August 2020 Edition

COVID-19: Relief measures related to Quebec LIFs and DC plans. New webinars for plan members. Responsible investing and new investment options.

Vol. 20 – N˚8

Desjardins

Desjardins has reviewed its positions in sectors that no longer line up with its sustainable development goals. By the end of the year, the organization will be completely divested from thermal coal, tobacco and vaping products, which harm both consumer health and the environment. Desjardins has also recently started fast-tracking the use of environmental, social and governance (ESG) criteria in investment decisions and portfolio management.

Desjardins is:

  • The first financial institution in North America to join the Powering Past Coal Alliance (PPCA) External link. Opens in a new window., a coalition of national and sub-national governments, businesses and organizations working to advance the transition from unabated coal power generation to clean energy
  • One of the first organizations in North America to sign the Tobacco-Free Finance Pledge, which was developed in collaboration with the United Nations Environment Programme Finance Initiative

Learn more about...

Desjardins's commitment to responsible investment and agriculture

https://youtu.be/fMCz3HV1m4w External link. Opens in a new window.

Desjardins's commitment to responsible investment and energy management

https://youtu.be/z2-D-IecuOU External link. Opens in a new window.

You might also like: Desjardins SocieTerra Funds and Portfolios are now 100% oil production- and pipeline-free

Your plan members

In September, two new courses are being added to our Education Centre as part of our back-to-school program: Government retirement programs and Retirement income products.

According to the 2020 RSI index External link. Opens in a new window. published by HEC Montréal's Retirement and Savings Institute, Canadians still have a relatively limited knowledge of government retirement programs. These new courses are designed to help plan members better understand these programs so they can make more informed decisions when they retire.

These new courses are on top of the budgeting, debt management and investment courses we already offer, which are still popular with plan members.

New communications campaign

We'll be sending emails to plan members starting in September to promote the new webinars, and tools will be available for you to promote them as well. You'll find them in the next edition of The Essential and in the plan sponsor website message centre.

Promoting these webinars is a way for you to actively contribute to your employees' financial wellness.

Our live webinars are offered to plan members free of charge via WebEx. To sign up, they can just log into the plan member website via dfs.ca/participant Opens in a new window. and go to the Education Centre, found under the Wellness Centre tab.

More LIF holders eligible for temporary income

In response to the COVID-19 pandemic, Retraite Québec has announced a temporary measure to ease the rules for LIF withdrawals in 2020. These changes apply to all LIFs governed by Quebec's Supplemental Pension Plans Act.

Plan members who are holding an eligible LIF and were under 70 on December 31, 2019, can obtain temporary income of up to 40% of the maximum pensionable earnings ($23,480 in 2020). At any age, when temporary income is paid, the life income amount is adjusted accordingly. The adjustment is based on the amount of temporary income withdrawn, the account balance and the age of the holder.

Further details

LIF holders who were between the ages of 65 and 69 on December 31, 2019, are entitled to temporary income in 2020, which is not usually allowed.

LIF holders who were under 54 on December 31, 2019, are entitled to temporary income as per the usual rules, but these rules have also changed for 2020:

  • Income from other sources, such as employment earnings, will no longer be considered.
  • Withdrawals can be made as a lump sum or in several payments throughout 2020.
  • It's not required to have only one LIF; withdrawals can be made if the holder has more than one LIF.

To request the temporary income, eligible plan members must contact us at 1-877-585-3033 This link will launch your default phone software. or yourtransition@dfs.ca This link opens your default mailing software.. However, they also have the option of maintaining the payment already scheduled for their LIF, in which case they don't have to do anything. We will issue the payment as planned.

Our communications to your plan members

A communication to this effect was sent in early July to plan members who are holders of a Quebec life income fund (LIF) and are eligible for temporary income.

How to

Due to the COVID-19 pandemic, the Canada Revenue Agency announced in the spring that the 1% rule for minimal contributions under a defined contribution pension plan was suspended for the rest of 2020.

The federal pension legislation authority, as well as three provincial authorities—Ontario, British Columbia and Saskatchewan—then authorized the possibility to amend a pension plan text in order to suspend contributions until the end of 2020.

Since July 15, 2020, the Quebec government also adopted additional temporary easing measures External link. Opens in a new window. regarding the administration of supplemental pension plans registered in Quebec.

Normally, plan sponsors have to contribute a minimum annual amount (employer contributions) equivalent to 1% of the total pensionable earnings of all active plan members. To benefit from this relief measure, provincial authorities must also allow a suspension of both employee and employer contributions.

Eligible plan sponsors who want to take advantage of this relief measure for the rest of 2020 must submit an amendment request to the Canada Revenue Agency - Registered Plans Directorate as well as the provincial or federal pension plan authority. They can then suspend their contributions without having to terminate the plan, as is normally required under the law.

For pension plans registered under other provincial authorities, contributions can't be completely suspended at this time. We are closely monitoring this rapidly evolving situation and will keep you informed of any other announcements.

If you have questions regarding the above, contact Plan Sponsor Services or your client relationship manager.

See a related article published in June Opens in a new window., before the Quebec government adopted the above relief measures.

If any of your employees are turning 71 this year, they'll need to transfer the assets in their retirement savings plan to a retirement income vehicle (RRIF, LIF, annuity, etc.).

In September, Desjardins will send these employees a statement outlining their options. They will then have until December 31, 2020, to make their choice.

To help avoid any risk of error:

  • Check that we have the correct address and date of birth on file for these employees, and make sure their names don't show up in your Missing Information Report.
  • Let us know if you plan on remitting any contributions for these employees between now and the end of the year. If so, we'll need to receive the contributions no later than December 15, 2020; otherwise, they'll be returned to you.

If you have any questions, please call Plan Sponsor Services at 1-888-510-4762 This link will launch your default phone software..

Investments and financial markets

All 17 Desjardins SocieTerra Funds and Portfolios are now 100% oil production- and pipeline-free, another step forward in the lineup's commitment to energy transition.

This change provides a better product lineup for members, clients and investors who want to do more to fight climate change. It also demonstrates Desjardins's leadership in the move toward a low-carbon economy.

The impact of this change

This change reduces the exposure of SocieTerra products to fossil fuel producers and specialized transporters from 5% to 0%. That means the product lineup no longer has any shares in companies that earn a significant portion of their revenue from:

  • The extraction or production of oil, natural gas or thermal coal
  • Specialized oil and gas transportation (including pipelines)
  • Oil refining
  • Coal-based energy production

Thanks to our Investment Solutions division, Desjardins Group has been one of the country's leading proponents of responsible investing for nearly 30 years.

In May, Beutel Goodman announced the appointment of Ryan Fitzgerald, CFA, to the position of Vice President, US and International Equity. He joined Beutel Goodman with more than 20 years of experience at CI Investments, where he rose through the ranks, particularly in analyst and portfolio management positions.

In May, CI Investment Inc. announced the appointment of Bradley Hicks to the position of Senior Vice President, Head of CI Institutional Asset Management. Mr. Hicks has 20 years of experience in the institutional asset management business with Canadian and global firms.

In June, Fiera Capital informed us that François Bourdon, who most recently served as Global Chief Investment Officer, announced his decision to leave Fiera Capital at the end of June. François's responsibilities within Fiera Capital's asset allocation team and across a number of alternative vehicles were assumed by other members of those teams.

In June, MFS informed us that effective September 30, 2021, the MFS Core Equity strategy will be managed by Ted Maloney and Alison O'Neil, who have served on the portfolio management team since 2012 and 2018, respectively. Furthermore, Kevin Beatty, a member of the portfolio management team since 2004, will retire from MFS, relinquishing his portfolio management duties on strategy and his role as Co-Chief Investment Officer (Co-CIO) of Equity for the Americas.

On July 6, Mawer Investment Management Ltd. announced that effective January 1, 2021, Jim Hall, CFA, Chair, will step down as co-manager of the Mawer Canadian Equity and Mawer Global Equity strategies to focus full-time on his role as Chair and on the investment risk management process. Meanwhile, Paul Moroz, CFA, CIO, will stay on as lead manager of the Global Equity strategy. Vijay Viswanathan, CFA, Director of Research, will remain lead manager of the Canadian Equity strategy.

Desjardins Insurance is proud to announce the launch of two new funds on its group retirement savings platform on June 26, 2020. These funds enhance our Canadian fixed-income offering.

PH&N Bond Fund

The PH&N Bond Fund is actively managed and aims to provide relatively high yields and stability of capital through a well-diversified portfolio of fixed-income securities issued by Canadian corporations and governments. The manager invests primarily in Canadian government and corporate bonds, as well as guaranteed mortgages and foreign bonds. The fund is actively managed using interest rate, credit and liquidity strategies.

PH&N Core Plus Bond Fund

The PH&N Core Plus Bond Fund is actively managed and aims to provide relatively high yields and stability of capital by investing primarily in a diversified portfolio of fixed-income securities issued by Canadian corporations and governments, and similar securities outside of Canada. The fund utilizes core fixed-income instruments found in the benchmark, and also contains a significant allocation to non-benchmark securities, including mortgages and international and high-yield bonds.

For more information about these new funds, contact your client relationship manager.

Desjardins Insurance is proud to announce the launch of the UBS Global Direct Real Estate Fund on its group retirement savings platform. This fund enhances our current alternative investment offering.

UBS Global Direct Real Estate Fund

The UBS Global Direct Real Estate Fund is actively managed and aims to provide low volatility returns through broadly diversified exposure to major global real estate markets. It focuses on unlisted funds which predominantly invest in the office, retail, logistics and residential sectors and in some cases hospitality and healthcare. The fund typically holds good quality buildings in prime locations with high occupancy rates and good tenants. The fund targets an annualized return at least 4% higher than that of the Canada Consumer Price Index, over moving four-year periods.

Due to the nature of its underlying investments, this fund possesses specific entry and exit provisions that can be shared upon request. In addition, this fund cannot be offered on an individual basis or within a lifecycle path in the context of a capital accumulation plan. Its availability is also limited to tax-exempt plans and entities.

For more information about this new fund, contact your client relationship manager.

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