1. Colloque sur les régimes de retraite de L’ICA
CIA Pension Seminar
April 15, 2009
Colloque sur les régimes de retraite de L’ICA
Le 15 avril 2009

2. Promises to Keep The Final Report of the NS Pension Review Panel
Peter C. Hayes, FCIA, FSA
Eckler Ltd., Halifax, NS 2

3. Topics
Background
Process
Themes

4. Background Societal changes Declining pension coverage
One of 3 Panels/Commissions

5. Process Created February, 2008
2 actuaries and a lawyer!
Rounds of discussion papers, submissions, and meetings
Final report January, 2009

6. Themes
Hopes and promises
Funding
Flexibility
Governance

7. Flexibility and governance; hopes and promises
Types of plans
Target benefit
Jointly sponsored
Governance
Advisory Committee
Governance Plan
Hopes and promises

8. Funding Current regime Criticisms Going concern and solvency
Exceptions
Universities, SMEPPs, Municipalities
Going concern
Too much discretion
Solvency
Too conservative

9. Funding (cont’d) Proposed New Minimum Funding Standard
Must include ALL promises
Less conservative than solvency, less discretion than going concern
Same for all plans
Doesn’t preclude higher funding (per plan’s funding policy)

10. New Minimum Funding Standard
Method and Assumptions
What’s in the weeds?
Consequences

11. Method and assumptions
Accrued benefit method
Unprojected
Including ancillary benefits*
Introduces MFCSC
* Relationship between plan-mandated eligibility requirements and whether to reflect early retirement subsidies

12. Method and assumptions (cont’d)
Discount rate: CIA CV rate, plus
0.6% to NRD, 0.3% t/a for actives
0.3% for pensioners

13. Which means … what?? First 10 years Thereafter
CIA CV standard (for a June 30/08 valuation, but using the April 1, 2009 standard)
4.1%
5.5%
NS NMFS
Active members to NRD
Active members after NRD
Pensioners*
4.7%
4.4%
6.1%
5.8%
CIA CV standard (for a December 31/08 valuation, but using the April 1, 2009 standard)
4.2%
5.7%
4.8%
4.5%
6.3%
6.0%
*CIA annuity rates were 4.50% and 4.55% at June 30th and December 31st, respectively.

14. Method and assumptions (cont’d)
Discount rate: CIA CV rate, plus
0.6% to NRD, 0.3% t/a for actives
0.3% for pensioners
Mortality: per CV Standard
Terminations: none
Retirement: use plan experience, but …
Adjust for plan with subsidies
Inflation: 2%
Assets: at market (no smoothing)

15. What’s in the weeds? Funded ratio between 95% and 105% Otherwise …
Minimum contribution = MFCSC
Otherwise …
Add deficit amortization piece, or
Subtract surplus amortization piece
Amortization is over 10 years, with interest (one exception)

16. What’s in the weeds (cont’d)
Terminations: CVs calc’d according to NMFS
“Top-ups” paid within 1 year
No partial wind-ups
Target benefit plans (including MEPPs)
95% test, then
Compare PVFB to assets-plus-PVFC

17. What’s in the weeds (cont’d)
MEPPs: funding and benefit levels

18. Consequences
Indexed plans or plans with generous early retirement benefits
Heavier contribution burden (in some cases significant) vs current regime
Non-indexed, no heavy subsidy
It depends!
MEPPs
More stability vs current regime (depending on plan design)

19. Other stuff Member issues Promotion Province-wide plan
Transition rules

20. Promises to Keep The Final Report of the NS Pension Review Panel
Questions
Peter C. Hayes, FCIA, FSA
Eckler Ltd., Halifax, NS 20