A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer

Today’s topics  Financial growth  Funding stability  Service growth  Membership growth  Advocating efforts  Stakeholder survey 2

FINANCIAL GROWTH 3

Adding value 4 “Our 2012 net return of 11.3% added $50 million in value compared to the policy benchmark return of 10.4%.” Julie Cays Chief Investment Officer

5 5 Year ending December 31 GrossNet %11.3% %3.4% %12.6% %14.7% Solid returns, low costs

Positive returns from all asset classes 6

Returns in excess of requirements 7

CAAT Plan is well-positioned 8 “The Plan is 103% funded with a reserve to provide some cushion during this period of continued economic uncertainty.” Derek W. Dobson CEO & Plan Manager

Growing surplus 9

FUNDING STABILITY 10

Agreement reached with province Jointly Sponsored Pension Plan (JSPP) Framework Agreement 11 October 2012

Contribution Rates – stable to to the YMPE to RCA limit Over RCA limit MembersEmployers %14.4% 43.2% %14.8% 44.4% YMPE (Year’s Maximum Pensionable Earnings) - $51,100 in 2013 RCA Limit - $152, in 2013

JSPP Framework Agreement Highlights  Exempted from special legislation, including forced participation in pooled investment fund  Granted 4-year valuation cycle for flexibility and stability  Governance remains with Plan Sponsors 13

JSPP Framework Agreement Highlights  Funding Policy temporarily changed – until 2017  Contribution rates stay at announced levels  Phase-in of adjustments finishes  Any shortfall would be addressed with temporary reductions to future benefits  Could be restored when Plan funding improved 14

Plan is financially stronger because:  Healthy demographic mix  Realistic assumptions  Solid returns  More diversified investments aligned with liabilities  Prescriptive Funding Policy 15

16 Active members: 21,400 Retired members: 12,600 (including survivors) 16 Healthy demographic mix

Plan is financially stronger because:  Realistic assumptions  Longer lifespan - age 88 versus national avg. 85  Discount rate – 5.8% 17

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Plan is financially stronger because:  Prescriptive Funding Policy  Uses mix of reserves, stability contributions and conditional benefits to manage through volatility 19

Outlook  Interest rates up  Investments continue to perform strongly 20

SERVICE GROWTH 21

Service growth Plans for:  People  Processes  Tools 22

People  New Director, Client Services: Angela Goodchild  Additional staff  2 Permanent for service improvement  2 Temporary for part-time enrolment, manual processes before new system  Training support for employer administrators 23

Processes  Realigned employer services team  Centralized support for employers through their main Plan contact (Pension Analyst)  Broader data collection allows Plan to do more  Part-time notification  Estimating liabilities  Proper calculations 24

RCA changes  Needed to adjust way administrative expenses were charged  Separate charge for portion of administrative expenses  Offset by lower contribution – no change in overall amount  Still one remittance – change to form only 25

Tools  Pension administration system will reduce manual processing, risk and help improve service experience, including timeliness  Data collection tool being rebuilt 26

MEMBERSHIP GROWTH It’s in our best interests 27

Growth benefits the Plan 28  Growth in Plan membership improves stability of pension funding  Accelerates contribution rate reductions  Similar demographic profile makes for lower risk and better alignment  Further reduces administration and investment costs

Growth benefits funding levels 29

Drummond Report – Recommendation 7:27 “Establish a single pension fund administrator for all university and college pensions, while recognizing differences in pensions.” Commission on the Reform of Ontario’s Public Services February 15,

How universities benefit 31  Avoids solvency funding requirements  Substantially lowers cost and risks associated with pension administration, investments, governance and compliance  Stabilizes contribution rates

How Ontario benefits 32  An efficient postsecondary sector pension plan achieved without legislation  The proposal offers an immediate solution  High interest in its success  Recognizes post-secondary sector alignment trends

 Growth must be in the best interest of CAAT members  CAAT members will not subsidize university debts 33 Fundamental principles

Preparing for growth 34

Earlier eligibility for part-time employees  On Jan. 1, 2014 all OTRFT employees can choose to join anytime  vs. 24-month continuous service qualification  Change made to manage legal risk with minimal administrative work, especially by employers 35

ADVOCATING EFFORTS 36

FATCA  Would have required withholdings for any retirees who are US citizens.  Exemption for pension plans received. 37

Bill C-377  Would require “labour trusts” to disclose personal information about those in receipt of payments  Written submission by Plan requesting exemption  Bill may be reintroduced 38

HST Relief  Relief for accounting for tax on deemed taxable supplies made by an employer to a pension plan  Response to advocacy Plan participated in  College does not have to remit HST where GST portion of deemed taxable supply is less than $5,000 (about $70,000 in activities)  Do NOT make election to ignore HST on actual taxable supplies 39

STAKEHOLDER SURVEY 40

Broad response received  Nearly 5,000 responses from 24 stakeholder groups  Over 3,500 active members responded for a 16% participation rate 41

Key findings  65% said pension plan was important part of decision to join college system  90% said pension plan was important part of remaining employed in college system  90% said pension is important part of total compensation received  90% said having an independent organization manage the plan is important  1.3% do not believe they are deriving good value for money from the plan 42

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