UBC Faculty Pension Plan Pension Forum

Transcription

1 UBC Faculty Pension Plan Pension Forum Mr. Joost Blom, Chair, Board of Trustees Ms. Cheryl Neighbour, Executive Director Operations Mr. Mike Leslie, Executive Director Investments May 22,

2 Agenda Introduction of Trustees Plan Demographics Plan s Mission Statement 2012 Board Initiatives and Projects 2012 Operations Update & 2013 Operations Objectives Investment Review for 2012 and Year to Date 2013 Questions a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 2

3 Board of Trustees Mr. Joost Blom, Chair Professor, Faculty of Law Dr. Robert Heinkel, Vice-Chair Professor, Sauder School of Business Dr. Joy Begley Associate Professor, Sauder School of Business Dr. Joyce Boon Associate Professor, Barber Arts & Sciences, UBCO Dr. Ken Carty Professor Emeritus, Department of Political Science Dr. Joanne Emerman Professor, Department of Cellular and Physiological Sciences Dr. Kai Li Professor, Sauder School of Business Mr. Vijay Verma Researcher Emeritus, TRIUMF a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 3

4 Plan Demographics Membership Growth since Inception 6,000 5, (9.0%) 582 (10.9%) 691 (12.4%) Members 4,000 3,000 2, (3.2%) 106 (4.7%) 205 (7.1%) 225 (7.5%) 237 (7.2%) 253 (7.2%) 288 (7.6%) 1, YEAR # Active & Deferred Members # Retired Members a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 4

5 1,800 Plan Demographics Annual Asset Growth Fund Value Millions (Cdn$) 1,600 1,400 1,200 1, (5.2%) 47.1 (5.3%) 52.7 (5.5%) 47.2 (4.9%) 49.7 (5.2%) 51.8 (5.8%) 62.2 (6.5%) 78.1 (7.8%) (11.5%) (12.9%) (14.7%) (12.9%) (16.1%) (17.0%) (20.3%) (19.0%) YEAR Fund Value held by Active & Deferred Members Fund Value held by Retired Members a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 5

6 350 Plan Demographics Retired Members Annual Asset Growth 300 Fund Value Millions (Cdn$) MRB VPLA RRIF LIF a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 6

7 Members Choices at Retirement Year No. who Purchased FPP Retirement Options No. who Terminated from the Plan a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 7

8 Reasons behind Demographic Changes Introduction of the LIF/RIF options to the Plan in November 2004 Elimination of mandatory retirement in May 2007 a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 8

9 Plan s Mission Statement The main purpose of the Plan is to provide a wellmanaged, cost-effective retirement plan, designed to assist members in meeting their financial responsibilities, both leading up to retirement and if members choose, through retirement. a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 9

10 2013 Board Initiatives and Projects Investigate Potential New Asset Classes Asset Mix Study Review investment options Review retirement options Review bond manager allocations Review trustee and members education programs Review member communication programs a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 10

11 2012 Operations Update Replacements hired for two key staff members retiring in 2013 Office relocation GIC communication completed Operations review completed a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 11

12 2013 Operations Objectives Determine staff requirements Review in-house pension system Document retention and storage project Ensure Plan is in compliance with new BC Pensions Act Web site improvements a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 12

13 Investment Review of 2012 a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 13

14 2012 Fund Returns / Rankings Fund 1 Year (%) 5 Year (%) Return Ranking (percentile)* Risk** Ranking (percentile)* 1 Year 5 Years 10 Years Balanced th 28 th 19 th Bond rd 55 th 43 rd Canadian Equity rd 26 th 31 st Foreign Equity rd 44 th 32 nd Short Term Investment th 87 th 52 nd Returns to Dec. 31/12 * 1 st percentile highest ranking 100 th percentile lowest ranking ** Risk - as measured by annual standard deviation of returns - a lower ranking number means less risky a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 14

15 Global Markets in 2012 a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 15

16 S&P/TSX Capped Composite Index Annual sector returns vs. sector weights a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 16

17 U.S. S&P 500 Index Annual sector returns vs. sector weights a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 17

18 MSCI EAFE Index Annual country returns vs. country weights a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 18

19 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Mar-63 Mar-65 Mar-67 Mar-69 Mar-71 Mar-73 Mar-75 Mar-77 Mar-79 Mar-81 Mar-83 Mar-85 Mar-87 Mar-89 Mar-91 Mar-93 Mar-95 Mar-97 Mar-99 Mar-01 Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 Mar-13 We Remain in a Very Low Interest Rate Environment Government of Canada 30 Year Bond Yield From March 1963 to March 2013 a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 19 Yield

20 Canadian bond market Annual sector returns vs. sector weights a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 20

21 Stocks Climbing a Wall of Worry 13,500 13,000 12,500 12,000 Slowdown in China Europe s Financial Mess Unsolved U.S. Fiscal Problems 11,500 Unrest in Middle East & Asia 11,000 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 21

22 Summary of 2012 Canadian stocks, with contributions from all non-resource sectors, outperformed domestic bond indices Gold stocks fell 13.9% over the year The U.S. and many foreign countries had surprisingly strong returns despite continued uncertainty in the global marketplace Interest rates remained at historic lows a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 22

23 Results to March 31, 2013 a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 23

24 Fund Rates of Return* (to March 31, 2013) Fund 1 Yr. 5 Yrs. 10 Yrs. Balanced Fund 10.1% 5.2% 8.0% Bond Fund 4.8% 6.7% 6.4% Canadian Equity Fund 11.2% 3.7% 11.2% Foreign Equity Fund 15.8% 2.8% 5.5% Short Term Investment Fund 1.3% 1.2% 2.3% * Before fees a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 24

25 Global Markets First Quarter 2013 a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 25

26 S&P/TSX Composite Index Sector Performance Q Health Care 22.8% Information Technology 17.5% Industrials Consumer Discretionary Telecom Services 11.7% 12.6% 14.2% Consumer Staples Energy Financials S&P/TSX Composite Index 5.6% 4.2% 4.2% 3.3% Utilities 0.5% Materials -10.4% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Sharp Materials stock losses skewed index returns a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 26

27 U.S. (Real) Economic Growth a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 27

28 U.S. Unemployment Rate a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 28

29 Summary of Q Non-resource sectors advanced in the quarter, led by Healthcare, Information Technology and Industrials, as the outlook for economic growth improved slightly in North America Canadian stocks outperformed domestic bonds and emerging market equities, but underperformed U.S., European, and Japanese equity markets Serious debt problems still remain in the U.S. and Europe and China s growth rate is slowing Low interest rates/bond yields expected to remain for a while a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 29

30 a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 30

31 Conclusions Diversification within the fund options helped to protect value Our investment managers continue to add value overall New staff additions and succession planning are being well addressed The size of the Plan continues to grow from contributions, returns and most retirees keeping their funds with the FPP a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 31

32 Thank You! Questions? a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 32

33 Appendix a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 33

34 Administrative Staff Cheryl Neighbour Mike Leslie Derrick Johnstone Andrea Gesner GV Fragante Helena Huynh Diana Iampietro Lorraine Heseltine Louise Mah Nathan Nie Maricres De Leon Kathy Pang Chelsey Maher Shirley Lim Claudia Chan Executive Director Operations Secretary to the Board Executive Director Investments Senior Operations Manager IT Manager Systems Analyst Systems Analyst Faculty Pension Plan Manager Member Services Specialist Faculty Pension Plan Assistant Senior Financial Officer Pension Plan Accountant Communications Coordinator Communications Assistant Project Coordinator Office Administrator a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 34

35 Balanced Fund Target Asset Allocation Canadian Real Return Bonds 8.0% Canadian Real Estate 10.0% Canadian Equities 20.0% Fixed Income 32.0% Hedge Fund 3.0% Global Equities* 21.0% US Equities 6.0% * Global Equities includes investments in both U.S. Equities and Non-North American Equities a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 35

36 Plan Considerations Lower risk through broad diversification 12 Managers, 15 Mandates Provide flexibility regarding contribution, investment, retirement and withdrawal options Low cost High level of member service One part of member s overall retirement plan a place of mind THE UNIVERSITY OF BRITISH COLUMBIA faculty pension plan 36