promptly instead of monthly or quarterly. You can also have a program encouraging people to recognize their co-workers, such as a postcard program or social program like Sprout or Virgin Pulse.

Workplace safety is about more than the physical environment and the mechanics of the job. To protect workers, employers must encompass all aspects of employee health ‒ physical, psychological, financial, social, and occupational ‒ within their health and safety programs. Protecting the mind will help protect the body, improve productivity, and reduce absence and worksite injuries.

Lianne Clarke (B.Sc., B.Ed) is a principal and vicepresident, wellness and disability innovation and growth at Cowan Insurance Group Ltd. lianne.clarke@cowangroup.ca 1. Brown JP, Martin D, Nagaria Z, Verceles AC, Jobe SL, Wickwire EM. Mental Health Consequences of Shift Work: An Updated Review. Curr Psychiatry Rep. 2020 Jan 18;22(2):7. doi: 10.1007/s11920-020-1131-z. PMID: 31955278 2. https://www.csagroup.org/store/product/CAN-CSA-Z1003-13-BNQ%20 9700-803-2013/ 3. De Smet, A., Dowling, B., Mugayar-Baldocch, M., Schaninger, B. 4. Tilo, D4.

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The Importance Of Employee-Employer Relations

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BY: CHRIS LEE

o one could have predicted that all of us would experience a third consecutive year of significant change, especially one that further influenced a deep shift in personal and organizational priorities. From war to inflation, global events have affected each of us individually, leaving human resources professionals and internal communicators with tough terrain to navigate.

But this isn’t just about employees struggling to adapt to long periods of wholesale change. This is about people reprioritizing what’s important to them ‒ health and well-being, being closer to family, minimizing work-related stress, and greater flexibility.

The growing prominence of employee well-being; sustainability; and diversity, equity, and inclusion have added extra pressures ‒ exacerbated by emphasis on the employee experience following the “Great Resignation.”

The fact is employees now have essentially non-negotiable expectations.

If their current employers can meet these, great; if not, there’s a newfound confidence that they’ll be able to find what they want elsewhere.

Employee experience If your organization is experiencing vertigo-inducing levels of staff turnover due to an unexpected surge in people jumping ship, it’s likely that your business has fallen victim to the dreaded Great Resignation that everyone was talking about at one point.

So what’s gone wrong? How come, when we consider everything we’ve discovered throughout the pandemic and everything that the customer experience world has been teaching us for the past decade, many of us are still not quite managing to create the employee experi-

ence that our people – our most important asset – really deserve?

There is a positive outcome to all of this. Solidifying the employer-employee relationship has become very important, with HR and communications practitioners gaining greater influence at top levels of every organization. What’s more, recent events have presented a prime opportunity to pause and rethink the very purpose of internal communication, the role it plays, and the role it should be playing in supporting organizational well-being within an ever-changing employee landscape.

After three years of reflection and recalibration, have organizations taken steps to redefine the employee experience ‒ along with the employer-employee relationship?

The Great Resignation placed significant pressure on organizations to improve both talent retention and attraction.

Although talent retention featured relatively low on the list of possible purposes for internal communication, a few signals indicate that many organizations have taken steps to rebalance the employeremployee relationship.

The Gallagher State of the sector 2023 global internal communications survey of over 2,000 organizations found one in five internal communications professionals cited developing and refreshing their employee value proposition (EVP) as one of their top priorities this year. With many organizations already stretched financially, making the most of what’s already in place will be key. And there is evidence of the positive impact of a defined EVP on employees’ understanding of their rewards, benefits, and career development opportunities.

Evolving concepts EVPs are arguably evolving concepts, so it can be hard to capture their essence in a PowerPoint presentation. That said, there is value in writing down your promise to employees, especially as a way to cultivate shared understanding

among leaders, communicators, and HR. Overall, 26 percent of organizations said they have put their EVP down on paper ‒ a proportion that increases to 33 to 39 percent in larger organizations.

If we define an EVP as “What’s in it for employees?” then organizations seem to be doing an average job at communicating this. When asked how they’d rate employees’ understanding of their compensation, rewards, and benefits package, 53 percent rated this as either excellent or good ‒ which is a truly missed opportunity. This number drops to 34 percent for career development opportunities, which is a precariously low score when research shows poor career well-being to be one of the top reasons employees leave their jobs.

Interestingly, organizations that reported having a written EVP rated their employees’ understanding of pay, rewards, benefits, and career development significantly higher – over 10 percent more than for those without a written EVP. Now that salaries are struggling to keep up with inflation, leveraging rewards and benefits is key to retaining top talent and enhancing employee financial well-being ‒ as well as promoting less-tangible (but no less important) aspects like culture and belonging.

This is where communicators can really make a difference, by raising awareness of what makes an organization a great place to work beyond the paycheque.

Workplace experience Organizations continue to prioritize some very specific components of the employee experience and neglect others, including their workplace experience and digital experience.

As the most well-defined component, purpose and strategy was seen by 57 percent of respondents as being leveraged well. Three other components (which are also notably easier to define) attracted around half of the votes. These were rewards, benefits, and recognition; learning and development; and wellbeing.

Diversity, equity, and inclusion, as well as ways of working, scored a little lower, with around two in five respondents saying their approach is well defined.

This left three components lagging, with 36 percent of respondents citing no digital experience strategy, 33 percent reporting lack of activity around environ-

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mental and social impact (a new component this year), and 28 percent with no structured workplace experience strategy.

Employers and employees have been renegotiating the terms of their relationships in recent years. We’ve seen high levels of people jumping ship and increased pressure on people managers after a period of high attrition and hybrid working. As a result, the focus is now turning to creating a sense of belonging and purpose for employees amid economic uncertainty.

The competition for talent, however, remains fierce. So how can companies invest in people and stay ahead of competition? Fifty-seven percent of organizations started revising their EVP this year.

Organizations need to answer the questions “Why should I work for you?” and “Why should I stay with you?” – but too many focus on the former and overlook the latter.

What’s more, with many organizations now stretched financially, reimagining how to get the most out of what they have must be a priority. Highly effective

EVPs can help, as they combine important factors such as pay and benefits with essential factors such as career well-being and work environment to help employees understand how their needs are being met.

For too long we fixated on why people weren’t engaged, all the while failing to see that it was because the experiences we were creating were fundamentally flawed.

Broad recognition Mountains of research and lots of clever people later, there’s now a broad recognition that how “engaged” people feel at work is a direct consequence of the experience they have while they are there.

A sharp rise in employee experience apps and technology has followed frighteningly quickly since the term become mainstream – but because we’re not robots, people’s experiences and engagement levels fluctuate daily (often hourly), and no out-of-the-box quick-fix product is going to mitigate that.

The real problem here is that many businesses have lost their heart and soul.

As your reliable health solutions partner, we’re here to support the evolving needs of you and your employees and deliver the Best in Health.

Together, we’ll help you build a healthy, productive, and engaged workforce.

Visit sunlife.ca/groupbenefits. Let’s get started today!

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Somewhere along the way they forgot how much they need people to provide their services, to make their things, and to keep their wheels turning.

But to play their part, those people need to feel supported, encouraged, welcomed, and valued. They need to feel anything except confusion, exclusion, irrelevance, and frustration.

We have an opportunity to influence the people experience – to create space for cultures to develop, a platform from which leaders can lead, and a mouthpiece through which employees can hold those leaders to account.

The result? A better employee experience and improved financial performance.

Chris Lee is vice-president of communications for the consulting practice at Gallagher.

Chris_Lee@ajg.com

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HEALTHCARE

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Tool Helps Workers with Chronic Conditions Access Support

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BY: MONIQUE GIGNAC AND UYEN VU

ata from Statistics Canada for 2017 showed that 3.8 million Canadians aged 15 or over have disabilities that are dynamic ‒ worsening, improving, or fluctuating over time. However, thanks to advances in health treatments and medical procedures, and to greater adoption of remote work technology, it’s now easier than before for people with chronic health conditions to continue to work.

For these individuals, their health conditions, combined with job demands, organizational policies and practices, and work environments can create obstacles to working. A common challenge for many is how to manage periods of disability at work without doing lasting damage to their work performance, their reputation at work, their relationships with colleagues, and their own health.

Workers with physical and mental

health-related difficulties need a way to receive support from their managers and employers to get through disability episodes ‒ without having to disclose their personal health information. They now have access to a tool to do just that.

The Job Demands and Accommodation Planning Tool (JDAPT) is designed to help workers and managers focus on specific work demands that can sometimes be difficult. It’s intended to remove the need for workers to have undesirable and intrusive conversations with their workplaces about their medical diagnoses or symptoms.

For people living with conditions that are chronic and often lifelong, episodes of illness and disability can recur unpredictably, varying in both severity and duration. Examples of episodic conditions include mental health conditions such as depression and anxiety, Crohn’s disease, colitis, multiple sclerosis, migraines, rheumatic diseases like arthritis and lupus, chronic fatigue syndrome, many musculo-

skeletal conditions such as low-back pain and tendinopathies, HIV/AIDs, and many forms of cancer and rare diseases.

Invisible nature Due to the intermittent and often invisible nature of their symptoms, people with episodic conditions often struggle with the question, “Should I disclose my health condition to others at my workplace?”

It’s a question that can arise repeatedly across people’s working lives with every job change, every new manager, or each worsening episode of disability.

Our research over the years has shown that this question can be complex and deeply personal. In studies over the past 10 years with over 3,400 individuals, between one quarter and one half of workers surveyed said they had not talked to their supervisors about their health limitations at work. For some, that may be because their symptoms and job demands are manageable and they are doing well at work. For others, despite

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health-related challenges that may have been considerable, the discomfort at having to share personal information may have been too great.

However, not disclosing health limitations can carry risks. According to another study we conducted in 2018, workers with unmet accommodation needs experience more work limitations, job disruptions, and perceived productivity losses. If individuals don’t get support when they need it, they risk others misperceiving the reasons for their difficulties. If their work performances falter, if they are absent more often, or if they appear more withdrawn from co-workers, they may be seen as lacking in motivation, skills, or ability to get along with others.

culties. Some are small adjustments that workers can make on their own. Some are accommodations that may involve the help or cooperation of co-workers. Others are changes that users need to formally request through HR. Beyond the job demands summary and a list of potentially helpful strategies that users can save as a PDF or print out, results are not recorded anywhere or shared with anyone. No data is retained or preserved by the browser-based app, ensuring complete anonymity for users.

How JDAPT works The JDAPT is an online and interactive questionnaire that’s available in French and English. By using the tool, individuals can identify the different aspects of their job where they encounter health-related difficulties. The tool then provides suggestions for job modifications that they can ask for, without having to go into detail about why they made the requests.

Developed as part of a large research partnership that includes health charities, people with lived experiences, and workplace representatives, the tool can be used by people working in diverse job types and workplace contexts and living with a wide variety of health conditions.

It asks users to think about the physical, cognitive, and interpersonal demands of their jobs, as well as the conditions of their day-to-day work. As users make their way through the job demands, they’re asked to think whether each job demand is an important part of their job. They’re then asked whether they encounter difficulties meeting those job demands due to their health difficulties. If yes, are those difficulties constant, or do they change over time?

If users indicate that a particular job demand is not an important part of their job, the tool takes them to the next job demand. It skips over the follow-up questions about health-related difficulties for the job demands that users mark as not important.

Once users have gone through the questions, they’re provided with a customized list of ideas relevant to the areas where they are experiencing diffi-

PEOPLE WITH EPISODIC CONDITIONS OFTEN STRUGGLE WITH THE QUESTION, “SHOULD I DISCLOSE MY HEALTH CONDITION TO OTHERS AT MY WORKPLACE?” The JDAPT has already been recognized with the grand prize in the second innovation challenge of the MaRS and CIBC Inclusive Design Challenge series.

The first version of the tool, designed for workers, was launched in March 2023. An organizational version is being released later in the year. It’s designed to help managers consider ways to either support individual workers specifically or think through in advance how job categories can be modified generally.

Sensibility study Our team recently conducted a sensibility study on the worker version of the JDAPT to understand the extent to which it is comprehensive, easy to understand, and easy to use. In their comments, participants said the tool helped them think about their health in new ways. It also helped them better understand the links between specific job demands and areas where support might make a difference.

One study participant, a health and safety specialist living with irritable bowel syndrome and anxiety, appreci-

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ated the tool for its comprehensiveness.

“I thought that you did a very good job of breaking down each of the different categories into subcategories. Your questions on physical demands, for example, covered almost every physical demand I could think of. The same goes for cognitive demands and the other categories as well. I thought that was really great.”

This comment was echoed by another study participant, a baker living with ADHD (attention-deficit/hyperactivity disorder) and a skin condition: “Whether it was the physical work, or the tedious work that happens repeatedly, or the long working hours, or the travelling, you have covered everything.”

One manager, who tried out the tool from the perspective of someone providing support to employees with health difficulties, said the tool helped users consider the many ways employees are affected by their health: “The way that the tool separated the questions into four major domains, I think it forces me to think about a job in a more detailed way than I otherwise would have.”

One worker in the study said the tool may help change the kinds of conversations they have with managers when seeking support. What used to happen, wrote this worker, was, “I go in and just say, ‘I’m dealing with a mental illness.’

And my boss says to me, ‘What do you need?’ and I say, ‘I don’t know.’”

This conversation may be different now with the use of the JDAPT, said the worker.

“I think [the JDAPT] might help me understand that these are the three aspects of the job that are difficult for me. Let’s think about what we do with these.”

Dr. Monique Gignac is senior scientist and scientific director at the Institute for Work & Health.

Uyen Vu is communications manager at the Institute for Work & Health.

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QEX and the Connection between Financial Wellness and Mental Health

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BY: FAIZAL MITHA

early 40 percent of Canadians report that money and financial concerns are the biggest stressors in their lives.

That means that employers who help support their workers’ emotional and financial health through strong financial wellness programs can have a powerful impact. Even more important, these programs are essential to ensuring a quality employee experience (QEX).

The QEX approach to benefits and retirement savings involves relying on compensation and the right mix of personalized benefits to create a positive employee experience. The right experience will lead to strong employee loyalty, which creates an organization with a strong, positive talent brand to attract potential employees.

In many ways, money and financial security are at the heart of QEX. Not only do employees need to feel secure financially, but they need to feel secure in other ways, too. That’s where money and security, financial wellness, and QEX intersect.

Importance of financial wellness With concern growing over the day-today cost of living, more and more Canadians (up to 85 percent) are recognizing that rising inflation and interest rates are affecting their ability to save for retirement.

Add to that financial stress from other life choices – such as buying a home or going back to school; caretaking challenges and unexpected medical expenses; and even credit card or other personal debt – and you have a recipe for disaster.

In this context, employer-sponsored personalized financial wellness programs are key to the QEX approach. Employees dealing with financial stress are twice as likely to report poor overall health. And stress over finances affects performance and ability to concentrate at work, not to mention the time spent during working hours sorting out various challenges.

Implement a financial wellness program Today, financial wellness is such a hot topic that such programs are becoming essential rather than optional. But throwing financial wellness initiatives at employees is a bit like playing darts – some will hit the mark, but others will land far off target.

To implement an effective financial wellness program, organizations must integrate their initiatives with QEX. Start by assessing your current financial wellness initiatives. Begin by measuring engagement with your current offerings.

Analyze the data around these initiatives to determine participation rates and engagement with existing initiatives to determine whether you’re offering appropriate programs or not.

As well, offer customization options.

Each employee’s concerns and trigger points are different, so the success of financial wellness programs and benefits is dependent on customization. Many organizations are adopting data analysis tools such as HUB’s Workforce Persona Analysis to identify micro-segments, such as single parents with university-age children or young employees with student loan debt. This kind of segmentation allows employers to offer more customized options and provide the right kind of

benefits for their workforce.

The financial wellness conversation needs to be opened. Many Canadians are uncomfortable discussing financial issues with anyone, so the organization may need to teach them about financial wellness programs and how they can help. It’s a good idea to offer tailored messages across a variety of delivery channels, targeting different groups of employees in each one.

As employees become more comfortable, they will engage more often, increasing the number of positive experiences they have with the organization.

Limitations Finally, recognize the limitations. In the end, the most powerful financial wellness strategy is a multi-layered collection of solutions. Offering a variety of options targeted to individuals’ needs is the best way in.

Employees who believe their employers understand their challenges and are offering real guidance will be open to those solutions.

And those employees, in the end, will be the ones who achieve security.

Traditional benefit options will no longer serve the diverse needs of today’s and tomorrow’s workforce. Organizations need to expand their definition of benefits and incorporate solutions that cater to the micro segments within their workforce.

Faizal Mitha is chief sales and innovation officer for Hub International’s employee benefits division in Canada.

Faizal.Mitha@Hubinternational.com

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Opportunity, Set, Match: The Art And Science Of Distressed Credit Investing

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BY: PARUL GARG

usinesses large and small must now try to cope with higher interest rates. We’ve seen the effects in the US with the failures of Silicon Valley Bank and Signature Bank, and in Europe with Credit Suisse. For distressed credit investors, this is a classic case of “unfortunately/fortunately” ‒ unfortunately, a business is facing a credit crunch, but, fortunately, this may present an opportunity to achieve attractive, noncorrelated, risk-adjusted returns.

After a decade of benign credit conditions with historically low interest rates and exuberantly high investor risk appetite, the worm has finally turned. The transition in monetary policy from easing to tightening has created hurdles for businesses trying to raise capital through the credit markets. Companies can delay or roll over their debt for only so long before coming back to credit markets, hat in hand. This leads to rising distressed exchanges and default rates as companies face an inhospitable environment.

Corporate borrowing costs have spiked to levels not seen since the great financial crisis (GFC). I expect the trend of rising levels of stressed and distressed businesses that require financing and, potentially, restructuring of their debt to continue well into 2023.

Bad balance sheets

Distressed credit investing is investing in good companies with bad balance sheets. Distressed credit investors seek sound businesses ‒ with valuable assets and the ability to generate cash ‒ that have hit a rough patch, making it difficult to service their debts. When this happens, companies may choose to restructure their debt through bankruptcy proceedings or outside of the courts.

Distressed credit investors can help facilitate a turnaround. For example, a creditor could exchange old debt for new debt at a lower value (less than 100 cents on the dollar), take an ownership position in the company by exchanging debt for equity, and rehabilitate the balance sheet to achieve greater liquidity. Unlike index investing, stress investing is hands-on, boots-on-the-ground. Each business situation is unique.

Distressed credit investors have a certain temperament. They are patient and able to see beyond today’s headlines and rumours; they are comfortable with potential episodes of illiquidity.

At the same time, to be successful, you need to be value-oriented and tightly focused on company f u n d a mentals.

Of course, you also need the technical skills to analyze a business and dissect a balance sheet. You must be willing to engage directly with the stressed company, with legal counsel and the court system, with accountants, and with the whisper network of employees, suppliers, and other members of the resource ecosystem, as part of a scuttlebutt approach to determining the margin of safety. There is no standardized valuation across each credit situation. When people ask me if this is difficult to do, I say, “Short answer: it’s difficult. Long answer: it’s very difficult.”

However, even in better times, there will always be company-specific credit issues that present opportunities. Experienced distressed credit investors seek situations where there is a significant price dislocation between the fundamentals of the business and its price.

Current climate The current climate of rapidly rising interest rates, tightening financial conditions, increasingly volatile markets, and geopolitical uncertainty, among other factors, create negative expectations in the credit markets. The general pessimism provides a robust set-up for distressed credit investors looking to diversify their fixed-income exposure.

Today, there is a growing list of opportunities for patient investors with a longterm orientation. For example, in the two years following the troughs in CCC high-yield credits, this segment of the credit market delivered an outsized return of over 70 percent to investors up until mid-May. This created an attractive opportunity developing in the areas of stressed and distressed credit, with high return potential.

It’s a good thing distressed credit investors are a patient sort. For 128 months after the GFC, the economy expanded, steadily bobbing along on a sea of liquidity.

Distressed credit investors had to wait for their chance to, as the song says, “Do that voodoo that you do so well.”

To paraphrase Warren Buffett: Unfortunately, opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.

Parul Garg

is an associate portfolio manager at PenderFund.

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Classic Mistake Made with TBP Focus

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BY: BARRY GROS

he Ontario Ministry of Finance has released a consultation document on the regulation of target benefit pension plans, with a request for feedback by

June 30.

The C.D. Howe Institute has published extensively on this topic, including my paper last year, highlighting what’s required for target benefit plans to thrive. Earlier, in 2021, the Financial Services Regulatory Authority of Ontario (FSRA) released its own study on leading practices for definedbenefit multi-employer pension plans.

This article is a compilation of three Intelligence Memos I authored that were recently published by the C. D. Howe Institute.

Grading the proposals I grade the proposals found in the consultation document against recommendations I made last year.

• Changing the conversation Under DB plans, benefits are fixed and contributions vary. Conversely, in target benefit plans (TBPs), contributions are generally fixed and benefits can vary. But regulation still views TBPs through the lens of contribution adequacy. The legislation needs to focus more on the benefits that are in play, and its language should be adjusted accordingly. Grade: F Ontario’s consultation document makes the classic mistake of using contributionfocused language as opposed to focusing on what is required ‒ the development and monitoring of a target benefit that can be sustained for an extended period.

• Benefit stability Pension standards have typically focused on funding to prevent problems from developing in the future. With TBPs, where contributions are fixed, problems will not occur due to underfunding, but due to overbenefiting, poor assumption-setting, and inappropriate investment policies, all of which are indicators of poor plan management and/or poor governance. What’s needed are higher governance standards, not complex funding standards. Grade: D

The document seems to equate strengthening governance with protecting against benefit reductions. The degree of benefit stability should be a decision of the relevant board, not dictated by regulation. By taking its position, the document works to restrict the range of target benefit plans that can be implemented.

• The importance of governance and communications Research has shown that governance and communication play a crucial role in benefit sustainability in plans like TBPs, and recommend plans be required to have a communication policy, similar to a governance policy or a funding policy, and lay out what it should include.

I attribute separate grades to governance (A) and communication (C). The consultation document is spot-on in indicating that governance policy should reflect guidelines published by the Canadian Association of Pension Supervisory Authorities (CAPSA), and one of the most welcome aspects of those governance guidelines is Principle 4: “The plan administrator should establish and document performance measures to monitor the performance of participants in the governance and administration of the plan.”

On communication, the document makes the classic mistake of confusing disclosure with communication. With disclosure, which is really what the consultation document is promoting, no effort is made to determine the effectiveness of what has been done. True communication involves a feedback loop, requiring testing of whether the communication objectives were achieved.

Consistent with this, the FSRA study recommends that plans “consider

conducting member feedback sessions or surveys to gauge the effectiveness of member communication.”

• Employ industry best practices Changes to laws codified in pension benefits acts happen infrequently and only after decades of lobbying. So when change is being contemplated, it is important to involve industry in the conversation from the start to ensure critical discussion can happen well before minds are set toward certain solutions. Grade: DThere is no mention of any attempt to bring in industry best practices for managing target benefit plans or even best practices from similar types of plans regulated by Ontario, such as jointly sponsored pension plans. There is also a clear disconnect between the focus on risk management through the funding policy in Pillar One of the consultation document and the contribution sufficiency test suggested in its Pillar Three.

• Scale TBPs are complex financial instruments.

Scale is needed so these plans can afford the sophisticated tools required to manage them properly. One of the primary ways to achieve scale is to allow multi-employer pension plans to include past service benefits when converting to TBPs. Grade: A+ Here’s where the consultation document scores best, by allowing conversions to target benefit plans to include past service.

British Columbia has seven years of experience with such plans converting to target benefit, with no adverse results of which I am aware.

Overall, Ontario could have done better.

Solutions for target benefit plans need to

OPINION

www.bpmmagazine.com be broader rather than focused on fixing long-standing issues with specified Ontario multi-employer pension plans. While there are some good suggestions in the consultation document, it lacks an understanding of the breadth of TBPs that is possible.

Finding a path to sustainability • Assessing benefit risk Too much TBP legislation to date has been focused on reducing benefit risk rather than the options available to sustain a benefit aspiration. Little can be found in any provincial policy paper or consultation document about the breadth of TBP options available and the range of options regarding how to sustain them.

A 2015 Canadian Institute of Actuaries task force report has much to say about achieving a sustainable TBP: “Best practice would involve the use of stochastic valuations at the design stage. For ongoing assessment of benefits in relation to the target, a simple deterministic affordability test with clearly defined trigger points for action may be sufficient. To supplement the deterministic affordability test, a BFI (benefit/funding/investment strategy) could require more frequent stochastic analysis, either at regular intervals or when certain triggers are met.” None of this has been reflected in any subsequent provincial TBP legislation.

That actuaries’ commentary is supported by the recent FSRA study: “Leading risk management practices observed from the thematic review include ... Articulating how the financial health of the plan is to be assessed. This includes, for example, principles of selection of actuarial assumptions and methodologies …”

My reading of this indicates support for plans to determine and articulate to all stakeholders their own risk-management policies and practices and not have them dictated by regulation.

The preceding quotes are technical, but crucial to grasping the attributes of actuarial tools and their suitable application.

Only at a technical level can one assess the feasibility of proposals for TBP sustainability, as I outlined in a memo last year.

Perhaps the most crucial aspects of any TB regulations are the procedures for establishing, supervising, and modifying benefits.

Although the consultation document may align with practices in other jurisdictions, common practice is not necessarily

best practice. Ontario has a significant number of multi-employer pension plans that could easily become TBPs in the future. It’s critical these plans get a regulatory framework designed for the way they operate, not rules more suited to other types of pension plans.

• Determining future benefit levels to match future fixed contributions.

It is common practice to establish a PfAD (provision for adverse deviation) to act as a buffer between contribution levels and the costs of the benefit. PfAD size is critical because it directly affects the size of the benefit earned and its income adequacy for members, which is a primary measure of pension-plan quality.

This differs from how PfADs operate in defined-benefit plans, where the PfAD is a complete add-on to the service cost and has no direct impact on benefit size.

Many TBPs aim for benefit stability, which requires a relatively predictable and stable PfAD over time. The British Columbia PfAD working group, of which I was a member, concluded that the PfAD applied against contributions should be easy to determine and communicate to plan members. However, the contribution sufficiency test in Ontario’s consultation document works against this stability objective by proposing a PfAD that changes with every valuation cycle.

In contrast, BC implemented a minimum PfAD at a flat rate of 7.5 percent of the service cost, leaving each TBP to specify an additional specific PfAD as needed.

It is important to note that for mature TBPs with a significant retiree population, a PfAD requirement on the service cost has negligible effect on benefit security.

• Assessing when and how benefits earned to date can be improved or reduced.

The board of trustees typically makes critical decisions about benefit levels by assessing a plan’s funded status. Benefit improvements are generally determined by setting funded status thresholds (e.g., a funded ratio of at least 110 percent), while benefit reductions would likely be required if the funded status dips below 100 percent. Funded status thresholds exist as an actionable metric. While some jurisdictions require a minimum PfAD on the plan funded status for benefit improvements, none has any require-

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ment to fund this target. There is no need for PfAD requirements to be identical with respect to their application against a plan’s service cost and their incorporation into thresholds for decision-making on benefit improvements. Different needs should be met in different ways.

PfADs should align with the plan’s objectives and not be regulated in a way that is disconnected from those objectives. Ontario’s document could benefit from a clearer definition of the PfAD role – and its proper magnitude – in creating plan sustainability.

Moving forward I suggest the following four changes to realign the consultation document: • Grant plans the flexibility to choose their own methodology for determining and assessing benefit sustainability. Many plans already employ multiple tests and actuarial methods based on specific circumstances, so regulatory imposition on the methodology should be avoided.

• Establish a minimum PfAD level, similar to that adopted in BC, which would apply regardless of the actuarial methodology used to assess sustainability.

• Mandate comprehensive disclosure of sustainability testing in filed actuarial valuation reports, encompassing methodologies, assumptions, and conducted stress tests. This would allow the provincial pension regulator, FSRA, to assess its own comfort level with the analysis.

• Impose a standardized financial reporting methodology for all plans, such as employing the unit credit going concern funding method. This would enable FSRA to compare all plans using a common platform. This reporting exercise would solely serve as a means of disclosure and would not affect separate plan assessments regarding sustainability.

Barry Gros

is a retired actuary, chair of the Pension Board at the University of British Columbia Staff Pension Plan, and a member of the C. D. Howe Institute Pension Policy Council.

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A Benefit that Pays for Itself

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BY: JIM HELIK

he great debate of these postCOVID times involves when and how people should return to their previous office environments. Many employees want to work from home or work otherwise remotely, while some employers want their employees showing up for at least part of the work week.

Each side is armed with studies that give conflicting advice: employees are more (or less) productive at home, and the traditional office set up is dead (or awaiting a return).

But while many employees want remote work, there is little information on whether the ability to do so is seen as an employee benefit and, more importantly, how much this is worth to them.

The first study actually predates COVID. Appearing in 2017 in the American Economic Review vol. 107 no.

12, “Valuing alternative work arrangements” was authored by Alexandre Mas of Princeton University and Amanda Pallais of Harvard University.

Work arrangements The authors note that very little is known about how workers actually value different work arrangements. They conduct a field experiment – carrying out a recruitment drive to staff a national call centre. The job ads described the position but did not include any additional information about the job, such as the schedule or whether the job was on-site. During the application process, they asked the 7,000 applicants their preference between two positions: a baseline position offering a traditional 40-hour, 9-a.m.-to-5-p.m., Monday-to-Friday on-site work arrangement, and a randomly chosen alternative arrangement, including flexible scheduling, working from home, and positions that gave the employer discretion over scheduling. They also randomly varied the wage difference between these two options and then asked applicants to tell them their preference.

Surprisingly, the authors found that the great majority of workers did not value

scheduling flexibility – either the ability to set their own days and times of work at a fixed number of hours or the ability to choose the number of hours they worked.

However, they found that “working from home is the most valued [option]. On average, job applicants are willing to take 8% lower wages for the option of working from home.”

A similar figure appears in a more recent study from the National Bureau of Economic Research. “Why working from home will stick,” by Jose Maria Barrero of the Instituto Tecnologico Autónomo de Mexico and others, is based on a survey of 30,000 people. It found that “respondents are willing to accept pay cuts of 7%, on average, for the option of working from home two or three days per week. While the preferred frequency of WFH [work from home] varies greatly among individuals, desires to work from home part of the week are pervasive across groups defined by age, education, gender, earnings, and family circumstances. The actual incidence of WFH rises steeply with education and earnings.”

Lower pay The effects of this analysis range far beyond the fact that employees can be paid less in exchange for the benefit that they perceive from working from home.

Another paper from the National Bureau of Economic Research in 2022, again by Jose Maria Barrero and five other authors, has a very descriptive title: “The shift to remote work lessens wage-growth pressures.” In a large-scale survey of executives, the authors asked: “Over the past 12 months, has your firm expanded the opportunities to work from home (or other remote locations) as a way to keep employees happy and to moderate wage-growth pressures?”

Applying this to the economy at large, they conclude that work from home has lowered overall wage growth pressures by two percent over the past two years, which is about half of the overall inflation pressure felt by others.

So it seems as if working from home is not just a passing trend, but is highly valued by many employees – to their benefit, and to the benefit of the economy at large.

Jim Helik is a contributing author to the Managing High Net Worth and the Commodities as Investments courses published by CSI Global Education. He is also one of the first holders in Canada of the Human Resource Management Professional designation from the Society for Human Resource Management.

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