Non-Academic Pension and Benefit Plans Realize. It starts with you. Annual General Meeting for...

Non-Academic Pensionand Benefit Plans

Realize. It starts with

you.

Annual General Meeting

for Members of the

Non-Academic

Pension and Benefit Plans

May 12, 2015

Non-Academic Pension and Benefit Plans

Program

Welcome and Introductions: Darlene Marchuk, Director, Pension & Benefits (Human Resources)

Pension Plan Overview and Annual Update: Dale Schoffer, Chair, Non-Academic Benefits Committee (NABC)

Co-Chair, Joint Pension Investment Committee (JPIC) Associate Vice-President (Finance)

The Financial Educator Website Demonstration: Holly Johnson, Pension & Benefits Analyst (Human Resources)

Feature Presentation: Where There’s Will … There’s a WayJennie Aldworth, Sun Life Workplace Solutions (Blue Whale Financial Solutions)


Outline

• NABC & JPIC Committee Work

• Master Trust 2014 Market Overview

• Non-Academic Plan Highlights

• Options at Retirement / Termination

• Pension Plan Provisions

• Working Beyond Age 65

• Benefits

• Resources


NABC Committee Work in 2014

• approved the 2014 pension plan budget;

• reviewed and considered the extrapolation provided by the Actuaries outlining the financial position of the pension plan at December 31, 2013;

• was provided a statistical update on the University’s Disability Program;


NABC Committee Work in 2014 (cont’d)

• continued monitoring the payment of benefits exceeding the 5.5% funding cap as provided for in the Collective Agreement;

• met with Sun Life Financial (Group Benefits)

• agreed to review the findings of the Study of Mortality Experience for Pension Plans of Saskatchewan’s Municipalities and Non-Academic Staff.


JPIC Committee Work in 2014

• met with the Master Trust Investment managers to review their investment performance;

• had various portfolio managers provide observations and updates in the investment landscape;

• recommended the Board of Governors approve the 2014 Statement of Investment Policies and Goals;

• following approval of the Master Trust Asset Mix Benchmarks, recommended rebalancing of investment portfolios (including adding emerging market asset class)


Master Trust: 2014 Market Overview

• Established in November 1995

• Assets of the University’s Pension Plans• Academic & Administrative Pension Plan (Defined Benefit

Component) and Non-Ac pension Plan combined into a single fund called the “Master Trust”

• Each Component of the Plan has its own Statement of

Investment Policies and Goals (SIP&Gs)• Separate accounting for each• Market value at December 2014: $344.7 million


Master Trust (cont’d)

• Upside• Reduces expense fees

(2014 expenses .66% of assets)

• Investment manager diversification

• Downside• Challenge of “one size fits all” approach• Non-Academic Plan – DB Plan open to new

members, while Ac & Admin DB Component (closed)



• Distribution of Assets at December 31, 2014• Equities

• Canadian Equities 18.8%• U.S. Equities (50% Hedged to C$) 17.4%• Non-North American Equities 15.1%• Global Equities 8.0%• Emerging Markets 4.0%

• Bonds 23.0%• Real Estate 8.1%• Cash & Cash Equivalents 1.9%• Mortgages 4.0%

*TOTAL 100.0%* exceeds 100% due to rounding



• Investment Managers / MandatesPhillips, Hager & North (PH&N) – Balanced Fund 35.8% (Cdn Equities/Bonds/Mortgages)Mawer Investment Management Ltd. 11.7% (Cdn Equities)Templeton 15.1% (Non-North American Equities)Grantham, Mayo, Van Otterloo & Co. (GMO) 11.9% (Global & Emerging Market Equities) BlackRock (US Equities) 17.4%Bentall Kennedy (Real Estate) 8.1%

TOTAL 100.0%



• 2014 Annual Return of 10.0% before expenses• Exceeded the Benchmark by 0.5%• Particularly strong relative performance in Canadian equities

(Mawer’s 17.3% return was 6.7% above the S&P/TSX Index)• Mortgages were strong in the year, returning 6.4% versus

3.1% benchmark• Longer Term Performance

• Four years: value added of 1.4% (total fund: 10.2% vs Benchmark of 8.8%)

• Ten years: value added of 0.7% (total fund: 7.1% vs Benchmark of 6.4%)



• Year to date performance to March 31, 2015 is estimated at 6.7% (before expenses)

• 0.7% above the 6.0% benchmark


Non-Academic Pension Plan Highlights

• Membership in the Plan at December 2014

• Active Members 518

• Pensioners & Beneficiaries 249

• Other 75 (former members who have yet to transfer their funds)

Total 842


Plan Highlights (cont’d)

• Market value of the Pension Plan Assets at December 31, 2014:

• $87.5 million

• Increase of $6.9 million from December 31, 2013 balance



• Financial Situation of the Plan

Going Concern Position: (Based on the premise the plan will continue on into the future indefinitely.)

Based on the latest valuation, the University is currently contributing the additional amounts necessary to satisfy the prescribed funding requirement of the Pension Benefits Act (Saskatchewan) as recommended until such time as a subsequent valuation is filed.

• Next valuation due for the year ending December 31, 2015• The additional amount is approximately 2.18% of

pensionable earnings which is over and above the regular contributions which match employee contributions.




• Stellar investment returns of 18.8% and 10% (before expenses) in 2013 and 2014

• Exceeds the 6.25% (net of expenses rate) used as investment assumption

• One would anticipate plan would be in surplus




For the next funding valuation (Year ending December 31, 2015)

• requirement to strengthen mortality tables to reflect we are living longer; this requirement alone offsets the gains

PLUS

• Superintendent of Pensions reviewing level of margins required by pension plans – the last valuation used a 5% margin (margin is an explicit provision for adverse deviations or outcomes differing from assumptions used for mortality, inflation, discount rate, etc.)




Conclusion:

Even with a good investment return for 2015, theremay still be a deficit at December 31, 2015 when a

valuation is required.

Is increasing contributions and/or decreasing benefitsthe answer? This has been done multiple times since 2011.




• Current Contributions:

Employees contribute 8.75%, matched by the Employer

Combined Total: 17.5%

PLUS

Employer paid contributions of an additional 2.18% of pensionable earnings



• Financial Situation of the Plan (Based on extrapolation to December 31, 2014)

• Estimated contributions required of 20% – 22.5%

without incorporating anticipated increases to margins


Options on Retirement

• Your DB Pension Benefit (paid monthly) Normal form of annual pension based on a formula:

A = 2.00% of your best consecutive three year average earnings x your years of pensionable service prior to 2011; plus

B = 1.75% of your best consecutive three year average earnings x your years of pensionable service for 2011, 2012 and 2013; plus

C = 1.50% of your best consecutive five year average earnings x your years of pensionable service after 2013.

• Normal form of pension: Life only, Guaranteed 10 years

• Other options: Integrated Pension Joint & Survivor Benefits (if you have a spouse)

(100%, 75%, 66 2/3%, 60% and 50%)


Options on Termination

• DB Balance on Termination

Consists of the following amounts:

• Pre-2011 Contributions: Greater of your account balance or commuted value, plus

• Post 2011 Contributions: Commuted Value (calculated at actual time of termination due to sensitivity to economic factors such as long bond rates)


Options on Termination (cont’d)

• Interest on your DB Balance

• 2014 Prescribed Rate: 1.4%

• 2014 Fund Rate: 8.04%*• 2015 Fund Rate: 8.52%*

Annual rate of return applied on your account for balances prior to December 31, 2010

• Benefits post January 1, 2011 Commuted value (Present value of stream of payments at retirement)


Options on Termination (cont’d)

• Your DB Transfer Options• Other Employer Pension Plan• Cash / Transfer to an RSP

(if considered a small benefit. For 2015 must be less than $10,720)

• Locked-In Retirement Account (LIRA)• a “parking space” for retirement savings for those who

do not yet require retirement income

• Prescribed Registered Retirement Income Fund (PRIF)

• Annuity: purchased from insurance company

Note: 44% holdback on transfers other than small benefit Paid with interest within five years or earlier if plan no longer in deficit


Plan Provisions

• Pension Indexing• Applies to all pensioners

• Ad hoc increases paid from plan surplus

• Due to financial position of the plan, indexing last provided to pensioners for the plan year ending 2001


Other Retirement Information

• Age limit for maturing registered pension plans and Registered Retirement Savings Plans (RRSPs) currently permitted until the end of the year you turn 71

• Assess your tax position – (ie income splitting between spouses)

• Government Programs• Canada Pension Plan• Old Age Security• http://www.servicecanada.gc.ca/eng/home.shtml

http://www.servicecanada.gc.ca/eng/home.shtml


Working Beyond Age 65

• Pension plan contributions and benefits accruals:in accordance with the Income Tax Act permitted until the end of the year the member turns 71

• Benefits continuing beyond Normal Retirement Date until age 71include:• Life insurance• Dental• Extended Health and Health Spending Account• Only sick and short term disability benefits

Long Term Disability Benefits ceases on Normal Retirement Date


Benefits: Dental, Health, Life Insurance

• All benefits cease on date of retirement

• Sun Life “My Choices”• Life Insurance

• must be under age 65 and• make application to convert within 31 days of

retirement / termination from the plan• Dental and Extended Health Care Benefits

• must be under age 74 and• make application to convert within 60 days of

retirement / termination from the plan• converted to an individual Sun Life Plan

(Option: Standard or Enhanced)


Benefits: Dental, Health, Life Insurance (cont’d)

• Other Options (generally require medical evidence)

• Canadian Labour Congress (Information at CUPE Office)

• Other service providers: SK Blue Cross, Group Medical, etc.


Resources

• Human Resources Department: • HR Website: benefits and pension information is available at:

http://www.uregina.ca/hr/faculty-staff/cupe5791-staff/benefits.htmlhttp://www.uregina.ca/hr/faculty-staff/cupe5791-staff/pension.html

• contacting HR: Pension & Benefits 306.585.4167

• Consult a Financial Advisor• Certified Financial Planners website www.fpsc.ca/

(provides CFA list of members in good standing)

http://www.uregina.ca/hr/faculty-staff/cupe5791-staff/benefits.html

http://www.uregina.ca/hr/faculty-staff/cupe5791-staff/pension.html

http://www.fpsc.ca/


Resources (cont’d)

• Financial Educator (TFE) e-learning website: Pension plan paid service that provides stand-alone interactive modules on financial, retirement and lifestyle planning. Demo to follow this presentation

• Sun Life Financial:• www.mysunlife.ca/uregina• From the drop-down menu select

• My Financial Plan• Tools and calculators

http://www.mysunlife.ca/uregina


Questions

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Non-Academic Pension and Benefit Plans Realize. It starts with you. Annual General Meeting for...

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