Non-Academic Pension Plan
Annual Report to Membership
July, 2013
The primary purpose of this report is:
∗ to review the actuarial valuation information and contribution requirements of the Non
Academic Pension Plan as at December 31, 2012
∗ to review investments and investment performance of the Plan in 2012
∗ to report on the activities of the Non-Academic Pension & Benefits Committee (NAPBC)
ACTUARIAL VALUATION at December 31, 2012
Membership Data
Active Members
Pensioners & Beneficiaries
Other members (deferred, pending transfers)
2012
1407
697
81
2011
1413
660
78
Going-Concern Financial Position of the Plan
The financial position of the Plan on a going-concern basis is measured by comparing the
market value of assets to the actuarial liabilities assuming the Plan is continuing for the
long-term. The actuarial valuation performed as at December 31, 2012 shows that the
Plan, on a going-concern basis, is in a deficit position of $36.2 million as per the summary
table below. Comparative numbers as at December 31, 2011 are also provided.
Going-Concern Financial Position
Actuarial value of assets
Actuarial liability
Surplus (Deficit)
2012
$ 242,978,400
279,195,300
$ (36,216,900)
2011
$ 222,966,600
259,078,400
$ (36,111,800)
Contribution Requirements
The Plan last filed a valuation report with the regulators at December 31, 2009.
The
going-concern deficiency established at December 31, 2009 is being amortized over a
period of fifteen years, or until the next funding valuation is certified, with monthly
payments being paid by the University. The December 31, 2012 valuation is required to be
filed with the regulators by September 30, 2013.
This communication, future communications and other pension plan information are available online at:
www.usask.ca/fsd/faculty_staff/pension_plans
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Contribution Requirements based on actuarial valuation at
December 31st
Total going-concern current service cost
Member fixed rate contributions
Employer fixed rate contributions
Additional employer current service contributions
Unfunded liability payments (going concern deficit)
Total additional annual required payments as a percentage of
earnings
% of Earnings
2012
2011
18.45%
18.33%
8.50%
8.50%
8.50%
8.50%
1.45%
1.33%
7.07%
5.24%
8.52%
6.57%
Payments for January 1, 2014 and onward will be determined once the valuation report has
been finalized filed with the regulators. As a result of additional employer current service
cost contributions and unfunded liability payments, the required monthly special
payments, based on the most recent valuation report at December 31, 2012 are anticipated
to be:
Monthly deficit required contributions
Jan 1, 2014 to
Dec 31, 2014
Jan 1, 2013 to
Dec 31, 2013
$384,750
$136,136
$4,617,000
$1,633,632
Current Service Cost Deficiency & Unfunded
liability payments
Total Annual Payments *
Solvency Position of the Plan (Hypothetical Wind-Up)
The Pension Benefits Act (Saskatchewan) requires the University to review whether the
assets of the Plan would be sufficient to cover the liabilities of the Plan in the event of a
plan wind-up. The actuarial valuation performed as at December 31, 2012 shows that the
Plan, on a hypothetical wind-up basis, is in a deficit position of $170.7 million. The solvency
ratio at December 31, 2012 is 59%.
Solvency Financial Position
Solvency assets
Solvency liabilities
Surplus (Deficit)
Solvency ratio(assets/liabilities)
2012
$ 242,778,400
413,520,100
$(170,741,700)
0.59
2011
$ 222,766,600
371,324,300
$(148,557,700)
0.60
Temporary Solvency Deficiency Payment Relief
In 2010, The Pension Benefits Regulations, 1993 was amended to provide temporary relief
from solvency deficiency funding for sponsors of defined benefit plans. The university
undertook to elect for temporary solvency relief in compliance with regulations for the
valuation report filed at December 31, 2009. This relief provided for a three year
This communication, future communications and other pension plan information are available online at:
www.usask.ca/fsd/faculty_staff/pension_plans
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moratorium from funding a solvency deficiency and is in effect until December 31, 2012
when an actuarial valuation must be filed with the regulators.
In the spring of 2012 the Saskatchewan Financial Services Commission, Pensions Division
released a Consultation Paper – New Funding Regime for Public Sector Plans for comment.
The intent of the paper was to seek feedback on establishing new funding rules for all
public sector plans. New regulations have been drafted for Public Sector Pension Plans,
proposing the elimination of the solvency funding test, but with enhanced going-concern
payments whereby payments are required over a 10 year period as opposed to the current
15 year amortization period. To date, the new regulations have not been approved by the
provincial government; however through discussions with the Pension Division, we are
confident that the regulations will be approved as drafted. Once that occurs, the valuation
report will be finalized and filed with the regulatory authorities.
*The Monthly deficit required contributions of $4.6 million per year, highlighted on page 2,
are based on the assumption that the new regulations will be approved as drafted.
Transfer Deficiency Requirements
Because solvency relief provisions do not apply to lump-sum payments, and as the plan has
a solvency ratio of 0.76 (determined in the valuation at December 31, 2009), it is necessary
to withhold 24% of any lump-sum payments. The amount withheld, referred to as the
“transfer deficiency”, will be paid out with interest at the end of the five-year period
following the date of original payout (or earlier in the event of plan surplus). This
provision does not impact members retiring and commencing a pension from the plan.
Once the valuation at December 31, 2012 is filed with the regulators, the solvency ratio will
change to 0.59 and 41% of all lump-sum payments will be withheld.
Transfer Deficiency Payout Example



Applies to individuals who terminate employment and elect to transfer the lump sum
value of their entitlement out of the plan
When a plan has a solvency deficiency, legislation requires that a portion of every lump
sum (LS) payment be held back
Transfer Deficiency = Portion of LS held back
= (1- solvency ratio) x total LS entitlement
Example
– Date of termination = May 31, 2013
– Total LS entitlement = $200,000
– Solvency ratio = 0.76
– LS payment on May 31, 2013 = 0.76 x $200,000 = $152,000
– Transfer Deficiency payment on May 31, 2018 = (1–0.76) x $200,000 = $48,000
(with interest)
This communication, future communications and other pension plan information are available online at:
www.usask.ca/fsd/faculty_staff/pension_plans
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INVESTMENTS of the PENSION PLAN at December 31, 2012
Market Value of Pension Plan Assets
By Asset Classes
2012
($000)
% of Market
Value
Canadian Equities
Global Equities
Total Equities
$
45,910
92,145
$ 138,055
18.9
38.0
56.9
Bonds & Mortgages
Real Estate
Short term investments
Total Fixed Income
$
77,736
19,847
6,902
$ 104,485
32.1
8.2
2.8
43.1
Total Market Value
$ 242,540
100.0
By Investment Manager
Greystone Managed Investments
Burgundy Asset Management
Phillips, Hager & North Investment Management
Connor, Clark & Lunn Financial
Harding Loevner
Sprucegrove Investment Management
2012
($000)
$ 19,847
23,564
82,864
23,167
45,412
47,516
% of Market
Value
8.2
9.7
34.2
9.6
18.7
19.6
Investment Performance
The long-term investment goal of the Plan is to achieve a minimum annualized rate of
return of 4.25% in excess of the Canadian Consumer Price Index. To achieve this goal, the
Plan has adopted an asset mix that has a bias in favour of equity investments.
The responsibility for investing the assets of the Plan had been delegated to six
professional investment fund managers with different mandates to ensure adequate
investment diversification.
The Plan’s Return Benchmark is a performance standard developed by the Investment
Consultant, Aon Hewitt. The Non Academic Pension & Benefits Committee and the Board of
Governors have approved the benchmark. The investment fund managers of the Plan are
expected to meet or surpass the benchmark.
This communication, future communications and other pension plan information are available online at:
www.usask.ca/fsd/faculty_staff/pension_plans
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Investment Performance
Plan return (gross)
Plan return benchmark (gross)
Consumer Price Index
2012
9.4%
8.5%
0.8%
Last 4 years
7.9%
7.6%
1.7%
Last 10 years
5.8%
5.9%
1.8%
NON-ACADEMIC PENSION & BENEFIT COMMITTEE (NAPBC)
Committee Members
CUPE Union Local 1975 Appointees:
Michael Brockbank, Library
Wayne Foley, Facilities Management
Jeff Theis, Facilities Management
Board of Governor Appointees:
Cheryl Carver, Human Resources
Laura Kennedy, Financial Services
Heather Fortosky, Pensions Office
Meetings of the Committee
Joe Hromek, Retirees Association
Observers:
Doug Horel, Retirees Association
TBD, ASPA
The Non-Academic Pension & Benefits Committee met 6 times during the year. Acting in its
capacity as managing fiduciary; the Committee is responsible for the oversight of the NonAcademic Pension Plan operations, including funding, investment, and administration of
the Plan. The Committee is also responsible for the review and oversight of CUPE Benefits
Funding. The Committee activities over the past year in fulfilling these responsibilities are
outlined as follows:
Meeting Date
Time
allocated
September 20, 2012
3.0 hours
November 20, 2012
1.5 hours
March 12, 2013
4.0 hours
April 15, 2013
1.5 hours
May 21, 2013
2.0 hours
June 10, 2013
1.0 hour
Purpose
*Quarterly Investment Performance Review to June 30th
*Investment Manager Presentation: Sprucegrove
*Investment Manager Presentation: Harding Loevner
* Quarterly Investment Performance Review to Sept 30th
* Investment Policy Annual Review
* Annual General Meeting Review
*Quarterly Investment Performance Review to Dec 31st
*Investment Manager Presentation: Phillips Hager & North
*Investment Manager Presentation: Greystone
*2012 Actuarial Valuation Review
*Funding Policy Review and approval
*Quarterly Investment Performance Review to Mar 31st
*Investment Manager Presentation: Burgundy
*Investment Manager Presentation: Connor Clark & Lunn
*Financial Statements at December 31, 2012 review
This communication, future communications and other pension plan information are available online at:
www.usask.ca/fsd/faculty_staff/pension_plans
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NON-ACADEMIC PENSION PLAN INFORMATION
Plan Documents
Copies of the following documents are on file in the CUPE Union Local office and the office
of the Director of Pensions (Financial Services). They are available for inspection by any
member of the Plan during regular working hours by prior arrangements.
∗ Plan Text
∗ Financial Statements
∗ Actuarial Reports
∗ Auditor’s Report
∗ Committee meeting agendas and minutes
Other Agents of the Plan
Actuary:
Investment Consultant:
Custodian:
Aon Hewitt, Saskatoon
Aon Hewitt, Regina
CIBC Mellon Global Securities
Pension Administration & Support
Pensions Office, Financial Services
Room 220, Research Annex, 105 Maintenance Road
306-966-6633
www.usask.ca/fsd/faculty_staff/pension_plans
Please contact the Pensions Office at 306-966-6633 or any member of the NonAcademic Pension & Benefits Committee if you have any questions about the items
covered in this newsletter.
This communication, future communications and other pension plan information are available online at:
www.usask.ca/fsd/faculty_staff/pension_plans
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