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Faculty & Administration Pension Plan and Support Staff Pension Plan. Annual General Meeting June 2006. Agenda.

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faculty administration pension plan and support staff pension plan

Faculty & Administration Pension PlanandSupport Staff Pension Plan

Annual General Meeting

June 2006



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)

c ap guidelines assessment benchmarking the current practices of the smu pension plans
CAP Guidelines AssessmentBenchmarking the current practices of the SMU Pension Plans

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.

c ap guidelines assessment plan governance
governance statement formalized

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 documented

CAP 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.


CAP Guidelines Assessment – Investment

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.

  • comprehensive investment policy approved, annual review established
  • investment policy and performance benchmarks regularly reviewed
  • independent performance monitor engaged, Mercer HR Consulting
  • qualitative assessment of investment managers reviewed
  • range of investment choices is offered
  • investment choices aligned with purpose of the CAP
  • members control investment of employee and employer contributions
  • members can easily make changes to investment choices
  • investment decision-making tools provided to members
  • default investment option has been established
  • regular meetings with the investment alliance manager, Sun Life

CAP Guidelines Assessment – Administration

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.

  • engaged Sun Life Financial as recordkeeper
    • Management services
    • Plan member records and statements
    • Customer service helpline
    • Internet site
    • Interactive software
  • recordkeeper service level established
  • fees and service agreement in place
  • fees compliance monitored
  • formal system for monitoring the recordkeeper established
  • full fee disclosure
  • review member termination documentation periodically
  • document retention policy adopted

CAP Guidelines Assessment – Communication

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.

  • member sign-up process
  • new member orientation sessions
  • periodic updates from Chair
  • annual general meeting of members
  • quarterly statements mailed directly to members
  • pension plan website and information call centre
  • regular written materials
  • tools provided for decision-making
  • communication strategy established for the CAP
  • member booklet revised
  • formal process for assessment of member information needs
  • review process documented for communication materials in the communication policy

BGI information from Mercer monitor report

    • 3-yr. average Mar. 31, 2006 = 28.9%  top quartile performance compared to Mercer Pooled Fund Universe
    • Strategy has above-average prospects to outperform
    • Investment process, research, and professionals provide a competitive advantage
  • BGI fees are relatively low

Pension Plan – education opportunities for plan members

  • Sun Life Information Sessions
    • Plan member website training
    • Retirement planning tool training
  • Financial Partners Information Sessions
    • RBC – Estate Planning
    • Scotia Private Client Group – Planning for Retirement
  • Information tailored to members nearing retirement
    • Two small group sessions specific to SMU (Mercer)
    • One-on-one consulting – first session paid by SMU
    • Book purchase on retirement lifestyle
  • HR Department orientation sessions for new members
  • Canada Pension Plan session
  • Pension Website (SLF and SMU)
  • Quarterly statement inserts
  • Annual General Meeting

Pension Plan – financial/budget report

The pension committees have adequate funding to operate effectively:

  • Operating funding  $65,000 annual budget provided by SMU
  • 2005/06 expenses  $67,000 ($2,000 deficit)

(pension consulting, member meetings and training, investment monitoring, information return to pension superintendent, member communication)

  • Accumulated reserve for pension administration

 increased from $71,000 to $72,000

($71,000 - $2,000 deficit + $3,000 interest)