Retirees Pension Plan
Annual Report to Membership
July, 2013
The primary purpose of this report is:
∗ to review the actuarial valuation information and special payment requirements of the
Retirees 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 Retirees Pension Committee
ACTUARIAL VALUATION at December 31, 2012
Membership Data
Age of Pensioners & Beneficiaries
70 -75
76 - 80
81 - 85
86 - 90
90+
Total
2012
9
41
57
72
40
219
2011
18
43
59
74
35
229
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 $9.1 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)
Going Concern ratio(assets/liabilities)
2012
$ 37,033,000
46,147,000
$(9,114,000)
0.80
2011
$ 40,802,000
49,005,000
$(8,203,000)
0.83
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 $12.9 million, compared to
$13.9 million at December 31, 2011.
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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Solvency Financial Position
Solvency assets
Solvency liabilities
Surplus (Deficit)
Solvency ratio(assets/liabilities)
2012
$ 36,933,000
49,800,000
$ (12,867,000)
0.74
2011
$ 40,702,000
54,574,000
$(13,872,000)
0.75
2010
$ 45,184,000
56,476,000
$ (11,292,000)
0.80
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. The relief provided for a three year
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.
Funding Requirements
The University was required to file a valuation at December 31, 2009. The going-concern
deficiency (unfunded liability) of $3,462,000 established at this date is being amortized
over a period of fifteen years, or until the next funding valuation is certified, with monthly
payments of $29,800 being paid by the University.
The December 31, 2012 valuation is required to be filed with the regulators by
September 30, 2013. Once this valuation is filed, additional payments will be required to
fund the new unfunded liability.
Payments for January 1, 2014 and onward will be determined once the valuation report has
been finalized and filed with the regulators. Anticipated total payments to the plan for the
deficiencies above are shown in the following table, based on the most recent valuation
report at December 31, 2012.
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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Based on the assumption that the pension regulations will be approved as drafted, the
following monthly special payments will be required
Jan 1, 2014 to Jan 1, 2013 to
Monthly deficit required contributions Dec 31, 2014 Dec 31, 2013
Going-concern deficit (unfunded liability)
$ 29,800
$ 29,800
from December 31, 2009 valuation
Going-concern deficit (unfunded liability)
67,900
--from December 31, 2012 valuation
Total Monthly Payments
$ 97,700
$ 29,800
Jan 1, 2012 to
Dec 31, 2012
$ 29,800
--$ 29,800
Note: In spite of the difficult financial situation, there will be no decrease in current
monthly pension payments received by pensioners. Due to the current financial
position of the Plan, there will be no ad-hoc increases to current pensions.
INVESTMENTS of the PENSION PLAN at December 31, 2012
Market Value of Pension Plan Assets
2012
($000)
By Asset Classes
% of
Market
Value
% of
Market
Value
2011
($000)
Canadian Equities
Non-Canadian Equities
Total Equities
$
6,207
6,823
$ 13,030
16.7
18.4
35.1
$
8,168
8,824
$ 16,992
20.1
21.7
41.8
Bonds
Mortgages
Short term investments
Total Fixed Income
$ 20,623
3,036
386
$ 24,045
55.7
8.2
1.0
64.9
$ 23,417
194
-$ 23,611
57.7
0.5
-58.2
Total Market Value
$ 37,075
100.0
$ 40,603
100.0
By Investment Manager
Greystone Managed Investments
Jarislowsky Fraser Limited
2012
($000)
$ 23,880
13,141
% of Market
Value
64.5
35.5
Investment Performance
The long-term investment goal of the Plan is to achieve an annualized total rate of return of
a least 4.5% as of the December 31, 2012 actuarial valuation. To achieve this goal, the Plan
has adopted an asset mix that has a bias in favour of fixed income investments.
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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The responsibility for investing the assets of the Plan has been delegated to two
professional investment fund managers with different mandates to ensure adequate
investment diversification.
Investment Performance
Plan return (gross)
Plan return benchmark (gross)
Consumer Price Index
2012
7.3%
6.5%
0.8%
Last 4 years
7.1%
7.1%
1.7%
Last 10 years
5.7%
5.6%
1.8%
The Plan’s Return Benchmark is a performance standard developed by the Investment
Consultant, Aon Hewitt. The investment fund managers of the Plan are expected to meet or
surpass the benchmark.
2012 Investment Update
In 2011, the committee revised the investment philosophy and risk philosophy of the Plan
to reflect a de-risking strategy. This strategy involved two significant aspects. The first
was a schedule to gradually reduce the Plan’s equities in favour of bonds (liability matching
assets). The second was to transition the universe bond mandate to a custom liability
matching bond mandate, managed by a specialist manager, Greystone Managed
Investments.
The de-risking strategy was designed to be transitioned over two years. December 1, 2011
the Plan moved to a custom liability matching bond strategy and reduced the overall
allocation to equities by 5%. In 2012, the allocation to equities has decreased a further 5%,
with an additional 5% decrease to occur in 2013. At December, 2013, the Plan’s asset mix
is designed to be 70% custom bond and 30% equities.
RETIREES PENSION COMMITTEE
Committee Members
Bruce Schnell schnellbj@sasktel.net
Dennis Dibski djdibski@shaw.ca
Patricia Lawson plawson@sasktel.net
Meetings of the Committee
Terry Summers, Financial Services Division
Laura Kennedy, Financial Services Division
Heather Fortosky, Pensions Office, FSD
The Retirees Pension Committee met 3 times during the year. Acting in its capacity as
managing fiduciary; the Committee is responsible for the oversight of the Pension Plan
operations, including funding, investment, and administration of the Plan. The Committee
activities over the past year in fulfilling these responsibilities are outlined as follows:
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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Meeting Date
Time
allocated
September 21, 2012
2.5 hours
April 16, 2013
2.0 hours
June 11, 2013
2.0 hours
Purpose
*Quarterly Investment Performance Review to June 30th
*Investment Manager presentation: Jarislowsky Fraser
*Investment Policy review
*Quarterly Investment Performance Review to Dec 31s
*2012 Actuarial Valuation review
*Funding Policy review
*Financial Statements at December 31, 2012 review
*Quarterly Investment Performance Review to Mar 31st
*Investment Manager presentation: Jarislowsky Fraser
RETIREES PENSION PLAN INFORMATION
Plan Documents
Copies of the following documents are on file in 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 Retirees
Pension 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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