pension plan - manitoba school boards · 2018-06-08 · canadian pension plan (cpp) – upcoming...
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WWW.MBSCHOOLPENSION.CA
2017 ANNUAL REPORT
PENSION PLANFOR NON-TEACHING EMPLOYEES OF PUBLIC SCHOOL BOARDS IN MANITOBA
Hecla-Grindstone Provincial Park, ManitobaPhoto by Karen Harrington
Message from the Board of Pension Trustees
Investment Summary
Membership Information
Financial Information
Contribution Schedule
Plan Trustees and Advisors 15 - 16
Table of Contents
1 - 2
3 - 8
11 - 13
9 - 10
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2017 was a pivotal year for the Manitoba School Boards Non-teaching Pension Plan. The most significant changes to the diversification of the Plans investments since its inception in 1974 were completed.
Investments
For the 2017 calendar year, our total plan rate of return is 12.24%, an increased Annual Rate of Return (refer to the Investment Summary section for further information). The growth of the total plan assets has increased by $55 million from December 31, 2016 to December 31, 2017. The value of the plan climbed from $536 million to $591 million, just short of a milestone of $600 million.
Plan Amendments
Various plan amendments were made to ensure our plan continues to provide the same benefits for all members regardless of age. The plan amendment which is effective January 1, 2019, provides for a universal eight (8%) percent contribution rate for all plan members, with matching school division contributions, a move from age-based member contribution levels. The majority of members participating in the plan will experience increased contributions resulting in greater retirement income.
The administration costs that are incurred managing the Pension fund are separate and apart from the Pension Plan funds.The Administration Account costs are currently 100% Employer paid by the Divisions. The Administration Account rate increased from 1% to 1.2% on January 1, 2018, 1.4% for 2019 and 1.6% for 2020.
Canadian Pension Plan (CPP) – Upcoming Changes
In 2019, the Canada Pension Plan will be implementing changes to the government Plan, including the introduction of increased CPP contributions for employees and employers.
Starting in 2019, the Canada Pension Plan (CPP) will be gradually enhanced. The changes will be phased in from 2019 until 2025. These changes will result in Canadians receiving higher benefits in exchange for making higher contributions. Although these changes do not directly impact the Manitoba School Boards Association Non-teaching Pension Plan, they will affect your total retirement income. The changes are as follows:
• Annual target for payment of CPP benefits from 25% of 33% of average work earnings (up to maximum earnings limit each year).
• 2019 – 2023 gradual increase in contributions by one percentage point, 4.95% to 5.95%, on earnings between $3500 and the original earnings limit.
• In 2024, employees will begin contributing 4% on an additional range of earnings starting at the original earnings limit (estimated to be $69,700 in 2025) and go to the additional earnings limit which will be 14% higher by 2025 (estimated to be $79,400).
continued on page 2
Message from the Board of Pension TrusteesJune 2018
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The pension trustees would encourage you to take the time to read the 2017 annual report and hope that you find the content both useful and informative.
This annual report, along with downloads of plan documents, explanation of retirement options/retirement calculations and frequently asked questions can be found at www.mbschoolpension.ca.
Message from the Board of Pension Trustees
Vince MarianiChair, Board of Pension Trustees
June 2018
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Investment Summary
Canadian Defined Benefit Pension Plans gain further ground in 2017: RBC Investor & Treasury Services
Q4 total returns gain 4.4 per cent, led by global equity returns of 6.1 per cent
Toronto, February 6, 2018 – Canadian defined benefit pension plans ended 2017 in positive territory, posting an annual return of 9.7 per cent,according to the $650 billion RBC Investor & Treasury Services All Plan Universe – the industry’s most comprehensive universe of Canadian pensionplans – marking nine consecutive years of positive returns.
In addition, a recent RBC Investor & Treasury Services poll of Canadian defined benefit pension plan sponsors, showed their median funded status stands at 96 per cent. The poll, A Confident Outlook revealed that nearly 25 per cent of respondents reported levels in excess of 100 per cent andonly five per cent with funded levels of less than 70 per cent. Eighty-seven per cent of respondents remain confident they can meet their ongoing pension liabilities, which should be good news for the longevity of Canadian defined benefit pension plans.
“2017 was a strong year for Canadian pension plans, with year-over-year returns, despite a backdrop of ongoing global economic and political volatility,” said James Rausch, Head of Client Coverage, Canada, RBC Investor & Treasury Services. “The Bank of Canada rate hikes, the first inseven years, reverberated through the bond market, while the energy and commodity sectors continued to fluctuate and impact Canadian markets.
Meanwhile, global equities continued to provide strong and stable returns. Fund managers will continue to pay close attention to these strong global returns and geopolitical developments to maintain a diversified portfolio across asset sectors and classes in the year ahead.”
Continuing low interest rates, an uptick in the global economy, recovering emerging markets and improving labour markets helped fuel 2017 global equity returns.
While the Canadian economy was a strong performer in 2017, and the Bank of Canada interest rate hike in September of 2017 boosted financial stocks in Q4, the energy sector weighed down year-over-year returns on the TSX. In 2016, however, Canada’s three largest sectors – energy, materials and financial services, posted strong results, helping lift returns.
The RBC Investor & Treasury Services poll also revealed that 40 per cent of respondents identified low interest rates as their main concern in the year ahead.
In 2017, Canadian bond yields rose across most of the curve while the Bank of Canada’s interest rate hikes in July and September led to a flatter yield curve when compared to the start of the year.
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Investment Summary
Total Plan Assets ($Million)
Total Plan$591.0
Canadian Equities
$156.2 26.4%
Global Equities
$186.5 31.6%
Mortgage
$25.1 4.2%
Real Estate
$95.6 16.2%
BlackRock $79.1 13.4%
Hexavest $92.1 15.6%
Greystone $25.1 4.2%
Fiera $45.9 7.8%
Burgundy $77.1 13.0%
Baillie Gifford $94.4 16.0%
Greystone $3.6 0.6%
25.0% 30.0% 0% 10.0%
Fixed Income
$127.7 21.6%
Fierra $67.0 11.3%
Alliance Bernstein $60.6 10.3%
30.0%
Greystone $46.0 7.8%
Performance TargetsThe performance targets for the total plan are as follows:
1. Consumer Price Index +3.5%2. Rank avove 40th percentile in Plans $250 Million - $1 Billion Universe over 4 years.3. Exceed Premium Benchmark:
(since June 1, 2012) = 25% TSX Composite + 30% MSCI World +45% FTSE TMX Universe +1.25% over four years (since July 1, 2009) = 25% TSX Composite + 15% S&P 500 + 15% MSCI EAFE + 40% FTSE TMX Universe =5% 91-Day T-Bills +1.25% over four years (prior to July 1, 2009) = 30% TSX Composite + 10% S&P 500 +10% MSCI EAFE + 40% FTSE Universe +10% 91-Day T-Bills +1.5% over four years
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Investment Summary
Beginning Market Value09/30/2017$ 580.3
Beginning Market Value12/31/2016$ 536.0
Net External Growth
$ (10.8)
Net External Growth
$ (11.3)
Income Received
$ 11.2
Income Received
$ 38.5
Gain/Loss
$ 10.3
Gain/Loss
$ 27.8
Ending Market Value12/31/2017$ 591.0
Ending Market Value12/31/2017$ 591.0
Asset Growth Summary ($Million)
Canadian Equities
Global Equities
Fixed Income
Mortgage
Real Estate
Cash & Short Term
Market Value
12/31/2012
26.5%
30.2%
43.4%
0.0%
0.0%
-0.1%
12/31/2012
$ 390.9
12/31/2013
27.2%
33.7%
39.1%
0.0%
0.0%
0.0%
12/31/2013
$ 444.0
12/31/2014
26.9%
32.7%
38.7%
0.0%
1.1%
0.5%
12/31/2014
$ 487.6
12/31/2015
24.0%
34.2%
29.0%
0.0%
12.9%
0.0%
12/31/2015
$ 491.6
12/31/2016
27.4%
33.7%
23.3%
0.0%
15.5%
0.0%
12/31/2016
$ 536.0
12/31/2017
26.4%
31.6%
21.6%
4.2%
16.2%
0.0%
12/31/2017
$ 591.0
Policy
25%
30%
35%
0%
10%
0%
Median
21.3%
27.1%
37.5%
0.0%
1.2%
Asset Allocation
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Investment Summary
Plans $250 Million - $1 BillionTotal Fund Annualized Rates of Return
5th Percentile25th PercentileMedian75th Percentile95th Percentile
TOTAL PLANPolicy BenchmarkCPI + 3.5%
5.895.104.503.802.99
3.703.690.86
8282100
12.6611.029.717.724.88
12.358.045.43
67392
12.6611.029.717.724.88
12.358.045.43
67392
11.569.678.477.353.63
11.477.705.24
66890
9.608.507.716.014.69
8.516.915.21
246081
10.459.218.787.666.11
8.697.915.16
5367100
12.0010.87
9.618.456.48
9.388.795.09
5372100
10.109.468.307.655.76
7.807.415.09
7184100
10.089.348.688.026.13
8.147.615.20
6687100
One Quarter
Universe: RBC Plans $250 Million - $1 Billion - Total PortfolioAsset Class: Total Portfolio
11.0910.07
9.518.527.00
9.058.395.16
7076100
Rank
7.947.346.525.925.19
6.586.005.11
427396
YTD Calendar
OneYear
TwoYears
ThreeYears
Four Years
Five Years
Seven Years
Eight Years
Nine Years
TenYears
Plans $250 Million - $1 BillionTotal Plan Policy Rates of Return
5th Percentile25th PercentileMedian75th Percentile95th Percentile
TOTAL PLANPolicy BenchmarkCPI + 3.5%
5.254.794.403.603.28
3.703.690.86
6768100
10.559.648.497.074.97
12.358.045.43
15485
10.559.648.497.074.97
12.358.045.43
15485
8.918.387.686.843.90
11.477.705.24
14889
8.527.966.835.864.66
8.516.915.21
54082
9.688.867.887.176.61
8.697.915.16
4048100
11.3610.07
8.728.075.94
9.388.795.09
3046100
9.518.457.787.166.08
7.807.415.09
486799
9.618.768.147.526.65
8.147.615.20
5073100
One Quarter
Universe: RBC Plans $250 Million - $1 Billion - Total PortfolioAsset Class: Total Portfolio
10.039.488.798.327.63
9.058.395.16
4573100
Rank
6.906.506.135.645.28
6.586.005.11
185397
YTD Calendar
OneYear
TwoYears
ThreeYears
Four Years
Five Years
Seven Years
Eight Years
Nine Years
TenYears
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Investment Summary
Following are the rates at which interest was allocated in 2016 and in each of the previous ten years for the active and deferred member accounts at year end:
Member’s Account
2017 201620152014201320122011201020092008200720062005
12.243157%10.460717%
2.042368%9.417250%
12.002601%7.339553%0.237688%9.880608%
14.075176%-13.607912%
1.45895%12.455695%12.313340%
0.702500%0.498333%0.515833%0.915000%0.967500%0.947500%0.910833%0.580833%0.320000%2.593333%4.124167%4.042500%2.729167%
YearAverage 91 Day
Treasury Bill Rate
1 year3 years ending 20175 years ending 201710 years ending 201720 years ending 2017
12.24%8.16%9.17%6.09%6.95%
Annualized Rate of Return
Fund Rates of Return
Investment Summary
Annual
Total Fund
Non-Canadian Equities
Annual
93,880,028
93,880,028
%
100.0
100.0
Net External Growth
(8,826,678)
(8,826,678)
Income Received
14,826,357
14,826,357
Gain/Loss
(7,747,475)
(7,747,475)
Ending Market
92,132,231
92,132,231
%
100.0
100.0
Quarterly
Total Fund
Non-Canadian Equities
Annual
90,184,758
90,184,758
%
100.0
100.0
Net External Growth
(2,526,678)
(2,526,678)
Income Received
-
-
Gain/Loss
4,474,151
4,474,151
Ending Market
92,132,231
92,132,231
%
100.0
100.0
Asset Growth SummaryTotal Portfolio
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Membership Information
2017 2016
Active Members Total at January 1New entrantsTerminations
• lump sum/transfers• deferred
RetirementsDeathsAccounts Consolidation & AdjustmentsTotal at December 31
8,584849
(324)(340)(180)
(11)5**
8,583
8,384845
(231)(262)(150)
(6)4*
8,584
Deferred Members Total at January 1Terminations from activeLump sum/TransfersRetirementsDeathsAccounts Consolidation & AdjustmentsTotal at December 31
2,363340
(154)(66)(12)(5)**
2,466
2,359262
(183)(64)
(7)(4)*
2,363
This report is based on membership and contribution data as at December 31, 2017, provided by the school boards and Manitoba School Boards Association.
We have applied tests for internal consistency, as well as for consistency with the data used for the previous year-end. These tests were applied to membership reconciliation and the active and deferred member accounts. Contributions and lump sum payments were compared with corresponding amounts reported in financial statements provided by RBC Investor Services Trust. The results of these tests were satisfactory.
The membership movement in 2017 is summarized below. For comparison, we have also included the membership movement for the prior year.
*These adjustments in 2016 represent employees who were incorrectly identified as terminated in 2015, however their status with the school division went from non-teaching to teaching, thus no termination of employement.
**These adjustments in 2017 represent employees who were incorrectly identified as terminated in 2016 by the school division, they should have remained as active with the school division.
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Membership Information
Members Total Value of Members’ Pension
Accounts
• Active member accounts Under 35 35–44 45–54 55–64 65+• Total active member accounts• Deferred member accounts Under 35 35–44 45–54 55–64 65+• Total deferred member accounts
Total as at December 31, 2016
$14,615,667$54,461,996
$160,018,552$254,638,421
$34,991,795$518,726,431
1,0481,7932,8562,525
3618,583
Average perMember
$13,946$30,375$56,029
$100,847$96,930$60,436
338602816603107
2,466
11,049
$2,543,157$9,902,307
$22,839,498$34,171,396
$8,057,538$ 77,513,896
$ 596,240,327
$7,524$16,449$27,990$56,669$75,304$31,433
$53,963
Member Account Balances by Age Group as at December 31, 2017
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Financial Information
Independent Auditors Report
To the Trustees of Manitoba School Boards Association Pension Plan for Non-Teaching Employees of Public School Boards in Manitoba
We have audited the accompanying financial statements of Manitoba School Boards Association Pension Plan for Non-Teaching Employees of Public School Boards in Manitoba, which comprise the statement of financial position as at December 31, 2017, the statement of changes in net assets available for benefits for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for pension plans, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of Manitoba School Boards Association Pension Plan for Non-Teaching Employees of Public School Boards in Manitoba as at December 31, 2017, and the changes in its net assets available for benefits for the year then ended in accordance with Canadian accounting standards for pension plans.
Original signed by KPMG LLP Chartered Professional Accountants
May 30, 2018Winnipeg, Canada
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Financial Information
2017
Investments Contributions receivableReceivable from Administration Fund
Benefits payablePayable to Administration FundPayable to School Divisions
Net assets available for benefits
Obligation for pension benefits
Net assets available for benefits less obligation for pension benefits
$ 594,138,1093,730,263
618,866598,487,238
2016
$ 540,156,1334,216,966
680,674545,053,773
1,869,910374,635
2,3542,246,899
596,240,339596,240,339
$ –
961,139 337,635
6,3241,305,098
543,748,675543,748,675
$ –
December 31, 2017, with comparative information for 2016
Assets
Liabilities
Statement of Financial Position
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Financial Information
2017
Investment income:Investment administration fee regarding deferred members
Realized gain (loss) on disposal of investments, net Unrealized loss in fair value of investments, net
Contributions: Participants Sponsors Allocation of forfeited contributions to School Divisions
Benefits: Retirements Termination Deaths Marriage breakdown
Increase (decrease) in net assets available for benefits
Net assets available for benefits, beginning of year
Net assets available for benefits, end of year
$ 37,379,151
(374,635) 37,004,516
2016*
$ 27,737,831
(337,635)27,400,196
10,025,15518,867,91628,893,071
65,897,587
(487,759) 23,995,669 23,507,910
50,908,106
Year ended December 31, 2017, with comparative information for 2016
20,858,231 20,032,24640,890,477
(2,354)40,888,123
106,785,710
19,535,064 19,333,48838,868,552
(6,324)38,862,228
89,770,334
32,292,71019,324,142
2,558,133 119,061
54,294,046
25,556,194 10,562,917
160,157331,367
36,610,635
52,491,664
543,748,675
$ 596,240,339
53,159,699
490,588,976
$ 543,748,675
Statement of Changes in Net Assets Available for Benefits
* Note: Certain comparative information has been reclassified to conform with the financial statement presentation adopted in the current year.
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Effective January 1, 2019, regular contributions increase to an 8% employee contribution, matched by the school division. The 8% universal rate replaces the current age graded contribution scale linked with CPP contributions.
Contribution Schedule
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Pension Plan Board of Trustees
Appointed by the Manitoba School Boards AssociationKen Cameron, Trustee, Rolling River School DivisionColleen Carswell, Trustee, River East Transcona School DivisionLouise Johnston, Trustee, Louis Riel School DivisionFloyd Martens, Trustee, Mountain View School DivisionLinda Ross, Trustee, Brandon School Division
Appointed by the Manitoba Association of School Business OfficialsVince Mariani, Secretary-Treasurer, River East Transcona School Division
Appointed by the Canadian Union of Public EmployeesDarlene ParsonsSharon Sapoznik
Appointed by the Non-Teaching AssociationCarol Newbound
Advisors/Administrators
Manitoba School Boards Association StaffKelly Henderson, Manager, Finance and AdministrationAlison Bourrier, Labour Relations Consultant
Plan AdministrationEckler Limited
Plan CustodianRBC Investor Services Limited
Measurement ServiceRBC Investor Services Limited
Investment ManagersAlliance Bernstein Global (AB Global)AxiumBaillie GiffordBlackRockBurgundyFiera CapitalFiera PropertiesGreystoneHexavest
AuditorsKPMG
Plan Trustees and Advisors
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If you have any questions about the plan, your first source of information should always be the plan booklet. The plan booklet can be found on our website at mbschoolpension.ca.
If you need further informaton, you should contact your school division office.
Additional information is also available from: Kelly HendersonManitoba School Boards Association191 Provencher Blvd. Winnipeg, MB R2H 0G4Telephone: 204-594-5165 or 1-800-262-8846 (outside Winnipeg)E-mail: [email protected]: www.mbschoolpension.ca or www.mbschoolboards.ca
If you need more assistance because of a member terminaton, change in marital status, or death you can contact:Eckler Ltd. Administration2475 - One Lombard PlaceWinnipeg, MB R3B 0X3Telephone: 204-988-1571Website: www.eckler.ca
For help in planning your retirement benefits contact:James RalkoEckler Limited2475-One Lombard PlaceWinnipeg, Manitoba R3B 0X3Telephone: 204-988-1581 or 1-877-988-1581 (outside Winnipeg)E-mail: [email protected]
Plan Trustees and Advisors
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Notes:
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