|
© Copyright 2000 Rogers Media. The following article first appeared in the October 2000 edition of
BENEFITS CANADA magazine.
Industry
Uniformity needed in DC plans
The Association of Canadian Pension Management (ACPM) and the Pension Investment Association of
Canada(PIAC) have released a paper calling for uniform regulation of defined contribution (DC) pension and
other money purchase plans.
The paper, Report on Defined Contribution Plan Regulation, is a submission to the Joint Forum of
Financial Market Regulators' working committee on investment disclosure in DC plans. It goes beyond
disclosure, though, outlining a recommended model for regulating DC plans which includes uniformity of
regulation, regardless of investment structure, provider, product or province.
"We felt the pension industry had an important contribution to make in deciding what type of regulation.
Whether it was securities regulation or pension regulation, we thought we had a contribution to make to
that discussion," says Gretchen Van Riesen, chair of the ACPM/PIAC DC taskforce and senior director,
pension and benefits policy with CIBC in Toronto.
The taskforce studied the current regulatory environments for both pensions and securities and combined the
best elements of both regimes to come up with a recommended model of regulation for all DC plans, including
group registered retirement savings plans (RRSPs), deferred profit sharing plans, employee purchase share
plans, registered retirement income funds and locked-in retirement accounts.
Key criteria of the recommended model include:
-
Investor protection. Protection should be provided via a combination of minimum investment standards
covering, but not limited to, investment disclosure, investment program design, registration for advice
providers and regulatory oversight.
-
Uniformity. To the extent appropriate, uniformity would apply to all DC plans (pension or not),
regardless of investment structure (securities or not). The same rules should apply to all providers,
products and provinces.
-
Investment program design. Regulations should set out minimum standards covering minimum number of
investment options, frequency of investment changes and default selections.
-
Investment information for DC plan members. Regulations should set out investor information
requirements, including general plan information, general financial and investment information.
Regulations should also clarify the key responsibilities between plan members and plan sponsors with
respect to investment decisions.
-
Individual advice to plan members. Plan sponsors and plan administrators should not be obligated to
provide investment advice. They may make available a qualified advisor to give such advice. Any party
providing advice to plan participants would be required to comply with minimum proficiency requirements
and perform suitability or know-your-client tests.
-
Investment disclosure. Minimum standards for investment disclosure content would include, but not be
limited to, fund descriptions, risk/return profiles, investment performance and fees and commissions.
Information may be provided in a prospectus for mutual funds or information folder for segregated
funds. Disclosure content can be provided in paper or electronic format.
-
Compliance. Regulators should monitor compliance with the minimum standards through a risk-based audit
process and there should be fines for non-compliance.
"This [report] recognizes the inconsistency in the marketplace of the regulation of typical DC pension
plans and other defined contribution vehicles such as structured group RRSPs," says Van Riesen. "It puts
forward a recommendation that would bring both types of plans under singular, consistent regulatory
requirements. In other words, plans that aren't regulated today would be under this model."
Van Riesen isn't too concerned about plan sponsors who feel regulating DC plans might discourage employers
from implementing them.
"We would hope that in reading the report, people would come to understand what we, the taskforce, have
come to understand and that is that [regulation] was not an avoidable outcome," she says. "We said rather
than wait for it to be done to us, let's figure out a way for it to be done logically, reasonably,
appropriately and uniformly."
Both Van Riesen and Keith Douglas, a member of the taskforce and general manager of PIAC, are keen to
emphasize that the report is just a starting point for future discussions with the Joint Forum of Market
Regulators.
"We certainly hope that we are going to stay in the loop [with the Joint Forum] as far as the development
of any regulation is concerned through involvement in the drafting of [specific] minimum standards," says
Douglas.
The full report is available at the ACPM's Web site at www.acpm.com.
Sceptre partners with U.S. firm
oronto-based Sceptre Investment Counsel Limited is partnering with U.S.-based Putnam Investments to launch
co-branded investment products for Canadian institutional clients. Under the terms of the agreement,
Sceptre will become the exclusive Canadian marketing agent for all Putnam global, international and U.S.
investment products for new institutional clients.
Putnam products that will be available to Canadian institutional investors include a U.S. equity fund, an
international equity fund, a global core equity product, a mid-cap U.S. equity fund and an emerging markets
equity product.
In addition to the marketing alliance, Putnam has signed an agreement to purchase a 5% minority position in
Sceptre at a purchase price of approximately $13 million. Putnam was also named sub-advisor for Sceptre's
foreign equity pooled funds, effective Oct. 1.
The deal reflects a trend among Canadian money managers towards partnerships with, or acquisitions by,
global firms. Sceptre president and chief executive officer William Malouin says his firm, which employs
100 people, wanted to retain its independence.
"We came to the conclusion that firms buying firms wasn't necessarily the most modern way to do things," he
says. "Maybe the best way for firms to relate to each other is to go to those areas that they can work with
each other and do that without all the burdensome aspects of total ownership."
Sceptre Investment Counsel has $16 billion in assets under management. Putnam Investments, based in Boston,
Mass., manages more than US$100 billion for over 600 institutional clients.
"The job of Canadian managers has been slowly shifting from mostly investing in Canada towards much more
involvement in foreign investments and it's our belief that, government regulations or not, eventually most
Canadian institutional funds will be invested purely on a global basis," says Malouin.
Additional areas of co-operation between the firms are under discussion.
New hormone replacement therapy approved
new hormone replacement drug has been approved by Health Canada. It's the first hormone replacement therapy
for relief of menopausal symptoms that combines estrogen and progesterone in a single pill. The drug,
called FemHRT, is manufactured by Pfizer Canada.
With previous oral hormone replacement therapies, women with an intact uterus needed to take both estrogen
and progesterone as two separate pills, either daily or in a cyclical regimen.
"With FemHRT, women will only have to take one pill, once a day, and they can expect faster and better
control of breakthrough bleeding within the first three months of taking the therapy," says Dr. Heather
Shapiro, assistant professor in the department of obstetrics and gynecology at the University of Toronto.
Breakthrough bleeding is cited in a recent Angus Reid/Parke-Davis study as the No. 1 reason women stop
taking hormone replacement therapy.
The drug will cost about $270 a year, or 74ยข a day. Pfizer has sent submissions to insurance companies
to get the drug on private payer formularies, says Don Sancton, director of corporate affairs with Pfizer
in Montreal.
"Traditionally for hormone replacement therapy, the bulk of the market is on the private side," he says.
"That's obviously been a priority for us but we'll also pursue opportunities for listings with the
provincial drug plans."
Sancton says FemHRT will provide potential cost savings to plan sponsors when compared with some other
hormone replacement therapies currently on the market, such as patch therapies.
Other areas of interest to plan sponsors in the Angus Reid survey, which asked 1,800 Canadian women aged 45
to 64 about their knowledge of and attitude toward menopause, include the finding that 17% of women feel
that their menopausal symptoms have led to negative experiences at work or in social situations. Six per
cent say they have missed work because of menopausal symptoms.
Feds to regulate natural health products
ealth Canada expects a regulatory framework to be in place for natural health products in less than one
year. Under the proposed regulations, mass manufacturers of popular herbal remedies such as St. Johnswort
and ginkgo will have to state on their products' labels exactly how much of the active ingredient the item
contains--either per 100 milligrams or per tablet.
Currently, the natural health products market is unregulated and consumers must trust that the manufacturer
is producing an effective and safe product.
"This is not about pulling products off the shelf but about regulating them to ensure that Canadian
consumers have safe access to these products," says Phil Waddington, director general of Health Canada's
Office of Natural Health Products.
Waddington and several other senior employees at the government agency were in Toronto recently to meet
with public interest groups about plans to implement government regulations on the burgeoning natural
health products market, which is largely comprised of herbal products.
Waddington stresses that the proposed regulations do not cover natural practitioners who may prescribe
these products to their patients. He says Health Canada hopes to have a two-stream regulatory system in
place for monitoring natural remedies by June 2001. One stream would examine products that are already on
the shelf; the other would cater to new product launches.--Kathryn Dorrell
Derivative designation
he Canadian Securities Institute has added a new designation for professionals involved in derivatives
markets. The derivatives market specialist (DMS) designation will provide individuals with in-depth
knowledge of pricing, hedging, risk management and advanced investment strategies in derivatives.
To earn the DMS designation, candidates must take the Derivatives Fundamentals Course, followed by four
elective courses from the designation stream.
The rationale behind offering a specific designation for derivatives specialists was two-fold, says
Marshall Beyer, director of product development with the Canadian Securities Insitute in Toronto. There has
been tremendous growth in the derivatives market over the past decade and because of its complexity, there
have been a number of problems associated with derivatives over the years.
"We wanted to raise the standard when it comes to education," he says.
The new designation is not replacing the current licensing requirements. "It's one step beyond the basic
licensing course," says Beyer.
Arthritis breakthrough
team of B.C. researchers have identified the gene that predicts the severity of rheumatoid arthritis in
those who develop the disease. Rheumatoid arthritis is an auto-immune disease that affects 300,000
Canadians. It appears most commonly between the ages of 25 and 50.
"We believe the gene identified operates by controlling the degree of joint inflammation. It is the most
powerful indicator currently recognized for predicting the severity of [rheumatoid arthritis]," says Dr.
Abbas Khani-Hanjani, an immunologist with the Vancouver General Hospital.
Researchers believe the disease is caused when the body's immune system attacks the lining of the joints,
which results in inflammation and joint damage. The disease destroys cartilage, bone, tendons and ligaments
and can lead to permanent deformity and disability.
The study of the gene, identified as the IFN gamma gene, has tremendous implications for people with
rhematoid arthritis, says Dr. Diane Lacaille, research scientist and rheumatologist.
"It offers the possibility of identifying early which patients are likely to get severe disease and of
selecting appropriate treatment before joint damage has occurred," she says. "This means we can choose
treatment according to the risk of each patient."
SEI completes sale
EI Investments Canada has officially exited the performance measurement business with the completion of the
sale of its funds evaluation service to Royal Trust. SEI did not disclose how much Royal Trust paid for its
performance management unit.
SEI now plans to focus its efforts on its core asset management business. The firm has over $100 billion in
assets under management.
"It's just a case of simple business analysis," says David Mather, managing director, institutional
investments with SEI Investments in Toronto. "The asset management business is a core business for us and
we wanted to focus all our resources on that."
SEI's performance measurement unit employed about 30 people, all of whom will be retained by Royal Trust,
and served approximately 300 institutional clients.
|
News
News
