governance - sfl.sk.ca us... · capsa guideline 5, prudent investment •administrator acts as...
TRANSCRIPT
Governance
and
Investment
Elisabeth Ballermann, Secretary-Treasurer
National Union of Public and General Employees
SFL Pensions Conference 02 05 2018
Wouldn’t you rather have a pension?
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Securing the Pension
Promise
• Income Security
• Dignity
• 70% of pre-retirement income
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The Three-legged Stool of
Retirement Security
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The Three Legs
• Old Age Security (OAS)
• Employment Pensions (CPP, Workplace Pension Plans)
• Private Savings (RRSP, TFSAs, Savings Accounts, securities, real Estate, etc.
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Types of Workplace Pensions
• Defined Benefit
• Target Benefit
• Defined Contribution
• Profit sharing arrangements*
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Types of Workplace Pensions
• Single Employer
• Multi-Employer Pension Plan
• Specified Multi-Employer Pension Plan
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Governance
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. . .the structure and processes in place for the effective administration of the pension plan to ensure the fiduciary and other responsibilities of the plan are met. (CAPSA)
Who makes the decisions, the rules, and how? Employer/Government Union – e.g. Building Trades, Joint Trusteeship
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Legislative Framework Governing Pensions
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• Pension Standards Legislation
• Income Tax Legislation
• Pension Benefits Guarantee Fund – Ontario
• Family Law Legislation
Canadian Association of Pension Supervisory Authorities (CAPSA)
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Jurisdiction Applicable Legislation Regulatory Body
Canada (Federal) Pension Benefits Standards Act, 1985(R.S.C. 1985, c.32(2d Supp)
Office of the Superintendent of Financial Institutions (OSFI)
British Columbia Pension Benfits Standards Act, RSBC 1996 C.352 BC Financial Institutions Commission
Alberta Employment Pension Plans Act RSA 2000, C E-8 Office of the Alberta Superintendent of Pensions
Saskatchewan Pension Benefits Act 1992, . C. P-6.001 Sask. Financial Services Commission
Manitoba Pension Benefits Act C.C.S.M. c. P32 Office of the Superintendent – Pension Commission
Ontario Pension Benefits Act R.S.O 1990 C. P8 Financial Services Commission of Ontario
Quebec Supplemental Pension Plans Act Régie des rentes du Queébec
New Brunswick Pension Benefits Act C. P-5.1 Office of the Superintendent of Pension
Nova Scotia Pension Benefits Act RSNS 1989 C. 340 Office of the Superintendent of Pension
Prince Edward Island No legislation
Yukon As for Federal
NW Territories As for Federal
Nunavut As for Federal
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Saskatchewan Healthcare Employees Pension Plan SHEPP is governed by an independent Board of Trustees made up of an equal number of employer and employee representatives. • Four Trustees are appointed by Health Shared Services Saskatchewan
(3sHealth), and • the following four unions each appoint one Trustee:
o Canadian Union of Public Employees (CUPE) o Health Sciences Association of Saskatchewan (HSAS) o Saskatchewan Union of Nurses (SUN) o SEIU-West
Saskatchewan Pension
Plan
Saskatchewan Pension Plan is a defined contribution pension plan available to people with RRSP room. Individual & company pension plans available
Subject to RRSP rules
$6000/ year max. contributions
Members choose among 3 funds
No guarantees, may benefit from pooling effects, reports 8% verage returns
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SK Public Employees
Pension Plan
• Defined Contribution Plan
• Jointly trusteed, (some decisions subject to approval of Lt. Gov. )
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Key Players
• Plan Sponsor(s) o Employer(s)
oUnion
• Plan Administrator
• Government (regulator)
• Trustees
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CAPSA
• Canadian Association of Pension Supervisory Authorities
• CAPSA is a national interjurisdictional association of pension regulators whose mission is to facilitate an efficient and effective pension regulatory system in Canada. It develops practical solutions to further the coordination and harmonization of pension regulation across Canada.
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Guideline 4: Pension Plan
Governance Guideline
CAPSA Pension Plan Governance Principles
• Principle 1: Fiduciary responsibility The plan administrator has fiduciary responsibilities to plan members and beneficiaries. The plan administrator may also have other responsibilities to other stakeholders.
• Principle 2: Governance framework The plan administrator should establish and document a governance framework for the administration of the plan.
• Principle 3: Roles and responsibilities The plan administrator should clearly describe and document the roles, responsibilities, and accountabilities of all participants in the pension plan governance process.
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Guideline 4 cont’d
• Principle 4: Performance monitoring The plan administrator should establish and document performance measures to monitor the performance of participants in the governance and administration of the plan.
• Principle 5: Knowledge and skills The plan administrator, directly or with delegates, has a duty to apply the knowledge and skills needed to meet the plan administrator’s responsibilities.
• Principle 6: Governance information The plan administrator should establish and document a process to obtain and provide to governance participants appropriate information to meet fiduciary and other responsibilities.
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Guideline 4 cont’d
• Principle 7: Risk management The plan administrator should establish and document a framework and ongoing processes, appropriate to the pension plan, to identify and manage the plan’s risks.
• Principle 8: Oversight and compliance The plan administrator should establish and document appropriate processes to ensure compliance with the legislative requirements and pension plan documents.
• Principle 9: Transparency and accountability The plan administrator should establish and document a communication process with the aim to be transparent and accountable to plan members, beneficiaries and other stakeholders.
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Guideline 4 cont’d
• Principle 10: Code of conduct and conflict of interest The plan administrator should establish and document a code of conduct, incorporating a policy to manage conflicts of interest.
• Principle 11: Governance review The plan administrator should establish and document a process for the regular review of the pension plan’s governance framework and processes.
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The Union Trustee
• Fiduciary yes, but what about union values and principles?
• Elect or appoint?
• Experts?
• How do we build capacity
• What about diversity?
• What resources do we provide?
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Funding
• For DC plans, the formula is straight forward – contributions plus investment returns establish an account for each contributor, whatever the total is forms the basis of the pension. There is no guarantee of the amount of the pension.
• DB plans: oPay as you go – contributions pay benefits
o Solvency basis – An actuarial valuation determines how much money would be needed to meet the pension obligations if the plan were to be wound up on the date of the valuation. The fund consists of contributions plus investment income.
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Funding cont’d
• When a private plan has an unfunded liability, in order to meet the pension promise, and comply with regulation the trustees (adminiatrator)must create a plan to bring the plan back to full funding in 5 years. o Increase contribution rates or
oCut benefits – indexing? Ancillary benefits
• Public sector plans usually are allowed longer periods
• Funding status of pension plans has improved in recent years, OSFI reports private plans on average are at 95%
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Investment
CAPSA Guideline 5, Prudent Investment • Administrator acts as prudent person, but higher standard by law
• Prudent Delegation – hire professionals as needed
• Investment Objectives
• Risk Tolerances
• Investment Policy/Statement of Investment Policies and Procedures (SIP&P) o identify the kinds of investments that
o could be held;
o · indicate the allocation between different
o kinds of investments;
o · address the nature and extent of risk that
o is anticipated in the investment portfolio;
o and
o · identify expected return on investments.
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Investment
Guideline 5 Cont’d
• Asset Allocation
• Investment Selection and Due Diligence
• Monitoring
• Documenting Processes, Policies and Procedures
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Can we use Workers’
Capital to achieve Labour’s
Goals?
• ESG screens o Environmental
o Social
oGovernance
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Thank You!
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