A Plan for Growth ASCC / COFO Session 2 October 29, 2013

1. A Plan for GrowthASCC / COFO Session 2October 29, 2013 Kevin Rorwick – Chief Financial Officer

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

3. FINANCIAL GROWTH

4. Adding value “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 Solid returns, low costs

6. Positive returns from all asset classes

7. Returns in excess of requirements

8. CAAT Plan is well-positioned “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

9. Growing surplus

10. FUNDING STABILITY

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

12. Contribution Rates – stable to 2017 YMPE (Year’s Maximum Pensionable Earnings) - $51,100 in 2013 RCA Limit - $152,718.50 in 2013

13. 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

14. JSPP Framework Agreement Highlights • Funding Policy temporarily changed – until 2017 • Contribution rates stay at announced levels • Phase-in of 2012-14 adjustments finishes • Any shortfall would be addressed with temporary reductions to future benefits • Could be restored when Plan funding improved

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

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

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

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

20. Outlook • Interest rates up • Investments continue to perform strongly

21. SERVICE GROWTH

22. Service growth Plans for: • People • Processes • Tools

23. 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

24. 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

25. 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

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

27. It’s in our best interests membership GROWTH

28. Growth benefits the Plan • 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

29. Growth benefits funding levels

30. 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, 2012

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

32. How Ontario benefits • 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

33. 33 Fundamental principles • Growth must be in the best interest of CAAT members • CAAT members will notsubsidize university debts

34. Preparing for growth

35. 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

36. ADVOCATING efforts

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

38. 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

39. 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

40. Stakeholder survey

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

42. 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