Vancouver Webcast Financial and Operational Review Accountable To You 4th Annual General Meeting October 15, 2005

2 Agenda  Plan profile  Financial structure  Annual financial statements  Actuarial valuation  Service highlights

3 PLAN PROFILE

Membership Profile  Active membership  1%  Number of retired members  8% (about 3,900 new pensions granted) * Members no longer employed with a Municipal Pension Plan employer, but with contributions on deposit in the plan Retired 44,915 23% Active 130,043 66% Inactive * 21,217 11%

5 Retired Members as a Percentage of Active Members Year ended December 31 Pension Benefits as a % of Regular Contributions 25% 35% 37% 40% ActualForecast Year Number of retired members will continue to grow as a result of aging membership

Age Profile of Active Members <40 yrs 27% >60 yrs 4% yrs 13% yrs 19% yrs 37%

Active Members by Group 91,173 Females (other than Police/Fire) 70% 5,853 Police/Fire 5% 33,006 Males (other than Police/Fire) 25% There are 130,043 active members 11 females from a special closed group (0.01%) not shown on graph

Employer Profile Total regular contributions by employer sector There are 599 Municipal Pension Plan employers Health Sector 53% Municipal and Regional Districts 30% School Districts 11% Colleges3% Other3%

9 Pensions Granted by Age Normal Retirement Age 65 Normal retirement Age 60 Per cent     60

10 FINANCIAL STRUCTURE

11 Plan Financial Structure Member $ Employer $ The Retirement Annuity Account accumulates special agreement contributions used to fund retirement annuities ($0.3 billion). Inflation Adjustment Account $3.3 billion Funds Future Indexing Basic Account $14.7 billion Funds Basic Pensions Supplemental Benefits Account Funds Group Benefits Employer $

12 Plan Financial Structure Member $ Employer $ Inflation Adjustment Account $3.3 billion Funds Future Indexing Basic Account $14.7 billion Funds Basic Pensions Supplemental Benefits Account Funds Group Benefits Employer $

13 Plan Financial Structure Member $ Employer $ Inflation Adjustment Account $3.3 billion Funds Future Indexing Basic Account $14.7 billion Funds Basic Pensions Supplemental Benefits Account Funds Group Benefits Employer $

14 Inflation Adjustment Account IAA Balance History $ Billions $ Billions  Increase to pensions in January is based on year over year increase in the Canadian Consumer Price Index  Full indexing granted in Jan was 2.2%  Historically, the plan has paid full indexing Year Year

15 Plan Financial Structure Member $ Employer $ Inflation Adjustment Account $3.3 billion Funds Future Indexing Basic Account $14.7 billion Funds Basic Pensions Supplemental Benefits Account Funds Group Benefits Employer $

16 ANNUAL FINANCIAL STATEMENTS

17 Annual Financial Statements  Prepared by Pension Corporation, board’s administrative agent  Audited by KPMG LLP, board-appointed independent auditor  “Clean” audit report  Board reviews and approves statements  Financial statements include:  Net assets available for benefits  Changes in net assets available for benefits  Notes that include actuarial valuation information

18 Net Assets Available for Benefits as at December 2004 Net assets  $1.7 billion (about 10%) from Dec $ Thousands Investments & cash$18,163,988 Contributions receivable30,329 Accrued investment income 2,380 Prepaid expenses4,267 Net investment settlements34,468 Other accounts payable (20,305) Total (Basic, IAA, RAA)$18,215,127

19 Changes in Net Assets Available for Benefits ($ Thousands) Net assets as at December 31, 2003$16,493,296 Investment income $1,686,391 Contributions774,710 Net transfer with other plans608 Pension benefits(593,731) Retired member group benefits(41,391) Termination & Refund Benefits (61,648) Investment & Administration Costs(43,108) Total Increase$1,721,831 Net assets as at December 31, 2004 $18,215,127

20 Net Assets Available for Benefits $ Billions  10% Net assets available for inflation protection Net assets available for basic pension benefits

21 Pension Contributions  Contributions  2% over 2003  $775 million versus $759 million  Salary base  2%  Active members  1%  Purchases  1% Year $ Millions MemberEmployer

22 Pension Benefits  Pension benefit payments  13% over 2003  $594 million versus $525 million  Number of retired members  8%  Full CPI indexing of 2.2% at January 2004 (2003: 2.3%) $ Millions Inflation adjustment Basic pensions Year

23 Pensions Benefits as a Percentage of Regular Contributions Pension Benefits as a % of Regular Contributions Year ended December 31 56% 81% 85% 90% Year ActualForecast Number of retired members will continue to grow as a result of aging membership

24 Retired Member Group Benefit Costs Extended Health, Dental and MSP Costs  21% due to:  Spousal and dependent premiums introduced in Jan for extended health and dental  Partially offset by increase in retired members and rising extended health and dental costs  Costs  increased 18% from 2000 to 2004  Number of retired members  32% over same period $ Millions Year

25 Retired Member Group Benefits Group Benefit Costs as a Percentage of Employer IAA Contributions  The plan rules require that retired member group benefit costs not exceed 100% of employer IAA contributions  This rule is applied on a fiscal year basis % of Employer IAA Contributions Used ActualForecast % Year Funding Policy Maximum (100%) 77% 52% 64% 111%

26 ACTUARIAL VALUATION

27 Basic Account Actuarial Valuation Defined Benefit Portion Assumptions include:  Investment return  Salary escalation rate  Mortality and termination rates  Retirement age Assets - Liabilities = Surplus or (Unfunded Liability)  Investment fund  Future member contributions  Future employer contributions  Pensions being paid  Value of pensions for current active & inactive members  Other future expenses Actuarial value of basic account assets Actuarial liability of basic account

28 Basic Account Actuarial Valuation Defined Benefit Portion  Independent actuary appointed by board  Results of valuation and key assumptions reviewed by the board  Most important indicator of the financial health of the basic account  Most recent valuation done as at Dec. 31, 2003

29 Basic Account Actuarial Valuation Defined Benefit Portion  Primary purpose of the valuation is to determine appropriate member and employer contribution rates required to properly finance the basic account  Change in actuarial position from surplus of $436 million as at Dec. 31, 2000, to an unfunded liability of $789 million as at December 31, 2003

30 Total Basic Benefit Liability Funding Year $ Billions Funded Portion Unfunded Liability Surplus  Funded portion of the basic benefit liability is $20.52 billion, meaning the basic benefit obligation is 96% funded  Liability indicates additional contributions required to properly finance basic benefits

31 Reason for Change in Actuarial Position  Change in actuarial position from surplus of $436 million as at Dec. 31, 2000, to an unfunded liability of $789 million as at Dec. 31, 2003  There were two primary reasons for the change in the actuarial position:  Lower rates of investment performance  Revised assumptions about future rates of investment performance

32 Increase in Contribution Rates  The Joint Trust Agreement requires that:  Contribution rates must be increased in order to properly finance the pension plan;  That those rate increases must be shared equally between plan members and employers  Trustees decided that effective July 1, 2005, member and employer contribution rates each increased by 0.99% of salaries, as recommended by the actuary

33 SERVICE HIGHLIGHTS

34 3-Year Continuous Improvement Client Satisfaction – Recent Retirees 02/0303/0404/05 Target Actual 94% 84% Per cent 90% Year 94%

35 3-Year Continuous Improvement First Pension Payment on Time 02/0303/0404/ Per cent Targets Actual 99% 97% 95% 98% 98% 98% Year

36 3-Year Continuous Improvement Final Pension Options on Time 02/0303/0404/ Per cent Targets Actual Annual Forecast Actual for 12 Months 93% 85% 73% Service Requests (demand 8% higher than forecast) 7,567 7,000 75% within 30 days 80% within 30 days 85% within 30 days Year

37 3-Year Continuous Improvement Purchase Quotes on Time 02/0303/0404/ Per cent Targets Actual 88% 77% 75% 75%within 30 days 70% within 30 days 70% within 60 days Year

38 3-Year Continuous Improvement Termination Options on Time 02/0303/0404/ Per cent Targets Actual 92% 88% 78% 90%within 30 days 95%within 95%within 28 days Year

39 Continuous Improvement Response to Written Enquiries 03/0404/ Per cent Targets Actual 93% 86% 95%within 30 days 95%within 21 days Year