Non-Academic Pension Plan
Annual Report to Membership
September, 2012
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, 2011
∗ to review investments and investment performance of the Plan in 2011
∗ to report on the activities of the Non-Academic Pension & Benefits Committee (NAPBC)
ACTUARIAL VALUATION at December 31, 2011
Membership Data
Active Members
Pensioners & Beneficiaries
Other members (deferred, pending transfers)
2011
1413
660
78
2010
1399
638
92
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, 2011 shows that the
Plan, on a going-concern basis, is in a deficit position of $36.1 million as per the summary
table below. Comparative numbers as at December 31, 2010 are also provided.
Going-Concern Financial Position
Actuarial value of assets
Actuarial liability
Surplus (Deficit)
2011
$ 222,966,600
259,078,400
$ (36,111,800)
2010
$ 222,500,100
241,841,700
$ (19,341,600)
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 next required valuation to be filed with the
regulators will be at December 31, 2012.
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Contribution Requirements
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
2011
18.33%
8.50%
8.50%
1.33%
5.24%
% of Earnings
2010
17.33%
8.25%
8.25%
0.83%
1.77%
2009
17.94%
7.50%
7.50%
2.94%
1.62%
6.57%
2.60%
4.56%
As a result of additional employer current service cost contributions and unfunded liability
payments, the required monthly special payments with solvency relief are:
Monthly deficit required
contributions
Jan 1, 2012 to
Dec 31, 2012
Current Service Cost
Deficiency & Unfunded
liability payments
Total Annual Payments
Jan 1, 2011 to
Dec 31, 2011
Jan 1, 2010 to
Dec 31, 2010
$136,136
$157,223
$226,370
$1,633,632
$1,886,676
$2,716,440
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, 2011 shows that the
Plan, on a hypothetical wind-up basis, is in a deficit position of $148.6 million. The solvency
ratio at December 31, 2011 is 60%.
Solvency Financial Position
Solvency assets
Solvency liabilities
Surplus (Deficit)
Solvency ratio(assets/liabilities)
2011
$ 222,766,600
371,324,300
$(148,557,700)
0.60
2010
$ 222,500,100
304,620,400
$ (82,120,300)
0.73
2009
$216,130,600
283,827,000
$ (67,696,400)
0.76
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 provides for a three year
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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. It is anticipated that new regulations will be finalized by the provincial
government in the fall of 2012.
Transfer Deficiency Requirements
Because the temporary solvency relief provisions do not apply to lump-sum payments, as
the plan has a solvency ratio of 0.76 (determined in the valuation at December 31, 2009), it
is necessary to withhold 24 percent 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 fiveyear 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.
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 = June 30, 2012
– Total LS entitlement = $100,000
– Solvency ratio = 0.76
– LS payment on June 30, 2012 = 0.76 x $100,000 = $76,000
– Transfer Deficiency payment on June 30, 2017 = (1–0.76) x $100,000 = $24,000
(with interest)
INVESTMENTS of the PENSION PLAN at December 31, 2011
Market Value of Pension Plan Assets
2011
($000)
% of Market
Value
39,897
87,801
$ 127,698
18.0
39.5
57.5
By Asset Classes
Canadian Equities
Non-Canadian Equities
Total Equities
$
3
Bonds
Mortgages
Real Estate
Short term investments
Total Fixed Income
$
65,505
5,143
17,639
6,025
$ 94,312
29.5
2.3
8.0
2.7
42.5
Total Market Value
$ 222,010
100.0
By Investment Manager
Greystone Managed Investments
Jarislowsky Fraser Limited
Phillips, Hager & North Investment
Sceptre Investment Counsel
2011
($000)
$ 17,639
70,911
117,960
15,475
% of Market
Value
8.0
31.9
53.1
7.0
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 four
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.
Investment Performance
Plan return (gross)
Plan return benchmark (gross)
Consumer Price Index
2011
0.0%
0.8%
2.3%
Last 4 years
1.0%
1.1%
1.8%
Last 10 years
4.2%
4.3%
2.1%
2012 Investment Update
As previously communicated, the NAPBC recommended an investment policy change,
moving the asset mix to a pure specialist structure, consisting of two Canadian equity
managers and two Global equity managers. The committee undertook a manager search to
fill the required mandates. The Canadian equity managers selected were Burgundy Asset
Management and Connor, Clark & Lunn Investment Management. The Global equity
managers selected were Harding Loevner and Sprucegrove Investment Management. The
fixed income portfolio from Jarislowsky Fraser was reallocated to Phillips, Hager & North.
Greystone Managed Investments retained the real estate mandate. The transition was
completed June 4, 2012.
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NON-ACADEMIC PENSION & BENEFIT COMMITTEE (NAPBC)
Committee Members
CUPE Union Local 1975 Appointees:
Michael Brockbank, Library
Wayne Foley, Facilities Management
Jeff Theis, Facilities Management
Observers:
Doug Horel, Retirees Association
Joe Hromek, Retirees Association
Jamie Rogal, ASPA
Board of Governor Appointees:
Cheryl Carver, Human Resources
Laura Kennedy, Financial Services
Heather Fortosky, Pensions Office
Meetings of the Committee
The Non-Academic Pension & Benefits Committee met 12 times during the year. Acting in
its capacity as managing fiduciary; the Committee is responsible for the oversight of the
Non-Academic 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
Purpose
July 12, 2011
2.5 hours
*Management Structure Review
September 6, 2011
2.0 hours
*CUPE Funding Review
*Long-term Disability Plan Annual Review
September 9, 2011
7.5 hours
*Canadian Equity Manager Interviews
September 21, 2011
7.5 hours
*Global Equity Manager Interviews
September 27, 2011
2.0 hours
*Quarterly Investment Performance Review to June 30th
October 25, 2011
1.0 hours
*Manager selection follow up
*Annual General Meeting Discussion
November 14, 2011
2.0 hours
* Quarterly Investment Performance Review to Sept 30th
* Investment Policy Annual Review
* Annual General Meeting Review
February 9, 2012
2.0 hours
*2011 Annual Credited Interest Rate Approval
*CUPE Funding Review
5
3.0 hours
*Quarterly Investment Performance Review to Dec 31st
*Investment Manager Presentation: PH&N
*Investment Manager Presentation: Greystone
April 23, 2012
2.0 hours
*CUPE Funding Review
*Health & Dental Financial Experience and Rate Review
*2011 Actuarial Valuation Review
May 25, 2012
2.0 hours
*Quarterly Investment Performance Review to Mar 31st
June 1, 2012
1.0 hours
*Financial Statements at December 31, 2011 Approval
March 8, 2012
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
966-6633
Please contact the Pensions Office at 966-6633 or any member of the Non-Academic
Pension & Benefits Committee if you have any questions about the items covered in this
newsletter.
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