2009/2010 Annual Report · website facelifts are in the works for the Public Service Pension Plan,...

2009/2010 Annual ReportApril 1, 2009–March 31, 2010

Pension Corporation 2009/2010 Annual Reportii

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Our Business and Accomplishments . . . . . . . . . . . . . . . . . . . . 1

Our Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Corporate Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Our Operating Principles . . . . . . . . . . . . . . . . . . . . . . . . . . 1Phase3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2We Make It Easy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Service You Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Great Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Finances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4People Who Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Our Clients and Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

The Plans We Serve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Our Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Our Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Board and Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

A Message from Board Chair, Gary Johnson . . . . . . . . . . . . . . 7Pension Corporation Board Members . . . . . . . . . . . . . . . . . . 8Roles and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . 9Responsibilities of the Board . . . . . . . . . . . . . . . . . . . . . . . . 9Board Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Board Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

The Executive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

A Message from Laura Nashman, Chief Executive Officer . . . . . 11Executive Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Messages from Our Vice Presidents . . . . . . . . . . . . . . . . . . 13Special Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . 14Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 15

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Pension Corporation 2009/2010 Annual Report1

Introduction

The British Columbia Pension Corporation is one of the largest pension services organizations in Canada. Created in 2000, the corporation operates on a not-for-profit basis under the provisions of the Public Sector Pension Plans Act. The Pension Corporation has grown into an award-winning organization with more than 400 staff members committed to serving the needs of our clients.

We provide pension services to British Columbia’s College, Municipal, Public Service and Teachers’ pension boards of trustees; WorkSafeBC; more than 900 plan employers; and just over 411,000 active and retired plan members.

Our offices are located in Victoria, British Columbia.

Our Business and Accomplishments

Our PurposeThe British Columbia Pension Corporation provides services to the College, Municipal, Public Service and Teachers’ pension boards of trustees and WorkSafeBC. Operating on a not-for-profit basis, we provide expertise, services and information on behalf of the boards of trustees to their pension plan members and employers.

Corporate Values

Spirit•Teamwork•Accountability•Integrity•Respect•

Our Operating PrinciplesPrinciples How we achieve them

Maximize value for money We operate in a cost-effective, risk-smart, financially prudent manner .Listen to our clients We solicit input, direction, advice and criticism, and act on it .Maintain confidentiality We protect the privacy of plan members .Promote simplicity We provide products and services that are simple and easy to understand .Look to the future We are dynamic, proactive and focused .Leverage best practices We work with our clients to continuously improve our service delivery .Keep our promises We live up to our commitments .


Phase3Phase3 is a significant renewal initiative for our staff that is reshaping our work culture. Phase3 develops, strengthens and improves the organization, enhancing the customer service experience for our clients and members by focusing on process improvements, better use of technology and development of staff.

Phase3 encourages innovation, idea sharing and celebrating success. The positive influence of Phase3 thinking is at work in various projects and initiatives currently underway and will continue to guide the corporation in the years to come.

Engaged employees

Our 2009 employee engagement survey had an 83 per cent response rate—well above the typical rate for employee surveys. We are very pleased with the results, seeing positive gains in areas pertaining to client focus, employee communication, respectful treatment, overall morale and overall leadership.

One of our biggest gains was in employee satisfaction. Seventy-six per cent of survey respondents indi-cated they are satisfied working at the Pension Corporation, a 22 percentage point increase since our 2008 survey. This rate is six percentage points higher than 85 other public sector organizations with whom we measure our performance. We are very proud of our results and the progress we continue to make in our employee engagement.

We Make It EasyWe are always looking for ways to make the member and employer experience with us simple and easy. Here are some recent examples.

For members

Better web services—The Municipal Pension Plan’s website has received a significant facelift. The site’s new look and feel is based on feedback from members and trustees. It features easier, more intuitive site navi-gation and clearly identified sections for active members, retired members and plan employers. Similar website facelifts are in the works for the Public Service Pension Plan, Teachers’ Pension Plan and College Pension Plan.

My Account—More than 61,000 active members—23 per cent of total active membership—are making use of our online services through My Account. This is a 20 per cent increase over the previous year, demon-strating the importance of building more services into our plan websites.

Seminars—Over 450 member seminars were held in 43 communities throughout British Columbia. These were attended by more than 14,000 members and prospective members, 95 per cent of whom said they were satisfied with the information and quality of the seminars.

For employers

eLearning—Our eLearning service for employers is a series of online courses that cover key training top-ics. eLearning supports and expands upon materials offered in our province-wide employer training workshops, so those not able to attend may still receive the same information. We continue to enhance key features of the eLearning program.

Employer Data Submission (EDS)—EDS is a new web service for employer reporting that provides plan employers with enhanced online security and easier access to the services they need. EDS features a secure log in area where employers can enroll new members, submit member data (including payroll data), pick up pension adjustments and communicate on a secure message board with Employer Services staff.


Service You TrustWe monitor and implement industry best practices, delivering services that are accountable, forward-think-ing and accessible to every type of member and employer. We are committed to building relationships with our members and employers, and ensuring their needs are met every step of the way.Retired Member System (RMS)—Scheduled for release in 2011, RMS will replace the existing Pension Information and Payment System (PIPS) that manages the pension payments made to retired members and other key services. The new RMS will support streamlined business processes and facilitate automated cor-respondence. The system will also be easier to update and upgrade and allow for future enhancements such as online services for retirees.Benefits Canada Award for Plan Member Communications—At the third annual Benefits Canada Awards, our efforts were recognized for the video series Value of Your Plan that was produced for the Municipal Pension Plan. These videos were judged on their innovation, effectiveness and measurable results in the Plan Member Communications category.Plan support—In addition to the transactional work that the corporation does on behalf of the plans, the corporation also assists them in implementing plan rule design changes and other important initiatives to ensure the plan boards are fulfilling their mandates and fiduciary responsibilities. This includes policy work, regulatory filings, communications to explain the changes to affected parties, and administrative and system changes required to implement these initiatives.Highlights from the past year include:Municipal Pension Plan—Implementation of the Group 5 accrual rate for police and firefighters. As well, 200 Community Social Services Employer Association (CSSEA) employers enrolled in the plan, resulting in the enrolment of 8,000 new plan members.Public Service Pension Plan—Enabled the transfer of more than 200 members between the plan and the federal government plan under the Labour Market Development Agreement. As well, we administered the summer leave without pay program at the Public Service Agency.Teachers’ Pension Plan—Conducted an awareness campaign about the Inflation Adjustment Account, including providing support to the British Columbia Teachers’ Federation’s consultation on pension issues.College Pension Plan—Implementation of a new voluntary post-retirement group benefits plan and the elimination of the 35 year accrual limit.

Great ValueOur commitment to excellent service and providing value for every pension fund dollar spent is reflected in our high member satisfaction scores. In 2009/10, we delivered our pension services at a reasonable cost per member of $115. We are proud to deliver excellent services to clients and plan members while being a low-cost service provider.

2009/102008/09

Benefit administration services*average cost per member

$106 $115

* Does not include pension board secretariat services.

Relative cost per member

PeersBC Pension CorporationSource data: Cost Effective Measurement (CEM) benchmarking data based on 2008/2009 fiscal year


FinancesFunding

The corporation operates on a not-for-profit basis, charging each pension plan with its respective share of the corporation’s operating and capital expenditures. As part of the corporation’s service delivery planning and budget development process, each pension plan board of trustees approves its share of relevant costs. Any savings achieved are passed on directly to the pension plans served in the form of lower charges.

Operating expenses

The corporation had $41.7 million in operating expenses in 2009/2010.

People Who CareA great team of people who care about serving our clients and community is at the heart of everything the Pension Corporation does.

Community support

Provincial Employee Community Services Fund (PECSF)—Our 2009 PECSF campaign was successful on many fronts. We raised more than $54,000 – an increase of $600 over 2009. Corporation staff raised $1,040 at our annual corporate picnic and $7,176 through our many smaller events such as the basket raffle, bake and book sales, 50/50 draws and the silent auction. These funds have been distributed directly to the Burnside Gorge Community Centre, Victoria Hospice, Queen Alexandra Foundation for Children and the Victoria Women’s Transition House.

United Way Loaned Representative program – The corporation continues to support the charitable efforts of the United Way

Excludes pension board secretariat services. Certain operating expenses have been reclassified from the prior year presentation.

Client Services34%

Corporate Management,Corporate Board

and Other Support Services17%

FinancialServices

7%

Communications and Plan Management

10%

InformationManagement

24%

Amortization8%

Operating expenses by category

0

20

40

60

100

80

Active members*

Longer-termretirees***

Recentretirees**

Member satisfaction 2009/2010

40%

55%

48%40%

42%

Satis�ed

84%82%

36%

Very Satis�ed

*Active members are individuals who are currently contributing, or who are receiving benefits from an approved salary continuance plan, or are on a leave of absence.

**Recent retirees are individuals who are receiving a pension, including those who are receiving a disability pension and who have been retired for up to one year.

***Longer-term retirees are individuals who are receiving a pension, including those who are receiving a disability pension and who have been retired for three years or longer and are under the age of 75.

95%


program through the United Way Loaned Representative program. The program offers an excellent oppor-tunity for a staff member to participate in the planning and implementation of the United Way’s successful workplace fundraising campaigns while being a full-time member of the Pension Corporation.

Our Clients and StaffThe Plans We ServeBoards of Trustees

The Pension Corporation provides services on behalf of the boards of trustees for major British Columbia public sector pension plans.

Plans and their members

The Pension Corporation serves the College, Municipal, Public Service and Teachers’ pension plans and WorkSafeBC. Figures below are up to March 31, 2010.

The Municipal Pension Plan serves about 222,000 active mem-bers, their employers and retirees in British Columbia. Members and employers come from a variety of sectors across the prov-ince, including health, municipalities, school districts and others. With over $24 billion in assets, Municipal Pension Plan is the sixth largest defined benefit pension plan in Canada.

The Public Service Pension Plan serves about 93,000 active mem-bers, their employers and retirees in BC’s public sector. With over $17 billion in assets, the Public Service Pension Plan is the seventh largest defined benefit pension plan in Canada.

The Teachers’ Pension Plan serves about 75,000 active members and retirees from all school districts across British Columbia. With over $15.5 billion in assets, the Teachers’ Pension Plan is the ninth largest defined benefit pension plan in Canada.

The College Pension Plan serves about 16,000 active members and retirees. The plan provides a sustainable, guaranteed retire-ment income for senior administrative employees and faculty members of most of the publicly funded post-secondary insti-tutions in British Columbia. The College Pension Plan holds $2.3 billion in assets.

The WorkSafeBC Pension Plan is a single-employer plan that serves eligible employees of WorkSafeBC. The plan has about 4,700 active, inactive and retired members and holds just under $1 billion in assets.

Reg. T.M. Municipal Board of Trustees


Active members live and work throughout British Columbia, and retirees in our plans live all over the world. Total active and retired membership in the plans is about 411,000 people, an increase of about three per cent from the previous year. Retired membership grew by approximately five per cent in 2009/10, and just over 130,000 retired members are now served by the Pension Corporation.

Employers

The Pension Corporation works with more than 900 employers across the five plans we serve. To ensure we meet the needs of employers, the corporation has established both a employer advisory council for large employers as well as a small employer forum. These groups meet once or twice a year. Meeting with these groups enables us to better understand the unique requirements of our employer base and work collaboratively to improve our interactions.

Our StaffCommitted expertise

When you contact the Pension Corporation, be assured you are dealing with highly trained staff members committed to excellent customer service and meeting your needs.

The Pension Corporation invests in continuous learning and career development for our staff. We support a certificate program in both basic and advanced pension administration. In addition, we offer in-house staff training focused on client service skills, project management, communications, in-house software, leadership development and health and wellness in the work place.

Our ServicesWe provide comprehensive and customized pension services on behalf of the College, Municipal, Public Service and Teachers’ pension boards of trustees and WorkSafeBC.

Our business focuses on providing information and support to plan members and employers. Services include enrolling members, collecting remittances, paying pensions and providing strategic advice to our plan boards.

We ensure our clients are provided with exceptional service every time they contact us—whether by phone, e-mail or in per-son at member seminars held throughout British Columbia. We seek feedback from clients and actively monitor pension plan and industry trends to best serve our clients’ evolving needs.

We take pride in providing cost-effective service to the pen-sion boards for every pension fund dollar spent.

under 40 years30%

Age profile of active membersas at March 31, 2010

40–49 years31%

55+ years21% 50–54 years

18%

010203040506070

2010200920082007

55+50-5445-4940-4435-3930-3425-29<25

Increasing age profile of active membersas at March 31, 2010

(thousands)

Retired membersActive members

Number of active and retired membersas at March 31, 2010

(thousandsof members)

0

50

100

150

200

250

300

350

400

450

2009/102008/092007/08

68.9%

31.1%

69.2%

30.8%

68.3%

31.7%


Board and Governance

A Message from Board Chair, Gary JohnsonIt was my pleasure to serve as the chair of the British Columbia Pension Corporation’s board of directors during the 2009 and 2010 fiscal year. Serving the Municipal Pension Plan Board of Trustees since 2001, and the Pension Corporation board since 2004, I have witnessed first hand the corporation’s growth, challenges and successes. Always, corporation staff members have remained focused on making the client service experience easy for members of the pension plans we serve.

It is an interesting and challenging time in the Canadian pension industry. This is true at the corporation. While funds for members’ basic pensions are healthy and secure, the plans face challenges in managing their inflation adjustment accounts, cost-of-living adjustments and extended health benefits for retired members.

Members ask us, “Why are these challenges happening?” There are four main reasons.First, there’s an increasing number of retired members. Baby boomers are entering retirement age, so

more and more members are drawing upon pension funds.Second, retired members are living longer. Each time a cost-of-living adjustment is granted, enough

money must be transferred to the basic account to pre-fund that approved adjustment for the rest of a member’s lifetime. As life spans increase, so do the costs of individual cost-of-living adjustments.

Third, the costs for post-retirement group benefits have increased sharply.Fourth, the market volatility of 2008 and early 2009 put financial pressures on the inflation adjustment

accounts. Market values have recovered to a degree, but losses and volatility continue to exert pressure on these accounts. These four factors impact the inflation adjustment accounts for all of our plans.

Despite the challenges, the Pension Corporation is well positioned to assist our plan boards and plan partners with sound advice, best practices, strategic planning and communications support.

I’m pleased to share that our executive team is now complete with the addition of two new members: Kevin Olineck as Vice President of Client Services, and Cheryl Eason as Vice President of Financial and Plan Board Services. Both bring a wealth of experience and strategic thinking to the corporation, and along with Sher Anderson, Vice President of Corporate Services, and their management styles support and com-plement the leadership of Chief Executive Officer Laura Nashman. Laura and her team continue to build strong partnerships with the Pension Corporation’s board as well as the plan boards. A focus on people, processes and technology continues to drive many long-term projects, including business continuity plan-ning, risk management and the new Retired Member System.

I look forward to working with the Pension Corporation’s board of directors and the executive team dur-ing the next fiscal year as the Pension Corporation reaches an important milestone: its 10th anniversary. The board thanks all corporation staff for their hard work and team spirit this year.

With confident leadership and caring staff ready to serve, the future of the organization looks bright.

Gary Johnson Chair, Board of Directors

March 31, 2010


Pension Corporation Board Members

Gary Johnson, ChairGary was appointed to the board of directors in 2004 by the Municipal Pension Board of Trustees and has been chair of the corporation’s board since April 2009 . Gary was a national representative of the Canadian Union of Public Employees British Columbia, responsible for pension and benefit issues on behalf of members in the public education sector . He has been a member of the Municipal Pension Board of Trustees since May 2001 .

Ron McEachern, Vice ChairRon was appointed to the board of directors in 2008 by the Public Service Pension Board of Trustees . He has worked in human resources and labour relations for more than 30 years and was an associate deputy minister of Employee Relations prior to retiring in 2005 . Ron has served on the boards of directors for several employer associations and was a member of the British Columbia Labour Relations Board for eight years . Ron was appointed to the British Columbia Investment Management Corporation board of directors in 2007 and has been a member of the Public Service Pension Board of Trustees since April 2002 .

Danny BradfordDanny was appointed to the board of directors in 2005 by the College Pension Board of Trustees . He is a Vice President of the British Columbia Government and Service Employees’ Union and is retired from Selkirk College where he was the Chair of the School of Industry and Trades Training and re-employed as a relief Millwright Instructor . He has been a member of the College Pension Board of Trustees since March 2000 .

Carl FischerCarl was appointed to the board of directors in 2007 by the College Pension Board of Trustees . He is the executive director of Financial Reporting and Advisory Services for the provincial Ministry of Finance . He has been a member of the College Pension Board of Trustees since December 2007 .

Wayne JeffersonWayne was appointed to the board of directors in 2002 by the Teachers’ Pension Board of Trustees and was chair of the corporation’s board from 2007 to 2009 . Wayne has also chaired the corporation’s audit committee since 2003 . Prior to becoming a trustee, Wayne served for many years with the British Columbia School District Secretary Treasurers’ Association (predecessor to the British Columbia Association of School Business Officials) and was a trustee in School District No . 36 (Surrey) . He is currently the Secretary Treasurer of the Maple Ridge–Pitt Meadows Board of Education, serving since May 2009 . He has been a member of the Teachers’ Pension Board of Trustees since April 2001 .

Dale LauberDale was appointed to the board of directors in 2004 by the Teachers’ Pension Board of Trustees . After 25 years’ experience as a teacher and serving local unions on bargaining committees, Dale worked as a staff officer for the British Columbia Teachers’ Federation from 1990 until his retirement in 2006 . He has been working in bargaining and benefit administration, including pensions, since 1996 . He has been a member of the Teachers’ Pension Board of Trustees since April 2001 .

Paul MartinPaul was appointed to the board of directors in 2007 by the Public Service Pension Board of Trustees . He has been actively involved in the pension business for 20 years . Since 1987 Paul has worked exclusively on pensions and pension policy for the British Columbia Government and Service Employees’ Union . He has been a member of the Public Service Pension Board of Trustees since January 2001 .

Richard TaylorRichard was appointed to the founding board of directors by the Municipal Pension Board of Trustees in 2000 . He has been Chair of the Corporate Board and the Human Resources Committee and a member of the Audit and Human Resources Committees . He was executive director of the Union of British Columbia Municipalities from 1985 until stepping down in October 2007 . He has been a member of the Municipal Pension Board of Trustees since April 2001 .


Roles and ResponsibilitiesThe Pension Corporation is governed by a board of directors that operates independently from the cor-poration’s management team. The board has adopted a written code of conduct detailing its roles and responsibilities as directors of the corporation.

Responsibilities of the BoardThe board of directors:

appoints a chair and vice chair,•appoints and evaluates the chief executive officer,•approves business plans and budgets,•appoints an auditor of the Pension Corporation,•oversees the operations of the Pension Corporation, and•acts in the best interests of the Pension Corporation.•The board consists of eight directors with representatives from each of the four major public sector pen-

sion plans. Two directors, one of whom is nominated by the plan member partner and one by the plan employer partner, are appointed by each pension plan board of trustees. Directors are appointed for up to a three-year term. The chair and vice chair are appointed by the board for up to a two-year term. The board has two committees: the audit committee and the human resources committee.

Board CommitteesAudit Committee

The audit committee acts on behalf of the board of directors to ensure effective financial oversight of the corporation. The four committee members must be financially literate and one member must be a finan-cial expert who understands generally accepted accounting principles (GAAP), internal controls and audit committee functions. The committee meets at least twice a year. In addition to its role of financial oversight through monitoring and reporting, the committee also evaluates its own performance annually. The com-mittee’s mandate includes ensuring effective oversight in the areas of:

integrity and cost-effectiveness of internal controls, reporting and compliance,•financial statements conforming with GAAP,•an independent audit of the financial statements, and the selection, compensation and performance of •the auditors,an annual report with audited financial statements,•an effective risk management program relating to the objectives and operations of the corporation, •including risks relating to the responsibilities carried out by the corporation as a benefit administrative agent for the pension plans,an effective internal audit program, and•any other matters referred to the committee by the board.•The audit committee met twice in the 2009/10 fiscal year.

Human Resources Committee

The mandate of the human resources committee is to assist the board in assessing strategic proposals that will enhance the human resource potential of the corporation, including:

evaluating policies that impact the corporation as an employer,•


considering the corporation’s strategies on succession planning,•assessing compensation and rewards strategies,•establishing a process to review the performance and remuneration of the chief executive officer (CEO), and•developing a board education program.•The human resources committee met once in the 2009/10 fiscal year.

Board CompensationMembers of the board are remunerated through an annual retainer and a per diem fee for meetings of the board and its committees. Board members are either paid directly for their services or through the organi-zation that employs them. In addition, members are reimbursed for reasonable travel expenses relating to their board services. Board member compensation for the period ended March 31, 2010 is as follows:

Name and Position Remuneration ($)

Gary Johnson, Chair 11,924 Ron McEachern, Vice Chair 7,782 Wayne Jefferson, Director 7,451 Richard Taylor, Director 6,747 Dale Lauber, Director 6,181 Paul Martin, Director 5,850 Dan Bradford, Director 5,519 Carl Fischer, Director 5,519


The Executive

A Message from Laura Nashman, Chief Executive OfficerOrganizations are best judged not by what they accomplish in good times, but on how they manage and move forward in challenging times. This was a challenging year for our clients, and in turn it tested the Pension Corporation’s ability to respond to several complex issues. While members’ basic lifetime pensions remain secure, helping the plans manage their inflation adjustment accounts, cost-of-living adjustments to retired members’ pensions and extended health benefits for retirees proved challenging during this period.

I am proud to say that in this past year we delivered with expert advice, strategic thinking and creative solutions. The Pension Corporation brought its pension expertise to the table by anticipating the needs of clients and helping them develop and implement strategies that addressed the issues they faced.

This is when we thrive and how we add value. It is also a source of renewed energy for our leaders and staff. Inside the organization we are pouring our collective positive energy into a significant renewal effort we call Phase3. Phase3 is our commitment to strengthen, develop and improve our organization. It focuses on improved business processes, better use of technology, and the development of our people. In Phase3, we are exploring new and better ways to serve the plan boards and their members.

I would also like to mention that this year, at the third annual Benefits Canada awards, our efforts were recognized for the video series Value of Your Plan, produced for the Municipal Pension Plan. These videos were judged on their innovation, effectiveness and measurable results in the Plan Member Communications category.

I can also report that the new Retired Member System is on track to be delivered on time, on budget and within scope. This is the largest and most complex project in our recent history. Scheduled to go into pro-duction next spring, it promises to bring better services to our retirees while making our work easier and more efficient. In Phase3 we are also improving core functions such as business continuity planning, enter-prise risk management and business planning, to name a few.

Of greater long-term significance are the preparations currently underway for the development of our next strategic plan. I look forward to working with our board of directors, the plan boards of trustees, our leadership team and all of our staff as we begin to look far ahead and plan for our future.

We will be deeply engaged in this activity in the months ahead. And what a perfect time for this—as we enter our 10th anniversary year.

I would like to thank the plan boards for the productive partnership we have with them and the Corporate Board for their guidance and support. On behalf of the Executive Team, our management team and all our staff, we look forward to serving the five pension plans and their members in the years ahead.

Laura Nashman Chief Executive Officer

March 31, 2010


Executive TeamLaura Nashman—Chief Executive Officer

Laura became chief executive officer of the British Columbia Pension Corporation in December 2008. Since joining the Pension Corporation, Laura’s focus has been on developing, strengthening and improving the corporation. She has paid particular attention to the business processes, the use of technology and how the corporation trains and develops staff to ensure the best service is provided to the plan boards and the plan members.

Laura came to the corporation after serving as the Commissioner of Employee and Business Services for the Regional Municipality of Peel, Ontario, a position she held since 2002. Her portfolio included execu-tive oversight of the corporate functions including human resources, information and technology services, information management, real estate, construction and facilities management.

Laura holds Bachelor of Arts and Master of Industrial Relations degrees from the University of Toronto.Role of the Chief Executive Officer (CEO)The CEO is appointed by the board and is accountable for the day-to-day operations of the Pension Corporation. The CEO is responsible for:

the overall management and leadership role in the organization,•carrying out the strategic plan and policies as approved by the board, and•carrying out the service delivery plans as approved by each of the pension boards of trustees.•The CEO and all corporation employees adhere to a code of conduct that governs confidentiality, profes-

sional service delivery and conflict of interest.

Sher Anderson—Vice President, Corporate Services

Sher is responsible for the Corporate Services Division, which includes the Information Technology (IT), Human Resources, Property Services and Executive Administration branches. Sher joined the Pension Corporation’s predecessor organization, the Superannuation Commission, in 1997 as part of the manage-ment team that directed the transition from the Ministry of Finance’s Superannuation Commission to the Pension Corporation in 2000.

Sher brings a thorough knowledge of the history and the evolution of the corporation and joint trustee-ship as well as an understanding of the BC environment. She has well established relationships with many key Pension Corporation stakeholders, including employees and organizations such as the British Columbia Government and Service Employees’ Union.

Currently, Sher is leading the design of the corporation’s Leadership Development program. She is overseeing the implementation of the IT process improvement program and is a member of the steering committee for developing a new planning framework.

Sher holds a Certificate in Public Relations from the University of Regina and has a Certified Human Resources Professional (CHRP) designation. Sher brings considerable management experience from work-ing in all levels of government and in the private sector.

Cheryl Eason—Vice President, Financial and Plan Board Services

Cheryl joined the Pension Corporation in June 2009 as vice president, Financial and Plan Board Services. Cheryl brings over 25 years of financial management experience to the corporation and extensive exper-tise in strategic and business planning, enterprise risk management, corporate social responsibility and stakeholder relations. Cheryl has held several senior executive positions in both public and private sec-tors, including the Emergency Management Organization with the Province of Manitoba and the City of Winnipeg. Most recently, she served as executive vice-president & chief financial officer for the Manitoba Lotteries Corporation.


Cheryl’s areas of responsibility at Pension Corporation include finance, procurement, policy and plan board services. Since joining the corporation, Cheryl has focused her attention on leading the review of an integrated planning model that includes key business processes such as strategic and business planning, budgeting, forecasting and performance measurement.

Cheryl holds a Certified General Accountant (CGA) designation. Since joining the corporation, she has received the Retirement Plans Associate (RPA) designation from Dalhousie University. She is currently enrolled in the Master of Business Administration (MBA) program at Royal Roads University.

Kevin Olineck—Vice President, Client Services

Kevin joined the BC Pension Corporation as vice president, Client Services Division in May 2009. Prior to joining the Pension Corporation, he worked as Vice President, Pension Services for Alberta Pension Services Corporation. In addition to his experience in public sector pension administration, Kevin held management positions within the Pension & Investment Management Division at Canada Life Assurance Company/Crown Life Insurance Company.

Since joining the corporation, Kevin has focused on defining a future model for service delivery to clients as well as providing strategic leadership to a restructured Client Services Division. The division is respon-sible for providing front line services to more than 411,000 active and retired members as well as more than 900 employers. In addition, the division now has responsibility for plan board, corporate and internal communications.

Kevin has a degree in Public Administration from the University of Saskatchewan, a Certified Employee Benefits Specialist (CEBS) designation and a Pension Plan Administration Certificate (PPAC). Kevin has been a member of the Canadian Pension Benefits Institute (CPBI) for many years; he currently sits as a member of the Pacific Council and sat on the Northern Alberta Council prior to moving to Victoria.

Messages from Our Vice PresidentsMessage from Sher Anderson, Vice President, Corporate Services

It has been my privilege to have helped shape the Pension Corporation over the past 10 years. I am very proud of all that has been accomplished and want to say thanks to our experienced and caring staff who truly are the reason for our success and the reason it’s great to work here. I look forward to continuing to build on our success and help move our organization to the next phase in its evolution.

In the past year, my responsibilities have been expanded to include Information Technology and Property Services. I have been very impressed with the skills and commitment these employees bring to their jobs each and every day. Like the Human Resources and Executive Administration teams, they work behind the scenes, quietly and competently, providing support services that enable our front line staff to deliver the excellent service for which we are best known. Whether it’s developing eLearning for members, enhancing web-based services for employers or building websites, the Corporate Services Division is a team dedicated to providing the best support services in a cost-efficient manner. You have our word on this. We look for-ward to serving our clients in the coming year and thank our clients for the opportunity.

Message from Cheryl Eason, Vice President, Financial and Plan Board Services

As I begin my second year with the Pension Corporation, I am elated by the performance and ongoing improvements in our processes and am filled with optimism for further successes.

Two highlights for me for this year have been streamlining our financial and reporting processes, and expanding our E-remit program for employers. E-remit enhances reporting, expedites the investment of contributions and reduces the corporation’s paper usage.


By maintaining our vision, values and operating principles—while sustaining the momentum that has carried us this far—we will be well along our way to achieving our full potential as one of best pension administration service organizations in Canada.

My goal is not only to provide proactive support to corporate initiatives but also to ensure the organiza-tion is well poised to benefit from working together toward continuously improving service performance and exceeding the expectations of our boards, trustees and clients.

Message from Kevin Olineck, Vice President, Client Services Division

It was exciting to join a customer service success story and have the opportunity to help guide the Pension Corporation into the future. Having been involved in the administration of public sector pension plans for over a decade, I was familiar with the corporation. But I agree with our staff when they say that until you work here, you cannot appreciate what makes it so special.

The corporation is a success because of our staff and their devotion to making each customer interac-tion a great one. I am continually impressed with the passion, open-mindedness and willingness to make positive changes our employees bring to their work. In doing so, they make the customer experience the Pension Corporation has to offer even better.

I am also very proud of the achievements of the corporation over this past year, as many important initiatives were completed while service standards continued to be met. In particular, the work done on defining a new model for the delivery of client services; a refined communications review cycle; progress on our Retired Member System as well as the development of more staff training modules work toward our Phase3 mandate of improving processes, leveraging technology and renewing our commitment to staff engagement.

I am confident we have the necessary components to become a true leader in the pension services field and look forward to helping lead our team on that journey.

Special AcknowledgementsIn 2009/10 we said good-bye to three members of our executive team.

Karen Harper

Karen Harper is an expert in the field of pension and group benefits, first working with the BC Teachers’ Federation before joining the Pension Corporation in May 2000. Before her retirement in February 2010, Karen served as the corporate chief knowledge officer. Branches that reported to her include Policy, Communications, Legal Services, Information Technology, Municipal Pension Board Secretariat and Pension Services. In recognition of her experience and knowledge in the pension field, Karen had been appointed to numerous advisory committees dealing with pension issues, including the provincial Pension Benefits Standards Act advisory committee and the Canada Revenue Agency pension advisory committee.

Sandra Lenz

Sandra Lenz joined the Superannuation Commission in 1995 as Manager of Finance Management. In 2000, Sandra became the director of the Finance at the Pension Corporation, the Superannuation Commission’s successor organization. She served as chief financial officer from 2005 to 2009. Sadly, Sandra died in October 2009, leaving behind a loving family and many friends at the Pension Corporation who will remember her for her down-to-earth style, amazing sense of humour and never-ending energy. Sandra’s commitment to excellence and sound financial management helped to shape the standards by which the corporation operates today and will continue to operate in the future.


Louise Young

Louise Young played a key role in shaping the corporation into what it is today. She began her time with us at the Superannuation Commission and was the first vice president of the Pension Corporation. Louise excelled and provided expertise and guidance to all areas of the corporation, including Finance, Information Technology, Facilities, Business Planning and Enterprise Risk Management. In 2008, Louise assumed the role of interim CEO and managed the business as several new executives were recruited, including Laura Nashman as chief executive officer, Kevin Olineck as vice president, Client Services and Cheryl Eason as vice president, Financial and Plan Board Services

Louise retired in August 2009 and leaves a legacy of many successes, including significant year-over-year improvement in service response times; new web services for employers; the introduction of enhanced member and employer education programs; and the streamlined processes that helped the corporation reduce costs while achieving new service targets.

Executive CompensationThe chief executive officer’s compensation is determined by the board. All other employees of the corpo-ration, including the executive team, fall under the provisions of the Public Service Act and the relevant compensation framework for the public service.

Benefits include group life insurance and health benefits, disability plans and employer contributions to the Canada Pension Plan, Employment Insurance and the Public Service Pension Plan, a defined benefit pension plan.

The executive management team’s compensation for the period ended March 31, 2010, are as follows:

Name and Position Remuneration ($) Benefits ($)

Laura Nashman, Chief Executive Officer 238,029 55,568

Kevin Olineck, Vice President Client Services* 164,831 39,675

Sher Anderson, Vice President Corporate Services 138,815 33,419

Cheryl Eason, Vice President Financial and Plan Board Services* 150,876 36,313

Karen Harper, Chief Knowledge Officer* 136,507 32,833

Louise Young, Chief Operating Officer* 43,454 10,425

* compensation reflects partial-year employment

Financial Statements


BRITISH COLUMBIA PENSION CORPORATION

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING The financial statements and information in the Annual Report are the responsibility of management of the British Columbia Pension Corporation (corporation) and have been approved by management and the Board of Directors (board). Management is responsible for the integrity and fairness of the data presented, including significant accounting judgments and estimates. This responsibility includes selecting appropriate accounting policies consistent with generally accepted accounting principles in Canada. Other financial information contained in the Annual Report conforms to these financial statements. In discharging its responsibility for the integrity and fairness of the financial statements, management maintains the internal controls necessary to provide reasonable assurance that relevant and reliable financial information is produced and that assets are properly safeguarded. The board, primarily through its Audit Committee (committee), is responsible for ensuring that management fulfills this responsibility. The committee reviews the financial statements and recommends them to the board for approval. The committee meets with management and external auditors to discuss internal controls, auditing matters and financial reporting issues. The firm of PricewaterhouseCoopers LLP has been appointed the independent auditor of the corporation by the board. The role of the auditor is to perform an independent audit of the financial statements of the corporation in accordance with generally accepted auditing standards in Canada. The resulting audit opinion is set out in the Auditors’ Report attached to these financial statements. _______________________________ _______________________________ CHERYL EASON, C.G.A. BRUCE NICOL, C.A. Vice President, Financial and Plan Board Services British Columbia Pension Corporation

Director, Pension Plan and Corporate Financial Services British Columbia Pension Corporation

June 7, 2010

TEN YEARS – MANY HAPPY RETIREMENTS





March 31 2010 2009

Assets Current: Cash and Short-term Investments (Note 4) 1,705$ 1,126$ Due from Pension Plans (Note 5) 7,595 6,122 Accounts Receivable 203 248 Prepaid Expenses 547 461

10,050 7,957 Computer Systems and Other Assets (Note 6) 11,822 9,198 Total Assets 21,872$ 17,155$

Liabilities and Shareholder's Equity Liabilities Current: Accounts Payable 3,899$ 2,594$ Accrued Salaries and Benefits (Note 7) 6,151 5,363

10,050 7,957 Long term: Deferred Capital Funding (Note 8) 11,822 9,198

21,872 17,155 Shareholder's Equity Share Capital (Note 2) - - Total Liabilities and Shareholder's Equity 21,872$ 17,155$

All accompanying notes are an integral part of these financial statements including:

Commitments (Note 13)

Gary Johnson, Chair Ron McEachern, Vice Chair British Columbia Pension Corporation British Columbia Pension CorporationBoard of Directors Board of Directors

BRITISH COLUMBIA PENSION CORPORATIONBALANCE SHEET

($ Thousands)



For the year ended March 31 2010 2009

Revenues Benefit Administration Service Revenue (Note 9) 41,712$ 40,130$ Pension Plan Boards' Secretariat Service Revenue (Note 10) 1,157 1,053 Investment and Miscellaneous Income 42 122 Loss on Disposal of Computer Systems and Other Assets (17) (4) Total Revenues 42,894 41,301

Expenses Salaries and Benefits 27,884 26,006 Professional Services 3,729 3,375 Amortization 3,215 4,159 Rent, Office Expenses and Insurance 3,062 2,957 Systems Maintenance and Telephones 2,425 2,252 Communications Products and Distribution 999 925 Travel and Business Expenses 602 600 Staff Training 517 426 Bank Charges and Regulatory Fees 374 485 Corporate Directors Remuneration and Expenses 87 116 Total Expenses 42,894 41,301

-$ -$

BRITISH COLUMBIA PENSION CORPORATIONSTATEMENT OF REVENUES AND EXPENSES

($ Thousands)



BRITISH COLUMBIA PENSION CORPORATIONSTATEMENT OF CASH FLOWS

($ Thousands)

For the year ended March 31 2010 2009

Cash Flows from Operating Activities Operating Funding Received from the Pension Plans 38,164$ 37,060$ Cash Paid to Suppliers and Employees (37,627) (36,898) Investment and Miscellaneous Income Received 42 122 Total Operating Activities 579 284

Cash Flows from Investing Activities Purchase of Computer Systems and Other Assets (5,856) (3,113) Total Investing Activities (5,856) (3,113)

Cash Flows from Financing Activities Capital Funding Received from the Pension Plans 5,856 3,113 Total Financing Activities 5,856 3,113

Increase for the Year 579 284 Cash and Short-term Investments at Beginning of Year 1,126 842 Cash and Short-term Investments at End of Year 1,705$ 1,126$



BRITISH COLUMBIA PENSION CORPORATION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010

1. AUTHORITY

The British Columbia Pension Corporation (corporation) was established as a corporation on April 1, 2000, under section 5 of the Public Sector Pension Plans Act, S.B.C. 1999 C 44 (the act). The act describes the composition, appointment, powers, functions and duties of the Board of Directors (board) for the corporation.

2. NATURE OF OPERATIONS The corporation operates on a not-for-profit basis providing benefit administration services as agent for the boards of trustees responsible for the College, Municipal, Public Service and Teachers’ pension plans. It may also provide services to other British Columbia public sector pension clients. The corporation’s board consists of eight (8) directors, two (2) directors from each of the four boards of trustees above. The chair and vice chair of the board are elected by the directors. Benefit administration services provided by the corporation include collecting and recording contributions, calculating and paying benefits, communicating to employers and plan members, pension plan board support services and other services specifically approved by the individual boards of trustees. These administrative services are provided pursuant to service agreements with each plan. The corporation charges each pension plan with its respective share of the corporation’s operating expenses, and computer systems and other asset purchases, less investment and miscellaneous income and amortization. The issued share ($10 par value) of the corporation is held by the Province of British Columbia, and accordingly the corporation is exempt from income taxes. The corporation pays goods and services tax (GST) on applicable purchases and recovers those costs fully, through input tax credits.




3. SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Presentation These financial statements are prepared on an accrual basis, in accordance with Canadian generally accepted accounting principles.

b) Cash and Short-term Investments For the purpose of the statement of cash flows, cash and cash equivalents consists of all cash and short-term highly liquid investments, such as pooled money market funds, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes of value. c) Computer Systems and Other Assets Computer systems and other assets are recorded at cost and amortized on a straight-line basis over their estimated useful lives as follows: Major Business Application Software 3 to 10 years Other Computer Equipment and Software 3 to 5 years Furniture 10 years Tenant Improvements 10 years Direct expenditures including salaries on specifically developed computer software are capitalized only after development approval. Major business application software under development is not amortized until completion and implementation. The corporation monitors computer systems and other assets for changes in circumstances that indicate assets may be impaired if their service value to the corporation has declined. If such circumstances occur, the excess of the net book value over any residual value will be recognized as an expense in the statement of revenues and expenses. d) Revenue Recognition Cash funding is received in advance from the pension plans that receive services from the corporation. Service revenue is recognized as operating expenses are incurred and as assets are amortized. The corporation defers capital funding received in advance for computer systems and other asset purchases. This deferred capital funding is recognized as service revenue on the same basis as the related assets are amortized. Investment income is recorded on an accrual basis. e) Foreign Currency Translation Transactions denominated in foreign currencies are recorded in Canadian dollars at exchange rates in effect at the related transaction date. Monetary assets and liabilities denominated in foreign currencies are adjusted to reflect year-end exchange rates at the balance sheet date. Any resulting exchange gains and losses are included in the determination of income.



BRITISH COLUMBIA PENSION CORPORATION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010 3. SIGNIFICANT ACCOUNTING POLICIES (continued)

f) Use of Estimates The preparation of financial statements, in conformity with Canadian generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts on the balance sheet and statement of revenues and expenses at the date on the financial statements. Actual results could differ from these estimates. The significant area requiring the use of management estimates relates to the estimated useful lives of computer systems and other assets. g) Change in Accounting Policy In June 2009, the Canadian Accounting Standards Board (AcSB) amended Canadian Institute of Chartered Accountants(CICA) Handbook Section 3862, Financial Instruments – Disclosures, to require disclosures about the inputs to fair value measurements, including their classification within a hierarchy that prioritizes the inputs to fair value measurements. Each level within the hierarchy is based on the transparency of the inputs used to measure the fair values of financial instrument assets and liabilities. This standard, which was voluntarily adopted effective April 1, 2009, impacted the disclosure the corporation provides (Note 14), but did not affect the corporation’s Balance Sheet or Statement of Revenues and Expenses. h) Recent Accounting Pronouncements In 2006, the AcSB published a new strategic plan that will affect financial reporting requirements for Canadian public and private enterprises and not-for-profit entities. As part of this initiative in March 2010 the AcSB issued an exposure draft - Accounting Standards for Not-for-Profit Organizations. The final standard is expected to be issued in late 2010. The AcSB proposes that not-for-profit entities adopt either the new standard or international financial reporting standards effective for fiscal years beginning on or after January 1, 2012. The corporation continues to monitor these developments.




4. CASH AND SHORT-TERM INVESTMENTS

Short-term investments consist of direct ownership in units of pooled investment portfolios, managed by the British Columbia Investment Management Corporation (bcIMC). Each unit gives its holder a proportionate share in the net assets of the pooled investment portfolio. The pooled investment portfolios consist of Canadian money market securities such as financial and corporate commercial paper, with terms of 15 months or less. These investments are held for trading, and are recorded at fair value.

($ Thousands) 2010 2009 Cash $ 466 $ 312 Short-term Investments 1,239 814

$ 1,705 $ 1,126 5. DUE FROM PENSION PLANS

Due from pension plans represents total charges to pension plans less operating and capital funding received as follows:

($ Thousands) 2010 2009 Beginning Balance, Due from Pension Plans $ 6,122 $ 6,162 Total Charges to Pension Plans for: Benefit Administration Services 44,311 39,069 Pension Plan Boards’ Secretariat Services 1,182 1,064 Operating Funding Received (38,164) (37,060) Capital Funding Received (5,856) (3,113) Ending Balance, Due from Pension Plans $ 7,595 $ 6,122

Total Due from Pension Plans: Municipal Pension Plan $ 4,621 $ 3,561 Public Service Pension Plan 1,676 1,423 Teachers’ Pension Plan 1,069 829 College Pension Plan 168 253 Other Plans 61 56 Total Charges to Pension Plans $7,595 $ 6,122

Please see Note 3d) regarding funding arrangements.




6. COMPUTER SYSTEMS AND OTHER ASSETS

($ Thousands) 2010 2009

Cost Accumulated

Amortization Net

Book Value Major Business Application

Software $ 26,751 $ 24,762 $ 1,989 $ 3,231

Other Computer Equipment and Software 17,702 15,062 2,640 2,411

Furniture 3,602 2,911 691 718 Tenant Improvements 1,781 1,056 725 736 49,836 43,791 6,045 7,096 Major Business Application Software under development

5,777

-

5,777

2,102

$ 55,613 $ 43,791 $ 11,822 $ 9,198

7. ACCRUED SALARIES AND BENEFITS

($ Thousands) 2010 2009 Accrued Salaries and Benefits $ 5,046 $ 4,345 Leave Liability 1,105 1,018 $ 6,151 $ 5,363 Leave liability primarily consists of vacation earned but not yet taken.

8. DEFERRED CAPITAL FUNDING

($ Thousands) 2010 2009 Opening Balance, Deferred Capital Funding $ 9,198 $ 10,248 Capital Funding Received 5,856 3,113 Capital Funding Recognized as Service Revenue: Amortization (3,215) (4,159) Loss on Disposal of Computer Systems and Other

Assets (17) (4) Ending Balance, Deferred Capital Funding $ 11,822 $ 9,198

Please see Note 3d) regarding funding arrangements.



BRITISH COLUMBIA PENSION CORPORATION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010 9. BENEFIT ADMINISTRATION SERVICE REVENUE

The corporation’s benefit administration service revenue consists of charges to the pension plans for the corporation’s operating expenses, and computer systems and other asset purchases, less capital funding received, plus capital funding recognized as benefit administration service revenue:

($ Thousands) 2010 2009 Total Charges to Pension Plans for Benefit

Administration Services

$ 44,311

$ 39,069 Capital Funding Received (5,831) (3,102) Capital Funding Recognized as Service Revenue: Amortization 3,215 4,159

Loss on Disposal of Computer Systems and Other Assets 17 4

Benefit Administration Service Revenue $ 41,712 $ 40,130

Total Charges to Pension Plans for Benefit Administration Services were:

Municipal Pension Plan $ 23,093 $ 20,266 Public Service Pension Plan 10,350 9,040 Teachers’ Pension Plan 8,534 7,565 College Pension Plan 1,897 1,774 Other Plans 437 424 $ 44,311 $ 39,069

10. PENSION PLAN BOARDS’ SECRETARIAT SERVICE REVENUE

The corporation’s pension plan boards’ secretariat service revenue consists of charges to the pension plans for the pension plan boards’ secretariat operating, computer systems and other asset purchases, less capital funding received. Pension plan boards directly approve the pension plan boards’ secretariat operating and capital expenditure budgets, and the corporation recovers these expenses from the pension plans. ($ Thousands) 2010 2009 Total Charges to Pension Plans for Plan Boards’ Secretariat Support Services

$ 1,182

$ 1,064

Capital Funding Received (25) (11) Total Pension Plan Boards’ Secretariat Service Revenue $ 1,157 $ 1,053 Total Charges to Pension Plans for Plan Boards’

Secretariat Services were:

Municipal Pension Plan $ 505 $ 403 Public Service Pension Plan 226 220 Teachers’ Pension Plan 225 221 College Pension Plan 226 220 $ 1,182 $ 1,064



BRITISH COLUMBIA PENSION CORPORATION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010 11. EMPLOYEES’ PENSION PLAN AND RETIREMENT BENEFITS

In accordance with the Public Sector Pension Plans Act, S.B.C. 1999 c44, the corporation and its employees contribute to the Public Service Pension Plan (plan), a jointly trusteed pension plan. The plan is a multi-employer contributory defined benefit pension plan. The corporation administers the plan, including the payment of pension benefits, on behalf of the employers and the employees to whom the act applies. As at March 31, 2010, the corporation has approximately 430 employees contributing to the plan which has approximately 58,000 active plan members and 35,000 retired plan members. Employer contributions to the plan are included in salaries and benefits and represent the amount of pension expense for the year. For the year ended March 31, 2010, employees contributed 7.78% of salary up to the Canada Pension Plan’s Year’s Maximum Pensionable Earnings (YMPE) and 9.28% for salaries above that. The corporation contributed 8.78% of salary up to the YMPE and 10.28% for salaries above that. Employee and corporation contributions include 1.50% and 2.50% of salaries respectively, to fund contingent benefits such as future pension indexing and retired member group benefits that are subject to the availability of specified funding arrangements. Effective April 1, 2005, the employee contribution rate increased by 0.25%, to 1.50% of salaries, to fund these contingent benefits. The corporation, as employer, is paying the 0.25% employee contribution rate increase. Every three years an actuarial valuation is performed to assess the financial position of the plan and the adequacy of plan funding. The latest valuation as at March 31, 2008 indicated a $487 million surplus for basic pension benefits. Since that valuation, financial markets have experienced a significant downturn. As a result, effective April 1, 2009 employee contributions increased by 0.15% of salaries, from 7.63% of salaries up to the YMPE and 9.13% of salaries above that. Also effective April 1, 2009, employer contributions made by the corporation increased by 0.15% of salaries, from 8.63% of salaries up to the YMPE and 10.13% of salaries above that. The next valuation will be as at March 31, 2011 with results available in 2012. The actuary does not attribute portions of the unfunded liability to individual employers. In 2010, the corporation paid $2.1 million (2009: $1.9 million) for employer contributions to the plan. Employees are also entitled to specific retirement benefits as provided for under collective agreements and terms of employment. The cost of these future benefits is included in salaries and benefits expense.




12. RELATED PARTY TRANSACTIONS

The College, Municipal, Public Service and Teachers’ pension plans are related parties to the corporation. The pension plan boards appoint members to the corporate board, and the corporation provides services to the pension plans. Please see Notes 2, 9, and 10. These transactions are in the normal course of operations and consist of the recovery of the corporation’s operating expenses, and computer systems and other asset purchases. The corporation engages in transactions with the Province of British Columbia. These transactions are considered to be in the normal course of operations and include some limited supporting services; payroll, building occupancy and some information technology support services. Included in accounts payable and accrued salaries and benefits is $5.7 million (2009: $5.1 million) due to the Province of British Columbia.

13. COMMITMENTS Through the Province of British Columbia, the corporation has committed to various building rental and accommodation agreements for which the estimated costs for the years ending March 31, 2010 and 2011 is $2.2 million per year. The estimated costs for the year ending March 31, 2012 is $1.9 million, $1.5 million for the years ending March 31, 2013 to 2017 and $0.5 million for the three months ending June 2017. The corporation is developing a replacement business software application for serving retired pension plan members. The total project cost is forecast at $16 million over the four year development period with an expected implementation date of mid 2011. Through March 31, 2010 $7.4 million has been spent and of the remaining $8.6 million, $3.5 million is anticipated to be spent under an existing contract for software development. The contract provides for termination with no penalties.

14. FINANCIAL INSTRUMENTS The corporation’s financial instruments recorded at cost consist of cash, short-term investments, accounts receivable, including due from pension plans and accounts payable and accrued liabilities. The fair values of these financial instruments approximate their carrying values due to the relatively short period to maturity for these items. Short-term investments are recorded at fair value using current market yields and are held in a pooled investment fund managed by the British Columbia Investment Management Corporation (bcIMC) and are regularly monitored by bcIMC and management. Risks associated with financial instruments include market risk, credit risk and liquidity risk. Market risk is the risk that the fair values of an investment will fluctuate as a result of changes in market conditions. Market risk comprises foreign currency risk, interest rate risk, and price risk. Market risk is minimal as all investments are short-term.




14. FINANCIAL INSTRUMENTS (continued)

Credit risk is the risk that a loss may occur from the failure of another party to perform according to the terms of a contract. Credit risk is managed for investments by establishing specific investment criteria such as minimum credit ratings for investees. The credit risk associated with the receivable from pension plans is minimal. In June 2009, the AcSB amended the CICA Handbook Section 3862, Financial Instruments – Disclosures, to require disclosures about the inputs to fair value measurements, including their classification within a hierarchy that prioritizes the inputs to fair value measurements. Each level is based on the transparency of the inputs used to measure the fair values of assets and liabilities. The three levels of the fair value hierarchy are: Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or

liabilities; Level 2 – Inputs other than unadjusted quoted prices that are observable for the asset or

liability either directly or indirectly; and Level 3 – Inputs that are not based on observable market data.

Short-term investments, which total $1.2 million, are classified level 2. Liquidity risk is the risk of not being able to meet the corporation’s cash requirements in a timely and cost effective manner. The corporation forecasts its cash requirements over the near term to determine whether sufficient funds are available to meet forecast expenditures. The corporation’s primary source of liquidity is amounts charged to pension plans (Note 15). It is management’s opinion that the corporation is not exposed to significant risks arising from these financial instruments.

15. CAPITAL MANAGEMENT

The authorized capital of the corporation is one share with a par value of $10 held by the Province of British Columbia and is registered in the name of the Minister of Finance on behalf of the Province. The corporation is required by the Public Sector Pension Plans Act to recover its operating costs and capital expenditures from one of the following sources: amounts charged to the pension plans for operating costs and capital expenditures

necessarily incurred by the corporation on behalf of the pension plans it administers; amounts authorized under other enactments for services provided; amounts charged to persons, organizations and other clients for services provided; income accruing from investments made by the corporation.

The corporation may attribute costs to the pension plans that it administers, and requisition those amounts from the pension plans it anticipates are necessary for operating and capital costs associated with the administration of the pension plans.



BRITISH COLUMBIA PENSION CORPORATION NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2010 15. CAPITAL MANAGEMENT (continued)

It is the corporation’s policy to requisition quarterly, in advance, the amount required to meet its funding requirements for the quarter, with the objective of holding a minimum of excess funds. The funds are placed in short-term investment funds to be drawn on as required. Income earned on these investments is offset against the operating and capital costs of administering the pension plans. The corporation also has the ability to fund capital expenditures through amounts borrowed by the corporation.

16. COMPARATIVE FIGURES Certain comparative figures have been reclassified to conform to the current year’s presentation.

Corp AR 2001-035 2010 .09 .30 (WEB PF VERS)

British Columbia Pension Corporation

PhoneVictoria: 250 387-1002Rest of BC: 1 800 663-8823

Fax250 953-0429

E-mailPensionCorp@pensionsbc .ca

Mailing AddressPension Corporation PO Box 9460 Victoria, BC V8W 9V8

Webpensionsbc .ca

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