a plan for growth ascc / cofo session 2 october 29, 2013 kevin rorwick – chief financial officer
TRANSCRIPT
![Page 1: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/1.jpg)
A Plan for Growth ASCC / COFO Session 2October 29, 2013
Kevin Rorwick – Chief Financial Officer
![Page 2: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/2.jpg)
Today’s topics
Financial growth Funding stability Service growth Membership growth Advocating efforts Stakeholder survey
2
![Page 3: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/3.jpg)
FINANCIAL GROWTH
3
![Page 4: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/4.jpg)
Adding value
4
“Our 2012 net return of 11.3% added $50 million in value compared to the policy benchmark return of 10.4%.”
Julie Cays
Chief Investment Officer
![Page 5: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/5.jpg)
5
5
Year ending December 31
Gross Net
2012 11.8% 11.3%
2011 4.1% 3.4%
2010 13.3% 12.6%
2009 15.2% 14.7%
Solid returns, low costs
![Page 6: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/6.jpg)
Positive returns from all asset classes
6
![Page 7: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/7.jpg)
Returns in excess of requirements
7
![Page 8: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/8.jpg)
CAAT Plan is well-positioned
8
“The Plan is 103% funded with a reserve to provide some cushion during this period of continued economic uncertainty.”
Derek W. Dobson
CEO & Plan Manager
![Page 9: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/9.jpg)
Growing surplus
9
![Page 10: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/10.jpg)
FUNDING STABILITY
10
![Page 11: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/11.jpg)
Agreement reached with province
Jointly Sponsored Pension Plan (JSPP) Framework Agreement
11
October 2012
![Page 12: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/12.jpg)
Contribution Rates – stable to 2017
12
to the YMPE
YMPE to RCA limit
Over RCA limit
Members Employers
2013 10.8% 14.4% 14.4% 43.2%
2014-17 11.2% 14.8% 14.8% 44.4%
YMPE (Year’s Maximum Pensionable Earnings) - $51,100 in 2013RCA Limit - $152,718.50 in 2013
![Page 13: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/13.jpg)
JSPP Framework Agreement
HighlightsExempted from special legislation, including forced participation in pooled investment fundGranted 4-year valuation cycle for flexibility and stabilityGovernance remains with Plan Sponsors
13
![Page 14: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/14.jpg)
JSPP Framework Agreement
HighlightsFunding Policy temporarily changed –
until 2017 Contribution rates stay at announced levels
Phase-in of 2012-14 adjustments finishes Any shortfall would be addressed with temporary
reductions to future benefits Could be restored when Plan funding improved
14
![Page 15: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/15.jpg)
Plan is financially stronger because:
Healthy demographic mix Realistic assumptions Solid returns More diversified investments aligned with
liabilities Prescriptive Funding Policy
15
![Page 16: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/16.jpg)
16
Active members: 21,400Retired members: 12,600 (including survivors)
16
Healthy demographic mix
![Page 17: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/17.jpg)
Plan is financially stronger because:
Realistic assumptions Longer lifespan - age 88 versus national avg. 85 Discount rate – 5.8%
17
![Page 18: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/18.jpg)
18
![Page 19: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/19.jpg)
Plan is financially stronger because:
Prescriptive Funding Policy Uses mix of reserves, stability contributions and
conditional benefits to manage through volatility
19
![Page 20: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/20.jpg)
Outlook
Interest rates up Investments continue to perform strongly
20
![Page 21: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/21.jpg)
SERVICE GROWTH
21
![Page 22: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/22.jpg)
Service growth
Plans for:PeopleProcessesTools
22
![Page 23: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/23.jpg)
People
New Director, Client Services: Angela Goodchild Additional staff
2 Permanent for service improvement 2 Temporary for part-time enrolment, manual
processes before new system Training support for employer administrators
23
![Page 24: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/24.jpg)
Processes
Realigned employer services team Centralized support for employers through their
main Plan contact (Pension Analyst)
Broader data collection allows Plan to do more
Part-time notification Estimating liabilities Proper calculations
24
![Page 25: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/25.jpg)
RCA changes
Needed to adjust way administrative expenses were charged
Separate charge for portion of administrative expenses
Offset by lower contribution – no change in overall amount
Still one remittance – change to form only
25
![Page 26: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/26.jpg)
Tools
Pension administration system will reduce manual processing, risk and help improve service experience, including timeliness
Data collection tool being rebuilt
26
![Page 27: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/27.jpg)
MEMBERSHIP GROWTHIt’s in our best interests
27
![Page 28: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/28.jpg)
Growth benefits the Plan
28
Growth in Plan membership improves stability of pension funding
Accelerates contribution rate reductions
Similar demographic profile makes for lower risk and better alignment
Further reduces administration and investment costs
![Page 29: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/29.jpg)
Growth benefits funding levels
29
![Page 30: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/30.jpg)
Drummond Report – Recommendation 7:27 “Establish a single
pension fund administrator for all university and college pensions, while recognizing differences in pensions.”
Commission on the Reform of Ontario’s Public Services
February 15, 2012
30
![Page 31: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/31.jpg)
How universities benefit
31
Avoids solvency funding requirements
Substantially lowers cost and risks associated with pension administration, investments, governance and compliance
Stabilizes contribution rates
![Page 32: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/32.jpg)
How Ontario benefits
32
An efficient postsecondary sector pension plan achieved without legislation
The proposal offers an immediate solution
High interest in its success
Recognizes post-secondary sector alignment trends
![Page 33: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/33.jpg)
Growth must be in the best interest of CAAT members
CAAT members will not subsidize university debts
33
33
Fundamental principles
![Page 34: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/34.jpg)
Preparing for growth
34
![Page 35: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/35.jpg)
Earlier eligibility for part-time employees
On Jan. 1, 2014 all OTRFT employees can choose to join anytime vs. 24-month continuous service qualification
Change made to manage legal risk with minimal administrative work, especially by employers
35
![Page 36: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/36.jpg)
ADVOCATING EFFORTS
36
![Page 37: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/37.jpg)
FATCA Would have required withholdings for any retirees
who are US citizens. Exemption for pension plans received.
37
![Page 38: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/38.jpg)
Bill C-377
Would require “labour trusts” to disclose personal information about those in receipt of payments
Written submission by Plan requesting exemption
Bill may be reintroduced
38
![Page 39: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/39.jpg)
HST Relief
Relief for accounting for tax on deemed taxable supplies made by an employer to a pension plan Response to advocacy Plan participated in
College does not have to remit HST where GST portion of deemed taxable supply is less than $5,000 (about $70,000 in activities)
Do NOT make election to ignore HST on actual taxable supplies
39
![Page 40: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/40.jpg)
STAKEHOLDER SURVEY
40
![Page 41: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/41.jpg)
Broad response received
Nearly 5,000 responses from 24 stakeholder groups
Over 3,500 active members responded for a 16% participation rate
41
![Page 42: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/42.jpg)
Key findings
65% said pension plan was important part of decision to join college system
90% said pension plan was important part of remaining employed in college system
90% said pension is important part of total compensation received
90% said having an independent organization manage the plan is important
1.3% do not believe they are deriving good value for money from the plan
42
![Page 43: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/43.jpg)
![Page 44: A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer](https://reader035.vdocuments.net/reader035/viewer/2022062517/56649eab5503460f94bb1325/html5/thumbnails/44.jpg)
44