REPORT TO THE BOARD OF GOVERNORS

Transcription

1 Agenda Item #3.4 REPORT TO THE BOARD OF GOVERNORS SUBJECT UBC STAFF PENSION PLAN ANNUAL REPORT AND QUARTERLY COMPLIANCE UPDATE MEETING DATE APRIL 14, 2014 Forwarded to the Board of Governors on the Recommendation of the President APPROVED FOR SUBMISSION Presented By Lisa Castle, Vice-President Human Resources Jay Parker, Executive Director, Staff Pension Plan Report Date March 4, 2014 DECISION REQUESTED For Information EXECUTIVE SUMMARY a. Quarterly Compliance & Governance Report As part of its regular duties, the UBC Staff Pension Plan Pension Board (the Pension Board ) provides quarterly report to update the Board of Governors on key SPP developments, including investment and funding matters. b. SPP Governance Report & Compliance Checklist for the calendar year 2013 Circulated for information. Place and Promise COMMITMENT(s) Outstanding Work Environment. Page 1

2 UBC Staff Pension Plan Pension Board s Annual & Quarterly Reports to the UBC Board of Governors April

3 Objective To update the UBC Board of Governors on the Staff Pension Plan in the following areas: Governance Report & Compliance Checklist for 2013 Plan Member Communications Risk Management Actuarial and Funding Status 2

4 Governance Report & Compliance Checklist for 2013 Pension Board has reviewed the 2013 Annual Governance Report & Compliance Checklist. Plan compliant with Legislation & Regulations. Plan compliant with checklists; 1.0 (Legislation), 2.0 (Internal Governance Policies) & 4.0 (Prudent Investment Practices). Compliance with checklist 3.0 (Self-Assessment ) is being developed. 3

5 Plan Member Communications Communications on the Actuarial Valuation: The February newsletter included an article on preparing for the Actuarial Valuation. The November newsletter will report the results of the valuation. Preparation has started for the annual Pension Fair on June 5, May newsletter will be mailed to members with annual member statements in late April. Plan s 2013 Year in Review report will be completed in early April. Members version of the report will be posted on the Plan s website in late April. 4

6 Risk Management The new BC Pension Standards Act & Regulations are anticipated to be effective January 1, The Deputy Superintendent of Pensions for BC has said publicly that the new regulations will not include Single Employer Target Benefit Plans. The Staff Pension Plan will therefore continue to be regulated as a Defined Benefit Plan. 5

7 Behind the Numbers Actuarial Valuation is in-progress: Preliminary results April/May 2014 Final report & filing September

8 The University of British Columbia Staff Pension Plan Governance Report and Compliance Checklist for the calendar year 2013 Approved by the Pension Board February 25, 2014

9 The University of British Columbia Staff Pension Plan Governance Report for the Calendar Year Purpose of this Report The University of British Columbia (the University ) sponsors the University of British Columbia Staff Pension Plan (the Plan ). The Plan provides benefits to non-faculty staff of the University and several related employers and bargaining agents. The Plan is registered under the Pension Benefits Standards Act (British Columbia) (the PBSA ) and the Income Tax Act (Canada) (the ITA ). It is a target benefit plan design, which means that benefit levels are defined but the University and other participating employers contribution obligations are limited to approximately 10% of members salaries. Plan members also contribute. A benefits funding test is used to enable coordination of benefit levels and available funding. The University of British Columbia Staff Pension Plan Pension Board (the Pension Board ) has been established to perform administration duties related to the Plan and to oversee the Plan s compliance with governing legislation and regulatory guidelines. The Pension Board meets at least seven times per year to oversee the administration of the Plan, supervise agents, review and direct the investment of the Plan s funds, receive reports and provide direction in respect of projects that the Pension Board has initiated. The Pension Board meetings are minuted. As part of its annual duties the Pension Board completes this Governance Report and Compliance Checklist to document the Plan s compliance with key statutory and regulatory obligations and facilitate the annual review of governance documents relating to the administration of the Plan. This report focuses on the compliance and governance aspects of retirement plan management and not on investment or financial aspects. A legislative and regulatory compliance checklist developed by the Pension Board is attached as Schedule A. 2.0 Overview of Plan Administration The UBC Board of Governors will receive a comprehensive report titled Staff Pension Plan 2013 Year in Review in the April/May 2014 timeframe. This annual publication is produced by the staff of the Pension Administration Office for the Staff Pension Plan Board of Directors, the UBC Board of Governors and University Administration, and UBC Investment Management Trust. It presents the year s highlights, discusses the Plan s structure and governance, and provides an update on membership, administrative, and investment trends and statistics. 2.1 Members of the Pension Board As of January 1, 2014, the Pension Board was comprised of the following individuals: Name Position Term Harry Satanove Independent Chair (non-voting) January 1, 2014 December 31, 2015 Peter Smailes Appointed Board Member December 1, 2011 December 31, 2014 Debbie Wilson Appointed Board Member February 2, 2012 December 31, 2015 Mike Leslie Appointed Board Member January 1, 2013 December 31, UBC Staff Pension Plan Governance Report and Compliance Checklist Page 1 of 16

10 Name Position Term Jay Parker Appointed Board Member January 1, 2014 December 31, 2017 Brian Evans Elected Board Member January 1, 2011 December 31, 2014 George McLaughlin Elected Board Members January 1, 2011 December 31, 2014 Alan Marchant Elected Board Member January 1, December 31, 2016 David Lance Elected Board Member January 1, 2013 December 31, Key Pension Administration Office Personnel As of year end 2013, the Pension Administration Office was comprised of the following key individuals: Name Jay Parker Andrea Gesner Title Executive Director, Secretary to the Board Acting Senior Operations Manager 2.3 Plan Service Providers Service Provider Duties Comments Aon Hewitt (Actuary) UBC Investment Management Trust Inc. (Investment Manager) PBI Actuarial Consultants Ltd. (Asset Consultant) RBC Investor Services Trust (Pension Fund Trustee) Deloitte (Auditor) Pension Administration Office (Administrative Team) Lawson Lundell LLP (External Counsel) Provides professional advice on Plan funding, funded status and related matters; performs actuarial valuations and other filings Implements investment directions in the Statement of Investment Policies and Procedures (SIPP), reviews investment performance and advises Pension Board on investment matters Provides independent investment advice on SIPP and review of investment manager performance Holds the pension fund in trust Conducts annual audit and produces financial statements. Administers the Plan on a day-to-day basis Provide legal advice on Plan design, interpretation, contracts, legislation, governance and compliance tracking 2013 UBC Staff Pension Plan Governance Report and Compliance Checklist

11 3.0 Key Developments affecting the Plan in Calendar Year 2013 The Plan s estimated funded ratio on a going concern basis was 112.0% at the beginning of 2013 and ended the year at %. The 88 basis points rise in Long Bonds yields in 2013 helped reduced the Plan s liabilities and the 10% fund rate of return contributed to a very positive year. The Plan s estimated solvency ratio was 94.4% at the beginning of 2013 and ended the year at 106.5%. A solvency valuation will be done in 2014 and the Staff Pension Plan is expected to pass the solvency test. The new BC Pension Benefit Standards Act regulations were not released in 2013 as had been anticipated. It is now expected that they will be released in 2014 and that the new Act will come into force effective January 1, The Board of Governors approved recommended changes to the Plan s Asset Mix Policy effective April 3, Transition to the long term policy allocation continued in 2013 and it is expected to be fully implemented by The next Actuarial Valuation of the Plan is underway using data as at December 31, The Actuarial Valuation report will be filed with the regulators in September It is hoped that the improved funded position of the Plan will allow for some level of indexing going forward. Indexing has been paid at 50% of CPI (Consumer Price Index) since January 1, The results of this Actuarial Valuation and a Benefits/Funding test will determine what level of indexing can be paid going forward. Reporting to the UBC Board of Governors Under the Pension Board s Terms of Reference and Governance Policy, the SPP Board regularly reports to the Finance Committee of the UBC Board of Governors. In 2013 the Pension Board reported to the Board of Governors 3 times (March, September and December). 4.0 Risk Management Report When the new BC PBSA Regulations are implemented, which is expected to be by January 1, 2015, it is contemplated that the UBC Staff Pension Plan will be classified as a Target Benefit Pension Plan and will not be required to complete a solvency funding test. The asset consult PBI Actuarial Consultants, conducted an Asset Liability Study in 2012, and recommended an asset mix that is intended to minimize the probability of having to reduce the basic benefits in the future, while allowing for future inflation adjustments. PBI Actuarial Consultants monitors the performance and the activity of the investment manager, and reports their findings to the Pension Board at the end of each quarter. 5.0 Calendar Year 2013 Compliance Review In late 2011, the Pension Board adopted the template compliance checklist attached as Schedule A and has committed to using the checklist as a tool to assist in monitoring the administration of the Plan and ensuring compliance with statutory obligations, regulatory guideline standards and standards of administration set out in the Pension Board s pension governance documents. On an annual basis, the Pension Board will review the format and content of the governance report, compliance checklist and other governance documents and recommend updates to the documents to 2013 UBC Staff Pension Plan Governance Report and Compliance Checklist

12 ensure currency vis-à-vis changes in the law and industry best practice. The Pension Board will complete a governance report and compliance checklist in the first quarter of each calendar year in respect of the prior calendar year. The governance and investment practice self assessment set out in Parts 3.0 and 4.0 of Schedule A need not be done annually, but must be completed no less frequently than every four years, at such intervals as the Pension Board considers appropriate. The Pension Board has reviewed the compliance checklist questions for 2013 and sought professional assistance where necessary in order to complete the checklist UBC Staff Pension Plan Governance Report and Compliance Checklist

13 SCHEDULE A THE UNIVERSITY OF BRITISH COLUMBIA STAFF PENSION PLAN PENSION BOARD PENSION COMPLIANCE CHECKLIST IN RESPECT OF THE YEAR 2013 Prepared by the Plan Administrator 2013 UBC Staff Pension Plan Governance Report and Compliance Checklist

14 UBC Staff Pension Plan Compliance Checklist In Respect of the Year Compliance with Legislation 1 Category Registered Status Compliance Question 1.1. Has the Plan remained in good standing with the British Columbia Financial Institutions Commission ( FICOM ) and the Canada Revenue Agency ( CRA ) throughout 2013? If not, describe in detail. Compliant in 2013? Comments / No / NA / In Process Actuarial Valuations and Reports 1.2. If the PBSA or ITA required an actuarial valuation to be prepared for the Plan as of a date in has the actuary for the Plan prepared such a valuation? Note the effective date of the valuation in the Comments column. N/A The Actuarial Valuation, as at December 31, 2013 is in progress If the PBSA or ITA required an actuarial valuation as of Q has it been filed with FICOM and CRA in 2012 within 9 months of the review date as prescribed by the PBSA? 3 Filed with FICOM & CRA by the prescribed date. Audited Financial Statements 1.4. The PBSA requires financial statements for the Plan to be prepared, audited and filed each year in respect of the prior year. With respect to the financial statements for the year : 4 a. Did they receive an unqualified opinion from a qualified independent external auditor? Filed with FICOM & CRA by the prescribed date. b. Were they filed with FICOM by the end of September 2012 as prescribed by the PBSA? 5 1 For the purposes of this compliance checklist, the following legislation is applicable: (i) the Pension Benefits Standards Act (British Columbia) ( PBSA ); (ii) the Pension Benefits Standards Regulations (British Columbia) ( PBSR ); (iii) the Income Tax Act (Canada) ( ITA ); and (iv) the Income Tax Regulations (Canada) ( ITR ). 2 Under the PBSA defined benefit pension plans must be reviewed at least every 3 fiscal years [PBSR s.6(2)(c)] necessitating the preparation and filing of actuarial valuation reports and cost certificates. Actuarial valuations may also be required when a plan is materially amended (amendment affects the cost of benefits, creates an unfunded liability or otherwise affects the solvency or funding of the plan) or terminated, [PBSR s.6(4)]. Under the ITA, an actuary must recommend an employer contribution based on an actuarial valuation, the effective date of which is not more than 4 years before the day on which the contribution is made [ITR 8516(3)(b)(i)]. 3 Under the PBSA, information from the actuarial valuation must be filed within 270 days of the review date [PSBR s.7(2)(b)]. The ITA requires that an actuarial report be filed with the Minister of National Revenue whenever the Minister s approval of an actuary s employer contribution recommendation is sought [ITA s.147.2(3)]. 4 Under the PBSA audited financial statements are required at least annually [PBSA s. 9(7)] unless the plan has less than 10 million dollars in assets [PBSR s.4(4)]. 5 Under the PBSA audited financial statements must be filed within 270 days from the fiscal year-end of the plan [PBSR s.4(4)]. Page 1

15 UBC Staff Pension Plan Compliance Checklist In Respect of the Year Compliance with Legislation 1 Category Annual Information Return Compliance Question 1.5. Was the Plan s Annual Information Return for the year filed with FICOM and CRA by the end of June 2013 as prescribed by the PBSA and ITA? 6 Compliant in 2013? Comments / No / NA / In Process Financial Information Return 1.6. Was a financial information return in respect of 2012 filed for the Plan by the end of June 2012? 7 Contributions 1.7. Have all 2013 contributions for the Plan made in accordance with the provisions of the Plan been remitted to the Trustee within 30 days of the end of the quarter to which the contribution relates? 8 Benefit Payments 1.8. Where lump sum payments were required to be paid under the terms of the Plan during 2013 on account of death or termination of membership, were they paid out in accordance with the PBSA and ITA? 9 Employee s contributions: $26,521,879 Employer s contributions: $35,416,982 Total: $61,938,861 There were 507 lump sum payments in Total of termination & death payments was $12,595,882 Investments 1.9. Was the Statement of Investment Policies and Procedures ( SIPP ) in respect of the Plan reviewed and confirmed/updated by the Pension Board in 2013? Does the SIPP address all of the factors it is required to address as outlined in the PBSR? 11 6 Annual Information Returns must be filed within 180 days after the plan s fiscal year-end [PBSR s.4(1)] [ITR 8409]. 7 Financial Information returns (FIRs) must be filed within 180 days after the plan s year end [PBSR s.4]. 8 Under the PBSA, employer current service contributions in respect of a DB plan (including a negotiated cost plan) are payable within 30 days following the end of the quarter to which the contributions relate [PBSR s.37(d)]; under the PBSA payments toward deficits are payable in equal installments at least quarterly throughout the fiscal year of the plan [PBSR s.35(3)]. 9 Under the PBSA a person who is entitled to a deferred pension is entitled to require the administrator to pay an amount equal to the commuted value of the deferred pension out of the pension fund in accordance with the prescribed options within 60 days of receiving all required documentation/evidence [PBSA s.33]. 10 The PBSA requires that the administrator of a plan establish a SIPP, which must be reviewed and confirmed at least once each plan year [PBSR s.38]. See also s of SIPP and s of Terms of Reference and Governance Policy. 11 Section 38 of the PBSR provides a list of factors that must be considered in a plan s SIPP as follows: a) categories of investments and loans, including derivatives, options and futures; b) diversification of the investment portfolio; c) asset mix and rate of return expectations; d) liquidity of investments; e) the lending of cash or securities; f) the retention or delegation of voting rights acquired through investments; g) the method of, and the basis for, the valuation of investments that are not regularly traded at a public exchange; and h) related party transactions permitted under section 17 of Schedule III and the criteria to be used to establish whether a transaction is nominal or immaterial to the plan. Page 2

16 UBC Staff Pension Plan Compliance Checklist In Respect of the Year Compliance with Legislation 1 Category Compliance Question If during 2013 or the last 60 days of there were amendments made to the SIPP, were the amendments submitted to the Plan s actuary within 60 days of such amendment? 12 Compliant in 2013? Comments / No / NA / In Process N/A Plan Amendments If during 2013 or the last 60 days of there were amendments made to the Plan or to the trust agreement, have all such amendments been filed with FICOM and CRA within 60 days after the date the amendment was made as prescribed by the PBSA and ITA? 13 Indicate in the Comments column whether any such amendments have been approved by FICOM and CRA, and if not, if there has been any indication that the amendment may not be approved? Amendment No. 6 has been filed with FICOM. Amendment No. 7 was approved by the Pension Board and filed with FICOM If there were amendments to the Plan in 2013 or the last 90 days of , were the members of the Plan provided with an explanation or summary of material amendments (if any) within 90 days of its registration as prescribed by the PBSA? 14 via newsletter and website If during 2013, FICOM or CRA requested a re-filing or clarification of a filing of any plan document, has the University complied with the request(s) of FICOM or CRA in order to make the filing acceptable? N/A Information for Members In 2013, were all new employees given a plan explanation or summary addressing their eligibility for membership in, rights under and terms of the Plan, within the time limits prescribed by the PBSA? 15 All new employees who are eligible for the Plan receive a letter confirming their eligibility and info on how to join the Plan. 12 The PBSA requires a copy of each amendment to the SIPP for a DB plan be submitted to the actuary of the plan, within 60 days after the SIPP is amended [PBSR s.38(5) and s.38(9)]. 13 Under the PBSA and the ITA plan amendments must be filed within 60 days after the date on which the amendment is made [PBSA s.15(1)] [ITR 8512(2)]. 14 Each member must be notified and provided with an explanation of a material amendment within 90 days after its registration [PBSR s.9(2)(b)]. 15 Plan information must be provided to plan members and eligible employees according to the following: to an employee that becomes a member of the plan on the date the plan is established, within 120 days after the date the plan is established; to an employee who will become eligible to become a member of the plan, within 30 days prior to the date on which the person will become eligible; to a person who is eligible to become a member of the plan upon commencing employment, on or before the person s date of employment [PBSR s.9]. Page 3

17 UBC Staff Pension Plan Compliance Checklist In Respect of the Year Compliance with Legislation 1 Category Compliance Question In 2013, were all requests for information by a member or authorized representative, as applicable, complied with within the time limits prescribed by the PBSA? 16 Compliant in 2013? Comments / No / NA / In Process Statements for Members Have members been provided with their annual member statements for the year ended December 31, , containing the prescribed information, by the end of June as prescribed by the PBSA? 17 The 2012 Annual Statements were sent. The 2013 Annual Statements will be sent in May Have members, spouses or beneficiaries been provided with the appropriate forms and prescribed options on termination of membership, death, retirement, phased retirement, marriage breakdown, or plan windup, as applicable for 2013, within the time limits prescribed by the PBSA? 18 In 2013 the following were processed: Terminations Retirements - 14 Pre-Retirement Deaths Fines and Penalties If during 2013 fines or penalties were imposed or threatened to be imposed on the University for non-compliance with the PBSA or the ITA, has the University appropriately dealt with such a fine or penalty, or threat thereof, to the satisfaction of FICOM or CRA? Indicate details of any such situation in the Comments column. There were no penalties or fines imposed in 2013 for noncompliance or any other reason. Marriage Breakdown Were all pensions affected by marriage breakdowns of which the Pension Board became aware in 2013 divided or otherwise processed and administered in accordance with 16 Under the PBSA general plan information must be made available without charge within 10 working days of a written request from a person entitled to a benefit, or the spouse or a designated beneficiary or agent of a person entitled to a benefit [PBSA s.10(4)]. Benefit calculation data must be provided within 30 days of the written request [PBSR s.16]. 17 Members must be provided with an annual statement within 180 days of the plan s fiscal year-end containing information on a specified list of matters [PBSR s.11]. 18 Termination statements must be provided to plan members within 90 days of termination or receipt of notification of termination under the PBSA [PBSR s.12(1)]. Retirement statements are due within the one year period before the commencement of a pension and within 30 days after receiving a completed application for commencement of pension under the PBSA [PBSR s.13(1)]. Phased retirement statements (where the plan authorizes phased retirement) are due within 30 days after receiving a completed application for commencement of pension under the PBSA [PBSR s. 13.1(1)]. Statements upon death prior to pension commencement must be provided to the plan member s spouse, beneficiary or personal representative within 30 days of receiving proof of death under the PBSA [PBSR s.15(1)]. Page 4

18 UBC Staff Pension Plan Compliance Checklist In Respect of the Year Compliance with Legislation 1 Category Compliance Question the PBSA and the Family Relations Act (British Columbia)? 19 Compliant in 2013? Comments / No / NA / In Process Litigation If in 2013 any litigation against the University, the Pension Board or a service provider has been initiated or threatened to be initiated in respect of the Plan or the benefits payable under the Plan, have all appropriate steps been taken to address such a threat or initiation? Indicate details of any such matter in the Comments column. N/A PA/PAR Reporting Were all Pension Adjustments ( PAs ) 20 and all Pension Adjustment Reversals ( PARs ) 21 that were required to be reported and filed in 2014 reported and filed within the time limits set out in the ITA? PSPA Reporting If the ITA required the reporting of any Past Service Pension Adjustments ( PSPAs ) 22 arising from benefit improvements in 2012, were they reported and filed as required by the ITA? N/A 19 Section 64 of the PBSA (which cross references Part 6 of the British Columbia Family Relations Act) deals with payment on marriage breakdown. 20 PAs are reported on employees T4 slips, which (except on employer wind up) must be provided to employees and filed in accordance with the ITA by the end of February [ITR 8401]. 21 PARs arising in calendar quarters one, two and three are to be reported to employees and the CRA within 60 days after the end of the calendar quarter. PARs for the fourth calendar quarter are to be reported within 30 days after the end of the quarter [ITR (3)]. 22 When a PSPA does not apply to substantially all plan participants, or when certain other criteria are not met, the PSPA must be filed with CRA for certification before the additional pension service and/or improved benefits giving rise to the PSPA can be granted. PSPAs do not require CRA certification when they apply to substantially all plan participants and certain other criteria are met. Noncertifiable PSPAs are to be reported to employees and to CRA within 120 days after the event giving rise to the PSPA [ITR 8402] [CRA Past Service Pension Adjustment Guide]. Page 5

19 UBC Staff Pension Plan Compliance Checklist In Respect of the Year Compliance with Internal Governance Policies Category Compliance Question Compliant in 2013? Comments / No / NA / In Process Internal Governance Document Compliance 2.1. To the knowledge of the Pension Board during 2013 was there general compliance with the University of British Columbia Staff Pension Plan Pension Board Terms of Reference and Governance Policy? Pension Board Pension Board Compliance 2.2. In 2013 did all new Pension Board Members complete and submit a Written Commitment to Serve document? Are similar documents held on file by the PAO for all existing Pension Board Members? Did the Pension Board have an Independent Chair and Secretary throughout 2013? If not, were vacancies filled in accordance with the Terms of Reference? Did the Pension Board hold meetings at least four times during 2013? 25 7 Pension Board meetings 2.5. Was an agenda prepared and notice given to all Pension Board Members prior to each meeting in 2013? 26 Were minutes taken at each meeting? 27 Day to Day Pension Management 2.6. Did the Pension Board and the PAO monitor changes to the PBSA, ITA and other legislation applicable for the Plan? Did the PAO review the performance and fees of service providers and report to the Pension Board? 29 University Obligations 2.8. Has the University considered whether any changes to its Terms of Reference are necessary and taken appropriate steps as necessary? 30 No changes were requested in See s. 3.2 of Terms of Reference and Governance Policy. 24 See. s. 3.5, 3.7 and 3.8 of Terms of Reference and Governance Policy. 25 See s. 3.9(a) of Terms of Reference and Governance Policy. 26 See s. 3.9(c) and (d) of Terms of Reference and Governance Policy. 27 See s. 3.9(g) of Terms of Reference and Governance Policy. 28 See ss.4.2(g)(f) and 4.3(f) of Terms of Reference and Governance Policy. 29 See s. 4.3(d) of Terms of Reference and Governance Policy. 30 See s. 4.1(e) of Terms of Reference and Governance Policy. Page 6

20 UBC Staff Pension Plan Compliance Checklist In Respect of the Year Compliance with Internal Governance Policies Category Compliance Question Compliant in 2013? Comments / No / NA / In Process SIPP 2.9. In 2013, did the Pension Board review the SIPP, including the Investment Policy Portfolio ( IPP ) and provide its views on its appropriateness for the coming year to Senior Management of the University? In 2013, did the Pension Board s investment consultant meet with the University of British Columbia Investment Management Trust Inc. ( IMANT ) at least once each calendar quarter? 32 Confirmation provided by Adam Rennison, PBI Actuarial In 2013, did each of IMANT and the Pension Board s investment consultant prepare a report at the end of each calendar quarter, and were these reports distributed to and discussed with the Pension Board? Has the Pension Board confirmed that a written mandate is in place for IMANT and for each external investment manager? Has the Pension Board confirmed that the President of IMANT met with each external investment manager at least once in 2013 and evaluated each external investment manager s performance relative to their mandate, including compliance with the SIPP? 35 Confirmation provided by Jai Parihar, UBC IMANT. Confirmation provided by Jai Parihar, UBC IMANT Has the Pension Board evaluated whether any information discovered through the various monitoring activities required specific communication to the Board of Governors? 36 Reports Did the Pension Board submit an Annual Governance Report and Compliance Checklist for 2012? 37 The Governance Report and Compliance Checklist was approved by the Board of Governors on April 3, See ss. 4.1(f), 12.2 and Appendix A of Terms of Reference and Governance Policy. Also see ss and 13.3 of SIPP. 32 See s of SIPP. 33 See ss and 12.5 of SIPP. 34 See s of SIPP. 35 See ss. 3.5(f), 3.5(g), 3.5(h) and 12.1 of SIPP. 36 See s of SIPP. 37 See s. 7.1 and Appendix A of Terms of Reference and Governance Policy. Page 7

21 UBC Staff Pension Plan Compliance Checklist In Respect of the Year Compliance with Internal Governance Policies Category Compliance Question Compliant in 2013? Comments Did the Pension Board submit quarterly reports to the Board of Governors? 38 / No / NA / In Process Plan Amendments Service Providers Did the PAO report to the Pension Board at every meeting? 39 Did the Pension Board receive the PAO s reports on administration risk and communication risk? 40 Year in Review Report Did the Pension Board determine if amendments to the Plan were required? 41 Amendment No Did the Pension Board monitor and assess the performance of the Plan s service providers, and take such steps as are necessary to address any concerns raised? In 2013, did the Pension Board appoint an auditor and have an audit of the Plan performed? In 2013, did the Pension Board meet with the asset consultant at least twice? 44 Did the Pension Board receive the asset consultant s report on asset management risk? In 2013, did the Pension Board review and consult with the actuary for the Plan on the actuarial status of the Plan including the status of the Benefits / Funding Test measures? 46 Did the Pension Board receive the actuary s report on actuarial risk? In 2013, did the Pension Board meet with or receive reports from the custodian? 48 Deloitte An Asset Liability Study was completed and presented to the Pension Board in The Plan s Actuary presented the valuation report to the Pension Board in September The next AV report will be September The actuary provides an estimate of the Plan s funded position at the end of each quarter In 2013, did the Pension Board meet with IMANT at least twice? 49 IMANT met with the Pension Board four times in See s. 7.2 of Terms of Reference and Governance Policy. 39 See s. 4.3(j) and Appendix A of Terms of Reference and Governance Policy. 40 See s and 13.5 of Terms of Reference and Governance Policy. 41 See s.6.4 of Terms of Reference and Governance Policy. 42 See ss. 7.3, 8.1(a) and 8.1(f) and Appendix A of Terms of Reference and Governance Policy. 43 See s. 7.3 and 8.1(a) of the Terms of Reference and Governance Policy. 44 See s and Appendix A of Terms of Reference and Governance Policy. 45 See s of Terms of Reference and Governance Policy. 46 See s.12.4, 12.6 and Appendix A of Terms of Reference and Governance Policy. 47 See s of Terms of Reference and Governance Policy. 48 Appendix A of Terms of Reference and Governance Policy. 49 See s and Appendix A of Terms of Reference and Governance Policy. See also s of SIPP and the CAPSA Pension Plan Prudent Investment Practices Guideline. Page 8

22 UBC Staff Pension Plan Compliance Checklist In Respect of the Year Prudent Investment Practices (CAPSA Guideline #6) 50 Category Compliance Question Compliant in 2013? Comments / No / NA / In Process Investment Objectives and Risk Tolerances 4.1. Are the Plan s investment objectives well defined, articulated in an easily understood manner and consistent with the Plan s risk tolerance? The Plan s investment objectives are well documented in a SIPP approved by the UBC Board of Governors on April 3, Have the risks associated with the investments been clearly identified? Section 4.1 Investment Policy Documents 4.3. Does the SIPP: a. identify the kinds of investments that should be held; Section 5 b. indicate the allocation between different kinds of investments; c. address the nature and extent of risk that is anticipated in the investment portfolio; Section 5.7 Sections 5.3 and 5.4 d. identify the expected return on investments; Section 5.2 e. include processes for regular monitoring and review of investment objectives, risk tolerances and established processes; and Section 13 f. include processes for selecting, evaluating and replacing investment managers and ways to monitor and review their performance? Section 12 g. Is the Board satisfied that investment activities in 2013 were in accordance with its SIPP? Prudent Delegation and Monitoring 4.4. Is the Pension Board satisfied that all investment decisions about the Plan have been made by individuals/organizations with the authority, skills, knowledge, expertise, information and resources to effectively make the decisions? 50 CAPSA Guidelines are best practices documents prepared and endorsed by Canada s provincial and federal pension regulators for use by pension plan sponsors and administrators, but do not have the force of law. All questions in section 4.0 are adapted from the CAPSA Pension Plan Prudent Investment Practices Guideline dated November 15, Page 9

23 UBC Staff Pension Plan Compliance Checklist In Respect of the Year Prudent Investment Practices (CAPSA Guideline #6) 50 Category Compliance Question Compliant in 2013? Comments / No / NA / In Process 4.5. Is the pension Board satisfied that the contract with IMANT clearly sets out its terms, the functions being delegated, any reporting obligations and IMANT s powers to subdelegate? The contract is between the UBC Board of Governors and UBC IMANT, not the Pension Board Is the Pension Board satisfied that IMANT has carried out independent and thorough investigations to determine the advantages and disadvantages of each particular investment? 4.7. Is the Pension Board satisfied that IMANT uses appropriate methods to review investment decisions once implemented? 4.8. Does the current asset allocation reflect the characteristics of the Plan s liabilities, demographics and risk tolerances? Confirmed by the Plan s Asset Consultant. Prudent Investment Selection and Documentation 4.9. Has the Pension Board clearly documented key investment decisions made, including the reasons for the decision and the circumstances that were considered? N/A The Pension Board has reviewed and approved the Asset Mix Policy recommended by the Plan s Asset Consultant. Page 10