apex governance board update - auma.ca · 2019-12-03 · apex governance board directors • chair...
TRANSCRIPT
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APEX Board Update
October 5, 2016
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Scope of Retirement Programs
• APEX Supplementary Pension Plan (APEX)
• MuniSERP
• Alberta Communities Pension Plan
• Group RRSP and Tax Free Savings Account
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APEX Governance Board Directors
• Chair Helen Rice, Councillor Grande Prairie
• Vice Chair Elaine Noel–Bentley, BA, MA
• Robert Kallir, BA, LLB, Independent Director
• Ellen Nygaard, BA, MBA, Independent Director
• Norbert Van Wyk, CPA, ICD.D, Independent Director
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Financial Overview of Retirement Programs
*As of August 31, 2016
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APEX December 31 2015 Financial Results
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Regulatory Requirement – APEX Actuarial Valuation Report
Is there enough money to cover the cost of future guaranteed pension benefits?
• What are the liabilities (current and future pension benefits)?
• What are the assets (contributions from employers and employees and investment earnings)?
• What employer and employee contribution rates are needed to pay for benefits?
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Unfunded Liability
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APEX 2017 Contribution Rates
• Employee contributions are 2.84%(current rate is 2.5%)
• Employer contributions are 3.78%(current rate is 3.00%)
• 2017 Review of APEX Plan
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Other APEX Initiatives
• Develop and Implement the APEX External Auditing program
• Secure a Fund Holder and Investment Manager
• Introduce Investment Advice Service (provided by Fund Holder)
• Review Governance and Oversight
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What You Need to Know About Pension Programs
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Pension Navigating into Retirement…Are you retirement ready?
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…what retirement looks like today
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• What retirement savings do you have?
• Do you contribute regularly?
• Do you leave money “on the table”?
• Are there other saving options?
• Are your investments diversified?
Understand where you are today
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…how do I see my retirement?
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Your retirement lifestyle will change
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How much pre-retirement income will you need?
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my retirement lifestyle… what will it cost?
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How long should your money last?
Source: Canadian Institute of Actuaries – 1994 Uninsured Pensioner Mortality Table Projected to 2020.
95
25% chance one spouse will live to
age 95
50% chance onespouse will live to
age 91
Retirement
9165
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my retirement lifestyle…prepare today for tomorrow
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Age
55 60 65 71
Earliest
company
pension may
be available
Earliest
CPP is
available
Traditional
retirement age
Earliest
OAS is
available
Latest registered savings
plans must be converted to
retirement income
Personal savings
Work part time
Employer pension
RRSP converted to income
Old Age Security* (for life)
Canada Pension Plan (for life)Reduced CPP
*Recent OAS changes impact anyone born on or after April 1, 1958
Sources of retirement income
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Next steps
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Put your plan into action
• Talk with your family
• Review your group/individual savings plans
• Set up a meeting with your advisor
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LIFE IN RETIREMENT
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Source: Sun Life Financial Retirement Now Report 2016
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Thank you!
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LAPP:
Update and Future Directions
APEX Board Update at
2016 AUMA Annual Convention
Christopher Brown, CEO
Alberta Local Authorities Pension Plan Corp.
October 5, 2016
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2
7
Largest pension plan in Alberta
7th largest pension plan in Canada
216th largest pension plan in the world
LAPP
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LAPP Membership(Dec. 31, 2015 unaudited)
426 employers
49 unions
244,621 members
(2014: 237,612)
156,141 active
(2014: 152,583)
30,393 inactive
(2014: 29,607 )
58,087 retirees
(2014: 55,422)
Retirees
Inactive
Active
28
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2
9
LAPP Stakeholders
Sectoral membership
approximately:
51% Health
30% Municipal
19% Education
health
municipal
education
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Financial Statements($ millions)
2015 2014
Net assets available
for Benefits
$34,419.6 $30,790.4
Pension Obligation $35,343.0 $33,245.0
Surplus (Deficiency) ($923.4) ($2,454.6)
% on Accounting
Basis
97.4% 92.6%
3
0
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3
1
Actuarial Valuation($ millions)
2015 2014
Assets $34,724.3 $30,427.5
Liabilities $36,904.9 $34,385.6
(Deficit) ($2,180.6 ) ($3,958.1 )
% Funded 94.1% 88.5%
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Funded Status
60%
70%
80%
90%
100%
110%
120%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Fu
nd
ed
Ra
tio
(%
)
Year
LAPP Historical Funded Ratio
Funded Ratio Market Value Funded Ratio Smoothed Value
3
2
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Contribution Rate
Structure
15.88
17.4518.78
19.7120.65
21.78
24.16 24.16 24.16 24.16
12.8514.02 14.42 14.42 14.42 14.82
16.76 17.08 16.7717.94
0
5
10
15
20
25
30
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Aggregate Rate Current Service Cost
33
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Contribution Rates
2014 – 2017
Employees’ Rate up to YMPE* 10.39%
Employees’ Rate over YMPE* 14.84%
Employers’ Rate up to YMPE* 11.39%
Employers’ Rate Over YMPE* 15.84%
Total 24.16% of pay
2016 YMPE**Year’s Maximum Pensionable Earnings
$54,900
2016 Salary Cap $160,970
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CPP Reform
Agreement in principle reached in June, 2016:
Income replacement level to increase to 1/3 of income from
the current ¼
Upper earnings limit will be targeted at $82,700 upon full
implementation in 2025
Gradual 7-year phase-in beginning on January 1, 2019
Increase to the Working Income Tax Benefit to help low-
income earners
Employee contributions to the enhanced portion of the CPP
will be deductible
Impact on LAPP benefits and contributions to be
assessed once details to implement the changes are
tabled in legislation 35
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Minister
of Finance
APS
ShareholderLegislator
Plan
Trustee/
Administrator
RegulatorAIMCo
Shareholder
APS Board
APS
AIMCo Board
AIMCo
LAPP
Boards &
ALAPP
Current Governance
Structure
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Governance Issues
Lack of clear roles & accountabilities (including
sponsors, APS, AIMCo)
Lack of coordinated decision making
Inability to make change quickly
Minister wears many hats, with conflicting priorities
Employees / Employers bear the risk, with no direct
decision-making role
Government does not backstop the Plan
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Governance Renewal
Awaiting formal mandate from government
In the meantime, LAPP Board and ALAPP focused on
education and engagement of sponsors in the process
Board’s strategic plan calls for moving ahead to allow
greater sponsor voice
Reviewing potential options for governance structuring
Identifying issues of importance to sponsors requiring
input and agreement
Identifying sectoral representation
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Municipal Sector
Representation
Municipal sector in LAPP includes both AUMA and
AAMD&C members
With sheer number of employers, not all will be able to
directly participate in discussions
Can AUMA/APEX play a role in choosing someone
from your membership to represent your portion of the
municipal sector in governance discussions?
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AMSC
RETIREMENT
PROGRAMS
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Group RRSP
Employer:
• Determines plan parameters, such aswho is eligible
whether the employer wants to make any contributions
Any restrictions on removal of employer contributions
Employee:• Contribute by payroll deduction and make
investment choices
• Can transfer in from an existing RRSP
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Tax Free Savings Account
• No financial obligation for employer
• Savings tool after tax dollars withdrawals tax free
• Investment earnings accrue tax free
• Choice to withdraw funds at any time and re-contribute the following calendar year
• Contribute by payroll deduction and make investment choices
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Alberta Communities Pension Plan (ACPP)
• Defined Contribution Plan for employee(s) who do not participate in Local Authorities Pension Plan
• Participation is voluntary
• Employer and employee make matching contributions
• Contribution rates: 3.0% to 9.0%
• Higher contribution rates for management or long-service employees
• Contribute by payroll deduction and make investment choices
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Investment Choices – Group RRSP, TFSA & ACPP
• Same investment choices available to participants in the Group RRSP, TFSA and ACPP
• Investment choices available recommended by AUMA investment consultant and reviewed periodically
• Fund management fees lower than most financial institutions
• Ability to change asset allocation at any time
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Questions?