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

Kevin Rorwick – Chief Financial Officer

Today’s topics

Financial growth Funding stability Service growth Membership growth Advocating efforts Stakeholder survey

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FINANCIAL GROWTH

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Adding value

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“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

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Year ending December 31

Gross Net

2012 11.8% 11.3%

2011 4.1% 3.4%

2010 13.3% 12.6%

2009 15.2% 14.7%

Solid returns, low costs

Positive returns from all asset classes

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Returns in excess of requirements

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CAAT Plan is well-positioned

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“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

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FUNDING STABILITY

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Agreement reached with province

Jointly Sponsored Pension Plan (JSPP) Framework Agreement

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October 2012

Contribution Rates – stable to 2017

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to the YMPE

YMPE to RCA limit

Over RCA limit

Members Employers

2013 10.8% 14.4% 14.4% 43.2%

2014-17 11.2% 14.8% 14.8% 44.4%

YMPE (Year’s Maximum Pensionable Earnings) - $51,100 in 2013RCA Limit - $152,718.50 in 2013

JSPP Framework Agreement

HighlightsExempted from special legislation, including forced participation in pooled investment fundGranted 4-year valuation cycle for flexibility and stabilityGovernance remains with Plan Sponsors

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JSPP Framework Agreement

HighlightsFunding 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

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Plan is financially stronger because:

Healthy demographic mix Realistic assumptions Solid returns More diversified investments aligned with

liabilities Prescriptive Funding Policy

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Active members: 21,400Retired members: 12,600 (including survivors)

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Healthy demographic mix

Plan is financially stronger because:

Realistic assumptions Longer lifespan - age 88 versus national avg. 85 Discount rate – 5.8%

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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

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Outlook

Interest rates up Investments continue to perform strongly

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SERVICE GROWTH

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Service growth

Plans for:PeopleProcessesTools

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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

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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

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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

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Tools

Pension administration system will reduce manual processing, risk and help improve service experience, including timeliness

Data collection tool being rebuilt

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MEMBERSHIP GROWTHIt’s in our best interests

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Growth benefits the Plan

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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

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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

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How universities benefit

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Avoids solvency funding requirements

Substantially lowers cost and risks associated with pension administration, investments, governance and compliance

Stabilizes contribution rates

How Ontario benefits

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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

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Fundamental principles

Preparing for growth

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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

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ADVOCATING EFFORTS

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FATCA Would have required withholdings for any retirees

who are US citizens. Exemption for pension plans received.

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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

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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

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STAKEHOLDER SURVEY

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Broad response received

Nearly 5,000 responses from 24 stakeholder groups

Over 3,500 active members responded for a 16% participation rate

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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

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