Realize. It starts
with you.
Annual General Meeting
for Members of the
Non-Academic
Pension and Benefit Plans
May 12, 2015
Non-Academic Pension
and Benefit Plans
Program
Welcome and Introductions:
Darlene Marchuk, Director, Pension & Benefits (Human Resources)
Pension Plan Overview and Annual Update:
Dale Schoffer, Chair, Non-Academic Benefits Committee (NABC)
Co-Chair, Joint Pension Investment Committee (JPIC)
Associate Vice-President (Finance)
The Financial Educator Website Demonstration:
Holly Johnson, Pension & Benefits Analyst (Human Resources)
Feature Presentation: Where There’s Will … There’s a Way
Jennie Aldworth, Sun Life Workplace Solutions
(Blue Whale Financial Solutions)
Non-Academic Pension
and Benefit Plans
Outline
• NABC & JPIC Committee Work
• Master Trust 2014 Market Overview
• Non-Academic Plan Highlights
• Options at Retirement / Termination
• Pension Plan Provisions
• Working Beyond Age 65
• Benefits
• Resources
Non-Academic Pension
and Benefit Plans
NABC Committee Work in 2014
• approved the 2014 pension plan budget;
• reviewed and considered the extrapolation provided
by the Actuaries outlining the financial position of the
pension plan at December 31, 2013;
• was provided a statistical update on the University’s
Disability Program;
Non-Academic Pension
and Benefit Plans
NABC Committee Work in 2014 (cont’d)
• continued monitoring the payment of benefits
exceeding the 5.5% funding cap as provided for in the
Collective Agreement;
• met with Sun Life Financial (Group Benefits)
• agreed to review the findings of the Study of
Mortality Experience for Pension Plans of
Saskatchewan’s Municipalities and Non-Academic Staff.
Non-Academic Pension
and Benefit Plans
JPIC Committee Work in 2014
• met with the Master Trust Investment managers to
review their investment performance;
• had various portfolio managers provide observations
and updates in the investment landscape;
• recommended the Board of Governors approve the
2014 Statement of Investment Policies and Goals;
• following approval of the Master Trust Asset Mix
Benchmarks, recommended rebalancing of investment
portfolios (including adding emerging market asset class)
Non-Academic Pension
and Benefit Plans
Master Trust: 2014 Market Overview
• Established in November 1995
• Assets of the University’s Pension Plans
• Academic & Administrative Pension Plan (Defined Benefit
Component) and Non-Ac pension Plan combined into a single
fund called the “Master Trust”
• Each Component of the Plan has its own Statement of
Investment Policies and Goals (SIP&Gs)
• Separate accounting for each
• Market value at December 2014: $344.7 million
Non-Academic Pension
and Benefit Plans
Master Trust (cont’d)
• Upside
• Reduces expense fees
(2014 expenses .66% of assets)
• Investment manager diversification
• Downside
• Challenge of “one size fits all” approach
• Non-Academic Plan – DB Plan open to new
members, while Ac & Admin DB Component
(closed)
Non-Academic Pension
and Benefit Plans
Master Trust (cont’d)
• Distribution of Assets at December 31, 2014
• Equities
• Canadian Equities
•
•
•
•
• U.S. Equities (50% Hedged to C$)
• Non-North American Equities
• Global Equities
• Emerging Markets
Bonds
Real Estate
Cash & Cash Equivalents
Mortgages
*TOTAL
* exceeds 100% due to rounding
Non-Academic Pension
and Benefit Plans
18.8%
17.4%
15.1%
8.0%
4.0%
23.0%
8.1%
1.9%
4.0%
100.0%
Master Trust (cont’d)
• Investment Managers / Mandates
Phillips, Hager & North (PH&N) – Balanced Fund 35.8%
(Cdn Equities/Bonds/Mortgages)
Mawer Investment Management Ltd.
11.7%
(Cdn Equities)
Templeton
15.1%
(Non-North American Equities)
Grantham, Mayo, Van Otterloo & Co. (GMO)
11.9%
(Global & Emerging Market Equities)
BlackRock (US Equities)
Bentall Kennedy (Real Estate)
17.4%
8.1%
TOTAL
Non-Academic Pension
and Benefit Plans
100.0%
Master Trust (cont’d)
• 2014 Annual Return of 10.0% before expenses
• Exceeded the Benchmark by 0.5%
• Particularly strong relative performance in Canadian equities
(Mawer’s 17.3% return was 6.7% above the S&P/TSX Index)
• Mortgages were strong in the year, returning 6.4% versus
3.1% benchmark
• Longer Term Performance
• Four years: value added of 1.4%
(total fund: 10.2% vs Benchmark of 8.8%)
• Ten years: value added of 0.7%
(total fund: 7.1% vs Benchmark of 6.4%)
Non-Academic Pension
and Benefit Plans
Master Trust (cont’d)
Non-Academic Pension
and Benefit Plans
Master Trust (cont’d)
Non-Academic Pension
and Benefit Plans
Master Trust (cont’d)
• Year to date performance to March 31, 2015
is estimated at 6.7% (before expenses)
• 0.7% above the 6.0% benchmark
Non-Academic Pension
and Benefit Plans
Non-Academic Pension Plan Highlights
• Membership in the Plan at December 2014
• Active Members
518
• Pensioners & Beneficiaries
249
• Other
75
(former members who have yet to transfer their funds)
Total
Non-Academic Pension
and Benefit Plans
842
Plan Highlights (cont’d)
• Market value of the Pension Plan Assets
at December 31, 2014:
• $87.5 million
• Increase of $6.9 million from December 31, 2013 balance
Non-Academic Pension
and Benefit Plans
Plan Highlights (cont’d)
• Financial Situation of the Plan
Going Concern Position:
(Based on the premise the plan will continue on into the future indefinitely.)
Based on the latest valuation, the University is currently
contributing the additional amounts necessary to satisfy the
prescribed funding requirement of the Pension Benefits Act
(Saskatchewan) as recommended until such time as a subsequent
valuation is filed.
• Next valuation due for the year ending December 31, 2015
• The additional amount is approximately 2.18% of
pensionable earnings which is over and above the regular
contributions which match employee contributions.
Non-Academic Pension
and Benefit Plans
Plan Highlights (cont’d)
• Financial Situation of the Plan
• Stellar investment returns of 18.8% and 10%
(before expenses) in 2013 and 2014
• Exceeds the 6.25% (net of expenses rate) used as
investment assumption
• One would anticipate plan would be in surplus
Non-Academic Pension
and Benefit Plans
Plan Highlights (cont’d)
• Financial Situation of the Plan
For the next funding valuation (Year ending December 31, 2015)
• requirement to strengthen mortality tables to reflect
we are living longer; this requirement alone offsets the gains
PLUS
• Superintendent of Pensions reviewing level of margins required
by pension plans – the last valuation used a 5% margin
(margin is an explicit provision for adverse deviations or outcomes differing from
assumptions used for mortality, inflation, discount rate, etc.)
Non-Academic Pension
and Benefit Plans
Plan Highlights (cont’d)
• Financial Situation of the Plan
Conclusion:
Even with a good investment return for 2015, there
may still be a deficit at December 31, 2015 when a
valuation is required.
Is increasing contributions and/or decreasing benefits
the answer?
This has been done multiple times since 2011.
Non-Academic Pension
and Benefit Plans
Plan Highlights (cont’d)
• Financial Situation of the Plan
• Current Contributions:
Employees contribute 8.75%,
matched by the Employer
Combined Total: 17.5%
PLUS
Employer paid contributions of an additional 2.18%
of pensionable earnings
Non-Academic Pension
and Benefit Plans
Plan Highlights (cont’d)
• Financial Situation of the Plan
(Based on extrapolation to December 31, 2014)
• Estimated contributions required of 20% – 22.5%
without incorporating anticipated increases to margins
Non-Academic Pension
and Benefit Plans
Options on Retirement
• Your DB Pension Benefit (paid monthly)
Normal form of annual pension based on a formula:
A = 2.00% of your best consecutive three year average earnings x
your years of pensionable service prior to 2011; plus
B = 1.75% of your best consecutive three year average earnings x
your years of pensionable service for 2011, 2012 and 2013; plus
C = 1.50% of your best consecutive five year average earnings x
your years of pensionable service after 2013.
• Normal form of pension: Life only, Guaranteed 10 years
• Other options: Integrated Pension
Joint & Survivor Benefits (if you have a spouse)
(100%, 75%, 66 2/3%, 60% and 50%)
Non-Academic Pension
and Benefit Plans
Options on Termination
• DB Balance on Termination
Consists of the following amounts:
• Pre-2011 Contributions:
Greater of your account balance or commuted value,
plus
• Post 2011 Contributions:
Commuted Value
(calculated at actual time of termination due to
sensitivity to economic factors such as long bond rates)
Non-Academic Pension
and Benefit Plans
Options on Termination (cont’d)
• Interest on your DB Balance
• 2014 Prescribed Rate: 1.4%
• 2014 Fund Rate: 8.04%*
• 2015 Fund Rate: 8.52%*
Annual rate of return applied on your account for
balances prior to December 31, 2010
• Benefits post January 1, 2011
Commuted value
(Present value of stream of payments at retirement)
Non-Academic Pension
and Benefit Plans
Options on Termination (cont’d)
• Your DB Transfer Options
• Other Employer Pension Plan
• Cash / Transfer to an RSP
(if considered a small benefit. For 2015 must be less than $10,720)
• Locked-In Retirement Account (LIRA)
• a “parking space” for retirement savings for those who
do not yet require retirement income
• Prescribed Registered Retirement Income Fund
(PRIF)
• Annuity: purchased from insurance company
Note: 44% holdback on transfers other than small benefit
Paid with interest within five years or earlier if plan no longer in deficit
Non-Academic Pension
and Benefit Plans
Plan Provisions
• Pension Indexing
• Applies to all pensioners
• Ad hoc increases paid from plan surplus
• Due to financial position of the plan, indexing last provided to
pensioners for the plan year ending 2001
Non-Academic Pension
and Benefit Plans
Other Retirement Information
•
Age limit for maturing registered pension plans and
Registered Retirement Savings Plans (RRSPs)
currently permitted until the end of the year you turn 71
•
Assess your tax position –
(ie income splitting between spouses)
•
Government Programs
• Canada Pension Plan
• Old Age Security
• http://www.servicecanada.gc.ca/eng/home.shtml
Non-Academic Pension
and Benefit Plans
Working Beyond Age 65
•
Pension plan contributions and benefits accruals:
in accordance with the Income Tax Act permitted until the end of
the year the member turns 71
•
Benefits continuing beyond Normal Retirement
Date until age 71include:
•
•
•
•
Life insurance
Dental
Extended Health and Health Spending Account
Only sick and short term disability benefits
Long Term Disability Benefits ceases on Normal Retirement Date
Non-Academic Pension
and Benefit Plans
Benefits: Dental, Health, Life Insurance
• All benefits cease on date of retirement
• Sun Life “My Choices”
• Life Insurance
• must be under age 65 and
• make application to convert within 31 days of
retirement / termination from the plan
• Dental and Extended Health Care Benefits
• must be under age 74 and
• make application to convert within 60 days of
retirement / termination from the plan
• converted to an individual Sun Life Plan
(Option: Standard or Enhanced)
Non-Academic Pension
and Benefit Plans
Benefits: Dental, Health, Life Insurance (cont’d)
• Other Options (generally require medical evidence)
• Canadian Labour Congress (Information at CUPE Office)
• Other service providers: SK Blue Cross, Group Medical, etc.
Non-Academic Pension
and Benefit Plans
Resources
• Human Resources Department:
• HR Website: benefits and pension information is available at:
http://www.uregina.ca/hr/faculty-staff/cupe5791-staff/benefits.html
http://www.uregina.ca/hr/faculty-staff/cupe5791-staff/pension.html
• contacting HR: Pension & Benefits 306.585.4167
• Consult a Financial Advisor
• Certified Financial Planners website www.fpsc.ca/
(provides CFA list of members in good standing)
Non-Academic Pension
and Benefit Plans
Resources (cont’d)
• Financial Educator (TFE) e-learning website:
Pension plan paid service that provides stand-alone interactive
modules on financial, retirement and lifestyle planning.
Demo to follow this presentation
• Sun Life Financial:
• www.mysunlife.ca/uregina
• From the drop-down menu select
• My Financial Plan
• Tools and calculators
Non-Academic Pension
and Benefit Plans
Questions
???????
Non-Academic Pension
and Benefit Plans