Benefit plan sponsors add excess coverage clause to travel insurance; Alberta dental fees too high
An in-depth look at these and other subjects are covered in the current issue of the Morneau Shepell News & Views
TORONTO, Sept. 14, 2017 /CNW/ - Morneau Shepell released the September 2017 issue of its monthly newsletter, News & Views, in which the company looked at a number of topics including, a new guideline for derivative usage, temporary solvency funding relief in Nova Scotia and New Brunswick, changes to travel insurance policies and the new Alberta dental fee guide.
- Plan administrators to establish policies and procedures for derivative usage – The Office of the Superintendent Financial Institutions is planning to replace the 1997 guideline "Derivatives Best Practices" with "Derivatives Sound Practices for Federally Regulated Private Pension Plans" and has issued the revised draft for comment. The goal of the new guideline is to encourage plan administrators to create clear policies and procedures regarding derivative investments.
- Solvency funding relief in two provinces – In Nova Scotia, temporary solvency funding relief regulations have been adopted for defined benefit pension (DB) plans and the province has announced a DB pension plan funding consultation. Additionally, New Brunswick has proposed the relief regulations for multi-jurisdictional DB plans registered in that province. These provinces join British Columbia, Manitoba and Ontario by introducing these measures for private sector pension plans, and Alberta is expected to follow suit.
- Changes to travel insurance contracts – Group insurers are beginning to add an "excess coverage clause" to their travel insurance policies that state they will only pay for expenses not covered by plan members' other travel insurance policies (e.g., spouse's plan, credit card insurance, etc.). This ensures those group insurers who have implemented the clause are the last to pay for claims rather than the first. The administration and payment of eligible travel claims is coordinated behind the scenes, so any changes will not affect the claimant experience.
- Alberta dental fee guide – This month, the Alberta Dental Association and College (ADAC) has put into place a dental fee guide that has incited criticism for only including a two or three per cent decrease in fees. The Alberta Minister of Health and the ADAC are in discussion about further revisions and cost reductions. In the meantime, insurers have been able to base dental claim reimbursements on the new fee guide since September 1, 2017.
- Tracking the funded status of pension plans as at August 31, 2017 – Morneau Shepell shared the changes in the financial position of a typical defined benefit pension plan since December 31, 2016. The graph in the newsletter shows the impact of three typical portfolios on plan assets and the effect of interest rate changes on solvency liabilities of medium duration.
- Impact on pension expense under international accounting as at August 31, 2017 – Morneau Shepell shows the expense impact for a typical pension plan that starts the year at an arbitrary value of 100 (expense index). The discount rate has increased in the last month, resulting in a reduced expense, despite poor returns (relative to the discount rate). Since the beginning of the year, the slight increase in the discount rate combined with returns slightly above expectations (relative to the discount rate) has resulted in the pension expense returning almost to its level at the beginning of the year.
About Morneau Shepell
Morneau Shepell is the only human resources consulting and technology company that takes an integrated approach to employee assistance, health, benefits and retirement needs. The Company is the leading provider of employee and family assistance programs, the largest administrator of retirement and benefits plans and the largest provider of integrated absence management solutions in Canada. As a leader in strategic HR consulting and innovative pension design, the Company helps clients solve complex workforce problems and provides integrated productivity, health and retirement solutions. Established in 1966, Morneau Shepell serves approximately 20,000 clients, ranging from small businesses to some of the largest corporations and associations. With more than 4,000 employees in offices across North America, Morneau Shepell provides services to organizations across Canada, in the United States and around the globe. Morneau Shepell is a publicly-traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit morneaushepell.com.
SOURCE Morneau Shepell - Pension/Retirement