Pension and benefit briefs

$16.5 billion pension shortfall • Maritime Life takes over Liberty Health • Canada Life investors approve takeover deal • B.C. protects partners of workers killed on the job • Benefits now 30 per cent of compensation in the U.S. • The ultimate perk every American CEO can now afford • It pays to be fit • Paperwork sucking up health care dollars • Government Web site lauded

$16.5 billion pension shortfall

— Canada’s largest publicly traded companies have a combined $16.5 billion shortfall in pension plans, according to a market study conducted by The National Post. More than 70 per cent of Canada’s 60 biggest companies by market value have pension deficits, with nine of them exceeding $500 million each. Nortel Networks, Bombardier, Alcan and Imperial Oil account for more than half of the $16.5 billion. Leo de Bever, of the Ontario Teachers’ Pension Plan, said the country’s pension funds haven’t been this bad since the 1970s and he expects it to have a serious drag on corporate earnings as more money will have to be pumped in to cover the shortfalls.

Maritime Life takes over Liberty Health

— Maritime Life is swallowing up Markham, Ont.-based Liberty Health in a $140-million deal that will add about $700 million in premium and premium equivalents to Maritime. Bob Nicholas, senior vice-president of Halifax-based Maritime Life Group Operations, said the move increases the company’s presence in the group insurance arena, particularly in Ontario. Thomas C. Ramey, Liberty Mutual Group executive vice-president, said Liberty made the decision to sell its Liberty Health division because of the recent major consolidations in the Canadian market. “At some future point, we would have faced the choice to acquire a group life and health company to remain competitive or sell Liberty Health,” he said. The deal is expected to close in early July subject to regulatory approval.

Canada Life investors approve takeover deal

— Investors in Canada Life Financial Corp. have voted overwhelmingly in favour of being acquired by Winnipeg-based Great-West Lifeco Inc. in a $7.3-billion deal. David Nield, the chief executive officer of Canada Life, said he expects the deal to close in early July following regulatory approval in Canada, the United States and other countries where the two insurers operate. The merger will create the largest life insurer in the country and one of the biggest in North America with a combined staff of 20,000, assets of $160 billion, annual revenue of $25 billion and profits of $1.2 billion. Sun Life Financial is the second biggest in Canada, followed by Manulife Financial.

B.C. protects partners of workers killed on the job

— The B.C. government has introduced legislation aimed at ensuring all surviving partners of workers who die from workplace injuries get lifetime survivor benefits from the Workers’ Compensation Board. Graham Bruce, the province’s labour minister, said the legislation, Bill 37, will allow surviving dependants to retain half their Canada Pension Plan retirement benefit rather than having it deducted from their WCB benefit.

Benefits now 30 per cent of compensation in the U.S.

— Benefits expenses for private-sector U.S. employers jumped 6.1 per cent for the year ending March 2003, up from 4.8 per cent from the year before, according to the U.S. Bureau of Labour Statistics. Government employers had similar boosts of 6.6 per cent in benefits and 3.1 per cent in wages and salaries. Much of the increase stemmed from rising health insurance premiums and an upturn in the costs of defined benefit pension plans. Employer costs for benefits now account for nearly 30 per cent of compensation costs, according the bureau.

The ultimate perk every American CEO can now afford

Cary, N.C.
— Every chief executive officer in the U.S. should have a corporate jet, and shareholders should welcome it, according to Jim Goodnight, CEO of North Carolina-based software firm SAS. Goodnight called it a “no-brainer” because of the U.S. government’s recent stimulus package that lets companies write off 42 per cent of the cost of an aircraft in the first year of ownership. Goodnight said this translates to about a $6-million gift from the government, which was enough to induce him to give up his days of commercial flying.

It pays to be fit

New Brunswick, N.J.
— Johnson & Johnson is offering employees in the U.S. who take part in the company’s wellness program a $500 annual medical insurance discount. The program has saved the company (US)$8.5 million annually in health costs over the past nine years. Other companies south of the border are starting to hold employees directly accountable for their health. Some programs are attaching negative financial consequences to a variety of behaviours, including smoking and missing recommended prenatal classes.

Paperwork sucking up health care dollars

— A look at practices at a Boston-area hospital shows that an increasing share of Americans’ health insurance premiums are going towards administrative and billing costs. The number of doctors at Massachusetts General Hospital has grown by 10 per cent since 2000, but the growth in the billing department that handles claims for doctors has increased 32 per cent. The higher costs are attributed to interpreting payment rules, using the correct codes and handling cost disagreements between doctors and health insurers, which has created a higher level of mistrust between physicians and insurance companies.

Government Web site lauded

— The Canada Benefits Web site has been touted as an innovative leader by Accenture’s annual study, eGovernment Leadership: Engaging the Customer. The site lists information and services such as pensions, employment insurance and housing from federal, provincial and territorial government departments, crown corporations and agencies. The site was launched in November 2001 and receives about 30,000 visitors per month. It features a tool called the “benefits finder” which provides citizens with a listing of programs relevant to their circumstances. Canada has been ranked number one by the study, which looks at the quality of government online services for citizens and business, for the last three years. The site is located at

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