July 2013
TO:
FROM:
Academic Money Purchase Pension Plan Participants
Academic Money Purchase Pension Committee (AMPPC)
ANNUAL REPORT TO PLAN PARTICIPANTS
Since June of 2012, the Committee has met six times for a total of approximately twelve hours.
Apart from the normal oversight duties associated with the operation of the Plan, a principal focus
this year was to review the operation of the Sun Life Money Market Fund, one component of the
investment structure of the Plan. We were offered the option of switching to the SLF Money
Market Fund and this change would lead to a reduction of Money Market management fees of
approximately 30 percent. The manager of both funds is McLean Budden, so there is no
likelihood of a change in the performance of this asset class. Accordingly the Committee
recommended to the Board a change from the Sun Life Money Market Fund to the SLF Money
Market Fund. This transition will occur sometime this summer at which time you will notice a
change in the name and fees associated with this asset class.
As part of the ongoing education and communication strategy, the AMPPC together with Sun
Life organized three enrollment and investment information sessions including one webinar and
two interactive investment workshops on November 6th and 7th 2012 to familiarize members with
the structure of the Plan and the principles of building an investment portfolio, respectively. The
Committee also partnered with Sun Life to hold retirement planning workshops on March 4th and
5th, 2013 and a webinar on March 6th, 2013.
In addition, the Committee arranged for a general meeting on February 26, 2013 that provided
members with the opportunity to discuss the annual performance of the Plan with our Investment
Consultant representative. A Sun Life representative also provided a presentation on the member
website, including how to use the asset allocation and retirement tools.
Investment Performance of the Plan
As Plan members have differing risk preferences, the Plan makes several investment options
available to members. These options allow members to select segregated funds with a mix of
underlying assets that meets their investment needs. Members are reminded of their
responsibility to review periodically the portfolio structure of their participation in the Plan and to
revise it as appropriate given their needs.
As an example of a possible review, many observers of financial markets believe that the current
low values of interest rates will not persist much longer. Since bond prices and interest rates are
inversely related, any general rise in interest rates will be accompanied by a fall in bond prices.
Accordingly, it is unlikely that the very strong returns generated by the Plan bond fund over the
past ten years will be repeated over the next ten years. Members with a long working horizon
might wish to consider a reweighting of their portfolios, increasing their exposure to equities and
reducing their exposure to bonds. As always, you should consult with a financial advisor who is
familiar with your circumstances before making any changes to your asset allocation.
In 2012 global uncertainty continued due to lingering European debt concerns. Nevertheless,
because central banks throughout the world pursued very expansionary policy, the real recovery
2
from the 2008-09 financial crisis continued and equity markets generated strong absolute returns.
The U.S. and international equity markets outperformed the Canadian market. Strong
performance of our active managers relative to their benchmarks pushed the performance of all
three Life Cycle above their respective benchmarks for the year.
The benchmark portfolios for each of the funds have been determined using the actual returns of
the market indexes such as 91-Day Canadian Treasury Bills, the DEX Universe Bond Index, the
S&P/TSX Capped Composite Index, Standard and Poor’s 500 U. S. Stock Index and Morgan
Stanley’s Europe, Australia and Far East Index. The following is a summary of the Plan’s annual
investment performance as at December 31, 2012 exclusive of Plan expenses:
Fund
Money Market Fund
Return
Benchmark
Bond Fund
Return
Benchmark
Conservative Life Cycle Fund
Return
Benchmark
Balanced Life Cycle Fund
Return
Benchmark
Aggressive Life Cycle Fund
Return
Benchmark
Canadian Equity Fund
Return
Benchmark
U.S. Equity Fund
Return
Benchmark
International Equity Fund
Return
Benchmark
1 year
4 year
1.1%
1.0%
0.9%
0.8%
3.6%
3.6%
6.3%
6.3%
5.7%
5.3%
6.9%
6.9%
10.0%
8.6%
8.0%
7.7%
12.1%
10.2%
8.4%
8.1%
10.7%
7.2%
10.7%
11.7%
13.4%
13.4%
8.5%
8.6%
18.5%
14.7%
6.2%
4.2%
The Sun Life website at https://www.mysunlife.ca contains additional information about the
Plan’s performance. You can access the Plan’s Financial Statements and Statement of Investment
Policies & Procedures (SIPP) at www.usask.ca/fsd/faculty_staff/pension_plans/index.php
Members of the Academic Money Purchase Pension Committee
Robert F. Lucas (Chair) Economics
Laura Kennedy, Financial Services
Don Gilchrist, Economics
Mike Sander, Financial Services
George Tannous, Finance and Management Science Jim Traves, (Vice-Chair) Advancement
Anand Elango, Edwards School of Business, ASPA Observer