PENSION PLAN FOR FULL-TIME CUPE 2745 EMPLOYEES OF NEW BRUNSWICK SCHOOL DISTRICTS

Transcription

1 PENSION PLAN FOR FULL-TIME CUPE 2745 EMPLOYEES OF NEW BRUNSWICK SCHOOL DISTRICTS ADMINISTRATOR S REPORT 31 December 2015 Prepared 9 September 2016 Prepared by: Pensions and Employee Benefits Division Treasury Board

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3 MESSAGE FROM PENSIONS AND EMPLOYEE BENEFITS DIVISION Pensions and Employee Benefits Division (PEBD) is pleased to present the 2015 Administrator s Report for the (Plan) for the year ended 31 December This report provides an overview of the activities that occurred during the Plan year, and includes the pension plan s financial statements. As the Plan Administrator, PEBD is responsible for the day-to-day administration of this Plan. Currently, PEBD is involved with the management and administration of 11 separate legislated or contractual pension plans, as well as some quasi-public organizations and numerous non-pension benefit programs. Throughout the year, Plan Members requested (in person, by phone, or through application forms) a number of services including, but not limited to the calculation of future benefits; purchases of service; and reciprocal transfers. Additionally, governance standards on all Plans are becoming more stringent and PEBD is tasked with updating its standards and practices to meet the demands. We recognize the importance of the New Brunswick School Districts assistance in providing continuous support to the Plan members. During the past year, PEBD has continued to improve the delivery of timely information to the school districts and look forward to introducing Employer Information Sessions in the coming year. We would like to take this opportunity to thank all of the stakeholders that we work with to deliver this benefit program: the Pension Plan for Full-Time CUPE 2745 Employees of New Brunswick School Districts Pension Committee, New Brunswick School Districts, the Canadian Union of Public Employees, the Department of Finance, the Department of Education and Early Childhood Development and the Treasury Board. We would like to welcome all new members and look forward to continuing to serve the Pension Plan for Full-Time CUPE 2745 Employees of New Brunswick School Districts. To communicate with us, please refer to the contact information on the next page. Sincerely, Original signed by Stephanie Maston Manager, Client Services PEBD, Treasury Board

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5 TABLE OF CONTENT INTRODUCTION... 1 STATEMENT OF FINANCIAL POSITION (TABLE 1)... 2 STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (TABLE 2)... 3 ASSET MIX (TABLE 3)... 4 HISTORICAL GROSS RATE OF RETURN (TABLE 4)... 5 RECONCILIATION OF MEMBERSHIP (TABLE 5)... 6 ANALYSIS OF 2015 RETIREMENTS BY TYPE OF PENSION ELECTED AND SEX (TABLE 6)... 7 BREAKDOWN OF ACTIVE MEMBERSHIP BY AGE AND SEX (TABLE 7)... 8 BREAKDOWN OF ACTIVE MEMBERSHIP BY SCHOOL DISTRICT (TABLE 8)... 9 BREAKDOWN OF ACTIVE MEMBERS OVER AGE 55 BY SCHOOL DISTRICT (TABLE 9) BRIEF DESCRIPTION OF THE PLAN SAMPLE EMPLOYEE STATEMENT Prepared by: Pensions and Employee Benefits Division Treasury Board P.O. Box 6000 Fredericton, NB E3B 5H1 Tel.: Fax: Toll Free: Website:

6 INTRODUCTION We are pleased to present this report, which summarizes the operation of the Plan over the calendar year ASSETS Tables 1 to 3, which follow this introductory section, give information on the assets in the fund. Over 2015, the net assets available for benefits increased by $2,099,734 from $77,965,661 to $80,065,395. Table 2 gives details of the sources of the net increase in assets. The gross annual rate of return on the fund during 2015 was 4.1%. Historical rates of return for the 2011 to 2015 period are shown in Table 4, along with the December to December increase in the Consumer Price Index in each year. According to a performance analysis prepared by the Treasury Division, the breakdown of the assets managed and the investment returns achieved by the two investment managers was as follows: Investment Manager % of total Fund Managed at 31 December 2015 Approximate Dollar Amount Managed at 31 December 2015 Investment Return Achieved Over 2015 Percentile Rank of Investment Performance Letko Brosseau 48.9% $39.2 million 2.8% 56 th Burgundy 51.1% $40.9 million 5.4% 26 th Consolidated 100.0% $80.1 million 4.1% 40 th The percentile rank of the investment performance for each manager was as measured by RBC Investor and Treasury Services. The median return of all balanced fund managers in the RBC Investor and Treasury Services survey for the year ending 31 December 2015 was 3.6%. The 4.1% consolidated investment return on the fund as a whole for 2015 put it at the 40 th percentile in performance in the RBC Investor and Treasury Services survey (i.e., it was in the top 40% of pension fund returns of balanced fund managers for 2015). This represented a relative increase from 2014, when the overall investment performance put the investment returns of the fund in the top 51 st percentile. MEMBERSHIP The Plan membership is summarized in Tables 5, 6, 7, 8 and 9. In 2015 the number of active members decreased from 695 to 693, a net decrease of 2. There was a net increase of 28 in pensioners over the year, from 417 to 445. The number of deferred pensioners (i.e. those who left their benefits in the Plan when they terminated, but whose pension has not yet started) remained the same from 1 at 31 December 2014 to 1 at 31 December A reconciliation of the data is shown in Table 5. The data was provided by PEBD of the Treasury Board. EMPLOYEE STATEMENTS The 31 December 2015 employee statements were distributed in September A sample copy of the statement is included at the back of this report. 1

7 STATEMENT OF FINANCIAL POSITION (TABLE 1) 31 December 2015* 31 December 2014* Assets > Investments at market value $79,358,794 $76,886,947 > Cash $619,364 $1,319,778 > Prepaid expenses $1,169 $1,169 Subtotal $79,979,327 $78,207,894 Receivables > Employee contributions $16,602 $8,329 > Employer contributions $128,024 $120,986 > Accrued interest and dividends $140,205 $136,346 Total assets $80,264,158 $78,473,555 Liabilities > Benefits and refunds payable $59,698 $399,823 > Accounts payable $139,065 $108,071 Total liabilities $198,763 $507,894 Net assets available for benefits $80,065,395 $77,965,661 * Source: Audited financial statements from the Treasury Division of the Department of Finance. 2

8 STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (TABLE 2) 31 December 2015* 31 December 2014* Increase in assets Investment income > Interest $985,074 $959,548 > Dividends $1,788,229 $1,521,301 Realized and unrealized gains $462,997 $4,553,239 Contributions > Employee $1,008,599 $1,018,059 > Employer $1,425,099 $1,427,981 Transfers under reciprocal agreement $297,854 $39,462 Total increase in assets $5,967,852 $9,519,590 Decrease in assets Investment manager fees $283,690 $255,044 Administrative expenses $185,368 $154,489 Custodial fees $24,106 $19,718 Transactions costs $17,450 $11,471 Compliance reporting fees $16,500 $16,500 Performance measurement fees $13,000 $13,000 Benefits paid > Retirement benefit payments $3,198,126 $2,975,973 > Termination benefit payments $96,917 $155,672 > Death benefit payments $28,258 $208,516 Total decrease in assets $3,868,118 $4,355,747 Increase in assets $2,099,734 $5,163,843 Net assets available for benefits at beginning of year $77,965,661 $72,801,818 Net assets available for benefits at end of year $80,065,395 $77,965,661 * Source: Audited financial statements from the Treasury Division of the Department of Finance. 3

9 ASSET MIX (TABLE 3) 31 December 2015* 31 December 2014* Cash and short term $3,851, % $3,160, % Bonds and debentures $29,148, % $28,807, % Canadian equities $23,287, % $22,331, % Foreign equities $23,691, % $23,907, % Total assets $79,978, % $78,206, % * Source: Audited financial statements from the Treasury Division of the Department of Finance. ** The above totals do not include the receivables nor the accounts payable shown in Table 1. 4

10 HISTORICAL ANNUAL GROSS RATE OF RETURN (TABLE 4) Gross Investment Return Dec. to Dec. Increase in Consumer Price Index* 2011 (1.5%) 2.3% % 0.8% % 1.2% % 1.5% % 1.6% * This plan uses Canadian Consumer Price Index. 5

11 RECONCILIATION OF MEMBERSHIP (TABLE 5) 31 December 2014 to 31 December 2015 Active Members Inactive Members Deferred Pensioners Retirees Members as of 31 December ,471 New members Inactive members becoming active 6 (6) Members becoming Inactive (24) Retirements (22) (9) (1) 36 4 Service refund or reversed (1) (1) Deferreds who returned to active Terminations > with refunds or transfers out (7) (16) 1 - (22) > with deferred pensions Deaths > with no continuing benefits (7) (7) > with survivor New survivor pensions Guarantee period expired (1) (1) Data adjustments Members as of 31 December ,490 The average age at entry of new actives in 2015 was years, compared with in The average age at retirement for those retiring in 2015 was years, compared with in Total 6

12 ANALYSIS OF 2015 RETIREMENTS BY TYPE OF PENSION ELECTED AND SEX (TABLE 6) Type of Pension Sex Total Age G-0 G-5 G-10 J50%S J60%S J67%S J100%S M F Grand Total The average age at retirement for those retiring in 2015 was 61.5 years, compared with 60.3 in G-0, G-5 and G-10 mean a pension payable for the life of the pensioner with no guarantee, 5 years of payments guaranteed and 10 years of payments guaranteed, respectively. J100%S, J67%S and J50%S means a pension payable for the life of the pensioner, with 100%, 67% or 50%, respectively, continuing to the surviving spouse upon the pensioner s death. 7

13 BREAKDOWN OF ACTIVE MEMBERSHIP BY AGE AND SEX (TABLE 7) Age Group Male Female Total Grand Total The average age for all active members was 50.8 years in 2015, compared to 50.7 years in

14 BREAKDOWN OF ACTIVE MEMBERSHIP BY SCHOOL DISTRICT (TABLE 8) School District Male Female Total Anglophone East School District Anglophone North School District Anglophone South School District Anglophone West School District Francophone North-East School District Francophone North-West School District Francophone South School District Grand Total

15 BREAKDOWN OF ACTIVE MEMBERS OVER AGE 55 BY SCHOOL DISTRICT (TABLE 9) Age Last Birthday at 31 December 2015 School District >=66 Total Anglophone East School District Anglophone North School District Anglophone South School District Anglophone West School District Francophone North-East School District Francophone North-West School District Francophone South School District Grand Total

16 BRIEF DESCRIPTION OF THE PLAN The Plan is a best average earnings defined benefit plan. The annual benefit is 2.0% of best five year average earnings up to the five year average Year s Maximum Pensionable Earnings (YMPE) under the Canada Pension Plan, times pensionable service prior to 1 January 1997, plus 1.45% of best five year average earnings up to the five year average YMPE, times pensionable service between 1 January 1997 and 31 August 1997, plus 1.3% of best five year average earnings up to the five year average YMPE, times pensionable service after 31 August 1997, plus 2% of best five year average earnings in excess of the five year average YMPE, times all pensionable service. Employees are required to contribute annually by payroll deduction 5.0% of earnings up to the YMPE plus 6.5% of any earnings in excess of the YMPE. The employer is responsible for the balance of contributions required to fund the benefits promised by the Plan. The normal retirement age defined in the Plan is 65 but members may retire as early as age 60 without any reduction in pension, or as early as age 55 with a reduction of 3% for each year by which the retirement age precedes age 60. The pension is increased every year by 2%, except that increases in a given year may be less than 2% if increasing by 2% will mean that the total increase since retirement exceeds the percentage increase in the Consumer Price Index since retirement. Results of the actuarial valuation of the Plan as at 1 January 2015 showed that the funding ratio has improved on a going-concern basis. The funding ratio (i.e., the assets divided by the liabilities) had increased from 73.5% at 1 January 2012 to 78.7% at 1 January RBC Investor and Treasury Services (formerly RBC Dexia) is the custodian for the fund and Burgundy Asset Management Ltd. and Letko Brosseau & Associates Inc. are the two investment management firms that manage the investments. 11

17 SAMPLE EMPLOYEE STATEMENT 12

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