June 28, 2007
TO:
Academic Money Purchase Pension Plan Participants
FROM:
Academic Money Purchase Pension Committee (AMPPC)
ANNUAL REPORT TO PLAN PARTICIPANTS
Since June of 2006, 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 an investigation of the potential benefits of expanding the Bond Index
Fund to include foreign currency denominated bonds, foreign currency and derivatives. The
Committee commissioned Jeff Stephen of Hewitt Associates, its Investment Consultant, to
provide a report on the possible benefits and costs of this strategy and on the basis of the
report the Committee decided not to expand the fixed income fund at this time.
A second major initiative of the Committee was to consider the ramifications of a change to
the Pension Benefits Regulations in 2006 to permit a defined contribution pension plan to
offer a Variable Benefit within the plan structure to retirees. A Variable Benefit is similar to
the Group Retirement Fund that was introduced in 2006 for retirees. After consideration of
the advantages and disadvantages of the Variable Benefit relative to the Group Retirement
Fund, the Committee decided to maintain the Group Retirement Fund as the retirement
option for Plan participants.
As part of the ongoing education and communication strategy, the AMPPC drafted three
newsletters to the membership and partnered with Sun Life Financial to circulate its
newsletters dealing with financial planning and investment strategies. These newsletters can
be viewed at http://www.usask.ca/hrd/benefits/pension_news_acmp.php.
The AMPPC together with Sun Life organized interactive investment workshops on October
17, 18 and 19, 2006 to familiarize members with the principles of building an investment
portfolio. In addition, the Committee arranged for a general meeting on January 25th, 2007
that provided members with the opportunity to discuss the annual performance of the Plan
with our Investment Consultant representative. Sun Life representatives were also present to
answer questions about Sun Life operations in relation to the Plan.
As part of its ongoing review of the governance structure of the Plan, the Committee
reviewed the Statement of Investment Policies and Procedures and recommended
amendments to this document to the Faculty Association Executive and Board for approval.
In addition, the Committee drafted an amendment to the Plan, M-06, to deal with changes in
the contribution rates for academic staff and senior administrative members of the Plan that
were agreed to in the Faculty Collective Agreement for 2007-2009 and recommended this
amendment to the Executive of the Faculty Association and the Board for approval.
2
Finally the AMPPC initiated an investigation of the desirability of changes to the Default
Option of the Plan. Presently the Default Option for all participants is the Balanced Life Cycle
Fund that has 60 percent of the Fund invested in equities. The Committee has
commissioned the Investment Consultant to report on the advisability and feasibility of
tailoring the Default Option to the working life of the participant, with exposure to equities
highest at the date of employment and declining as the years to retirement decrease. Any
recommendation the AMPPC might draft in the future regarding the Default Option would in
due course be submitted to Plan members for ratification and, if ratified, to the Board for
approval.
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.
The following is a summary of the Plan’s investment performance as at December 31, 2006:
Fund
Money Market
Return
Objective
Bond Fund
Return
Objective
Conservative Life Cycle Fund
Return
Objective
Balanced Life Cycle Fund
Return
Objective
Aggressive Life Cycle Fund
Return
Objective
Canadian Equity Fund
Return
Objective
U.S Equity Fund
Return
Objective
International Equity Fund
Return
Objective
1 year
4 year
3.9%
4.0%
3.0%
2.9%
4.1%
4.1%
6.1%
6.1%
7.2%
7.1%
7.6%
7.7%
13.3%
13.2%
10.3%
10.9%
16.5%
16.4%
11.6%
12.5%
14.4%
17.3%
19.9%
20.5%
15.3%
15.4%
6.2%
6.3%
29.1%
25.9%
12.5%
15.2%
The Sun Life website at https://www.sunnet.sunlife.com/member/signin/index.aspx?
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
Academic Money Purchase Pension Committee