Closing Report - Ministry of FinanceClosing Report Ontario Retirement Pension Plan Administration...

Closing Report Ontario Retirement Pension Plan Administration Corporation

July 2016

All financial information contained in this closing report is unaudited.

Ontario Retirement Pension Plan Administration Corporation Closing Report

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Contents

1. Message from the Chair ........................................................................................................ 5

2. Message from the CEO ......................................................................................................... 6

3. Executive Summary ............................................................................................................... 8

4. ORPP Overview ..................................................................................................................... 12

Ontario Retirement Pension Plan (ORPP) ............................................................................... 12

ORPP Implementation Secretariat (ORPPIS) .......................................................................... 13

ORPP Administration Corporation (ORPPAC) ......................................................................... 16

Transition from ORPPIS to ORPPAC ........................................................................................ 16

Five Year Project Summary .................................................................................................. 18

Board of Directors ..................................................................................................................... 19

Executive Team ........................................................................................................................ 20

Legislation ................................................................................................................................. 21

Ontario Retirement Pension Plan Act, 2015 ........................................................................ 21

Ontario Retirement Pension Plan Administration Corporation Act, 2015 ......................... 22

Ontario Retirement Pension Plan Act, 2016 ........................................................................ 22

Status of legislation .............................................................................................................. 23

5. Governance .......................................................................................................................... 24

Board Meetings ........................................................................................................................ 24

Board Approvals ...................................................................................................................... 24

Corporate Policies and Principles ............................................................................................. 25

Procurement Policy............................................................................................................... 25

Corporate Record Keeping Policy ........................................................................................ 25

Working with External Vendors .......................................................................................... 26

Draft Policies ............................................................................................................................. 27

Code of Conduct and Conflict of Interest ............................................................................ 27

Expense and Travel Policy .................................................................................................... 27

6. Corporate Objectives & Achievements.............................................................................. 28

Year One Objectives ................................................................................................................ 28

Year One Achievements .......................................................................................................... 28

Governance, Policy & Financial Controls ............................................................................ 28

Organizational Foundations ................................................................................................ 30

Plan Administration & Operations ...................................................................................... 33


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Marketing & Brand............................................................................................................... 36

7. Procurements ...................................................................................................................... 39

Procurement Process .............................................................................................................. 39

ORPPAC Procurements ........................................................................................................... 39

Procurement Contracts and Spend .................................................................................... 40

Assigned Contracts .................................................................................................................. 40

Costs of Assigned Contracts Post-Transfer ........................................................................ 40

Building Lease .......................................................................................................................... 40

8. Business Process Outsourcing (BPO) Procurement .......................................................... 41

Rationale for Outsourcing Pension Administration Services ................................................. 41

Overview of Procurement Process ......................................................................................... 42

Overview of Evaluation ........................................................................................................... 44

Evaluation Timeline .............................................................................................................. 44

Evaluation Team Responsibilities........................................................................................ 45

Vendor Agreement Terms and Conditions ............................................................................. 46

Summary of Core Outsourced Services .............................................................................. 47

Operational Timeline ........................................................................................................... 47

9. Financial Structure, Systems and Commitments .............................................................. 48

Loan Facility .............................................................................................................................. 48

Government Appropriations ............................................................................................... 48

Quarterly Advances ............................................................................................................. 48

Repayment of Loan ............................................................................................................. 48

Calculation of Interest ......................................................................................................... 48

Financial Analysis: Operating Expenses (unaudited) ............................................................. 49

Expense Reporting (unaudited).............................................................................................. 50

Financial Controls ..................................................................................................................... 50

Delegation of Financial Authority ....................................................................................... 50

10. Brand Identity & Communications Strategy ...................................................................... 51

Brand Identity ........................................................................................................................... 51

Brand Design Criteria ............................................................................................................ 52

Intellectual Property Registrations ......................................................................................... 53

Communications Protocol with the Provincial Government ................................................. 53

Organizational Chart ................................................................................................................ 55


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On-Boarding of New Employees ............................................................................................. 55

Compensation Framework ...................................................................................................... 55

Board Member Remuneration (unaudited) ....................................................................... 56

Benefits and Pension ............................................................................................................57

Payroll and Severance Summary (unaudited) .........................................................................57

Executive Compensation (unaudited) .................................................................................57

Severance Payments............................................................................................................ 58

11. Federal Government (CRA) Support .................................................................................. 59

Information Exchange Agreement ......................................................................................... 59

Support of the Initial Employer Outreach Strategy ............................................................... 59

12. Investment Strategy ........................................................................................................... 60

Rationale .................................................................................................................................. 60

Strategy Development ............................................................................................................ 60

13. Transition Planning ............................................................................................................. 63

ORPPAC Transition Team ........................................................................................................ 63

Contract Termination Summary .......................................................................................... 63

Records Management ............................................................................................................. 63

14. Appendices ........................................................................................................................... 64

Vendor Communication at Wind-up ....................................................................................... 64

Additional Appendix Documents ............................................................................................ 65


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1. Message from the Chair In 2015, the government of Ontario passed legislation to create the Ontario Retirement Pension Plan, in an effort to ensure workers without an adequate workplace pension would enjoy more security in retirement. To establish, organize and administer the plan would be an enormous operational undertaking. With this in mind, the government created the Ontario Retirement Pension Plan Administration Corporation (AC) and appointed a lean three-person board and tasked the independent organization with administering the plan. My fellow initial board members and I were committed to ensuring that the AC would be transparent, accountable and operate in the interests of its plan members. These were responsibilities we took extremely seriously. By early 2016, the Board had hired a CEO. He, in turn, assembled an executive team to begin working through the necessary steps to make the ORPPAC operational. The timelines set by the government for implementation were extremely challenging; as a result, the AC team worked diligently and quickly to draft corporate policies, hire staff with specialized skills, build business processes and procure necessary services. The pace was such that our initial board met twice a month – sometimes more – to ensure we were providing the necessary oversight and guidance to the ORPPAC management team. In addition, I was appointed to the nominating committee tasked with recommending candidates to serve on ORPPAC’s permanent Board of Directors. On June 20, 2016, Canada’s finance ministers met and agreed in principle to enhance the Canada Pension Plan. After this meeting, the government of Ontario stated that it would not proceed with establishing the Ontario Retirement Pension Plan. The AC board and management team immediately turned our attention to taking the necessary steps to halt ORPP implementation activities and to begin the transparent, accountable and responsible wind-down of the AC. This report is intended to provide the government of Ontario with an overview of the AC’s initial work up to June 20, 2016, and a synopsis of the wind-down activities undertaken after that date. My gratitude goes to ORPPAC’s team, led by CEO Saäd Rafi, for their willingness to go above and beyond to deliver a pension plan that would have been of a scale and level of complexity unlike anything Ontario had previously introduced. I also want to thank my fellow initial board members, Richard Nesbitt and Murray Gold, for devoting so much of their time to overseeing the ORPPAC’s initial implementation and wind-up efforts. Their thoughtful advice and guidance gave me great confidence in the quality and robustness of our oversight and decision-making during this critical start-up period. It was a privilege to serve as the Chair of the ORPP Board. Susan Wolburgh Jenah, Chair of the Board


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2. Message from the CEO I joined the Ontario Retirement Pension Plan Administration Corporation (AC) on January 4, 2016, with a mandate to implement the government’s Ontario Retirement Pension Plan (ORPP). I was excited by the challenge of building an organization that would ensure millions of Ontarians would enjoy a more secure retirement. By the year 2020, it was estimated that our organization would serve 4.5 million plan members and 450,000 employers. I had no doubt that our impact would positively impact the financial security of generations of Ontarians. The government set out an ambitious schedule – we were to begin collecting contributions by January 2018. In the six months that I worked to build the ORPPAC, we had to pursue a number of activities concurrently to facilitate the organization’s operations, including to:

• establish an organization and an executive leadership team;

• begin the process for hiring related staff in various functions with a priority on employer outreach and systems and controls;

• search for office accommodation space;

• establish a competitive compensation framework;

• establish corporate policies and by-laws;

• develop a registration and compliance regime for the initial and subsequent wave of employers;

• develop and establish human resource processes and financial controls;

• acquire information technology infrastructure and systems;

• begin the process of establishing a brand identity and corporate website;

• establish a portal for employers to access and determine if any of their corporate plans were comparable to the ORPP; and

• begin the process of developing material in the form of an employer handbook to explain employers’ obligations to register with the AC and begin contribution collections from their employees within prescribed timelines.

It’s worth pointing out that several aspects of the ORPP made the project particularly unique:


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Scale: The pension plan was being designed for over 4 million members and 450,000 contributing employers making it among the largest in Canada, both in terms of members and assets under management

Lack of precedent: No pension plan on this scale had been established in Canada in several decades. In addition, existing regulatory requirements under the ITA required thoughtful solutions to ensure the plan could be compliant and operable.

Timelines: The timeline for implementation was aggressive requiring the need to plan and action activities non sequentially.

Regulatory Role: No other pension plan in Ontario was charged with the dual role of administrator and regulator.

Privacy: The ORPP legislation imposed certain privacy rights and procedures that are unlike any other pension plan.

Over time, the AC would have been responsible for the registration of employers, as well as compliance and enforcement of all aspects of the ORPP. Moreover, it would have also been charged with investing the contributions that were to be collected beginning in 2018 and administering the retirement benefits to plan members beginning in 2022. Although there were many challenges, I am exceptionally proud of the team we assembled, of the long days and hours that were contributed to the project and of the culture of problem-solving we were establishing. Although we were starting from scratch, our ambition was to implement the ORPP as the lowest cost-per-member plan of its kind. I have no doubt that we would have succeeded, implementing the ORPP on schedule and on a very cost-effective basis. The abandonment of the ORPP in favour of CPP expansion resulted in the almost immediate cessation of all activities and undertakings. Even as the ORPPAC is disbanded, much of the knowledge, skills and expertise gathered will provide lasting benefit to the government in other respects. At the time of the commencement of wind-up, the AC had approximately 33 staff. I want to end by thanking each and every one of them for joining us on our journey and for working the long hours needed to make this pension plan a reality. It was a great privilege to work with the staff and the Board. Saäd Rafi Chief Executive Officer


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3. Executive Summary In the 2014 Ontario budget, the government of Ontario introduced the Ontario Retirement Pension Plan. The rationale was included in the budget document:

“The Province is not prepared to wait for the federal government to step up to address the retirement income challenge currently faced by today’s working Canadians. Unless action is taken now, there is a risk that the retirement savings problem will worsen over time. The retirement income system will become increasingly out of touch with the changing workforce, placing younger generations at a significant disadvantage relative to their parents. Given the federal government’s decision to shut down discussions on an enhancement to the CPP, Ontario is proposing to move forward with a new mandatory provincial pension plan — the Ontario Retirement Pension Plan (ORPP) — that would be cost-effective, responsible and designed to meet the needs of a 21st century workforce. The ORPP would be the first of its kind in Canada and would expand pension coverage initially to more than three million working Ontarians who currently rely on the CPP, OAS and their own savings for retirement income. It would build on the key features of the CPP, and could later be integrated with the CPP should negotiations on an enhancement be successful in the future.”

The document then went on to explain how the new Ontario Retirement Pension Plan would be administered:

“The ORPP would be publicly administered at arm’s length from government, have a strong governance model and be responsible for managing investments associated with annual contributions of approximately $3.5 billion.”

The ORPP Implementation Secretariat Following the 2014 budget, the government established the ORPP Implementation Secretariat (ORPPIS) within the Ministry of Finance to initiate and oversee the policy, legislative and operational foundations of the ORPP. Initial legislation was introduced in 2014. By late 2015, this secretariat was replaced by the more operational ORPP Administration Corporation (ORPPAC). The operational timeline outlined by the government to stand-up the ORPP was aggressive, with a contribution start-date for large employers (500+ employees) to begin on January 1, 2018. Originally, the timeline was established a year earlier but after consultation with employee and employer groups it was adjusted to ensure a smooth transition and implementation. From the outset, the objective of the ORPPAC was to establish, organize and implement the new pension plan on schedule and in a cost-effective manner, with a goal of ensuring it would be among the lowest cost-per-member plans of its kind anywhere in the world. Just as importantly, it was


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committed to creating an experience for employees and employers that would be simple, easy and hassle-free – both in terms of initial registration and ongoing operation. That job was undertaken in stages. The first task was the creation of a professional, arms-length agency that could work independently of government to gain the confidence of employers, employees and, eventually all Ontarians that the ORPP would be operate transparently and efficiently on behalf of the public. In late 2015, the ORPP Administration Corporation was established officially and the government appointed an initial three-person board, led by chair Susan Wolburgh Jenah and, in January 2016, the board hired Saäd Rafi as ORPPAC’s chief executive officer. The board was exceptionally active and committed to a schedule of work far beyond the pace and demands of virtually any other comparable situation. During this period, the three-person board met twice a month as compared to what is customarily once a quarter for many such organizations. In total the board met officially 18 times in approximately 7 months and was responsible for not only overseeing the creation of the management team and undertaking of key initiatives but also the creation of a nominating committee to expand the organization to a full board that would have been put in place by the end of 2016.

The ORPP Administration Corporation The objectives of the ORPP were specified in legislation as including:

administering the ORPP;

making the plan operational;

administering and investing the pension fund as trustee; and

exercising other powers and performing other duties as may be provided under legislation. The first and most vital task of the new ORPP was to build the executive and operational capacity to facilitate a successful implementation of the new pension plan under the direction of the CEO. This, in turn, meant an emphasis on hiring experienced professionals to oversee the wide variety of work streams required to complete the job as well as assembling a team of outside experts to assist in the cost-effective delivery of the many functions and service features required to support the ORPP. Between January and June 2016 a total of 33 ORPPAC employees had been brought on board including five of the planned senior vice-presidents and three vice-presidents. Executives were charged with overseeing a number of key responsibilities associated with getting the organization operational, including:

developing an MOU between the government and the ORPPAC board of directors, along with a communications protocol;

developing a delegation process from the Board to senior management;

developing a corporate policy framework and finalizing policies including a Code of Conduct and Conflict of Interest policy;

undertaking the steps required to establish an appeals structure and process for employer appeals, benefit entitlement determinations and privacy concerns;


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securing the IT services required to support a pension plan, including a secure hosting service provider;

selecting and implementing enterprise systems supporting the Finance and HR functions;

penultimate steps of the Business Process Outsourcing RFP to ensure ORPPAC would be capable of administering the pension plan in 2018;

sourcing and developing an online tool that would allow Ontario businesses to verify whether or not they had comparable plans and would need to make ORPP contributions;

developing a human resource plan for the organization and a compensation framework that would allow ORPPAC to attract talent with the skills and expertise required to build a pension plan from the ground up;

working with the Canada Revenue Agency to secure assistance that would empower ORPPAC to administer the plan, including the establishment of a data sharing plan and communications strategies to engage Ontario employers;

developing a logo/brand identity for the ORPPAC, which would provide needed legitimacy as the organization began work with employers and employees;

launching a corporate website that would provide more information to businesses and to the public about the ORPP and ongoing implementation;

developing and delivering a large-scale, province-wide business outreach plan to ensure that all Ontario businesses understood their legislated obligations;

establishing a three-year business plan;

finalizing an investment framework, mission, vision and values and the philosophy and strategy in order to allow the necessary lead-time to recruit investment professionals with the skills required to implement it; and

securing office space for ORPPAC. In addition to direct hires, the new ORPP management team relied upon contracting with external experts to provide expert, specialized services in a cost effective manner. To ensure contracting was completed fairly and transparently, with an eye to recruiting the best expertise at the best possible price, a team of outside Expert Technical Advisors (ETA) was recruited to advise the government and Infrastructure Ontario with respect to tendering and RFP process. In order to meet operational timelines, the AC initiated a number of requests for proposals for other services between January 2016 and June 2016. ORPPAC secured executive recruitment, financial management, communications, technical writing, verification portal, and brand & marketing services, among others. The organization also procured needed office space that would allow it to grow and onboard additional staff. At the same time, ORPPAC began recruiting needed talent in order to provide long-term support to the organization, with the aim of reducing the reliance on outside vendors and bringing more work in house over time. As of June 18, 2016, the AC had:

contracts for a total of 22 third party service provider agreements - 10 contracts were initiated by ORPPAC, and two procurements were led by ORPPIS, with the contracts eventually signed by ORPPAC. Six assignments were initiated and signed by ORPPIS and


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subsequently assigned to ORPPAC. There were also in place 4 contracts under the $25,000 value signed by ORPPAC; and

employment contracts for 40 full-time employees; 33 of these employees had started their assignments, with another 7 due to report in late June or early July. Employment resources also included a number of individuals seconded from government and other organizations as well as 5 independent contractors.

It is worth noting that all RFP and procurement contracts included mitigation strategies, or ‘off ramps,’ designed to give the AC the ability to terminate negotiated contracts in the event there was a decision to not proceed with the ORPP. In other cases, ORPPAC staff made careful decisions to contain expenses, such as the decision to sub-lease more modest and furnished Class B office space. All of this proved to be crucial as circumstances unfolded, saving taxpayers tens of millions in expenditures and commitments that, absent prudent practices might have been lost.

ORPPAC Wind-up Work was well underway on all of the tasks outlined above – ORPPAC was aiming to begin registering employers in the plan starting in late fall 2016. In the absence of any indication that an agreement to enhance CPP was likely, ORPPAC was working at full capacity by this point to begin outreach to millions of employers and build an online portal for registration and administration as well as engage the wider public about the ORPP. The Agreement in Principle on CPP Enhancement was announced by Ministers on June 20th. As a result, the ORPPAC immediately instructed all vendors and staff to cease activity on the morning of June 21, and sought confirmation from the Board and the Ministry that it should proceed with an orderly wind-up of the corporation and its obligations. On June 24th the government formally instructed the Corporation to develop a plan to wind-up the implementation of the ORPPAC. In the end, the ORPPAC was able to successfully begin the build toward the ambitious implementation of a new pension plan affecting millions of employers and millions more employees while containing costs, operating transparently and building in safeguards to protect the public purse. Although the ORPP was halted before completion the knowledge, skills and expertise gathered will provide lasting benefit to the government in other respects.


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4. ORPP Overview

Ontario Retirement Pension Plan (ORPP) The Ontario government committed in its 2014 budget to create a mandatory supplemental provincial pension plan – the Ontario Retirement Pension Plan (ORPP). The new plan would be designed to provide a predictable source of retirement income for life for millions of Ontarians who do not have a comparable workplace pension plan. The ORPP was to:

begin collecting contributions on January 1st 2018;

aim to replace 15% of an individual’s pre-retirement earnings up to $90,000;

require contributions to be shared equally between employers and employees, with a maximum combined rate not exceeding 3.8%; and

require benefits to be earned as contributions are made, to ensure fairness and promote intergenerational equality.

Enrolment in the ORPP was scheduled to be phased in, starting with large employers of 500+ employees. On February 16, 2016, the government rescheduled the planned start date for enrollment, delaying commencement to January 2017, one year later than originally targeted, and to then include large and medium employers (over 50 employees). Contributions were scheduled for payment by the first wave of employers in January 2018. Plans were made for all eligible Ontario employees to be part of the ORPP or a comparable workplace pension plan no later than 2020. The following table describes the way Ontario employers were identified and categorized for the purposes of scheduling their enrollment and payment of contributions to the plan.

Type of employer 2018 2018 2020 2021

Wave 1: large employers without registered workplace plans

0.8% 1.6% 1.9% 1.9%

Wave 2: medium employers without registered workplace plans

0.8% 1.6% 1.9% 1.9%

Wave 3: small employers without registered workplace plans

0% 0.8% 1.6% 1.9%

Wave 4: employers with registered plans 0% 0% 1.9% 1.9% Note: Employer contribution rates only, would be matched by employer


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It was projected that the ORPP would have had over 4 million members, approximately 450,000 contributing employers and would collect more than $6 billion annually at maturity in 2021. The ORPP was designed to become one of the largest pension plans in the country within a decade.

ORPP Implementation Secretariat (ORPPIS) The Ontario Retirement Pension Plan Implementation Secretariat was established in late November, 2014 to support the government’s development of the ORPP. Initially, ORPPIS’s mandate was to focus on the implementation plan for the ORPP. This mandate was subsequently expanded to include plan design and policy and legislation development. ORPPIS organized its efforts into five work streams. The object and achievements of each work stream include: Governance – to lead the development of the governance structure to support the implementation, delivery and ongoing management and oversight of the ORPP.

Developed pension governance options incorporating best practices in Ontario and globally.

Supported the drafting, introduction, and passage of legislation related to the governance structure (Ontario Retirement Pension Plan Administration Corporation Act, 2015).

Oversaw the establishment of the ORPP Administration Corporation.

Supported the recruitment of the Nominating Council, Interim Board of Directors, first CEO, and Nominating Committee members.

Contributed to the development of a draft Memorandum of Understanding between Minister of Finance and Chair of ORPP Administration Corporation.

Plan Design – to lead the development of the pension plan including key plan design features, comparability test for existing pension plans, funding policy, and the transition rules during the phase-in period.

Oversaw the development of the cost benefit analysis of the ORPP tabled in the legislature in December, 2015.

Developed the actuarial funding analysis and report with external consultant including the funding policy.

Facilitated detailed analysis of federal eligibility and tax rules related to pension plans with respect to participation, contributions, and benefits.

Engaged and reached consensus with federal government officials from CRA and the Department of Finance on a plan registration framework.

Facilitated the development and drafting of the plan text providing a comprehensive description of all major plan design features.

Supported the drafting, introduction, and passage of 2 pieces of legislation related to the plan design (Ontario Retirement Pension Plan Act, 2015 and Ontario Retirement Pension Plan Act, 2016).


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Supported the development of proposed regulations for Ontario Retirement Pension Plan Act, 2016

Communication and Stakeholder Engagement – to proactively pursue engagement with a broad range of stakeholders.

Governance structure consultations with key industry experts and stakeholders.

Consultation with Federal Government officials from CRA and Department of Finance on plan design.

Engaged a broad cross section of stakeholders on the plan design and implementation of the ORPP including, businesses, associations, non-profits, the pension and financial services industry, labour and pension experts. Supported the government with the Technical Advisory Group and Business Implementation Advisory Group discussions.

Supported ORPP plan design by ensuring stakeholder perspectives were taken into consideration when determining the design and implementation approach.

Conducted technical briefings for stakeholder groups in support of major government ORPP plan design and legislative announcements.

Presented to industry conferences and events regarding the policy rationale and design of the ORPP.

Partnered with MOF/CO communications staff to support the multi-faceted public media campaign on the ORPP.

Developed narratives for the 2015 and 2016 Budgets and Fall Economic Statements on the ORPP.

Responded to stakeholder correspondence and prepared materials for the ORPP call centre at Service Ontario.

Investment – initially, to canvas other public sector pension plans as to their ability and willingness to support the investment of the ORPP pension fund and establish an investment strategy.

Consulted widely with financial services industry and the Ontario public sector pension plans to understand best practices and their ability to support the investment of the ORPP pension fund.

Developed, posted and evaluated a RFP for consulting services for investment framework advice and support.

Preliminary thinking done on the definition of investment principles, and the development of an investment strategy.

Delivery and Operations – to develop the necessary infrastructure to support the administration of the ORPP, including employer registration and enrolment, collection of contributions, compliance and enforcement, payment of pensions and management of member and employer data.

Engagement with the federal government to explore the potential for administration support.


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Engagement with the Ontario government and major Ontario pension plans to gauge the ability and willingness to support the administration and/or investment of the ORPP

Engagement with domestic and international service and technology providers in the private sector to begin to raise awareness about the ORPP and explore the alternative approaches to develop a dedicated pension administration system for the ORPP.

Engagement with other large international pension administration organizations in the U.K., Netherlands, Europe and Australia.

Using the intelligence gathered through the engagement sessions, developed and posted a Request for Qualifications (RFQ) to support certain features of the administration of the ORPP on an outsourced basis.

Based on an undertaking of this magnitude, engaged expert support.

Engaged Infrastructure Ontario to support the development and execution of a robust procurement process to identify the firms that were best qualified to support the ORPP administration, through a business process outsourcing vendor.

Through Infrastructure Ontario, expert legal counsel was engaged to support the procurement process as well as the development of a comprehensive, marketable business process outsourcing agreement.

In collaboration with Infrastructure Ontario, issued an RFP in June, 2015 and engaged a consortium of firms to provide expert technical advice in four key areas: technology, outsource procurement, technical business issues and project management.

Through Infrastructure Ontario, engaged a Fairness Monitor to oversee the outsource procurement to ensure the process was consistently open, transparent and fair.

Conducted a detailed review of internal government programs to determine the viability of utilizing internal processes and platforms.

Initiated work on the design of the employer verification (registration) process and comparability test.

Engaged Service Ontario to provide call centre support for ORPP related queries.

Developed a data strategy including data sources and data elements that could support the administration and compliance requirements of the ORPP.

Within the organization, a project management office was set up, including the development of Issues, Risk and Dependencies Logs as well as the development of an ORPP project charter. All this work was ongoing when the ORPPAC was established and into early 2016 while the ORPPAC was being made operational. The quality and depth of this work was instrumental in the successful transition of work to the ORPPAC.


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ORPP Administration Corporation (ORPPAC) The Ontario Retirement Pension Plan Administration Corporation (ORPPAC) was established by legislation on November 19, 2015 to administer the ORPP. While ORPPAC is an agent of the Crown, the corporation has operated at arms’ length from the Ontario government. ORPPAC’s duties are described in the applicable legislation and include:

enrolment of eligible employees and employers in the ORPP;

collection of contributions from such employers and employees;

investing the collected contributions for the benefit of members and other beneficiaries of the ORPP;

holding contributions and investment accruals in trust for the benefit of such members and beneficiaries;

providing payment of retirement benefits to members and beneficiaries who have qualified;

providing information to employers and employees about the ORPP; and

submitting an annual report to the Minister of Finance concerning the affairs of the corporation.

The objectives of the corporation are also described in applicable legislation and include:

administering the ORPP;

making the plan operational;

administering and investing the pension fund as trustee; and

exercising other powers and performing other duties as may be provided under legislation.

Transition from ORPPIS to ORPPAC The ORPPAC began its official duties with the appointment of the initial Board of Directors in mid-November 2015. The initial Board benefitted from the support of the staff at ORPPIS for several months after their appointment, as there was only one staff member of the ORPPAC until mid- March. The cooperation and support provided to the Board and the CEO from mid-November until principally mid-March allowed the ORPPAC to continue the progress initiated by government, through the ORPPIS. This transition from policy development to implementation was necessary in order for a Corporation to be established and develop the expertise, over time, to implement the ORPP.


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As a result, the formative policy development and legislation development established the foundation for the work that the Corporation would be taking forward to implement the ORPP itself. In addition to this foundational work, the ORPPIS also undertook various procurement processes for several advisory firms. The use of advisors was critically necessary to bring expertise and to augment the very limited number of resources that ORPPIS had available. This model of advisory assistance was also deployed by ORPPAC as it began its start-up phase, especially considering the aggressive timelines for beginning the collection of contributions in January 2018. In addition, there were many concurrent activities required to take place in order to get a Corporation up and running and to develop and deliver against the implementation timelines. The corporate plan was for ORPPAC to have gradually reduced its use of advisors in the first full year of its operation as it would have been able to hire staff with the requisite expertise for key roles. ORPPAC was in the process of doing just that in areas of employer and member education and outreach, registration, compliance, enforcement, IT project management and systems support, finance, legal and HR staff. The hiring of staff was proceeding in an orderly manner while external advisors were providing guidance as the major milestones that were to be delivered were as follows:

• establish a brand identity – immediately;

• corporate website development and launch – August 2016;

• regional outreach and education sessions delivered by ORPPAC to employers from all three waves of implementation -- Fall 2016;

• employer Handbook being developed as an educational tool for employers – late Summer 2016;

• development and launch of a portal for employers in the Fall of 2016, for employers to assess the comparability of any defined contribution and/or defined benefits plan(s) that they may have in place, and to confirm ORPP registration – November 2016;

• development and implementation of a call centre, in partnership with a vendor, to address the case management questions and needs of employers prior to their registration -- October 2016;

• drafting ORPPAC introduction letters to be delivered to the 450,000 employers (with the assistance of the Canada Revenue Agency) who would be required to register with ORPPAC and the BPO outsourced pension administrator – correspondence delivered Fall 2016, with registration beginning January 2017 and proceeding throughout the calendar year; and

• build out of the first phase of the outsourced pension administration system, along with user testing and acceptance with wave 1 employers – last half of 2017.


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Five Year Project Summary


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Board of Directors The members of the ORPPAC’s initial board of directors (Board) were appointed by government to serve at the pleasure of the Lieutenant Governor in Council for a one year term, pursuant to orders in council issued on November 18, 2015. The initial board consists of Susan Wolburgh Jenah (Chair), Richard Nesbitt and Murray Gold. The initial Board has been actively engaged in overseeing the start-up activities of ORPPAC including the establishment of the corporation’s organizational structure, the corporation’s selection of vendors and service delivery partners and the employer verification process. Biographies for the initial directors follow.

Susan Wolburgh Jenah – Chair Ms. Wolburgh Jenah has over three decades of experience as a regulator in capital markets and the securities industry in Canada. She was formerly the President and CEO of the Investment Industry Regulatory Organization of Canada (IIROC) and Vice-Chair and Acting Chair of the Ontario Securities Commission. Ms. Wolburgh Jenah serves on several boards and has taught corporate governance at Osgoode Hall Law School.

Murray Gold Mr. Gold is the Managing Partner at Koskie Minsky LLP and a leading expert in pensions and employee benefits. He has advised boards and sponsors of major public and private sector multi-employer plans for over 25 years. Mr. Gold has been lead counsel for Koskie Minsky LLP in pension reform initiatives in Newfoundland, New Brunswick, Ontario and Alberta. He served as a member of Ontario’s Technical Advisory Group on Retirement Security and as an expert advisor to the Ontario Expert Commission on Pensions.

Richard Nesbitt Mr. Nesbitt is the President and CEO of Global Risk Institute and has more than twenty-five years of experience in the securities industry. He was formerly the chief operating officer of CIBC, CEO of TSX Group, and President of TSX Markets. Mr. Nesbitt is an Adjunct Professor at the Rotman School of Management and Chair of the Advisory Board of the Mind Brain Behaviour Hive at the University of Toronto.

Nominating Committee The government struck an independent nominating committee and work had started to identify and recommend candidates for appointment by the Lieutenant Governor in Council to constitute a full board of directors (at least 9 and not more than 15) by mid-September 2016. It was expected that board members would have been selected based on demonstrated expertise in a variety of areas including investments, pension administration, and accounting, auditing and customer service. The Nominating Committee was to be responsible for recruiting and recommending Board candidates to the Minister of Finance. The government appointed the following members to the Nominating Committee:

Eileen Mercier (Chair)

Carol Hansell


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Ms. Mercier and Ms. Hansell were joined on the Nominating Committee by Susan Wolburgh Jenah, as Chair of the initial board of the ORPPAC.

Executive Team The CEO immediately commenced recruitment of a senior executive team in early 2016. The board approved the appointment of the following officers on the dates indicated:

Name Title Approved by Board

Saäd Rafi Chief Executive Officer January 1, 2016

Jennifer Brown Senior Vice President, Plan Operations February 9, 2016

Vacant Senior Vice President, Plan Design, Governance and Policy

February 9, 2016

Neala Barton Senior Vice president, Marketing, Communications and Public Affairs

February 9, 2016

Mary Anne Palangio Chief Financial Officer March 22, 2016

Brian Gill Chief Technology Officer April 26, 2016

Anne Slivinskas Senior Vice President and General Counsel May 11, 2016

Vacant SVP and Chief Investment Officer TBD

Saäd Rafi - Chief Executive Officer Saäd joined the organization in January 2016 as Chief Executive Officer. Prior to this role, Saäd was the CEO of the Toronto 2015 Pan Am/Parapan Am Games Organizing Committee. Saäd also held the role of Deputy Minister of Health and Long-Term Care, Community Safety (formerly Public Safety and Policing Services), Transportation and Energy and Infrastructure. He was first appointed to the role of Deputy Minister in February 2003. From 2005 to 2008, Rafi was a partner at a major consulting firm where he started and successfully built a national infrastructure advisory and project finance practice. Saäd also is a Trustee with the Hospital for Sick Children in Toronto.

Jennifer Brown – SVP, Plan Operations Jennifer joined the Ontario Retirement Pension Plan Administration Corporation in March 2016 as the Senior Vice-President of Plan Operations. Before joining ORPPAC she was Assistant Deputy Minister at the Ontario Retirement Pension Plan Implementation Secretariat at the Ontario Ministry of Finance. Jennifer has 25 years of pension administration and policy experience across the public and private sectors, including Chief Pension Officer at the Ontario Municipal Employees Retirement System (OMERS), as a member of the Financial Services Tribunal and as Board member of the OPSEU Pension Trust. Jennifer holds a Bachelor of Administrative Studies from York University.

Mary Anne Palangio – SVP, Chief Financial Officer Prior to joining Ontario Retirement Pension Plan Administration Corporation in March 2016, Mary Anne served as Senior Vice-President, Global Head of Operations and Data Management, Investment Division at Manulife. She moved into that role after holding the positions of Senior Vice-President, Chief Information Office, Group Functions and Vice-President, General Fund Investment Systems.


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Before joining Manulife in 2008, Mary Anne was Executive Vice President, Operations at Perimeter Financial Corp. Mary Anne has also held senior investment operational roles with The Canada Life Assurance Company, Mackenzie Financial Corporation and the Ontario Teachers’ Pension Plan. Mary Anne is a CPA, CA and CFA and holds a BA from the University of Toronto.

Brian Gill – SVP, Chief Technology Officer Prior to joining ORPPAC in April 2016, Brian served as Vice-President, Information Technology and Planning at Blackberry before becoming the Head, Global Technology services in January 2015. Before joining Blackberry, Brian held senior positions with TMX, CDS, The Canadian Depository for Securities, Sun Life Financial and Clarica. Brian has a Bachelor (Honours) of Math and Computer Science from University of Waterloo, and has completed ongoing executive development programs with Queen’s University and Harvard University.

Anne Slivinskas - SVP & General Counsel Anne joined the Ontario Retirement Pension Plan Administration Corporation in May 2016, having held numerous positions at the Ontario Teachers’ Pension Plan. During her 17-year career with Teachers, Anne provided strategic and practical legal advice on plan governance and administration, most recently served as associate general counsel and director, pension law and policy group. Anne holds a Bachelor of Arts (Honours) in English and History from the University of Toronto, and a Bachelor of Laws from Western University. She also serves as the Chair of the Legal Advisory Committee for the Financial Services Commission of Ontario and the Chair of the Pension & Benefits section of the Ontario Bar Association.

Neala Barton - SVP, Marketing, Communications and Public Affairs Before she joined the ORPPAC in April 2016, Neala served as Senior Vice-President, Communications and Media Relations for the TORONTO 2015 Pan Am/Parapan Am Games Organizing Committee. Neala has also held senior communications roles with the governments of Alberta and Ontario. She holds a Bachelor of Journalism degree from Carleton University and a Master of Public Administration from Queen’s University. The officer’s register is maintained by Goodmans LLP and kept in the corporation’s minute book.

Legislation

Ontario Retirement Pension Plan Act, 2015 The Ontario Retirement Pension Plan Act, 2015, S.O. 2015, c. 5 (ORPP Act, 2015) required the government to establish the ORPP no later than January 1, 2017 and required the establishment of an administrative entity for the purposes of administering the ORPP. The schedule attached to the ORPP Act, 2015 described the basic requirements for the ORPP including rules concerning contributions to the plan, eligibility of employees and employers under the plan, payment of retirement benefits and survivor benefits. It also included the requirement that the legislation establishing the ORPP include compliance and enforcement provisions.


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Ontario Retirement Pension Plan Administration Corporation Act, 2015 The Ontario Retirement Pension Plan Administration Corporation Act, 2015, S.O. 2015, c. 20, Sched. 33 (ORPPAC Act) provided for the establishment of ORPPAC and describes the objects of the corporation. Notably, the ORPPAC Act provides that the Crown is not liable for certain obligations or liabilities incurred by the corporation and that amounts for any such obligations or liabilities are not payable out of the consolidated revenue fund. It also provides that monies collected or received by the AC are not public monies. Amendments to other legislation enacted concurrently with the ORPPAC Act, included clarifying that ORPPAC is not a “public entity” for the purposes of the Financial Administration Act. As a result, funds collected or received by ORPPAC are not expected to be consolidated in the province’s financial statements. In addition, the ORPPAC Act:

deals with various matters relating to the board of directors and officers;

specifies the standard of care that applies to the directors, officers and to the corporation;

establishes the requirements on ORPPAC to provide an annual report and hold an annual meeting; and

sets out requirements for the by-laws of the corporation.

Ontario Retirement Pension Plan Act, 2016 The Ontario Retirement Pension Plan Act (Strengthening Retirement Security for Ontarians), 2016, S.O. 2016, c. 17 (ORPP Act, 2016), which has not been proclaimed into force, contains provisions which describe:

contributions to be made to the ORPP;

duties of employers relating to the collection and remittance of contributions;

pension benefits;

protection of funds;

plan sustainability;

collection, use and disclosure of information;

examinations, audits and inquiries;

enforcement, penalties and offences; and

transition rules.

The ORPP Act, 2016 includes a provision for the repeal of the ORPP Act, 2015 as well as certain complementary amendments to the ORPPAC Act relating to the:


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establishment of a trust;

statutory protection of directors and officers from liability (for acts or omissions done in good faith);

management of the pension fund; and

timing for the disclosure, tabling and public release of ORPPAC’s annual report.

Status of legislation The ORPP Act, 2016, including the intended repeal of the ORPP Act, 2015, and amendments to the ORPPAC Act listed above were not proclaimed by the Lieutenant Governor and were not in effect as of the time this report was completed.


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5. Governance

Board Meetings The corporation’s board of directors was committed to a rigorous board schedule with seventeen board meetings held since ORPPAC’s establishment on November 19, 2015. The board met on each of the following dates:

December 11, 2015 (two meetings);

December 17, 2015;

January 13, 2016;

January 26, 2016;

February 2, 2016;

February 9, 2016;

March 7, 2016;

March 22, 2016;

April 5, 2016;

April 26, 2016;

May 11, 2016;

May 25, 2016;

June 20, 2016;

June 28, 2016;

July 5, 2016;

July 6, 2016; and

July 19, 2016 All directors were present for each board meeting.

Board Approvals In connection with its work on behalf of the corporation, the board approved the following:

organization structure and chart at the Senior Vice President level;

appointment of the officers (including the Chief Executive Officer, the Senior Vice President of Plan Operations, the Senior Vice President of Plan Design, Governance and Policy [individual appointed but a contract had not yet been executed], the Senior Vice President of Marketing, Communications and Public Affairs, the Chief Financial Officer the Chief Technology Officer and the Senior Vice President and General Counsel);

initial corporate by-law;

board mandate;

position description for the Chair of the Board;

loan agreement;


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letter of intent and related sub-lease for the head office location;

opening of a bank account and banking signing authority;

director and officer and commercial policies of insurance;

the assumption of the Assigned Contracts;

procurement policy;

matters relating to compensation including enrolment in the Public Service Pension Plan, employee benefits package, executive compensation framework and form of short term incentive plan;

procurement of information technology hosting services to support corporate services and employer verification software applications;

brand identity and business name; and

delegation of signing authorities.

Corporate Policies and Principles The following corporate policies and principles are attached to this report in the appendix.

Procurement Policy On April 5, 2016, the Board approved ORPPAC’s procurement policy. The policy requires adherence to substantially similar principles articulated in the Ontario Public Service Procurement Directive (OPS Procurement Directive), including; value for money; access, transparency and fairness; and responsible management. The procurement policy describes how to procure for goods and services with reference to the calculation of an estimated procurement value, identification of the responsible officer and selection of applicable method of procurement. Competitive procurements are required in all instances, except for prescribed circumstances and in cases where the procurement value is less than $25,000. The policy summarizes the responsibilities and authorities of specific officers in connection with the issuance and approval of ORPPAC procurements.

Corporate Record Keeping Policy On June 10, 2016, ORPPAC finalized its corporate record keeping policy and circulated it to employees. This policy requires the management of information in accordance with prescribed mandatory requirements including those related to the: creation, management and disposition of business records; storage and management of records; routine disposition of transitory records; versioning of business records, scheduling and disposition of business records and digital preservation. The policy also specifies certain roles and responsibilities for each of the General Counsel and the Chief Technology Officer pertaining to the implementation of the policy.


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In addition, the following message was communicated to all staff following the June 21 ‘stop work’ instructions.

Record Retention As a reminder to all staff, corporate record keeping and retention requirements apply to all ORPPAC documents. This includes all electronic or hard copy versions. As such, all documentation on local hard drives must be moved to the ORPPAC network share for storage. All documentation should be placed under an appropriate directory with department/owner/project identifier for long-term storage. This includes scanned copies of red lined documents, contracts and critical decision documents. Note: ORPPAC.ca email correspondence is already captured and archived and requires no action on your part to retain. However, please do not delete any of your email as it is also covered under documentation retention requirements. A copy of the policy has been attached for your reference. In anticipation of the requirement to store hard copies of contract and other signed documents, we will be ordering banker boxes to organize files. You will be advised when these are available. In addition, anyone that received a USB storage device is required to return these to Shannon. We will be expecting them as part of any IT equipment return. Any information contained on USBs must be uploaded to the ORPPAC Share before they are returned. Personal Privacy During this interim transition period, appropriate personal use of ORPPAC computing equipment is permitted including searching for new opportunities. Please remember that ORPPAC uses Ontario government servers so you should have no expectation of privacy in anything you create, store, send or receive. Protecting ORPPAC’s Assets We each have an obligation to protect information assets and other assets that belong to ORPPAC. Information and other assets include ORPPAC’s proprietary information, such as intellectual property, trademarks and copyrights, business and service plans, investment and service ideas, databases, records and any unpublished financial data and reports. The work you produce belongs to ORPPAC and you shall not misappropriate ORPPAC assets, funds or other property, nor use any such assets for improper personal gain.

Working with External Vendors On June 9, 2016, ORPPAC finalized and circulated to employees 10 key principles to be followed when working with suppliers. These principles were developed in preparation for the drafting of a supplier code of conduct to accompany ORPPAC’s Code of Conduct and Conflict of Interest Policy. The principles were designed to clearly communicate ORPPAC’s expectations of its suppliers, including that vendors should not be directing other vendors, that work is properly assigned by the applicable ORPPAC employee under existing vendor contracts, vendors implement appropriate privacy and security policies and procedures and identify any real or perceived conflicts of interest in connection with their work for ORPPAC and that ORPPAC’s Chief Financial Officer be involved in any disagreements concerning billing.


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Draft Policies In addition to the corporate policies that were implemented by the corporation, a number have also been developed in draft form including the following.

Code of Conduct and Conflict of Interest As of the wind-up of the organization, the corporation had completed a comprehensive draft Code of Conduct and Conflict of Interest Policy, applicable to officers, employees, directors and certain contractors. The code contains provisions relating to: the identification and reporting of conflicts of interest, the promotion of a work environment free from harassment and discrimination, the prohibition of accepting benefits, entertainment and gifts subject to a limited exceptions, guidance on acceptable political activities and contributions, privacy and confidentiality requirements, communications with the media and protection of ORPPAC’s assets. The Board was provided with a draft copy of the Code of Conduct and Conflict of Interest for discussion and approval.

Expense and Travel Policy The corporation had developed an advanced draft of a corporate policy intended to establish rules and principles for the reimbursement of expenses and to provide a framework of accountability to guide the effective oversight of resources in the reimbursement of expenses. ORPPAC’s expense and travel policy is drafted to apply to all officers, employees and directors when traveling or otherwise incurring expenses in relation to ORPPAC business. Certain provisions of the policy are also drafted to extend to consultants and vendors when travelling on ORPPAC business. The policy includes mandatory requirements as well as direction on how to claim expenses, obtain required travel approvals and describes the type of travel costs that are reimbursable by the corporation (e.g. economy class travel by air and train).


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6. Corporate Objectives & Achievements

Year One Objectives The ORPPAC senior leadership established a first-year corporate objectives document to guide their activities and measure their accomplishments. Corporate objectives were structured into four delivery groupings, each with aligned delivery objectives. The objectives were agreed to by the executive team and the Board and were to form the foundation for performance measurement at the end of the year, combined with an individual contribution ranking.

Year One Achievements Based on the Corporate Objectives document noted above, the following summarizes ORPPAC achievements as of June 21, 2016.

Governance, Policy & Financial Controls

Governance & Policy

ORPPAC and ORPPIS were in the process of drafting a Memorandum of Understanding between the Ontario government and the ORPPAC board of directors.


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An initial Corporate By-Law was developed and passed by the Board.

A Board mandate and Board Chair mandate was also developed and passed by the Board.

Budget forecasts to the end of the year and preliminary estimates for fiscal 2017 were completed for each major area of the corporation.

The following corporate policies or procedures were completed or in draft: Procurement, Corporate Recordkeeping, Working with External Vendors, Code of Conduct and Ethics, Expense and Travel Policy.

Loan facility was approved and in place with effective and efficient controls, process and approvals in place for the quarterly draws.

Financial Controls

Interim manual general ledger in place and operational, along with interim control processes and procedures including the procurement policy, daily bank reconciliations, disbursement review and sign offs. Refer to the letter filed May 25, 2016 by the board chair requesting the deferral of Certificate of Assurance, but outlining key control processes and procedures in place, attached in the appendix of this report.

ORPPAC engaged a major assurance, accounting and advisory firm on April 1, 2016 to provide financial management services, including: the development of policies, procedures, systems and controls to ensure compliance with financial record keeping, reporting, accounting and audit requirements, as part of its broader implementation of an enterprise risk management framework.

The firm worked with management under the direction of the Chief Financial Officer to prepare and deliver a memorandum describing the financial compliance requirements applicable to ORPPAC and its operations including applicable:

(a) laws, regulations and requirements;

(b) financial accounting, reporting and auditing standards; and

(c) best practices to apply to the preparation and audit of the quarterly and annual financial statements as well as the preparation and audit of administration calculations.

The memorandum also included a description of the financial management services to be provided and the firm’s recommendations relating to:

the development and identification of financial, management and information systems related to the preparation and audit of quarterly and annual financial statements and the preparation and audit of administration calculations;

the establishment and maintenance of required systems of controls (internal and disclosure), related to the effectiveness and efficiency of ORPPAC’s operations, including financial reporting, cash management and asset control;


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the development and determination of information and record keeping systems and auditing standards in connection with executive officers’ attestations and certifications and general reporting on ORPPAC’s internal and disclosure controls (including establishment, maintenance, design and effectiveness); and

the development and maintenance of disclosure controls and procedures sufficient to provide reasonable assurances that information required to be disclosed under financial compliance requirements is recorded, processed, summarized and reported and information required to be disclosed under financial compliance requirements is accumulated and communicated to the reporting issuer’s management, including its chief executive and financial officers to allow timely decisions regarding required disclosure; standards of independence and other qualifications for auditors and members of the audit committee.

Financial statements and notes templates were drafted for the corporation under the appropriate accounting framework.

o December 31, 2015 unaudited financial statements were prepared and filed with the T2 Corporate Income Tax Return on June 30, 2016.

Investment Strategy

Confirmed the selection of a competitively procured firm to provide advice on the development of key considerations for an ORPPAC investment strategy

Participated in a series of investment strategy workshops that explored a number of topics including:

Core investment principles

ORPPAC investment vision and mission (taking into account the unique characteristics of the ORPP membership demographic)

ORPPAC’s investment philosophy and investment risk appetite

Investment strategy considerations

Review of the ORPPAC’s integrated investment framework, perspective on active versus passive investment, investment management delivery

See Section 12 for more details on the Investment Strategy development

Organizational Foundations

Long-term organization design

Long-term organization design for each SVP developed: Plan Operations; Plan Design, Governance and Policy; Marketing, Communications and Public Affairs;


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Finance, Investment Operations and Human Resources; Information Technology; and General Counsel and Legal

Organizational structure for Plan Operations

Operational leads (VPs) hired across all 3 functional areas

Vendor Partnership Office

Functional “operational” model of VPO completed

Selected and on-boarded 3 secondees from a major assurance, accounting and advisory firm to support project management within Plan Operations functional areas

candidates for director positions in place

Outreach and Education

half of Outreach team hired (12) and engaged in activities; candidates for remaining hires in place

Writing and training staff recruitment pipeline in place

Compliance, enforcement and verification

Manager and senior advisor hired, and pipeline in place for director positions

Defined and grew the IT organization

Organization model and high level design developed

Wave 1 hiring completed to select and on-board staff in critical core areas or to support initiatives already in flight

Project Management

Technical Specialist

VP, Security

Director, Architecture

Wave 2 hiring completed to select and on-board staff in support of Hosting project and PMO

Project Management Secondment (from assurance, accounting and advisory firm)

Project Management Secondment (from assurance, accounting and advisory firm)

Project Management

Wave 3 hiring completed to select staff required to support BPO requirements

VP, Vendor Partnership

Specialist, Pension Systems


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Senior Advisor, CTO office

Wave 4 hiring requirements identified

Project Management

Office technology Support

Director, Infrastructure

IT Security policy drafted and reviewed internal to ORPPAC IT

IT Framework Document (MOU-like) drafted and discussed with management and the government’s corporate ITS to define the relationship between ITS/I&IT and ORPPAC for the consumption of common IT services

Recruited project manager and Architecture resources to support Finance Systems selection and implementation

Selected a technology infrastructure hosting facility to support ORPPAC applications

RFP developed, issued, evaluated

Vendor selected and approved

Master Services Agreement contract completed and ready for signature

Statement of Work negotiation underway

Commenced efforts and vendor discussions to provision temporary hosting for projects having more immediate hosting requirements

Defined and established ORPPAC’s Project Management Office

Defined the Project Management Office - Policy, Mandate, Structure, and Processes

Selected interim leadership and PM staffing

Developed project reporting guidelines and reporting cadence for in-flight initiatives, and produced the first edition of consolidated project reporting (not reviewed or distributed due to close-down actions of the organization)

Developed a process for Risk register management, until ERM is in place more broadly

Human Resources Function

Developed and implemented weekly orientation program for all new hires, including standardized On-boarding paperwork and processes

Hired 40 employees across the organization (including HR VP, HR Manager and HR Coordinator), on-boarded 33 employees

Implemented process for notifying organization of upcoming new hires


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Created employee folders and filing system (hard and soft versions) as well as an employee database

Negotiated and finalized secondment agreements for 5 secondees from major assurance, accounting and advisory firms

Standardized employee offer templates for respective levels as well as for independent contractors

Standardize employee compensation guidelines

Selection of compensation framework vendor (RFP process)

Recruitment Services RFP submitted and proposals reviewed. Vendor presentations held.

Created staffing budgets for over 400 employees

Created and implemented leave of absence tracking form and process

Created and updated organization charts

Sourcing strategy and employer brand created

Job description templates created

HR budget created

Eligible employees enrolled in group benefits and pension plans (employee communications sent)

Led, developed and delivered all employee related termination calculations, documentation, communications (written and verbal) in standardized template

Created “Dissolution FAQs” document to assist employees beyond last day with ORPPAC

Confirmed termination details and communications with benefits and pension plan providers

Plan Administration & Operations

Employer Outreach, Education & Engagement

Employer and stakeholder education program developed and implemented to support verification process

Engaged Behaviour Economics group within Treasury Board Secretariat to provide expertise on segmentation and communication approaches

Extensive research completed to identify industry and regional business associations

Initial research began to identify industry trade shows, conferences, and events for participation

Initial presentation material drafted


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Initial outreach to deputy ministers to access industry contacts, speaking engagement calendars, etc.

Federal Engagement Strategy in place:

CRA agreement on letter strategy re: delivery of employer introduction, call to action and follow-up compliance letters.

CRA support on mailing strategy – timing of mailings, content of letters and further segmentation options (e.g. First Nations, employers with existing RPPs)

Letter of Intent with CRA on letter and mailing strategy initiated

Statistics Canada data to support mailing strategy and timing

Employer information, education and collateral materials

Employer registration handbook 90% complete through the services of a procured technical writing vendor

Employer website and portal content 50% complete

Technical briefings documents initiated

Two-week Education Team training program developed, content creation underway

Contact Centre (CC) vendor secured and operational

RFP document and CC scoping exercise completed

CC volume modelling completed

CC vendors list identified; proposal for Business Process Outsourcing (BPO) integration also in place

High level planning of integration between Contact Centre and Case Management Team (Employer registration) underway

Plan Design

Recommended a phased implementation launch plan for employer registration and contribution collection

Ongoing work with MOF to provide input on draft regulations regarding compliance, enforcement, plan comparability and operational requirements

Planned for a privacy assessment to ensure that the proposed data governance framework and vendor agreement included all new requirements

Business Process Outsourcing (BPO) Vendor

Approved key operational documents related to the BPO Agreement - business requirement, ORPP Plan Rules documentation, detailed responsibility matrix and service level requirements


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Led the BPO process team of business, procurement, financial, legal and technical experts in the development, issuance and evaluation of the BPO RFP.

Conducted a series of Commercially Confidential Meetings (“CCMs”) and Technical CCMs to refine the Qualified Proponents’ understanding of the ORPPAC business model.

Together with assistance from Infrastructure Ontario and the Expert Technical Advisors, responded to over 200 Requests for Information (“RFI’s”). RFIs included requests for clarification of both commercial and technical terms.

Developed the Technical Submission Requirements for evaluation of the proposals from each of the Qualified Proponents – 10 themes in total were explored. About 30 questions were constructed to test the Proponents.

Developed a comprehensive Technical Submission Requirements Evaluation Framework that served as the scoring guide for the Technical Submission Evaluators.

Developed an Economic Model with the ETA to develop a better understanding of the key pricing correlations for the outsourced elements of the ORPP administration.

Conducted Technical and Financial evaluations of the BPO proposal.

Developed a comprehensive draft report back to Treasury Board of Cabinet describing the results of the search for a pension administration business process outsourcer. Report was not submitted.

Led the RFP technical evaluation team to assess and score the RFP responses.

Initiated negotiations with the first negotiations proponent on technical clarifications regarding their Bid. This was the next step in the procurement process.

Vendor Partnership Office

Established a Vendor Partnership Office between Plan Operations and IT

Began the effort to quantify and structure IT organization requirements to implement and support the BPO towers C, D, E, and F

Made offers to staff up the IT roles required by the Vendor Partnership Office

Established work stream deliverables and governance structure to manage Business Process Outsourcing (BPO) Vendor On-boarding

Approved Pension Operation organization requirements for BPO Service Towers A and B and approved related work plan for VMO office


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Employer Verification, Enrolment & Enforcement

Vendor RFP completed and vendor selected to build an Employer Registration portal

Vendor kickoff meeting completed (including integrated vendor meeting)

Initial cafe focus group sessions completed; feedback captured and incorporated into portal development

Baseline Business Requirements Document delivered and signed off

Development of alpha prototype underway for usability testing to start week of July 4

Focus group planning and readiness completed

Planning for case management team initiated to support employer comparability assessments during employer registration

Prepared outline of strategy for compliance approach during registration (verification) process

Initial development of dispute resolution process to be used during registration (verification) process

General

Oversaw the development of an initial survey of our potential cyber security challenges.

Conducted a survey of business and data analytic practices

Marketing & Brand

Brand image established

ORPPAC’s proposed public name and word mark was approved in principle by the board of directors on June 20, 2016.

Brand had been developed after significant work by the successful proponent of the Marketing RFP. An overview of the process they followed is outlined below.

Communication strategy developed in partnership with provincial government

ORPPAC and the government of Ontario had begun initial discussion around the delineation of roles and responsibilities.

A one-page ‘swim lanes’ document had been developed and shared. The document outlined the government’s role and responsibility and ORPPAC’s roles and responsibilities on the communications front. The document was intended to allow the ORPPAC and the government to begin planning independent but aligned communication outreach activities to support the implementation of the ORPP.


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Website development

ORPPAC was targeting to launch the first phase of its corporate website in August 2016.

An information architecture had been drafted and approved.

Website wireframes were close to being finalised; once final, the web build would begin.

Web content had been drafted, with a focus on content that would allow Ontario businesses to understand the verification process and their obligations.

A webmaster/web content specialist had been hired to manage the website and to begin work around the creation of an ORPPAC intranet portal.

Recruited PM, Architecture, and Technical Specialist resources to support Corporate Web Site development and implementation

RFP and selection of Marketing/Brand and Communications agencies

Two agencies procured, with the assistance of the Advertising Review Board (ARB).

Marketing RFP – scope of work included: developing a brand framework for the ORPPAC, proposing alternate naming, developing a logo for the organization, building and designing a corporate website, creating any associated ORPPAC advertising and collateral.

Communications RFP – scope of work included: developing content for the corporate website, assisting with ORPPAC outreach efforts, developing a stakeholder engagement plan, providing advice around positioning, issues management, proactive communications, media relations, etc.

It was expected that both firms would provide heavy support to ORPPAC at the outset and then reduce involvement over time as ORPPAC marketing and communications department recruited needed staff.

Public opinion research

Initial polling had been conducted to support the creation of ORPPAC’s brand and word mark.

A comprehensive review of the Ministry of Finance’s existing polling and research had been completed with a plan to develop a larger market research strategy. The future strategy would aim to incorporate insights from both businesses and potential ORPP members/recipients and provide the ORPPAC with the ability establish benchmarks and identify meaningful long-term trends.

Speaking opportunities for the CEO

Core CEO speech had been developed and drafted.


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CEO had accepted and completed speaking opportunities to discuss the ongoing implementation of the ORPP.

Ongoing work with the Plan Operations Education and Engagement Team

Enduring partnership with the Plan Operations team around the development of outreach materials designed to inform businesses about their obligations

Initial research had begun around stakeholder mapping in order to inform the development of a comprehensive stakeholder relations plan.

Internal communications plan in place to support Organizational Foundation Design tasks

ORPPAC had hired and on-boarded a Director of Internal Communications and Employee Engagement.

Director had begun conducting interviews with senior executives and staff in order to formulate advice around the creation of a workplace culture, communication protocols and internal policies.


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7. Procurements

Procurement Process In accordance with the corporation’s procurement policy (approved by the Board on April 5, 2016), as described under “Governance – Corporate Policies and Principles – Procurement Policy”, ORPPAC developed a robust and thorough process and set of standardized documents used in connection with numerous procurements for services and execution of related contracts with vendors. The corporation’s template collection of documents included requests for proposals, standard terms for agreements with vendors and suppliers of goods and services, no conflict of interest declarations and forms to obtain required approvals prior to the issuance of a request for proposal and also prior to the execution of all agreements entered. Copies of the template forms are attached in the appendix.

ORPPAC Procurements In connection with its procurement for goods and services, ORPPAC negotiated agreements with each vendor with a view towards securing value for money and protecting the corporation in the event of CPP expansion. In most instances, each vendor contract contained a provision allowing the corporation to terminate the agreement for convenience on short notice (30 days in most cases). In addition, fee arrangements were insisted upon to hold vendors to fee caps and requirements were introduced to require the delivery of agreed budgets and statements of accounts. The following chart lists ORPPAC’s procurements and provides details relating to the estimated procurement values and status. Contract terms for the procurements listed below ranged from six months to five years.

Note: The above amounts are unaudited.

$ millions

Total

Spent and Accrued

as of July 15

11 executed procurements and 4 contracts under $25,000, including:

Financial Management Services, Technical Writing Advice (ORPPIS-led), Employer Verification Tool,

Investment Advice (ORPPIS-led), Legal Advice, Payroll, Insurance, Communication and Marketing,

Recruitment and Compensation Advice $3.7M

Contracts assigned by ORPPIS to ORPPAC (incl. $8.7 million incurred by ORPPIS and reimbursed by

ORPPAC), including:

Procurement Advice, Legal Advice, Expert BPO Technical Advice, Realty $17.7M

Total Procurement $21.4M


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Procurement Contracts and Spend As outlined above, the corporation benefited from the procurement initiated by ORPPIS, described below in the section “Business Process Outsourcing (BPO) Procurement”.

Assigned Contracts In addition to ORPPAC’s procurement of services, the Ontario Retirement Pension Plan Implementation Secretariat (ORPPIS) had also worked to procure certain services on behalf of ORPPAC, prior to its establishment on November 19, 2015. Certain contracts had been entered into by ORPPIS which were subsequently assigned and assumed by ORPPAC with effect as of March 1, 2016.

Costs of Assigned Contracts Post-Transfer The following chart illustrates the costs of the Assigned Contracts to ORPPAC Post Transfer. These contractual arrangements (including procurement processes and evaluation of bids) were led by ORPPIS prior to their assignment to ORPPAC.

Note: The above amounts are unaudited.

Building Lease In early 2016 the ORPPAC signed a five year sublease agreement for two furnished floors at 2 Queen Street East. The ORPPAC was to take possession of the 3rd floor on July 1, 2016 and the 4th floor on September 1, 2016. The term of the lease would commence on January 1, 2017 (3rd floor) and December 1, 2016 (4th floor). The total payments over the 5 year term of the lease amount to $11.4 million in commitments plus HST of $0.7 million for a total of $12.1 million. At the time this report was being finalized, Infrastructure Ontario indicated that they have completed a business case assessment of the ORPPAC lease and were recommending to government to transfer the office space lease from ORPPAC to the government realty portfolio, for previously identified and required accommodation needs. Subject to necessary government approvals, the successful transfer of this building lease would eliminate the anticipated costs to be incurred by the ORPPAC.

Pre-Nov 19 Post-Nov 19

Total

Reimbursed to

ORPPIS *

Incurred post

March 1 to April 29

**

Total incurred to April

29, 2016, Paid by

ORPPAC

ORPPAC Costs Incurred

after April 29, 2016 Total Costs

*Total incurred prior to effective date of Assignment Agreements of March 1, 2016

** Amount incurred between effective date of Assignment Agreements of March 1, 2016 and date Assignment Agreements made of April 29, 2016

71,451.68$ 65,500.00$ $ 136,951.68

Legal Actual 658,076.90$ 205,862.48$ 863,939.38$ 355,549.92$ 1,219,489.30$

Realty Actual 41,799.75$ 5,740.43$ 47,540.18$ 23,911.50$

2,112,191.54$ 3,331,680.84$

Expert BPO

Technical AdviceActual 4,679,857.16$ 3,140,176.21$ 7,820,033.37$ 1,607,752.70$ 9,427,786.07$ 4,769,144.55$ 14,196,930.62$

10,718,727.05$ 6,946,836.09$ 17,665,563.14$ Total Assignment

Agreements5,379,733.81$ 3,351,779.12$ 8,731,512.93$ 1,987,214.12$


41

8. Business Process Outsourcing (BPO) Procurement The government committed to begin enrolling employers into the Ontario Retirement Pension Plan (ORPP) in 2017, with the first phase of contributions beginning January 1 2018. A number of options for administration of the ORPP were carefully assessed. These options included requesting the federal government administer the Plan, exploring the capacity and ability of the Ontario Public Service and broader public sector, and partnership with a private sector vendor. Based on a comprehensive evaluation, it was concluded that the most viable option was to procure the required pension administration services on an outsourced basis. To meet these legislative timelines, the Ministry of Finance initiated, on behalf of the ORPP Administration Corporation (ORPPAC), the procurement of an end-to-end pension administration services vendor. ORPPAC was proceeding with the procurement through Infrastructure Ontario and a first negotiating proponent had been identified for the 10-year contract. A preferred proponent had not yet been selected. ORPP administration services undertaken by the vendor were intended to include a broad range of activities, from the collection of contributions from employers, to ensuring employers are in compliance, to the delivery of benefits to retirees. The majority of vendor costs were expected to be associated with the ongoing administration of the plan.

Rationale for Outsourcing Pension Administration Services To develop the full suite of ORPP pension administration operations, three options were explored:

Build: Building or developing a custom pension administration solution including software. A

client could build all or a portion of the required services;

Buy: Purchase commercially available solution(s) from vendors, which could be installed on

an existing infrastructure. A client could buy all or a portion of the system solutions; and,

Outsource: Outsource to a provider of an integrated pension administration solution that is

already available in the market.

Under either a Build or a Buy option, two vital prerequisite were:

1. Sufficient time and expertise available to complete the buy or build – typically a 48 to 60

month window is required.

2. An existing team of pension administration experts is available to operate the new system

once built or bought.

Both conditions could not be met because the ORPP had a compact delivery schedule and as a new program lacked incumbent resources to operate a new system.


42

Overview of Procurement Process Given the government’s commitment to establish the ORPP by January 2017 and begin contributions by January 2018, the procurement process was initiated by the Ministry on behalf of ORPPAC, before the corporation was established. It was subsequently transferred to ORPPAC in March 2016, after ORPPAC was established and operational. Infrastructure Ontario (IO) was engaged at the outset to provide financial advice and modeling, support in structuring the agreement, and support throughout the discussions and negotiations with the potential vendors. The procurement strategy included five stages:

Stage 1: Market Sounding – Non-binding confidential meetings to gauge vendor interest in the ORPP administration project.

Stage 2: Request for Qualifications (RFQ) – Bidders demonstrate that they have a full-service pension administration solution that can meet the requirements of the ORPP, including the ability to scale their operations.

Stage 3: Request for Proposals (RFP) – Qualified vendors would work with the Ministry/ORPPAC on developing the specific business requirements in order to translate the specific details of the ORPP pension plan into their administration system solution, and provide a price for both the start-up of the ORPP and ongoing price once operational.

Stage 4: Evaluation and Negotiation – ORPPAC would negotiate with the highest scoring bidder and enter into a contract for ten years.

Stage 5: Closing

Expert Technical Advisors (ETA) were procured by the Ministry to provide expert IT technical and market advice, procurement advice, and project management support. A Fairness Monitor was engaged by Infrastructure Ontario (IO) to provide arms-length oversight and guidance by monitoring and documenting the procurement process. The Fairness Monitor worked with IO throughout the process to ensure that openness, fairness, transparency and impartiality were maintained. At the conclusion of the assignment, the Monitor was to provide a written report and assurance that each step within the process was conducted in an open, fair, transparent manner, with integrity and completeness. During the RFP process, a draft outsource agreement was issued to prospective vendors who were given an opportunity to provide comments in draft form. Once the outsource agreement was finalized, all vendors were required to submit a binding price (Financial Submission) as well as details regarding their Technical Submission. No material contract negotiations were permitted once the final outsource agreement was issued.


43

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44

Overview of Evaluation

Evaluation Timeline


45

Evaluation Team Responsibilities


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Vendor Agreement Terms and Conditions In the design of the outsource terms and conditions, there were certain foundational features that the ORPPAC was unwilling to negotiate. These non-negotiable terms and conditions are as follows:


47

Summary of Core Outsourced Services

Operational Timeline


48

9. Financial Structure, Systems and Commitments

Loan Facility In January 2016, Treasury Board recommended an Order in Council authorizing the Minister of Finance to provide a loan to ORPPAC on commercial terms and a loan agreement providing a non-revolving loan facility in the maximum principal amount of up to $400 million be entered into between ORPPAC and the Minister of Finance on February 3, 2016. Loan proceeds were used to fund start-up costs of the ORPP, including the projected costs associated with the work planned to be performed by the pension administration services vendor.

Government Appropriations ORPPAC understands that the government has made appropriations for the following amounts to be drawn and advanced to ORPPAC under the Loan:

$20,000,000 for the 2015-2016 financial year; and

$240,000,000 for the 2016-2017 financial year In addition to the appropriations listed above, an outlook for $140,000,000 for the 2017-2018 financial year was provisioned for in the fiscal plan.

Quarterly Advances The Loan is available to ORPPAC in quarterly draws. The first advance closed February 3, 2016 in the amount of $20 million. The second advance closed April 1, 2016 in the amount of $6,000,000. The third advance closed July 4, 2016 in the amount of $5,000,000. In total, $31 million has been advanced to the corporation pursuant to the Loan.

Repayment of Loan The parties to the Loan agreed to commence repayment on the earlier of July 1, 2019 or a date otherwise agreed to in writing (Repayment Date), intending for repayment to commence following the receipt of contributions and accruals from initial investments.

Calculation of Interest Under the Loan, interest is calculated and payable on all advances and on the principal outstanding amount. Interest accrues daily on the principal amount of each advance from and including the advance date to the Repayment Date an annual rate equal to the ninety-day Ontario Treasury Bill Rate plus 0.25 percent compounded quarterly. The interest rate applicable to each advance is reset automatically by the Lender on April 1, July 1, October 1, and January 1 to an annual interest rate equal to the ninety-day Ontario Treasury Bill Rate as of each reset date, plus 0.25 percent, and the reset interest rate will accrues on all outstanding advances during each calendar quarter. The lender provides ORPPAC with written notice of the interest rate for each advance under the Loan.


49

In addition to the interest accruing on advances, on and from the Repayment Date, interest will accrue daily and be payable on the sum of the outstanding principal amount plus the aggregate amount of interest accrued and capitalized during the period from the first advance to the Repayment Date (Consolidated Sum). The Loan requires ORPPAC to pay the Consolidated Sum, together with calculated interest at an annual interest rate equal to the Province of Ontario’s cost of funds for an eight-year amortizing bond, inclusive of fees and commissions, as determined by the lender as of the Repayment Date plus 0.25 percent, compounded semi-annually, in semi-annual instalments of blended principal and interest, commencing on the Repayment Date in such amount as will result in all amounts owed under the Loan being repaid eight years after the Repayment Date in accordance with an amortization schedule that the lender is required to deliver to ORPPAC on or before the Repayment Date.

Advance Date Amount Interest to Date Total

February 5, 2016 $20,000,000

April 1, 2016 $6,000,000

July 4, 2016 $5,000,000

Advances Received $31,000,000 $31,000,000

Interest $93,000 $93,000

Total $31,000,000 $93,000 $31,093,000

Note: The above amounts are unaudited

Financial Analysis: Operating Expenses (unaudited)

Actuals Nov 19 to June21

Payments and Accruals to July 15

Total

Salaries and Benefits $710,600 $4,945,500 $5,656,100

Consulting Services 8,359,900 9,308,700 17,668,600

Legal Services 863,900 2,635,900 3,499,800

Branding and Communications Services

5,700

502,900

508,600

Recruitment Services 564,100 193,800 757,900

Bid Fees 213,000 113,000 326,000

Insurance 109,200 185,000 294,200

Interest Expense - 93,000 93,000

Board Remuneration 102,700 37,300 140,000

Other Expenses and Fees1 65,900 636,400 702,300

Total Expenses $10,995,000 $18,651,500 $29,646,500

Interest Income 61,600 23,400 85,000

Net Expenses $10,933,400 $18,628,100 $29,561,500

1 Includes $601,000 of payments made to individuals whose contract of employment was terminated prior to the commencement of any services.


50

Excluded from the above chart are $11.4 million in lease commitments plus HST of $0.7 million for a total of $12.1 million for office accommodation space over a five year period, which is expected to be taken on by the Ministry of Infrastructure and Infrastructure Ontario for previously identified and required needs and costs associated with the provision of expert advisory services to be provided to ORPPAC in connection with its wind-up.

Expense Reporting (unaudited)

Financial Controls

Delegation of Financial Authority The Corporation has worked with a major assurance, accounting and advisory firm to advance a draft delegation of financial authority framework (DOFA). The DOFA framework has been prepared to facilitate effective administration and assign financial and administrative responsibility that satisfies legislative and managerial requirements for financial transparency, accountability and control. The DOFA framework: provides two categories of delegations relating to financial authority- spending and payment; describes the main steps involved in the financial expenditure payment process; identifies key components of the financial delegation of authority; and categories spending authority levels related to the procurement of goods and services, information technology, consulting services, assets and employee expenses. Copies of the draft Delegation of Authority Guideline and Delegation of Financial Authority Policy are attached in the appendix.

Expense Claims Filed by ORPPAC Board Members, Senior Executives and All Other Travel Expense Claimants

Title Purpose Date Destination Air Fare Transportation Accommodation Meals Taxes and Fees Total

Senior Analyst Oshawa Call Centre 04/15/2016 Oshawa - $77.88 - - $13.12 $88.00

Senior Advisor QPP 04/25/2016 Quebec City $397.00 $12.17 $148.32 $22.24 $205.35 $782.08

SVP, Plan Operations QPP 04/25/2016 Quebec City $397.00 $133.63 $120.39 $31.45 $221.72 $901.19

Chief Technology Officer CRA, Recruiting 05/03/2016

Ottawa,

Toronto $510.00 $17.40 - $173.65 $235.24 $933.29

Senior Advisor BPO 05/03/2016 Ottawa $390.00 - - - $150.03 $537.03

SVP, Plan Operations CRA 05/03/2016 Ottawa $390.00 $53.10 - - $156.93 $597.03

Board Member Board Meetings 05/25/2016 Toronto - $81.42 - - $13.58 $92.00

VP, Pension Education and

Communications CRA 06/08/2016 Ottawa $450.00 $9.61 - - $159.08 $615.69

VP, Compliance,

Enforcement & Verification CRA 06/08/2016 Ottawa $390.00 $48.67 - - $156.36 $592.03

SVP, Plan Operations CRA 06/08/2016 Ottawa $390.00 $128.32 - - $166.71 $682.03

Chief Technology Officer

2 people for

BPO/Hosting Services,

Recruiting 06/07/2016

Rimouski,

Toronto $1,828.00 $217.95 $131.00 $54.57 $416.48 $2,648.00

Senior Advisor

Hosting Site

Inspection 06/07/2016 Rimouski $439.00 - $131.00 - $134.12 $701.12

Senior Advisor CRA 06/07/2016 Ottawa $657.00 $27.18 $194.67 $55.82 $207.21 $1,138.88Board Member Board Meeting 06/28/2016 Toronto - $7.96 - - $4.04 $9.00


51

10. Brand Identity & Communications Strategy

Brand Identity Before the ORPPAC could begin communicating effectively with businesses and the public about Ontario’s new pension plan, it was essential that the organization have a distinct visual identity and word mark. This was a key component to enable the development of a corporate website, business cards for staff, press releases, etc. To do this work, the ORPPAC issued a Request for Proposals and, with the generous assistance and expertise of the Ontario Government’s Advertising Review Board in the evaluation process, selected a marketing firm. The firm was tasked with creating a brand framework and visual identity and recommending a more consumer-friendly name for the ORPPAC. The firm was asked to have this work completed by July 2016 in order to give the Administration Corporation the necessary lead-time to build a website to support outreach efforts, which were slated to begin as early as September 2016.

As part of the development process, the marketing firm strategists:

Assessed the competitive landscape of pension plan identities.


52

Conducted interviews with ORPPAC’s board of directors, executive team, Ministry of Finance ADM Mahmood Nanji and then-Associate Minister of Finance Mitzie Hunter.

Spoke to the Behavioral Economics in Action Research Cluster at the Rotman School of Management.

Presented initial framing to the ORPPAC board of directors on May 25, 2016.

Led a brand strategy workshop with the ORPPAC executive team on May 27, 2016.

Developed a brand framework and overarching principles that would guide the development of the ORPPAC brand.

Came up with naming options to simplify the public-facing name of the ORPPAC.

Branding options that aligned with the framework were presented to the ORPPAC executive team and focus tested in North York (June 13), Kitchener (June 14) and Toronto (June 15). On the morning of June 14, the marketing firm and ORPPAC’s Senior Vice-President of Marketing, Communications and Public Affairs presented the brand framework and visual identities being considered to Ministry of Finance and Cabinet Office staff. Focus testing provided meaningful feedback, which informed the recommendation to the ORPPAC board of directors that it consider and approve the following name and word mark. On June 20, 2016, the board agreed, in principle, to adopt this name and word mark for ORPPAC.

The board instructed management to secure the intellectual property rights and URL for the associated name and word mark. However, as a result of the government’s success at achieving a deal to enhance the Canada Pension Plan on the evening of June 20, this work was not undertaken; it

Brand Design Criteria

Distinct from ORPP

Straightforward, simple and accessible

Professional, trustworthy and efficient

Customer-experience driven, service oriented

At arm’s length from “Government”

Not “institutional”

Nimble and dynamic

Easy and pleasant to do business with


53

would have created additional costs for the ORPPAC at a time where the government had communicated that the ORPPAC was to stop implementation activities.

Intellectual Property Registrations In support of the development of the brand, trademark applications were filed, resulting in the registration of “ORPP” and “ORPPAC” as registered trademarks held by ORPPAC. In addition, several domain name registrations were filed in the name of ORPPAC to secure rights to the domains attached in the appendix to this report.

Communications Protocol with the Provincial Government The following chart was created by the ORPPAC and shared with government and had become an informal guide to help delineate who would communicate what when it came to the ORPP.

Activity Government of Ontario: POLICY ORPPAC: IMPLEMENTATION

Advertising/

Marketing

o Mass market focused: to raise

awareness about the benefits of the

policy and explain why the

government is moving forward with

the ORPP

o Maintaining the Ontario.ca/orpp

website to continue promoting the

o B2B-focused: to encourage employers to engage

with the verification process (may involve some

B2C as well)

o Establishing an ORPPAC website to offer

employers and workers the tools they need to

enrol/participate


54


policy o Overall ‘user experience’ with the plan

Comms o Anything focused on the architecture

of the policy, or the rationale for the

policy, including macro- and micro-

economic benefits for the province,

communities and individuals.

o CPP enhancement and ORPP-related

negotiations with the federal

government (e.g. anything to do with

Department of Finance Canada or the

CRA)

o Anything related to decisions around

board appointments and nominations

(noting that there will be exceptions)

o Costs incurred by government in

developing/promoting the policy,

including any cost or regulatory

offsets for businesses and/or

individuals.

o The rationale for the implementation

timelines chosen by government.

o Anything focused on the implementation of the

ORPP (e.g. verification process, procurements,

plan costs, eventual investment strategies, etc.)

o Individual benefits

o Contents of the Annual Report

o Anything around the overall development of the

ORPPAC:

o ORPPAC human resources,

compensation and recruitment

o ORPPAC board business and internal

policies

o Costs of establishing the plan and the

AC.

o Plan sustainability

o Approaches around compliance and

enforcement, and any specific associated issues

o The rationale behind decisions taken to meet

the implementation timelines outlined in

legislation.

Outreach o Continue the dialogue with major

stakeholder

associations/organizations around the

policy intent or concerns with the

policy/ legislation.

o Continue to champion the policy at

stakeholder/industry speaking events.

o Continue to identify and cultivate

relationships with supportive

stakeholders

o Engage with businesses around implementation

in all corners of the province (ORPPAC will go to

them) so they understand their obligations and:

o a) how to use the verification tool;

o b) how to enrol in the ORPP;

o c) Opportunities to use the plan as an

employee engagement initiative.

o Seek speaking opportunities focused on ORPP

implementation or building a new organization

from the ground up.

o Begin developing relationships with pension

experts, key stakeholder associations and


55


businesses to ensure ORPPAC’s activities/role is

thoroughly understood.

Issues o Responds to “I’m concerned about

‘Element X’ of the policy” questions/

concerns

o Responds to “I’m concerned about how ‘Aspect

X’ of the policy is being implemented”

questions/concerns

Organizational Chart

On-Boarding of New Employees To achieve its objectives and timeline, ORPPAC identified the need to hire 450 new staff comprising full time and part time employees to fill numerous roles across the organization. ORPPAC was positioned to on-board new staff to meet the following timelines:

commencing July 2016 – 100 new employees to be hired;

commencing September 2016 – 100 additional employees to be hired; and

commencing later in 2016 into 2017 – 200 to 250 additional employees to be hired.

Compensation Framework The following compensation framework was intended to be reflective of the current stage of ORPPAC’s evolution and be flexible to accommodate the organization’s unique circumstances – start up with a large and complex mandate, commercially oriented and an arm’s length organization from


56

government. Within two (2) years, as ORPPAC was to have advanced in its development and evolution, this compensation philosophy would have been necessarily be reviewed and updated. ORPPAC’s compensation framework was designed to attract, retain, and motivate high quality talent with the deep expertise and experience necessary to bring the ORPP into operation considering the scope and scale, the implementation time frame, and stakeholder scrutiny. The organization was to have done so while maintaining the plan members and sponsors confidence and trust.

Pay Comparators / Market Data ORPPAC was planning to maintain a compensation framework that is competitive with relative peer group(s) and relevant market pay data, taking into consideration criteria such as pace of implementation, complexity, risk, functional scope and, eventually assets under management. ORPPAC recognized that different peer groups and sets of market data were appropriate and relevant for different roles within the organization – i.e. pension administration vs. investment management and non-investment management administrative roles.

Target Pay Positioning Target total direct compensation levels were to be typically be set at approximately the median of the respective peer group/market data, with flexibility to position pay above or below median, as necessary and appropriate in order to attract and retain key talent and considering the current stage of the organization’s evolution. Additionally, employment agreement provisions (e.g. compensation outcomes under various termination scenarios) were to be aligned with prevalent and good market practice.

Pay Mix The amount of incentive compensation (“at risk” pay) was to be generally consistent with the respective peer group(s) and was to be reflective of the unique features of the current start-up phase. The organization established a total compensation approach at the 50th percentile of the pension industry’s comparable total compensation. As ORPPAC advanced in its development and evolution this compensation philosophy would have been necessarily be reviewed and updated. Initially, for fiscal 2017 and 2018, the framework was to be relatively simple with one incentive mechanism (STIP).

Pay-for-Performance ORPPAC maintained a pay-for-performance philosophy. Incentive compensation was to be linked to the achievement of organizational development, operational development and implementation objectives, including key milestones (as appropriate), and an individual executive’s performance within their areas of oversight

Board Member Remuneration (unaudited) Each initial board member receives an annual retainer of $50,000. The Chair of the Board receives an annual retainer of $100,000. Total remuneration is for the period from November 19, 2015 to July 29, 2016.

Board Member Board Meetings Total Remuneration

Susan Wolburgh Jenah Chair of the Board 18 $70,000


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Board Member Board Meetings Total Remuneration

Murray Gold Board Member 18 $35,000

Richard Nesbitt Board Member 18 $35,000

Benefits and Pension ORPPAC provides a competitive benefit program that includes life insurance, disability, health and dental benefits. ORPPAC retirement benefits for employees is a defined benefit pension plan. ORPPAC employees participate in the Public Service Pension Plan.

Payroll and Severance Summary (unaudited)

Executive Compensation (unaudited)

Name and Position

Annual Base Salary

Base Salary Paid2

Short Term Incentive Pay

Other3

Total Regular Compensation4

Saäd Rafi Chief Executive Officer5

$525,000 $282,692 $0 $20,233 $302,925

Mary Anne Palangio SVP, Chief Financial Officer6

$325,000 $131,250 $0 $9,688 $140,938

Jennifer Brown SVP, Plan Operations7

$335,000 $109,519 $0 $500 $110,019

Brian Gill SVP, Chief Technology Officer8

$325,000 $81,250 $0 $7,800 $89,050

Anne Slivinskas SVP, General Counsel9

$275,000 $52,885 $0 $3,533 $56,418

Neala Barton SVP, Communications, Marketing & Public Affairs10

$235,000 $81,346 $0 $500 $81,846

Total for All Staff Excluded from Above

$593,275 $0 $21,502 $614,777

Total $1,332,217 $0 $63,756 $1,395,973

2 Base salary paid is the amount paid from start date to end date 3 Includes unused vacation payout and other taxable benefits 4 Note that total regular compensation is before taxes and source deductions 5 Saäd Rafi commenced employment on January 1, 2016 with an end date effective July 19, 2016 6 Mary Anne Palangio commenced employment on March 21, 2016 with an end date effective August 12, 2016 7 Jennifer Brown commenced employment on March 21, 2016 with an end date effective July 15, 2016 8 Brian Gill commenced employment on April 18 2016 with an end date effective July 15, 2016 9 Anne Slivinskas commenced employment on June 6, 2016 with an end effective August 12, 2016 10 Neala Barton commenced employment on March 14, 2016 with an end date effective July 15, 2016


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Severance Payments Severance payments have been accrued, in the amount of $2,020,000, for the top six officers listed above. In addition, severance payments have been accrued for the remaining 27 employees in the total amount of $1,688,102. All severance payments are in accordance with obligations to employment.


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11. Federal Government (CRA) Support As the Federal Government had expressed a willingness to assist ORPPAC with the administration of the ORPP several meetings were held with representatives from ORPPAC, ORPPIS and the CRA to discuss how the Federal Government could assist with the operationalization of the plan. The discussions with CRA focused on: 1. Information Exchange Agreement

2. Support of the Initial Employer Outreach Strategy

Information Exchange Agreement The exchange of certain information was being discussed, likely requiring a legislative amendment, and was intended to be governed through a memorandum of understanding (MOU). Following the receipt of a draft MOU from CRA in late 2015, ORPPAC developed a conceptual design solution for information exchange, handling, transmission and storage (along with a data centre and infrastructure platform) that would be leveraged to assist with i) employer registration and ii) remittance, reconciliation and compliance activities. Following CRA approval of the conceptual solution the two parties engaged in discussions related to finalizing the MOU and drafting an interim letter of intent (LOI).

Support of the Initial Employer Outreach Strategy ORPPAC had developed a targeted Employer Outreach Plan and Public Awareness strategy to support the initial employer registration period. In order to best leverage the resources allocated to these initiatives a regional employer engagement plan had been developed – the core of which relies on sequential regional mailing segmented by Forward Sortation Area (FSA) once employers have been segmented by size. Two letters were being contemplated:

an introduction to employer registration, and

a call to action for the employer to register their organization in the ORPP.

The CRA had agreed to assist ORPPAC with these employer mailings and also provided further segmentation options. ORPPAC and CRA were in the midst of finalizing the timing and batch size of the mailings prior to the announcement of CPP enhancement. The batch sizes and mailing schedule had been based on analysis performed by ORPPAC on aggregate employer information that was purchased from Statistics Canada.


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12. Investment Strategy Ultimately, the medium to long-term financial sustainability of the ORPP would be heavily dependent on the investment returns that are achieved. As a greenfield start-up, it was recognized that there was no existing investment strategy, infrastructure or expert personnel in place to guide the investment program. The necessary foundation would have to be either secured or developed over a very short timeframe to enable the prudent investment of the pension fund, commencing with the receipt of contributions as of January 1, 2018. Consistent with the government’s commitment to explore how the OPS and broader public sector could support the investment of ORPP assets, discussions were held during the first quarter of 2015 with the Ontario Pension Board and all of the major pension plans in the broader Ontario public sector. As a result of these discussions, it was clear that the ORPP would need to develop its own investment program.

Rationale Developing an investment strategy specifically for the ORPP was appropriate due to the unique characteristics of the ORPP, including:

Compared to the Ontario public sector pension plan and other pension plans in the Ontario public sector, the demographic profile of the ORPP is unique. The ORPP membership would initially only include active (working) members. No existing retired members would be eligible to join the ORPP. Therefore, it was expected that the duration of the ORPP pension benefit liability would be much longer than would be the case in other public sector pension plans. A longer duration liability has a significant impact on the ORPP’s investment strategy.

The ORPP’s cash flow profile is very different than other Ontario public sector pension plans. Small pension payments would have only commenced in 2022 and the cash flows for the ORPP (pension contributions less pension payments) were expected to be positive for decades.

The accumulation of investable assets for the ORPP was projected to be substantial – unmatched in the Canadian public sector except for the CPP. According to projections, once the ORPP was fully phased in, the annual contribution inflows were projected to be about $6 billion per year. The net inflows would quickly cause the ORPP to become one of the largest pension plans in Canada.

Based on these and other considerations, it was therefore concluded that the development of a unique investment strategy for the ORPP was warranted.

Strategy Development While the ORPPAC’s Board would ultimately be responsible for the approval of an ORPP investment strategy, time was of the essence in launching the development of an executable strategy:


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The investment strategy needed to be developed that included an ORPP-based perspective

on the following:

o Investment mission and governance;

o Investment philosophy , including fund-wide investment beliefs, policies and constraints;

o Asset class perspectives;

o Investment strategies and processes including asset allocation, portfolio structuring considerations, active versus passive investment approaches for specific asset classes and whether these approaches should be managed directly by the ORPP versus outsourcing the investment functions to third parties;

o Develop an ORPP-specific perspective on risk management, including risk governance, metrics, processes and reporting;

o Develop a preliminary perspective on investment support functions including research, trading, back office and technology.

o Gain an understanding of what would be required to develop an executable strategy, particularly with regards to required personnel, compensation and a robust investment culture for the ORPPAC.

As more detailed demographic information was obtained; particularly the characteristics of the ORPP membership, an ORPP-specific investment strategy would need to be developed. One common approach is to develop a liability-driven investment strategy with the support of a qualified investment consultant. Typically, these studies require 4 to 6 months to complete.

To operationalize the strategy, a plan would need to be developed to first secure AC Board approval. It was decided that the approvals would be sought once the full AC Board had been constituted which was expected to occur in the last quarter of 2016.

These approvals would support the development of the ORPP’s investment infrastructure including attracting the required talent, beginning with the appointment of the ORPPAC’s Chief Investment Officer, implementing the necessary trading and investment management technologies, appointment of a Chief Compliance Officer and installing the required risk management resources and tools, and developing the necessary custodial and trust facilities. (Under the ORPPAC Act, the pension funds were to be held in a trust.)

For asset classes that were being managed externally, open, transparent and competitive searches would need to be conducted for each asset class / sub-class (e.g. infrastructure – utilities). For asset classes that were to be managed internally by the AC, the required talent would need to be hired and the appropriate management technologies and tools would need to be acquired and installed.

All of these important deliverables would need to be addressed by late 2017, to support the commencement of investment operations as of January 1, 2018. In light of the extensive work that was required, in August, 2015, an open, transparent and competitive search for an investment consultant was launched by the ORPP Implementation


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Secretariat to support the first phase of the investment strategy development. Four proposals were received which were evaluated by a team including IS personnel and a representative from the Ontario Finance Authority. This process was supported by the Ministry of Consumer and Government Services’ procurement group. Ultimately, a successful proponent was appointed to fulfill this mandate. The service provider worked with internal staff to complete the contracted work through a number of working sessions. The draft final reports were issued in June, 2016. Note that, while the service provider’s recommendations were discussed with the ORPPAC working group team, they were not finalized.


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13. Transition Planning Since the announcement of the agreement in principle, the Government of Ontario has indicated that the ORPP will not be proceeding. The Ontario Minister of Finance has directed the ORPPAC to cease operations.

ORPPAC Transition Team The transition team consists of the following individuals up to the indicated end date.

Team member End date

Saäd Rafi, Chief Executive Officer July 19, 2016

Anne Slivinskas, Senior Vice President and General Counsel August 12, 2016

Mary Anne Palangio, Chief Financial Officer August 12, 2016

Mandy Downes, Director, Communications July 29, 2016

Janet Howard, Senior Legal Counsel July 29, 2016

Eva Roszuk, Director, Corporate Services (ORPPIS Secondee to ORPPAC) July 22, 2016

Ihab Khalil, Manager, Corporate Services (ORPPIS Secondee to ORPPAC) July 29, 2016

It should be noted that the ORPPIS established and is leading a transition team for the government who is working with ORPPAC to undertake several wind-up activities, including assisting with assessment of the interim financial statements for ORPPAC and ensuring that all documentation is ready for any ensuing audit of ORPPAC. During this period, the ORPPAC Board continues to oversee the orderly wind-up of the corporation which, from ORPPAC’s perspective, is expected to be substantially complete by August 12, 2016.

Contract Termination Summary ORPPAC’s contracts with vendors and service providers have been reviewed to identify the termination and notice provisions.

Records Management As noted under the heading “Governance – Corporate Policies – Corporate Record Keeping Policy”, ORPPAC implemented its own policy pertaining to the creation, storage and management of records. In keeping with this policy, in preparation for the possible wind-up of operations, ORPPAC has provided direction to employees and directors to commence classification of all business records under each individual’s control to comply with its policy, including in a manner that: • allows records to be readily located and retrieved; and • minimizes duplication of storage; and, enables privacy and security protections to be applied efficiently and consistently.


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14.Appendices

Vendor Communication at Wind-up Following advisement from the Minister and board chair to have all third-party work formally concluded, the following message was communicated to all vendors:

I would like to take this opportunity to once again thank you and your colleagues for the impressive manner in which you so quickly partnered with us to tackle the significant challenges represented by this project. We are disappointed that we won’t have the opportunity to complete the journey that we embarked on together. Following last Monday’s announcements that agreement in principle had been reached between the provinces and the federal government to proceed with CPP enhancement I communicated with you requesting that all work your organization is doing for us be discontinued and that all outstanding costs for work in progress be identified and communicated to me. I am asking for your confirmation that this was completed and that all associated outstanding costs have been provided. If you would confirm this by return email, I would appreciate it.


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Additional Appendix Documents

1. Wind-up Correspondence between Board and Ministers

2. Delegation of Financial Authority

3. Corporate Policies and Principles

4. Template Procurement Forms

5. Organization Charts (2016-2017)

6. Officers’ Registrar

7. Board Governed Agency Attestation

8. Intellectual Property Registrations

9. Website Draft Wireframes

10. Corporate By-Law

11. Chair’s Mandate

12. Board Mandate

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