Pension PlaPension Plann 2009 2 0 0 9Capital Pension Plan 2009 Annual Report 3 Message from the...

apitalapitalPension PlanPension Plan

2009Capital Pension Plan

Annual Report

2 0 0 9

MISSIONWe are a professionally managed, service oriented defined contribution pension plan committed to helpingour members and retirees build and manage their retirement savings.

VISIONTo be the preferred pension plan for members, employers and retirees.

VALUESThe Capital Pension Plan is committed to integrity and professionalism in dealing with all stakeholdersthrough prudent leadership, innovation and open, effective communication.

Introduction ............................................................. 2Message from the Chair ........................................... 3Financial Performance Overview ............................ 42009 Achievements ................................................... 12Capital Pension Plan Board ..................................... 14Capital Pension & Benefits Administration ............. 15Governance Structure .............................................. 16Plan Demographics .................................................. 18Balanced Scorecard .................................................. 20Balanced Scorecard 2009 Results ............................. 212010 and Beyond ....................................................... 26Appendices ............................................................... 29Management’s Responsibility forFinancial Reporting ................................................. 31

Financial Statements

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Introduction

The Capital Pension Plan was established in 1976 as a defined contribution (money purchase)pension plan. The Capital Pension Plan can consider any employer interested in participating inthe Plan. Participating employers can determine the eligibility criteria for their employees to

become contributing members of the Plan, pursuant to relevant legislative and regulatory requirements.

Both participating employers and contributing members make required contributions, based on apercentage of earnings, subject to an annual maximum contribution limit set in the Income Tax Act(Canada).

All member and employer contributions made on behalf of a member are directed to an individualaccount in the member’s name. Contributions are invested and accrue investment earnings over time.

At retirement, members use the cumulative value in their Capital Pension Plan account to providepension income through various pension income options as permitted in each jurisdiction (provincial orfederal).

The Capital Pension Plan operates two pension income options.

A Retirement Annuity Fund is available to all Plan members that choose to receive guaranteed lifetimeretirement income through the purchase of a life annuity.

A Variable Benefit option is available to Plan members within the Saskatchewan jurisdiction that desirethe flexibility to change the amount of retirement income received.

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Message from the Chair

As Chair of the Pension Board, I am pleased to present the Annual Report and audited FinancialStatements for the year ending December 31, 2009.

Recovery in equity markets continued through to the end of 2009, having a positive impact onperformance of the Capital Pension Plan’s Diversified Fund. After reaching a low in March, theDiversified Fund posted an annual rate of return of 14.83% as at December 31, 2009. This return is net ofall investment management and administrative expenses.

While 2009 saw improved equity market performance, the same could not be said for money-marketyields. Interest rates were cut to record lows in Canada as part of the economic stimulus initiatives.These low interest rates significantly impacted the performance of money-market investments.As a result, the Capital Pension Plan’s Pre-Retirement Fund posted an annual rate of return of 0.47%, netof all investment management and administrative expenses.

It is important to remember that the investment goal of the Pre-Retirement Fund is to preserve capital inthe short-term. While this return is low compared to previous years, the Fund continues to achieve thisperformance goal. Looking ahead, returns for the Pre-Retirement Fund are expected to improve onceinterest rates and money market yields increase.

In closing, I would like to thank my fellow Board members for their service to the Capital Pension Planduring 2009. I also wish to thank the Capital Pension Plan administration staff for their hard work anddedication to the Plan. We remain committed to making the Capital Pension Plan the preferred plan formembers, employers and retirees.

Micheal McPhersonChair, Capital Pension Plan Board

Micheal McPhersonChair, Capital Pension Plan Board

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Financial Performance Overview

Defined Contribution FundContributions from participating employers and contributing members are deposited to the Plan’sDefined Contribution Fund. Within this Fund, the plan operates two investment funds - the DiversifiedFund and the Pre-Retirement Fund.

As the default investment fund, all Plan members are eligible to participate in the Diversified Fund.The investment objective of the Diversified Fund is to provide long-term investment growth withinacceptable levels of investment risk.

Members within five (5) years of their earliest retirement date can choose to participate in thePre-Retirement Fund. The investment objective of the Pre-Retirement Fund is to preserve capital in theshort-term.

2009 Investment Performance SummaryEquity markets rebounded after a shaky start to 2009. The S&P/TSX Index (Canadian equities) led therecovery, ending 2009 with a return of 35.1%. Returns for the S&P 500 Index (U.S. equities) and theMSCI EAFE Index (Non-North American equities) were tempered somewhat by the rising Canadiandollar, posting a return of 7.4% ($C) and 11.9% ($C) respectively. Fixed income markets ended the yearwith positive returns. The DEX Universe Bond Index (Canadian bonds) achieved a return of 5.4% for theyear. The IPD Index (Canadian institutional real estate) recorded a return of 0.8% for 2009. As a result,the Capital Pension Plan Diversified Fund recorded an annual return of 14.83% after expenses for 2009.

The objective of the Pre-Retirement Fund is to preserve capital in the short-term. The fund is investedsolely in money market investments and provided an annual return of 0.47% after expenses for 2009.

Defined Contribution FundAsset Mix, Investment Managers and Comparative Benchmark Indicators

(December 31)

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Diversified Fund Annual and 4-year Annualized Gross Performance(December 31)

-16.10%

Defined Contribution Fund Current and Historic Declared Returns(December 31)

2009 20052008 2007 2006

14.83%

0.47% 2.39%3.17% 4.12%3.09% 3.53%

13.64%

9.62% Diversified Fund (net of expenses)

Pre-Retirement Fund (net of expenses)

Diversified Fund 10-year Annualized Gross Performance(December 31)

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*L&CC %7.93 %1.53 1 a/n a/n a/n

denibmoCseitiuqE.S.U %7.41 %4.7 1 %7.2- %3.3- 2

enotsyerG %3.2 %4.7 4 %4.3- %3.3- 2

paCegraL-AgSS %6.32 %6.32 1 %9.2- %0.3- 2

paCdiM-AgSS %4.43 %2.43 1 %8.1- %6.1- 1

denibmoCseitiuqEnaciremAhtroN-noN %7.02 %9.11 1 %1.1 %5.1- 1

enotsyerG %6.02 %9.11 1 %3.0- %5.1- 2

ydeewT %2.81 %9.11 2 %8.1 %5.1- 1

denibmoC-sdnoB %0.7 %4.5 3 %2.5 %9.4 2

enotsyerG %2.8 %4.5 3 %3.5 %9.4 1

AgSS %6.5 %4.5 4 %1.5 %9.4 2

**enotsyerG-etatsElaeR %9.2- %8.0 a/n %2.31 %5.9 a/n

***ecnamrofrePdnuFlatoT %2.51 %3.41 3 %3.3 %6.2 M

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Defined Contribution Fund Net Assets Available for Benefits(December 31)

Defined Contribution Fund Net Compound Returns(December 31)

raey1 sraey2 sraey3 sraey5 sraey01

dnuFdeifisreviD %38.41 %58.1- %32.0- %53.4 %23.5

dnuFtnemeriteR-erP %74.0 %18.1 %85.2 %37.2 %14.3

Pre-Retirement Fund Annual and 4-year Annualized Gross Performance(December 31)

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)sdnasuohtC$( 9002 8002 7002 6002 5002

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snoitubirtnoCderiuqeRreyolpmE 152,61 200,51 431,41 609,21 520,21

snoitubirtnoCderiuqeRrebmeM 198,31 217,21 110,21 097,01 560,01

snoitubirtnoCyratnuloVrebmeM 281,2 897,1 546,1 260,1 269

dnuFehtotnisrefsnarT 918,3 707,5 175,5 570,3 461,7

)ssoL(niaGtnemtsevnI 219,53 )274,41( 916,59 504,76 064,45

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559,441 )077,201( 619,46 883,531 429,701

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seeFnaidotsuC/tnemeganaMtnemtsevnI 130,2 784,2 286,2 042,2 188,1

stifeneB&seiralaS 737 466 436 294 454

rehtO 416 676 556 975 315

tuOsrefsnarT/slawardhtiW 660,13 254,14 939,73 944,05 966,63

844,43 972,54 019,14 067,35 715,93

stessAteNniegnahC 705,011 )940,841( 600,32 826,18 704,86

)raeyfogninnigeb(elbaliavAstessAteN 725,177 675,919 075,698 249,418 535,647

stifeneBrofelbaliavAstessAteN 430,288 725,177 675,919 075,698 249,418

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Retirement Annuity FundThe Retirement Annuity Fund (RAF) provides lifetime retirement annuities to Plan members that chooseto receive retirement income through the purchase of a life annuity. When a member purchases a lifeannuity from the Plan, the member’s equity is transferred from the Defined Contribution Fund to theRetirement Annuity Fund and an annuity contract is established based on the current annuity interestrate and group annuity mortality tables. The contract provides for guaranteed lifetime income.

2009 Performance SummaryA rate of return is not calculated for the Retirement Annuity Fund. The Retirement Annuity Fund ismanaged to ensure the annuity promise (guaranteed lifetime income) is fulfilled, as determined throughthe completion of the annual actuarial valuation.

The Retirement Annuity Fund is fully funded as each new annuity is added. No additional contributionsare required to fund future benefit accruals. As well, no additional contributions are required to supportthe Fund’s current accrued liabilities.

Retirement Annuity FundAsset Mix, Investment Managers and Comparative Benchmark Indicators

(December 31)

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Retirement Annuity Fund Net Assets Available for Benefits(December 31)


)sdnasuohtC$( 9002 8002 7002 *6002 *5002

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984 870,2 613 125,1 300,2

emocnitnemtsevnI 798,1 398,1 780,2 834,2 848,1

stnemtsevnifoelasno)ssoL(niaG )64( 512 776,3 85 73

)sessoL(sniaGdezilaernUteN )926( )066( )875,3( 514 697,2

117,1 625,3 205,2 234,4 486,6

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stnemyapytiunnA 822,2 872,2 562,2 061,2 050,2

sesnepxegnitarepO 631 421 721 741 141

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142,2 )464,2( )946,2( 264 490,3

dnuFehtfosrebmemottnemyaprofnoisivorP 94 242 382 084 531,6

456,4 081 62 942,3 024,11

stessAteNniegnahC )349,2( 643,3 674,2 381,1 )637,4(

)raeyfogninnigeb(elbaliavAstessAteN 436,41 882,11 218,8 926,7 563,21

stifeneBrofelbaliavAstessAteN 196,11 436,41 882,11 218,8 926,7

eulavtekramtadetatser*

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Extract from annual Actuarial Valuation for the Retirement Annuity Fund,prepared by AON Consulting as at December 31, 2009

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0


Extract from annual Actuarial Valuation for the Retirement Annuity Fund,prepared by AON Consulting as at December 31, 2009

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1


Administrative ExpensesThe Capital Pension Plan operates on a cost-recovery basis. Actual expenses are deducted from thePlan’s earnings prior to the calculation of each weekly unit value. For comparison and communicationpurposes, a management expense ratio (MER) is calculated annually by dividing the total cost ofadministration by the year end market value.

For 2009, the management expense ratio (MER) for the Defined Contribution Fund was 38 basis points or0.38% (0.50% in 2008).

A management expense ratio (MER) is not calculated for the Retirement Annuity Fund. Expensesallocated to the Fund are accounted for in the annual actuarial valuation.

Defined Contribution Fund Expenses(December 31)

Retirement Annuity Fund Expenses(December 31)

)sdnasuohtC$( 9002 8002 7002 6002 5002

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seeFecivreSlaidotsuC 4 4 4 4 4

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secivreSlairautcA 81 41 71 61 11

seeFs'rotiduA 01 8 7 6 6

noitartsinimdAlareneG 66 06 06 08 28

latoT 631 421 721 741 141

)sdnasuohtC$( 9002 8002 7002 6002 5002

seeFtnemeganaMtnemtsevnI 819,1 163,2 655,2 531,2 977,1

seeFecivreSlaidotsuC 311 621 621 501 201

seeFtnatlusnoC&ecnamrofrePtnemtsevnI 98 98 38 28 08

seeFs'rotiduA 62 12 43 91 81

noitartsinimdAlareneG 632,1 032,1 271,1 079 968

latoT 283,3 728,3 179,3 113,3 848,2

)REM(oitaResnepxEtnemeganaM %83.0 %05.0 %34.0 %73.0 %53.0

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Implementation of Balanced ScorecardIn 2009, the Capital Pension Plan implemented a balanced scorecard performance measurement tool toprovide ongoing performance evaluation.

Revised Mission and Vision StatementsIn October 2009, the Pension Board conducted their annual review of the Plan’s mission, vision andvalues and approved the following revisions to affirm the Plan’s commitment to the increasing number ofretirees resulting from the implementation of the Variable Benefit retirement income option. The Plan’s‘values statement’ remained unchanged.

MissionWe are a professionally managed, service oriented defined contribution pension plan committed tohelping our members and retirees build and manage their retirement savings.

VisionTo be the preferred pension plan for members, employers and retirees.

Retirement Primer Information SessionsIn May and June of 2009, a total of 13 Retirement Primer information sessions were conductedthroughout the province. These half day sessions provide Plan members with valuable retirementpreparation information. At each session, a Retirement Primer Guide was provided to each attendee.This guide offers step by step retirement preparation analysis. A total of 112 Plan members attendedthese sessions and provided an overall satisfaction score of 90.1%.

Commitment to ServiceThe Capital Pension Plan strives to provide outstanding service to its Plan members and participatingemployers by meeting established service standard benchmarks. During 2009, Plan administrationanswered 2,514 telephone inquiries, responded to 275 email inquiries and 37 letter inquiries andconducted 69 (totalling 103.5 hours) one on one meetings with members.

2009 Achievements

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Retirement Annuity Fund Court ApplicationIn 2007, the Capital Pension Plan made application to the Court for direction in the distribution ofapproximately $6.6 million in reserve funds accumulated in the Retirement Annuity Fund. In 2008,information packages were sent to all current and former Plan members that could potentially be eligibleto participate in a distribution of the reserve funds. Four court hearings were held during 2008. OnNovember 13, 2008, the Judge reserved her decision to take time to consider all written and verbalarguments made (details available at www.capitalpension.com).

On April 7, 2009, the Court issued certain preliminary directions to guide the parties as to the nextsteps.

On June 11, 2009, the parties returned to court to clarify several issues arising from the Court’sPreliminary Directions. At that time, the Plan Sponsor provided a draft of the distribution schedule forthe reserve distribution, which was accepted by the Court. At the conclusion of the hearing, afterproviding the clarifications requested, the Court asked the Plan Sponsor to prepare a draft Order of theCourt, confirming the directions it has given, and to circulate the draft Order to the other parties forreview. That was done, and the draft Order was confirmed by the other parties.

On August 31, 2009, the Court issued its binding Order providing the Plan Sponsor with the generaldirections as to how the reserve is to be distributed (details available at www.capitalpension.com). Atthat time, there were no further court applications contemplated and the next steps were for the PlanSponsor to begin the process of distributing the reserve.

On September 30, 2009, the Plan Sponsor was served with a Notice of Appeal seeking to overturn theJudge’s decision. The appeal was filed by a Plan member who was dissatisfied with the Judge’s decision.The appeal will be heard by the Saskatchewan Court of Appeal, likely some time in 2010. Under theCourt of Appeal Rules, a party (such as the Plan Sponsor) is prohibited from carrying through with thelower Court’s decision until the appeal has been heard and finally decided.

2009 Achievements

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Capital Pension Plan Board

Pension Board MembersMicheal McPherson, ChairSaskatchewan Housing Authorities

David OlsenISM Canada

Edward HelmSaskatchewan Government Insurance

Gordon DolneyYara Belle Plaine Inc.

Tim MacLeodSaskatchewan Government Insurance

Pension CommitteesAuditCindy Ogilvie (Committee Chair)Edward HelmTwyla Meredith

InvestmentDavid Olsen (Committee Chair)Gordon DolneyCarla Brown

Cindy OgilvieCrown Investments Corporation

Twyla MeredithSaskatchewan Gaming Corporation

Carla BrownCrown Investments Corporation

Keith AppletonSaskatchewan Abilities Council

Margaret AndersonSaskatchewan Watershed Authority

GovernanceTim MacLeod (Committee Chair)Keith AppletonMargaret Anderson

Capital Pension Plan Board

back row (left to right) David Olsen, Tim MacLeod, MichealMcPherson, Keith Appleton, Edward Helm, Gordon Dolney

front row (left to right) Carla Brown, Cindy Ogilvie,Twyla Meredith (missing Margaret Anderson)

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Capital Pension & Benefits Administration

ExecutiveKen KleinExecutive Director

Stanley JonesDirector, Pensions

ManagementChristine TaylorManager, Group Benefits

Brad HuntManager, Accounting and Administration

Cheryl VialaManager, Communications, Research andDevelopment

AdministrationLaura ThompsonStaff Accountant

Sharon StruebyStaff Accountant

Arlene StinsonExecutive Secretary

Tracy MackPension & Benefits Coordinator

Capital Pension and Benefits Administration

back row (left to right) Brad Hunt, Sharon Strueby, Ken Klein,Christine Taylor, Stanley Jones

front row (left to right) Laura Thompson, Arlene Stinson,Cheryl Viala (missing Tracy Mack)

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Governance Structure

Capital Pension Plan

Participating Employers

Plan Members

Plan Sponsor

Plan Administrator

Auditor

Capital Pension & BenefitsAdministration

Other Delegates Other Delegates

Investment Managers

Investment Consultant

Custodian

Actuary

Pension Board Secretary

Plan SponsorCrown Investments Corporation of Saskatchewan (CIC) is the Plan Sponsor. CIC is responsible for theoverall management of the Plan in accordance with applicable laws, the terms and conditions of the Planand its governance structure and processes. CIC is responsible to hold the Plan’s funds in trust for thebenefit of its members and any person entitled to benefits pursuant to the Plan. CIC appoints the PensionBoard to act on its behalf to facilitate the operation of the Plan.

Pension BoardThe Capital Pension Plan Board composition is between five and ten persons, nominated by the twelvelargest participating employers of the Plan, as determined by active Plan membership. All Boardmembers must be active (i.e. contributing) members of the Plan. Board members must possesscharacteristics and traits of integrity, accountability, informed judgement, financial literacy, matureconfidence and commitment.

Board meetings are held at least once per fiscal quarter, with additional meetings for approval of financialstatements and the annual report and a planning retreat for the upcoming year. In camera sessions areconducted at each meeting.

Compensation for service on the Capital Pension Plan Board is restricted to reimbursement of actualcosts and reasonable expenses for attending to Board business.

Pension CommitteesThe Pension Board establishes committees to handle Board business. Each committee comprises threecurrent pension board members. The Chair serves as an ex-officio member of each Committee.

Committee meetings are conducted approximately 10 days prior to each Board meeting. At thesemeetings, committee members review and discuss Board material so they may facilitate informeddiscussion and make recommendations regarding a course of action to the Pension Board. The Pensioncommittees have no authority to make binding decisions or incur expenses unless the Pension Boardprovides prior approval.

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Governance Structure

Actuary, Custodian, Investment Consultant, Investment Managers and Other DelegatesThe Pension Board and Pension Committees hire industry professionals such as a custodian, investmentconsultant, investment managers and actuary to provide their expertise. Investment of the Plan’s assetsis delegated to professional investment managers under the supervision of the Pension Board.

Plan AdministratorThe Plan Sponsor has appointed the Executive Director of its Capital Pension & Benefits Administration(CPBA) division as Plan Administrator. The Plan Administrator handles the overall management,administration and day to day operation of the Plan in accordance with applicable laws and the termsand conditions of the Plan. The Plan Administrator makes application for the registration of the Plan andany amendments thereto with the appropriate authorities.

The Plan Administrator has the responsibility to carry out its duties with honesty and in good faith in thebest interest of Plan members and any other person(s) to whom a fiduciary duty is owed. The PlanAdministrator ensures administrative procedures and regulations are in compliance with applicable lawsand the terms and conditions of the Plan.

The Plan Administrator also provides assistance to the Pension Board and makes recommendationsconcerning the Plan’s annual budget.

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Plan Demographics

Plan MembershipMembership demographics are reviewed annually and taken into account during the determination ofthe Plan’s Statement of Investment Policies and Goals (SIP&G).

The membership of the Capital Pension Plan remains relatively young and, as a result, the asset mix ofthe Plan’s default investment fund (the Diversified Fund) contains a bias towards equity holdings, withmoderate investment risk.

Members’ investment risk tolerance may decrease as they get older and retirement approaches.For these members, the Capital Pension Plan offers the Pre-Retirement Fund, which is designed topreserve capital in the short-term.

Participation in the Pre-Retirement Fund is voluntary and restricted to those members who are withinfive years of their earliest possible retirement date and those members participating in the VariableBenefit.

The Capital Pension Plan had a total of 8,705 members at December 31, 2009 (8,436 in 2008).The Plan’s membership can be categorized into four groups:

Active Members are those members that are currently employed with a participating employer and onwhose behalf regular contributions to the Plan are made. The Capital Pension Plan ended 2009 with4,989 active members (4,817 in 2008).

Inactive Members are those vested members that are no longer employed with a participatingemployer, but choose to leave all or part of their equity with the Plan. At the end of 2009, there were3,192 deferred members with the Plan (3,126 in 2008).

Variable Benefit Members are those members within the Saskatchewan jurisdiction that are eligiblefor retirement and have chosen to receive pension income directly from the Plan through the VariableBenefit option. At the end of 2009, there were 151 Variable Benefit members with the Plan (113 in 2008).

Annuitants are those members that chose to receive lifetime pension income from the Capital PensionPlan Retirement Annuity Fund. At the end of 2009, there were 373 annuitants (380 in 2008).

Plan CapacityThe Capital Pension Plan continues to experience modest membership growth as participating employersacquire new employees while many departing employees that are vested choose to remain with the Planas inactive members. Many Plan members also choose to remain with the Plan during retirement andparticipate in the Variable Benefit and Retirement Annuity Fund retirement options.

The Plan remains in a position to expand membership and continues to enact policies to meet the needsof Plan members and participating employers.

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Plan Demographics

Age Demographics(December 31)

<24 years 25-34 years 35-44 years 45-54 years 55-64 years >65 years

246

1,695

1,983

2,761

1,534

486

Membership Demographics(December 31)

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sraey43-52 741,1 845 0 0

sraey44-53 072,1 317 0 0

sraey45-54 746,1 870,1 13 5

sraey46-55 396 407 19 64

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Cap

ital

Pens

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Plan

2009

Ann

ual

Rep

ort

2

0

Balanced Scorecard

Performance MeasurementIn 2009, the Capital Pension Plan implemented a widely accepted performance measurement approachknown as a ‘Balanced Scorecard’. The Balanced Scorecard approach provides a framework whereby keyconcepts outlined in the Plan’s mission, vision and values are categorized into goals or perspectives.Within each perspective, strategic performance objectives, with measurable results are articulated.

Perspectives

Financial• build retirement savings• manage retirement savings

Customer• preferred pension plan• integrity• service oriented• open, effective communication

Growth & Innovation• preferred pension plan• open, effective communication• build retirement savings• manage retirement savings• prudent leadership• innovation

Internal Resources & Processes• professional• service oriented• integrity• prudent leadership• open, effective communication

Accountability• professional• integrity• prudent leadership

Relationship Between Mission, Vision & Values and Perspectives

MissionWe are a professionally managed,service oriented definedcontribution pension plan,committed to helping our membersand retirees build and manage theirretirement savings.

VisionTo be the preferred pension plan formembers, employers and retirees.

ValuesThe Capital Pension Plan iscommitted to integrity andprofessionalism in dealing with allstakeholders through prudentleadership, innovation and open,effective communication.

Cap

ital

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Plan

2009

Ann

ual

Rep

ort

2

1

Balanced Scorecard 2009 Results

Financial PerspectiveThis perspective recognizes that the Plan is a defined contribution plan (i.e. money purchase) and thefinancial performance has a direct impact on members’ ability to build and manage their retirementsavings. The assets of the Plan are invested by professional investment managers who are providedspecific investment mandates.

2009 Strategic Initiatives• Completed review of currency hedging;• Monitored performance of the Diversified Fund, Pre-Retirement Fund and Retirement Annuity Fund

based on objectives and comparative benchmarks;• Investigated asset mix changes as part of the investment strategies of the Plan;• Prepared for implementation of International Financial Reporting Standards (IFRS);• Investigated potential implementation of CEO/CFO Certification.

Financial Perspective Scorecard Results(December 31)

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Cap

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Pens

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Plan

2009

Ann

ual

Rep

ort

2

2


Customer PerspectiveThis perspective challenges the Plan to provide its members and participating employers with a serviceoriented approach, a commitment to integrity and professionalism and to provide open and effectivecommunication that allows the Plan to become the preferred pension plan for members and employers.

2009 Strategic Initiatives• Reviewed and revised communications policy and strategy;• Developed/completed Participating Employer/Retirement Primer sessions satisfaction index;• Conducted Retirement Primer Information sessions throughout the province;• Published and distributed three issues of The Capital Report;• Completed re-design/refresh of public website (implementation in 2010).

Customer Perspective Scorecard Results(December 31)

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2009

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2

3

Growth and Innovation PerspectiveThis perspective challenges the Plan to grow by the amount of net assets under management, the numberof Plan members and the number of participating employers. This is to be accomplished by assembling aservice oriented team, knowledgeable about the pension industry, including new trends and innovativepension programs.

2009 Strategic Initiatives• Reviewed asset mix of Diversified Fund in relation to Plan member demographics;• Revised/updated Retirement Primer sessions/Retirement Primer Guide to meet member needs;• Drafted retention strategy (review and implementation in 2010);• Reviewed concept of phased retirement.


Growth and Innovation Perspective Scorecard Results(December 31)

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2009

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4

Internal Resources and Processes PerspectiveThis perspective challenges the Plan to provide its staff with opportunities to develop and expand theirknowledge of the pension industry through relevant publications and training opportunities. The Planempowers staff to make decisions within established policies and promotes a professional serviceoriented team approach for dealing with stakeholders. The Plan Administrator provides strategicdirection to the Plan and ensures its operations are transparent.

2009 Strategic Initiatives• Staff training dollars budgeted;• Scheduled upgrades to staff work stations;• Reviewed and monitored internal processes to ensure efficiency.



Internal Resources and Processes Perspective Scorecard Results(December 31)

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2009

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2

5

Accountability PerspectiveThis perspective challenges the Plan to ensure the fiduciary responsibility is upheld concerning memberequity and that internal controls are in place to ensure the integrity of the Plan.

2009 Strategic Initiatives• Implemented Balanced Scorecard;• Completed review of Governance Manual;• Continued review of Pension Board knowledge and skills;• Published results of key performance indicators in Annual Report;• Conducted and evaluated Pension Board Self Assessment;• Conducted Service Provider review.


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Cap

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Pens

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Plan

2009

Ann

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2

6

2010 and Beyond

2010 Strategic Initiatives

Financial• Investigate asset mix changes or the addition of other investment products as part of the investment

strategies of the Plan;• Complete review and provide recommendations on allocation of administration expenses to each of

the Funds;• Analyze and recommend potential changes to the Plan’s Non-North American equity structure.

Customer• Review the frequency and content of the Plan’s newsletter (The Capital Report) to determine changes

to better serve the membership of the Plan;• Investigate alternate communication methods for providing information to Plan stakeholders;• Roll out secure participating employer website to upload contribution listings for electronic

remittances;• Investigate the ability for participating employers to upload application and termination notices using

the secure website;• Investigate the impact of investment choice;• Review and make recommendations on strategies available for marketing the Plan.

Growth and Innovation• Investigate the feasibility of adding the Retirement Primer guide information on the website for use by

the Plan Membership;• Develop brochure for distribution to terminating members highlighting the advantages of remaining

with the Capital Pension Plan;• Review and make recommendations regarding investment choice options;• Investigate the use of alternate electronic forums for plan member communications.

Internal Resources and Processes• Promote staff training and professional development;• Investigate the ability of uploading Pension Board and Committee information to a secure website for

access by Pension Board members;• Evaluate the impact of investment choice on internal resources.

Accountability• Act on the results of the Pension Board self-assessment;• Conduct comprehensive review and update of Plan Text;• Evaluate the impact of investment choice on the accountability structures;• Implement processes to capture comparative financial information for 2010 under the International

Financial Reporting Standards (IFRS);• Complete the validity of the pension benefit payments being made through the Retirement Annuity

Fund.

Cap

ital

Pens

ion

Plan

2009

Ann

ual

Rep

ort

2

7

Three Year Performance Plan

2010 and Beyond

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2

8

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Three Year Performance Plan (continued)

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Pens

ion

Plan

2009

Ann

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Rep

ort

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9

Appendices

Service Providers

Diversified Fund Investment ManagersConnor, Clark & Lunn (CC&L), Vancouver, British ColumbiaCC&L is a quantitative value style manager, responsible for a portion of the Fund’s Canadian equityinvestment mandate. CC&L replaced Lincluden in November 2008.

Greystone Capital Management Inc. (Greystone), Regina, SaskatchewanGreystone is a growth at reasonable prices (i.e. GARP) manager, responsible for a diversified portfolio ofCanadian and foreign equities, Canadian bonds, real estate and short-term investments. Greystonecontracts Goldman Sachs and Hansberger Global Investors to manage the Non-North American equitiesportion of its investment mandate.

State Street Global Advisors (SSgA), Toronto, OntarioSSgA is an index (i.e. passive) manager, responsible for a portion of the Fund’s U.S. equity and Canadianbond investment mandates.

Tweedy Browne Company, LLC (Tweedy), New York, New YorkTweedy is a value style manager, responsible for a portion of the Fund’s Non-North American equityinvestment mandate.

Pre-Retirement Fund Investment ManagerGreystone Capital Management Inc. (Greystone), Regina, SaskatchewanGreystone manages the entire portfolio for the Pre-Retirement Fund.

Retirement Annuity Fund Investment ManagerGreystone Capital Management Inc. (Greystone), Regina, SaskatchewanGreystone manages the entire portfolio for the Retirement Annuity Fund.

Investment ConsultantHewitt AssociatesRegina, Saskatchewan

CustodianRBC DexiaCalgary, Alberta

AuditorsKPMG, LLPRegina, Saskatchewan

ActuaryAON Consulting Inc.Saskatoon, Saskatchewan

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ital

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Plan

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Ann

ual

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0

Appendices

Comparative Measures

91-day T-billsCanadian treasury bills represent the highestquality short-term investment available. Theindex is constructed by selling and repurchasingGovernment of Canada T-Bills with an averageterm to maturity of 91 days.

Consumer Price Index (CPI)CPI measures the relative prices at various timesof a select group of goods and services whichtypify those purchased by urban families. It isused to gauge Canada’s inflation rate. The seriesused is the all items, not seasonally adjusted, 1992base.

DEX Long Term Bond IndexThe DEX Long Term Bond Index is a capitalization-weighted index containing bonds with a term tomaturity of greater than 10 years. It includesapproximately 350 marketable Canadian bonds.Average term to maturity is 22 years and averageduration is 12.5 years.

DEX Universe Bond IndexThe DEX Universe Bond Index covers allmarketable Canadian bonds with term to maturityof more than one year. The Universe containsover 1,000 marketable Canadian bonds with anaverage term of 10 years and an average durationof 6.5 years. The purpose of the index is to reflectthe performance of the broad “Canadian BondMarket” in a similar manner to the S&P/TSXComposite Index.

Hewitt Manager UniverseThe Hewitt Manager Universe is a database ofactive manager returns, using both composite andpooled fund returns. All performance data mustbe for active strategies and suitable/available toinstitutional investors.

IPD IndexThe ICREIM/IPD Index is published by theInvestment Property Databank Ltd. and measurestotal returns on a diversified portfolio of over1,700 properties, compiled from property levelinformation from pension funds, life insurancecompanies and real estate managers on a quarterlybasis.

MSCI EAFE IndexThe Morgan Stanley Capital International Europe,Australia and Far East Index is a widely recognizedbenchmark of non-U.S. stock markets. It is anunmanaged index composed of a sample ofcompanies representative of the market structureof 21 European and Pacific Basin countries andincludes reinvestment of all dividends. This indexaims to capture 85% of the free float adjustedmarket capitalization in each industry group ineach country.

S&P 500 IndexThe Standard & Poors 500 Index measures thetotal return attributable to the 500 largestcapitalized companies on the U.S. stock exchanges.

S&P 500 Index (Hedged to $C)A synthetic hedging model constructed byNorthwater Capital Management Corporation.Through the use of derivative products the returnof the index is hedged to Canadian dollarseliminating currency risk.

S&P 400 Index (Hedged to $C)The S&P 400 Index consists of 400 medium-sizedcompanies chosen for market size, liquidity andindustry group representation. The index ishedged back into Canadian dollars to mitigatecurrency risk. It is a market value weighted indexand was the first benchmark of mid cap stock pricemovement.

S&P/TSX IndexThe S&P/TSX Index comprises over two-thirds ofthe market capitalization for Canadian-based,Toronto Stock Exchange listed companies. Theindex is calculated on a float market capitalizationand is the broadest Canadian equity indexavailable and serves as the premier benchmark forCanadian pension funds and mutual market funds.

Cap

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ion

Plan

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1

Management’s Responsibility for Financial Reporting

The financial statements and information contained in this 2009 Annual Report have been prepared bymanagement of the Capital Pension and Benefits Administration and have been approved by the PensionBoard. Information presented in this Annual Report that relates to the operation and financial positionof the Capital Pension Plan is consistent with that in its financial statements.

The Financial Statements have been prepared in accordance with Canadian generally acceptedaccounting principles and are consistently applied, using management’s best estimates and judgementswhere appropriate. Management is responsible for the adequacy of the internal controls which ensuresthe reliability and integrity of the Financial Statements and other information presented in this AnnualReport.

KPMG, the Plan’s external auditor, provides independent audit of the financial statements. Itsexamination is conducted in accordance with Canadian generally accepted auditing standards andincludes tests and other procedures that allow it to report on the fairness of presentation of the financialstatements prepared by management.

S. JonesDirector, PensionsCapital Pension & Benefits AdministrationMarch 15, 2010

K.M. KleinExecutive DirectorCapital Pension & Benefits AdministrationMarch 15, 2010

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