1. Radar
July 30, 2012
The Aon Hewitt Radar is a weekly summary of regulatory developments and trends related to retirement
and financial management, employee health benefits, and other HR issues in Canada. It highlights issues
that may require employers to take action to comply with new rules or review existing plans.
Health & Benefits who need an alternative to NPH or other pre-mix insulin.
Eligible patients include:
insulin-dependent diabetics taking NPH and/or a daily
Professional Regulation of pre-mix insulin for at least three months who have
Naturopathic Doctors in Alberta experienced unexplained nighttime hypoglycemia at
least once a month; and
A new regulation under the Health Professions Act diabetics who have severe or continuing allergic
establishes the College of Naturopathic Doctors of Alberta, reactions to their current insulin.
and describes the restricted activities that registered
naturopathic doctors are permitted to perform, including:
injections;
Slower Approval for Oncology Drugs
minor surgeries, such as removing warts and moles, in Canada
obtaining skin samples for biopsies and doing
According to the Fraser Institute, of the 33 oncology drugs
sutures;
slated for market approval between 2003 and 2011, 30
ear examinations, cerumen management, nasal
were approved in the US, 26 in the EU, and just 24 in
lavage and placing herbs in nasal passages; and
Canada. With the exception of one medication, Health
with additional training approved by the College,
Canada took longer to approve every new cancer drug
alternative medical treatments such as acupuncture,
than the US FDA, where the median review time was 182
chiropractic treatments, intravenous administration of
days compared to 356 days in Canada. Of the 30 drugs
ozone, or chelation therapy.
approved by the FDA 25 received an expedited review,
compared with only eight of the 24 drugs approved by
Naturopathic doctors are not permitted to prescribe drugs,
Health Canada that received a priority review. The latter
order x-rays or ultrasounds, or administer intravenous
process also takes almost twice as long as its US
nutrition. Naturopathic services are not covered by the
counterpart. Meanwhile, by the end of March 2012 only
Alberta Health Care Insurance Plan, but may be covered
three of the 24 drugs approved in Canada were covered
by supplemental insurance plans. In addition, professional
by government insurance in all 10 provinces, while seven
regulation facilitates registration of naturopathic doctors,
others had government-subsidized access in some
allowing Albertans to claim naturopathy costs as a medical
provinces. However, almost 60 per cent were not covered
expense on their personal income tax returns.
under any provincial drug plan.
Lantus Added as a Pharmacare
Benefit in Nova Scotia
Effective August 1, 2012 Lantus, a long-acting insulin, will
be added as a benefit on Pharmacare for eligible patients
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2. Pensions & Investments requirements that are clearly necessary for most micro-
sized entities, without modifying any of the principles for
recognising and measuring assets, liabilities, income and
Funding Relief for Specified Ontario expenses. The guidance will contain cross-references to
MEPPs Extended Until 2017 IFRS for SMEs for matters that are not addressed.
Subsequently, having applied the guidance, an entity's
Ontario Regulation 489/07 (the SOMEPP Regulation) has notes to financial statements and auditor's report could
been extended to August 31, 2017. This regulation (which simply refer to conformity with IFRS for SMEs.
was previously extended in 2009) clarified the funding
requirements for Multi-employer Pension Plans (MEPPs)
and introduced temporary solvency funding relief for
RRIF Withdrawals Impact Entitlement
Specified Ontario Multi-employer Pension Plans to GIS
(SOMEPPs) so that:
GIS and Allowance payments under the Old Age Security
the sufficiency of required contributions must be
Act (Act) are calculated on an individual's income in the
determined on the basis of a going concern valuation
last calendar year ending before the current payment
and a solvency valuation;
period. However, section 14 of the Act provides relief
any going concern unfunded liability must be
against this rule (by allowing GIS to be calculated on a
liquidated by special payments over a 12-year period,
prior year's income) when, among other considerations, an
instead of the usual 15 years; and
individual "suffers a loss of income due to termination of or
any benefit improvements must be funded on a going
reduction in pension income". The appellant claimed that
concern basis over eight years if, after reflecting the
$20,422 had been withdrawn from her RRIF in 2007,
improvement, the plan's transfer ratio is less than 80
following which less than $2,600 remained in her RRSP
per cent or its going concern funded ratio is less than
and RRIF accounts. However, she refused to produce the
90 per cent.
banking records necessary to establish when the alleged
withdrawal had in fact occurred, and whether or not it had
OSFI Instruction Guide: Amendments been mandatory or discretionary in nature.
Reducing Benefits in DB Plans
As a result, in Katz v. Human Resources, the Tax Court of
Effective July 19, 2012, OSFI has finalized its Instruction Canada dismissed the appellant's appeal from the Minister
Guide - Authorization of Amendments Reducing Benefits of National Revenue's refusal to accept her application for
in Defined Benefit Pension Plans and accompanying the GIS and Allowance. Nevertheless, according to the
Authorization Request Form, which replace the draft Court's inference, only mandatory RRIF withdrawals could
versions issued last January. Plan administrators are have supported the requested relief; while discretionary
expected to determine whether or not a proposed withdrawals could not establish an entitlement to benefits
amendment constitutes a Reducing Amendment that pursuant to section 14 of the Act. Relying on previous
requires authorization under paragraph 10.1(2)(a) of the jurisprudence, the Court held that "although 'suffer' is not
PBSA. An amendment that reduces future service defined in the Act, the term, as it is used in the provision,
accruals does not require the Superintendent’s must mean that the loss happens without any action on an
authorization. Administrators are also encouraged to individual's part respecting the minimum withdrawal
contact OSFI to discuss any proposed amendments, or amount per year. In other words, a choice respecting
the implications of the timing of an application that is part whether a loss will occur or not occur, is not within the
of a proposal negotiated with members under a Distressed ambit of this provision because choice implies some form
Pension Plan Workout Scheme. of control over the occurrence or non-occurrence of the
loss."
Guidance for Micro-sized Entities
Applying IFRS for SMEs Distribution Rules for DC Plans
The IASB will develop guidance to help micro-sized According to new research from the Society of Actuaries,
entities (those with only a few employees) apply longevity risk is probably the greatest risk facing current
International Financial Reporting Standards for Small and and future DC plan participants. Traditional lifetime
Medium-sized Entities (IFRS for SMEs). This will be done annuities offer one approach for spreading retirement
by extracting only the main principles from those savings out over a lifetime; while others include systematic
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3. withdrawals from account balances each year, longevity
insurance, and variable annuities with guaranteed lifetime
TRC / Other
withdrawal benefits. Governments could also help retirees
insure against longevity by: Public Sector Compensation in
introducing mandatory annuitization; British Columbia
requiring DC plans to offer annuity options, or default
participants into annuities; With individual reviews ongoing, the BC government has
encouraging (or requiring) individuals to allocate a established a new public sector compensation policy.
portion of their contributions to annuities or annuity- Crown corporations that do not already comply with its
like products; requirements must demonstrate by January 1, 2013 how
directly selling annuities and other lifetime income their compensation programs will be aligned with the new
products, or guaranteeing those sold by private policy. Rare exceptions for unique business reasons
companies; would require government approval. Boards may also take
encouraging employers to adopt higher yielding further steps within the framework to align executive
"qualified default investment alternatives", as has compensation with expectations of government, clients,
been done in the US; ratepayers and taxpayers. Highlights of the new policy
encouraging people to work longer and save more include:
while working; immediately freezing compensation for all current
promoting financial education and encouraging plan Crown corporation executives;
sponsors to provide investment advice to participants; effective immediately for all new or newly promoted
extending fiduciary rules to additional parties involved staff, phasing out bonuses and replacing them with a
in managing investments; non-pensionable holdback of up to 20 per cent tied to
regulating fees and expenses; financial and business results, with new criteria
prohibiting or limiting premature access to locked-in established for earning holdbacks;
accounts; recruiting new senior executives at a salary 10 per
making it easier to annuitize housing and other forms cent less than the incumbent;
of wealth; and stipulating that executives should earn no more than
reforming means-tested public programs that 85 per cent of the CEO salary;
encourage individuals to dissipate retirement savings, phasing out incentive pay for new non-executive staff,
or that discourage saving for retirement in the first except where established through collective
place. bargaining;
restricting Crown executives to the same travel
expense reimbursement policy as government
Retirement Challenges Facing executives;
Women ensuring that a vehicle allowance where required for
business will be the only permissible perquisite; and
According to new research from the US Government
phasing out any other perquisites now in place.
Accountability Office, many women have a more difficult
time saving for retirement and avoiding poverty late in life
than men, partly due to a greater likelihood of being single, Sunday Shopping in Manitoba
living longer, leaving the workforce to care for family
Bill 35, The Retail Businesses Holiday Closing
members, and having lower average earnings while in the
Amendment Act received Royal Assent on June 14, 2012
workforce. In addition, for recent generations of older
and comes into force on August 1, 2012. The Bill expands
women, late-in-life events such as widowhood and divorce
the time period within which a municipality may allow retail
can have devastating effects on income and asset levels.
businesses with more than four workers to be open on
While many options exist for addressing these challenges,
Sundays and specified statutory holidays, from between
ranging from changes to government support programs to
noon and 6:00 p.m. to between 9:00 a.m. and 6:00 p.m. If
altering the pension system, each would require trade-offs
an employee is terminated or discriminated against for
and difficult choices. Nevertheless, they could benefit both
refusing to work on those Sundays, an order for
women and men, and ultimately improve overall retirement
compensation or reinstatement may be granted. Special
security.
rules are provided for when Boxing Day falls on a Sunday,
and consequential amendments are made to The
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4. Employment Standards Code and The Remembrance Day communities, and the many intangible costs for individuals
Act. and their families.
The Cost of Mental Illness The six most common conditions afflicting the working-age
population include depression, dysthymia, bipolar
According to the Conference Board of Canada, mental disorder, social phobia, panic disorder and agoraphobia.
illnesses are costing the economy $20.7 billion in 2012 by They all range in severity, from mild and sporadic to
reducing the number of workers available in the labour completely debilitating, and each has a stigma attached to
force. This cost is growing at approximately 1.9 per cent it. Almost 452,000 more Canadians would be participating
every year and is expected to reach $29.1 billion annually in the labour force in 2012 if they were not affected by
by 2030. These estimates do not include the costs of mental illness.
patient care, insurance for employers, services in
Take Action | If you would like further information on any of these
topics, please contact Aon Hewitt at Infocan@hewitt.com.
The Aon Hewitt Radar is provided for information purposes only and should not be relied on as legal advice or
opinion.
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