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© Copyright 2000 Rogers Media. The following article first appeared in the April 2000 edition of
BENEFITS CANADA magazine.
Insights
Contrarian views, news and international intrigue
By Andrea Davis
Rethinking retirement
What will happen to Canada's economy as baby boomers retire over the next 20 years is anybody's guess. Some
observers predict financial chaos as a nation of workers and investors becomes a nation of retired
consumers. But others aren't so sure. Robert Brown is a professor in the department of statistics and
actuarial science at the University of Waterloo in Waterloo, Ont. He believes that while there are strong
demographic forces at work in Canada, these forces are manageable.
Canadian employers just have to rethink their human resources practices. "We have to start looking at older
workers as assets, not liabilities," says Brown. "And that may require a number of changes in the design of
employer-sponsored pensions and benefits."
In a recent paper, Impacts on Economic Security Programs of Rapidly Shifting Demographics, Brown
predicts a trend toward later-retirement incentives, as opposed to early-retirement incentives some plan
sponsors offer today. As well, pension systems need to become more flexible to meet the needs of older
workers.
"A worker could say 'I'll work Tuesday, Wednesday and Thursday and contribute to the pension plan, but I
want to take Monday and Friday off and draw from the pension plan.' You can't do that today, but it's the
type of thing we need to be able to do," says Brown. "There's no problem with the actuarial science of it.
It's more at the supervisory and tax authority level that big changes need to take place."
Wellness impact
alk to any plan sponsor about wellness and inevitably they'll say one of the biggest challenges of
developing a workplace wellness program is getting buy-in from the top. The reason? CEOs want a bang for
their buck.
"We all know in theory that wellness is a good thing to do but it's proving it to the employer that's
difficult," says Cathy Lerette, wellness coordinator with Halifax Regional Municipality in Halifax, N.S.
Kudos, then, to a group of Halifax-area employers who have offered up their employees as guinea pigs in
Project Impact, a study designed to improve employee health by reducing the risks of heart disease.
Launched by pharmaceutical firm Aventis Pharma, in partnership with Atlantic Blue Cross Care, one of
Project Impact's goals is to evaluate the return on investment of cardiac prevention programs for
employers.
"We're hoping the study will prove to employers that wellness intervention programs are beneficial, to both
employees and employer, so that wellness isn't something that's just going to die," says Lerette. Halifax
Regional Municipality has more than 160 employees participating in the project.
"We can't force people to engage in healthy lifestyles, we can just facilitate that through wellness
programs and hope that in the long-term there is a return on investment through decreased healthcare claims
and sick time," says Lerette.
But proving the benefits of wellness doesn't come cheap. Aventis Pharma is spending $750,000 on the study.
Results are expected in 2001.
Piece of the pie
Of all the costs associated with running a pension plan, investment management fees eat up the biggest
slice (59%) of the pie.
Next in line are consulting fees, which account for 10% of costs.
SOURCE: SEI Inc. Annual Fee Survey
Cinar suit
Disgruntled American shareholders of Cinar Corp. wasted no time in launching a class action lawsuit against
the Montreal-based producer of children's programming. The suit is open to Canadian shareholders, including
institutional investors, who purchased the common stock of Cinar between April 8, 1997 and March 10, 2000.
Milberg Weiss, one of the law firms handling the suit, refused to comment on how many shareholders have
signed up so far.
Watchdog watches media
he Globe and Mail received a stern rebuke from the Office of the Superintendent of Financial
Institutions (OSFI) last month for misrepresenting comments made by the superintendent, John Palmer. The
original story, "Watchdog fears stock market frenzy puts banks at risk," appeared on the front page of the
Mar. 14, 2000 edition of the paper. In it, the reporter wrote that "Canada's top banking regulator warned .
. . that the country's financial system is at risk of a major stock market correction. . . In a worst-case
scenario, he said, confidence in the marketplace could suffer a huge blow, banks could face large losses in
their investment portfolios and the brokerage subsidiaries of those banks could be hit by defaults on loans
to clients." OSFI issued a statement saying that the headline and first two paragraphs of the article "are
a fundamental misrepresentation of comments made by the Superintendent of Financial Institutions." In a
separate letter to the editor, Palmer wrote that the headline and opening paragraphs "created a sense of
alarm not justified" by any of his comments to the reporter.
Legal pitfalls
ecent case law in Ontario concerning employee communications may send shivers down the spines of pension
plan sponsors.
The case involves Monique Deraps, whose husband was a member of the Labourers' Pension Fund of Central and
Eastern Canada. The Ontario Court of Appeal ruled in favour of Deraps, who claimed she was not told prior
to signing a spousal waiver that it would mean she could not collect a spousal pension after her husband's
death. The defendants in the case were the board of trustees, which administered the plan, and an advisor
hired by the union to assist in the administration of the pension plan.
The court found that the pension plan advisor had a duty to clearly explain the contents of the spousal
waiver and that she did not fulfil that duty. As a result, the plaintiff was entitled to damages equal to
the survivor pension she would have received had she not signed the form.
"It's a clear lesson for plan administrators that they have to be very careful," says Douglas Rienzo, an
associate lawyer with Osler Hoskin & Harcourt LLP in Toronto. "They have to make sure if they provide
information to plan members, that the information is accurate, clear and complete and most importantly,
that the members have understood the information."
IN FACT
March 8, 2000 marked the one-year anniversary of Health Canada's approval of Viagra, a drug used to treat
erectile dysfunction. Some points of interest:<
Viagra costs between $12 and $13 per tablet.
As of the end of January 2000, more than 534,732 prescriptions for Viagra had been filled in Canadian
pharmacies, for an average of 53,000 per month over the first 10 months of the drug's availability.
Source: Pfizer Canada Inc.
In the last 10 months, approximately 375,000 men visited their doctors for treatment of erectile
dysfunction. That's almost double the number who sought treatment in the previous nine months.
Source: Pfizer Canada Inc.
Number of Web pages returned by search engine yahoo.com on the words "erectile dysfunction:" 8,873.
Virile One and Natural V are herbal supplements that claim to accomplish the same results as Viagra.
Complacent Canucks
Despite the challenges of attracting and retaining employees in the new economy, only 14% of companies
worldwide expect significant changes in the next two years in the use of retirement and insured benefits as
an attraction and retention strategy. Towers Perrin's Internetworked Organization Survey asked 330
companies around the world about how they are adapting to the e-commerce world. The survey found that
Canadian companies have, for the most part, made fewer changes so far in response to the Internet, and
fewer see dramatic change ahead. Almost half (44%) predict companies will outsource more of their non-core
activities in the future.
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