28 JUNE 2011
TO:
FROM:
Academic Money Purchase Pension Plan Participants
Academic Money Purchase Pension Committee (AMPPC)
ANNUAL REPORT TO PLAN PARTICIPANTS
Since June of 2010, the Committee has met 8 times for a total of approximately 16 hours. Apart
from the normal oversight duties associated with the operation of the Plan, a principal focus this
year was to initiate a review of the investment structure of the Plan. This structure has been in
place since the transfer of assets in June of 2002 and the Committee believes it is appropriate to
review whether the structure is still meeting the investment needs of Plan participants. As a first
step in the review process, the Committee conducted, with the help of Sun Life, a survey of Plan
participants in March and April of this year. A summary of responses to this survey is to be found
in the Appendix to this report.
A second initiative of the Committee was to conduct a review of and recommend changes to the
Governance Document to the Board and the Executive of the USFA for approval. In addition, the
Committee reviewed the Statement of Investment Policies and Procedures and recommended
changes to this document to the Board and the Executive of the USFA for approval. Finally, the
Committee in conjunction with Sun Life developed an annual communication and education
strategy for the Plan.
As part of the ongoing education and communication strategy, the AMPPC drafted one newsletter to the membership and partnered with Sun Life Financial to circulate three newsletters
dealing with financial planning and investment strategies. These newsletters can be viewed at
http://www.usask.ca/fsd/faculty_staff/pension_plans/whats_new/pension_news_ampp.php
The AMPPC together with Sun Life organized two enrollment and investment information
sessions and two interactive investment workshops on October 28th and 29th, 2010 to familiarize
members with the structure of the Plan and the principles of building an investment portfolio,
respectively. In addition, the Committee arranged for a general meeting on February 7, 2011 that
provided members with the opportunity to discuss the annual performance of the Plan with our
Investment Consultant representative and to discuss the services of the Sun Life website with a
Sun Life representative. Finally, the Committee partnered with Sun Life to hold retirement
planning workshops on February 23rd and 24th, 2011.
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.
In 2010 stock markets around the world continued their recovery from the nadir reached in March
of 2009 and the Plan’s funds participated in this recovery. 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,
2
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, 2010 exclusive of Plan expenses:
Fund
1 year
Money Market
Return
0.7%
Benchmark
0.5%
Bond Fund
Return
6.7%
Benchmark
6.7%
Conservative Life Cycle Fund
Return
7.4%
Benchmark
7.4%
Balanced Life Cycle Fund
Return
8.3%
Benchmark
8.7%
Aggressive Life Cycle Fund
Return
8.7%
Benchmark
9.2%
Canadian Equity Fund
Return
12.5%
Benchmark
17.6%
U.S Equity Fund
Return
9.0%
Benchmark
9.1%
International Equity Fund
Return
4.9%
Benchmark
2.1%
4 year
2.4%
2.2%
5.4%
5.6%
4.2%
4.1%
1.5%
1.1%
0.1%
-0.5%
4.0%
4.0%
-4.7%
-4.7%
-4.2%
-6.5%
The Sun Life website at https://www.sunnet.sunlife.com/signin/mysunlife/home.wca? contains
additional information about the Plan’s performance. Additionally, you can access the Plan’s
Financial Statements at http://www.usask.ca/hrd/benefits/pension_plans.php.
Respectively submitted by
Robert F. Lucas, Chair
Mike Sander, Vice-Chair
Academic Money Purchase Pension Committee
Appendix
AMPPC Survey of Plan Participants: Summary
The survey was completed by about 22 percent of Plan participants, a good response relative to
industry standards of 10-15 percent. The following conclusions are based on our analysis of the
responses received to five general question categories.
1. Investment Awareness
(a) One third of responders have not engaged in any planning for retirement in the past twelve
3
months.
(b) Approximately one half of responders consider themselves somewhat informed with respect
to the investment options of the Plan, the remaining members are divided roughly equally
between well informed and uninformed. Of the uninformed, three quarters suggest that either
more time is required to become informed or that the default option is meeting their needs so
there is little value-added in becoming informed. Lack of information is the reason offered by the
remaining quarter for being uninformed.
2. Asset Allocation
(a) Over 50 percent of responders place all their balances in the default option and tend not to
make changes in their allocation. For responders with more than 9 years of pension contributions
this percentage is about 60, and among responders who are uninformed, it is about 75 percent.
The principal reasons for the use of the default option are that either it is judged to be meeting the
needs of responders, or that they do not have the expertise to judge among the various options.
(b) Approximately 70 percent of responders do not use the aggressive or conservative life-cycle
funds. Those who are the furthest from retirement tend to utilize these funds more heavily.
(c) Less than one-half of responders utilize the five distinct asset classes, but of those who do,
half have at least 75 percent of their balances allocated to these asset classes, and these
individuals are likely to be either well informed or somewhat informed.
3. Expansion of Asset Classes
(a) There is limited demand for an expansion of asset classes, with over sixty percent of
responders unwilling to pay higher fees to access new classes. Of those who expressed an
interest in a GIC (36 percent), roughly half of these members have five years or fewer before
retirement.
(b) There were various suggestions for additional asset classes, including sector and regional
funds, but the GIC option is the only one with significant support.
4. Programmed Option
(a) One third of responders are interested in a programmed transfer option in the lifecycle funds, where the exposure to stocks diminishes with years of service, with another 40
percent uncertain about its value. The interest in this option is greatest among those responders
who self identified themselves as uninformed investors and those furthest from retirement.
5. Email Access
(a) Seventy percent of responders favour allowing Sun Life access to their email addresses to help
them manage their investments within the Plan.