Annual General Assembly 2013 Agenda Opening of the Meeting - - PowerPoint PPT Presentation

Annual General Assembly 2013

Agenda

• Opening of the Meeting
• Word of Welcome from the Retirement Committee President

– FNPSPP Profile and Presentation of Members

• Approval of the Minutes of the Meeting (August 29, 2012) and Follow-up
• Presentation of Financial Statements, Salient Facts and the Financial Situation of

the Plan

• Ratification of Action Taken by the Retirement Committee in 2012
• Varia
• Election of one employee representative
• Adjournment of the Meeting

Word of Welcome Profile of the FNPSPP Presentation of Committee Members by

• Mr. Floyd McBride

President of the Retirement Committee

• The FNPSPP is part of the largest Aboriginal defined benefits pension fund in Canada

– Registered with the Office of the Superintendent of Financial Institutions and the Canada Revenue Agency

– Meets the requirements of federal Pension Benefits Standards Act and the Income Tax Act

• The FNPSPP is intended specifically for employees such as police officers,

firemen and security agents working in fields deemed more at risk. The Plan provides these employees with fringe benefits equivalent to those prevalent

• n the market for these types of jobs
• The Retirement Committee serves as the Board of Directors and is made up
• f 7 members, 3 of which are elected by and from among employees,

employers members and retirees.

• The FNPSPP had 197 members as at December 31, 2012

First Nations Public Security Pension Plan (FNPSPP)

Floyd McBride, President Éric Cloutier, vice-president Régis Flamand, director Johanne Castonguay, director Jean-Marie Gagnon, Ph.D., director Danielle Gill, director Angèle Petiquay, director

Retirement Committee

Approval of the Minutes of the Meeting Held on August 29, 2012 by Me Jacques Beaudet Gagné, Letarte, s.e.n.c.

Presentation of Financial Statements, Salient Facts 2012 and the State of Financial Soundness (Solvency and Capitalization) by

• Mr. Sylvain Picard, CPA, CA, CGA, ASC. Adm.A.

General Manager

Assets 2012 2011 $ $ Units held in the global trust 20,386,156 17,460,313 Accounts receivable Contributions receivable Employees 127,306 49,805 Employers 254,611 99,609 Additional contributions 250,118 36,331 Related party – Native Benefits Plan 1,694 42,753 Accrued interest and dividends 35,701 61,080 Sales taxes receivable 34,455 10,992 Prepaid expenses 6,300

• Cash

592,851 1,779,327 Total assets 21,689,192 19,540,210

Financial Statements – Statements of Net Assets of the Fund

Available for the Provision of Benefits – December 31, 2012

2012 2011 $ $ Liabilities Accounts payable Accounts payable and accrued liabilities 39,809 29,047 Related party – RBA Financial Group 18,227 125,000 Total liabilities 58,036 154,047 Net assets available for benefits 21,631,156 19,386,163

Financial Statements Statements of Net Assets of the Fund (continued)

Available for the Provision of Benefits – December 31, 2012

2012 2011 $ $ Increase in assets Investment income from the units held in the global trust 1,594,055 61,559 Other revenues 12,692 5,555 Contributions Employees 409,790 360,611 Employers 1,130,423 1,032,101 Redemption of past services 3,858 3,858 Transfers from other plans 144,703 89,396 Increase in assets 3,295,521 1,553,080

Financial Statements Statements of Changes in Net Assets of the Fund

Available for the Provision of benefits – December 31, 2012

2012 2011 $ $

Decrease in assets Administrative expenses Management expenses

131,250 125,000

Management fees on investments

63,499 52,726

Professional fees - Actuaries

77,782 119,872

Professional fees – Audit

11,004 2,861

Professional fees - Others

5,844 21,946

Cost of meetings

84,353 56,942

Marketing and development

8,749 13,206

Decrease in assets

382,481 392,553

Financial Statements Statements of Changes in net Assets in the fund (continued)

Available for the provision of the Benefits - December 31, 2012

2012 2011 $ $

Decrease in assets (continued) Benefits paid

547,283 530,107

Refunds and transfers Refunds of contributions

76,210 1,949

Transfers to other plans

44,554 147,889

Decrease in assets

1,050,528 1,072,498

Increase in net assets

2,244,993 480,582

Net assets available for benefits, beginning of year

19,386,163 18,905,581

Net assets available for benefits, end of year

21,631,156 19,386,163

Financial Statements Statements of Changes in net Assets in the fund (continued)

Available for the provision of the Benefits - December 31, 2012

2012 2011 $ $

Interest

201,899 189,493

Dividends

428,639 334,747

Gain on sale of investments

198,332 (580,606)

Distribution from real estate company

16,563 39,241

Current period change in market of investments

748,622 78,684 1,594,055 61,559

Financial Statements Investment revenues of units held in the global trust

December 31, 2012

Period Increase (Decrease) Net cumulative assets 2012 2,244,993 21,631,156 2011 480,582 19,386,163 2010 1,384,450 18,905,581 2009 2,410,349 17,521,581 2008 (2,327,675) 15,110,782

Salient Facts – Evolution in Net Assets

For fiscal year ended December 31 (in Canadian Dollars)

Salient Facts – Changes in Net Assets

For fiscal years ended December 31 (in Canadian Dollars)

• 2

2 6 10 14 18 2008 2009 2010 2011 2012 Change (blue and red) Cumulative

Millions $

Increase 2012 : 2,244,993 $ Cumulative : 21,631,156 $

2012 2011 $ $ Money market Short-term maturity 66,979 0.33% 75,416 Asset-Backed commercial paper (ABCP)

• 0.00%

12,008 Canadian bonds (yield between 1 % à 11 %) 7,299,589 35.80% 6,760,227 Canadian shares 4,615,144 22.64% 4,239,997 American shares

• 0.00%

8,485 Foreign investments funds International shares funds 6,131,910 30.08% 5,036,145 Real estate funds Real estate companies 1,613,090 7.9% 652,265 Infrastructure funds 659,444 3.25% 675,770 20,386,156 100.00% 17,460,313

Financial Statements – Composition of investment- Units held in the global trust and other investment

December 31, 2012

Salient Facts

Breakdown of the Portfolio by Category of Asset

Cash and Canadian Bonds 37%

Canadian Equities 23% Global Equities 27% Emerging Market Equities 3% Direct Real Estate and Infrastructure 10%

Period Annual Contributions 2012 $ 1,540,213 2011 $ 1,392,712 2010 $ 939,927 2009 $ 1,208,908 2008 $ 1,019,354

Salient Facts - Contributions

Period Benefits paid Retirees December 31 2012 $ 547,283 33 2011 $ 530,107 33 2010 $ 456,068 32 2009 $ 367,179 28 2008 $ 325,202 25

Salient Facts – Benefits Paid to retirees

Salient Facts 2012

• To adapt to new realities to ensure the

sustainability of your plan we dealt with three realities as early as 2012

– First reality

• Addressing the solvency deficit of defined benefit pension plans

such as yours

– Second reality

• Addressing the economic context and changes in world markets

– Third reality

• Responding to members’ growing needs

First reality: “Addressing the solvency deficit of defined benefit pension plans such as yours”

Action Taken to Re-establish the Financial Health of the FNPSPP

• Dealings with the Superior Court to confirm the right of the Retirement

Committee to implement amendments reducing benefits. This request was accepted regarding the RBA.

• Follow-up on the acceptance by the OSFI of the amendments reducing

benefits; multiple discussions

• The amendments reducing benefits implemented will allow the FNPSPP to

comply with the financing framework already established

• Determination of employers under federal and provincial jurisdiction. For

the FNPSPP, all employees are under federal jurisdiction.

Actuarial Valuation: Capitalization and Solvency Review

The financial soundness of a defined benefit plan such as the FNPSPP is measured primarily in two different ways:

• Capitalization review

– The evaluation on the basis of capitalization serves to assess the financial situation of the Plan at the time of evaluation based on the premise that the Plan will continue to exist indefinitely

• A rate exceeding 100%: sufficient financing
• Rate under 100%: action must be taken to remedy the situation.
• Solvency review

– The evaluation on the basis of solvency serves to assess the financial situation of the Plan at a given date, based on the premise that the Plan will be terminated on this time. Using hypotheses prescribed by law, the aim is to determine the capacity of the Plan to fulfil its obligations to its members on the evaluation date

• A rate exceeding 100%: sufficient financing
• Rate under 100%: action must be taken to remedy the situation.

Solvency Review

As at December 31, 2011 Hypothetical wind- up ($) As at December 31, 2011 Solvency ($) As at December 31, 2012 Hypothetical wind- up ($) As at December 31, 2012 Solvency ($) Value of assets (1)

19,286,200 24,603,800 21,531,200 24,540,900

Current value of liabilities

• Active participants & disabled

9,367,100 9,367,100 9,556,000 9,556,000

• Retirees and beneficiaries

11,750,900 11,750,900 12,220,600 12,220,600

• Deferred pensions and cases pending

3,911,300 3,911,300 4,275,300 4,275,300

Total liabilities

25,029,300 25,029,300 26,051,900 26,051,900

Surplus (deficit) on the basis of solvency

(5,743,100) (425,500) (4,520,700) (1,511,000)

Solvency ratio

77.1% 98.3% 82.6% 94.2%

Solvency Review

94% 98% 92% 101% 88% 95% 98% 91% 105% 113%

0% 20% 40% 60% 80% 100% 120% 140% 2012* 2011* 2010* 2009* 2008 2007 2006 2005 2004 2003

*Taking into account the amendments reducing benefits. Pending approval by OSFI

Capitalization Review

As at December 31, 2011 As at December 31, 2012 Before changes to hypotheses ($) As at December 31, 2012 After changes to hypotheses ($) Value of assets (1)

20,688,100 21,942,900 21,942,900

Actuarial value of assets

• Active participants & disabled individuals

6,330,400 6,795,100 6,927,300

• Retirees and beneficiaries

11,422,700 11,388,700 11,600,800

• Deferred pensions and cases pending

1,728,300 2,412,300 2,455,400

• Provision for futur indexation

1,206,700 1,346,800 959,400

Total assets

20,688,100 21,942,900 21,942,900

Surplus (lack of assets) Degree of solvency (2)

100 % 100 % 100 %

Plan Capitalization (history) %

A rate exceeding 100% indicates sufficient long-term financing

100 % 100% 95 % 95 % 87% 130 % 142% 136 % 115 % 113 %

0% 20% 40% 60% 80% 100% 120% 140%

2012* 2011* 2010* 2009* 2008 2007 2006 2005 2004 2003

*Taking into account the amendments reducing benefits. Pending approval by OSFI

Second reality: “Addressing the economic context and changes in world markets”

Action taken to face the economic context and market developments

• Revision of the investment policy of the FNPSPP Master Trust and establishment of

a liability-driven investment policy implemented on the medium term (2014-2018)

• Hiring of Manuvie gestion d’actifs, a new real estate investment manager
• Removal of a Canadian bonds manager (Addenda Capital) and hiring of a new

manager (Gestion de placement TD)

• Eight Investment Committee meetings in 2012: we worked actively on the search

for a new investment policy

• Closely following each portfolio manager

Master Trust Fund Performance

Year 1 year 4 years 10 years

2012 7.7% 9.0% 6.3% 2011 1.6 % 2.1 % 4.7 % 2010 9.1% 1.8 % 4.8 % 2009 18.3 % 2.8 % 5.1 % 2008

• 17.1 %

0.9 % 4.9 % 2007 0.6 % 8.0 % 7.7 % 2006 13.4 % 11.8 % 8.7 % 2005 9.4 % 6.4 % 8.9 % 2004 9.0 % 4.5 % 9.5 % 2003 15.4 % 5.5 % 8.9 % 2002

• 6.8 %

5.6 % 8.7 % 2001 1.9 % 9.4 % 2000 13.0 % 11.6 % 1999 15.7 % 12.2 % 1998 7.4 % 12.3 %

• For 2012, return of

7.7%

Third reality: “Responding to members’ growing needs”

Actions taken to meet the growing needs of members

• Extranet development for members (RBAcces)
• Change of address
• Pension estimate
• Intranet development
• Request management tool:
• Golf
• Access
• Calculator data
• Work on system and data security

Directions and goals for 2013 Based on the issues 2010-2014

Main Goals Established for 2013

Ensure the sustainability of the Plan

• Restore the financial health of the Plan
• Achieve a solvency threshold greater than 100%
• Raise awareness among employers of the need to maintain their plan
• At the least, meet the target determined annually in the investment policy
• Offer competitive products and services meeting the needs of our clientele
• Offer service corresponding to the expectations of our clientele
• Consolidate our product and services mix

Main Goals Established for 2013

Enhance awareness of the FNPSPP

• Foster a feeling of belonging
• Pursue the establishment of the RBA Foundation
• Personalize employee / employer relations
• Increase our accountability to our clientele and their awareness of financial

security

• Inform the population of the products and services offered
• Strengthen the capacity for business development
• Define sales goals per products and service

Main Goals Established for 2013

Update governance at the NBP

• Develop information technologies
• Develop information systems based on the needs of our organizations
• Ensure network and information system security
• Improve and develop control systems
• Ensure organizational conformity
• Pursue the process of risk management
• Ensure continuity of service in a crisis context
• Ensure that human resources have the necessary capabilities and maintain

excellent committee functioning

• Maintain and develop the capabilities of our resources
• Promote good governance practices

Ratification of Action Taken by the Retirement Committee – 2012

by

Sylvain Picard, CPA, CA, CGA, ASC, Adm. A. General Manager

Ratification of Action Taken by the Retirement Committee Resolution No. Meeting Date Subject

301 March 22, 2012 Recommendation of a firm for the actuarial valuation as at December 31, 2011 302 March 22, 2012 2012 action plan 303 March 22, 2012 2012 budget 304 March 22, 2012 Recommendation from the Investment Committee 305 March 22, 2012 Signing officers for cheques 306 March 22, 2012 Nomination of an election officer 307 March 22, 2012 Attendance fees – telephone conference 308 June 20, 2012 Audited financial statements as at December 31, 2011 309 June 20, 2012 Actuarial valuation as at December 31, 2011

Ratification of Action Taken by the Retirement Committee Resolution No. Meeting Date Subject

310 June 20, 2012 Amendment to regulation 2012-01 311 June 20, 2012 End of mandate – Présima 312 June 20, 2012 ABSCAN bonds 313 August 28, 2012 Nomination of auditors as at December 31, 2012 314 August 28, 2012 Amendment to the investment policy 315 August 28, 2012 Amendment to the management contract 316 August 28, 2012 Election of officers 317 September 25, 2012 Nomination – member of the Investment Committee

Varia Findings of the Working Group on Employer Withdrawal

Varia – Context

• The FNPSPP is a multi-employer plan
• Basic principle: cost sharing and pooling risks

Varia – Context

• For several years, the financing of certain employers has been under

pressure

• The actuarial deficit has generated additional pressure
• For these reasons (financial) or other reasons, an employer might

want to end participation in the Plan (“complete withdrawal”)

• In this respect, Plan regulations provide a clear mechanism
• To withdraw form the Plan there are two conditions:
• 12- month notice
• Payment in full of the employer’s share of the deficit

Varia – Issues for the Coming Years

• Rather than putting a definitive end to participation in the Plan, and

from the perspective of cutting costs, an employer might want to reduce the number of employees benefiting from the Plan (“partial withdrawal”)

• For example, including for participation only certain categories of employees or
• ffering a defined contribution plan instead

Question that arise:

• 1. Is it legal?
• 2. What do the Plan regulations foresee in such cases?
• 3. In a deficit situation, is it fair to the other employers?

Varia – Is it legal?

• Yes. A category of employees may be excluded based on the nature
• f their work, in compliance with the Canada Labour Code
• There are many complex issues associated with a change to a defined

contribution plan

• Other observations
• A reduction in the number of employees may be the result of several other

factors (e.g., layoffs, retirement, rationalization, shutdown of certain departments/ services, etc.)

• The PBSA does not foresee specific situations regarding membership or

withdrawal of employers from multi-employer pension plans

• Recently, the notion of partial withdrawal was withdrawn from the PBSA

Varia – What does the pension plan regulations foresee in these cases?

• No specific provisions with respect to the partial withdrawal of an

employer

• There is nothing to stop it
• There is no applicable framework
• No notice
• No financial consequences

Varia – In a deficit situation, is it fair to the other employers?

• A multi-employer plan is never completely fair, even in the normal

course of its operations

• No distinct accounting by employer
• The partial withdrawal of an employer implies that a portion of the

deficit assumed by this employer will be reassigned to the other employers

Varia – Working Committee’s Recommendation

• Regulate situations involving the partial withdrawal of employers
• Goals sought
• Not to increase the burden of other employers
• Treat employers equally in time
• Prefer a solution that is simple to manage
• Ensure that the partial withdrawal does not become a way to avoid the rules

applying to total withdrawal

• Protect employers from a domino effect

Election of one employee representative Retirement Committee

by

Me Jacques Beaudet Gagné, Letarte, s.e.n.c.

Annual General Assembly 2013