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Faculty & Administration Pension Plan and Support Staff Pension Plan. Annual General Meeting June 2006. Agenda.
Annual General Meeting
Governance Overview and Financial Report – Chair, Pension Committees Pension Plan Investments – Mercer Report from Custodian and Record keeper – Sun Life Financial Open Forum- Member comments and questions Members’ Luncheon
Both plans have a substantial portion of membership in mid-career (age 35 to 54: F&A 60%, SS 67%). At the extremes of the distribution – the F&A group has more older members (F&A 29%, SS 16%) and the SS group has more younger members (F&A 11%, SS 17%).
The above distributions show the proportion of members in the various asset allocation portfolios (86% of plan members at SMU use the portfolios).
The above charts show the proportion of pension assets in the various investment funds (100% of plan assets – includes the SMU portfolios and other investment choices)
The Joint Forum of Financial Market Regulators, on May 28th, 2004, released the Capital Accumulation Plan (CAP) Guidelines.
The CAP Guidelines are intended to outline and clarify the rights and responsibilities of sponsors, service providers and members; and to ensure that members are provided the information and assistance that they need to make investment decisions in a capital accumulation plan.
The CAP Guidelines were developed by the pension industry to represent best practices.
The SMU pension plans were 100% compliant with the guidelines by the deadline on December 31, 2005.
organizational structure approved
retirement committees established
insurance and indemnification in place
mission and goals documented
terms of reference established
pension benefit adequacy assessed - need to do analysis to confirm
committee meetings occur regularly
minutes documented and approved
plan text updated and filed with regulator
professional agents employed
sufficient operating funds provided
periodic reporting to Finance Committee
member communication policy established
delegation and monitoring of functions carried out internally formally documentedCAP Guidelines Assessment – Plan Governance
Plan governance is the process of implementing an effective control system to oversee the proper operation of the CAP. Key elements include defining the purpose of the CAP, ensuring effective documentation of all roles and responsibilities, legal requirements and support materials. Where key functions are to be delegated, the terms of the delegation should be documented and an effective monitoring system should be in place.
The structuring and on-going assessment of an appropriate investment offering is critical to the success of a CAP. The investment structure should consider the nature of the CAP and the membership base. The structure should offer sufficient choice to enable members with different tolerances to risk and different return requirements to structure an optimal portfolio. The complexity of the investment structure should be managed so as to ensure that it can be communicated effectively to CAP members.
It is necessary to perform a periodic re-assessment of the recordkeeper to ensure that it continues to meet the original selection criteria and the standards outlined in the fees and services agreement. In the event that the recordkeeper no longer meets the needs of the CAP, quick action should be taken to remedy the situation. The level of fees borne by members will have a significant impact on member balances, and members should understand the level and what is included in the fees paid by them.
Having a clearly documented communication strategy helps to ensure that members receive accurate and timely communication. CAP members must be provided with information on their CAP account and the performance of the investment funds available in the CAP, as well as access to additional information upon request. All communication materials must be adequate and understandable, and provide CAP members with sufficient detail about available investment options so they can make informed investment decisions, using the tools available to them.
The pension committees have adequate funding to operate effectively:
(pension consulting, member meetings and training, investment monitoring, information return to pension superintendent, member communication)
increased from $71,000 to $72,000
($71,000 - $2,000 deficit + $3,000 interest)