The Pension Committee
To the Members of the General Synod:
The Pension Committee is responsible for the following pension and benefit plans:
The following is a summary of the work of the Pension Committee during the period July 1998 to March 2, 2001.
The General Synod Pension Plan is a defined benefit plan and is registered with CCRA (Canada Customs and Revenue Agency) as a SMEP (Specified Multi Employer Plan). All dioceses except the Diocese of Montreal participate in the Plan.
In accordance with pension legislation, an actuarial valuation must be conducted at intervals of not more than 3 years. An actuarial valuation was, therefore, required to be conducted as of December 31, 1999 as the previous one had been conducted as of December 31, 1996.
Purpose of the Valuation: compliance with regulatory requirements, assess relationship between assets and liabilities, assess adequacy of contribution rate, consideration of benefit improvements and other plan design changes.
"Going-Concern" Valuation - traditional basis for valuation, premised on plan continuing indefinitely, long term assumptions used and asset value smoothing.
"Solvency" Valuation - required by legislation, premised on plan wind-up, assumptions based on current market conditions, assets at market value, retiree liabilities based on annuity pricing, accelerated funding of deficiencies expected.
The Actuarial balance sheet as of December 31, 1999 showed total assets of $545 million dollars for past and future service. The liabilities of the Fund for past and future service plus administration costs totaled $497 million resulting in an actuarial surplus of $48 million on a "Going Concern" basis. The Actuary advised that as the "Solvency" liabilities of the Plan were significantly less than its "Going Concern" liabilities, there was no solvency deficiency as of December 31, 1999.
The main source of the $48 million actuarial surplus was derived from: $2 million carried over from the previous valuation; investment income in excess of the assumed rate of interest which was $68 million; new entrants $3 million, other experience $4 million less change in investment return assumption $29 million.
Details of benefit improvements as a result of the surplus are contained in the Newsletter which was distributed to all Plan members in December 2000. (Appendix 1).
As of December 31, 2000, the market value of the Fund amounted to $467,839,131.00. The firm of Towers Perrin provides asset consulting and investment performance measurement services.
% of Fund
RT Capital: Balanced Fund 30%
Letko, Brosseau: Canadian Equities 26%
TD Quantitative: Fixed Income 20%
Martin Currie: International Equities 13%
Barclays Global: US Equities Index 8%
BG Preeco Ltd.: Real Estate 3%
The current Asset Mix Policy is 65% Equities & 35% Fixed Income.
The total administration cost including investment management fees as a percentage of the total Fund was 0.43% in 1999 compared to 0.48% in 1998.
The Board of Trustees has been liaising with TCCR (The Taskforce on the Churches & Corporate Responsibility) and SRIG (Socially Responsible Investment Group) with respect to the Talisman Issue. The Trustees agreed to support the shareholder proposal submitted by TCCR and were represented by Archbishop Barry Curtis at the AGM of Talisman Energy Inc. in May 2000. In addition, a letter was sent to the Chairman of Talisman indicating that the Board of Trustees supported the church-related organizations shareholder proposal and that the company can and should do more to demonstrate its concern over the recent events in Sudan. The Board of Trustees will also have a representative at the May 2001 Annual General Meeting.
The Pension Committee expressed concern about the status of SRIG (Socially Responsible Investment Group), which was established by the Council of General Synod, as the EcoJustice Committee no longer has a staff person assigned to this work as a result of the downsizing which occurred in August 2000. In addition to the EcoJustice Committee, this Group has representatives from the Financial Management and Development Committee, the Board of Trustees and the PWRDF was asked to name a representative to this Group.
The Pension Committee received correspondence from the Executive Committee of the Diocese of Huron, the Synod of the Diocese of New Westminster, the Diocesan Council of the Diocese of B.C. and the Canadian Council for Refugees with respect to divestment of the Talisman shares in the Pension Fund.
Due to the fiduciary obligations, the Board of Trustees cannot take directions other than from the Pension Plan members and their beneficiaries. The Trustees reported to the Pension Committee that they have had considerable discussion with respect to ethical investing and that they are trying to find a balance so that their actions can reflect ethical principles and yet maximize investment returns. They pointed out that it is important to have a national policy on socially responsible investing which would include ethical principles and screening processes which could be applied to all investments rather than case by case. The Trustees are presently working with the Fund Managers with regard to establishing an ethical screening process. Although it is not the mandate of the Trustees, they offered to provide assistance in establishing an ethical investment policy for the Church. At its meeting on March 17, 2001, the Council of General Synod passed a resolution accepting this offer of the Trustees. Attached is the Pension Committee's response to the various parties. (Appendix 2).
An updated Member's Handbook for the General Synod Pension Plan was distributed to all Plan members in 1999.
The Standing Senate Committee on Banking, Trade and Commerce issued a Report on the Governance Practices of Institutional Investors in November 1998. This Report included a recommendation that pension plans in Canada adopt industry best practices with respect to plan governance. Specifically, the Committee recommended that plan administrators "adopt one of the ACPM (Association of Canadian Pension Management), PIAC (Pension Investment Association of Canada) and OSFI (Office of the Superintendent of Financial Institution) guidelines and report annually to pension plan members setting out how they comply with, or exceed, the adopted set of guidelines, and explaining why they do not comply if they choose not to do so". In 1999, as a result of this recommendation, a joint task force of ACPM, PIAC, and OSFI produced a self-assessment questionnaire for completion by the pension plan administrators to assess their governance practices.
The self-assessment questionnaire for the General Synod Pension Plan was completed by the Board of Trustees and the Pension Committee in 2000.
One of the requirements of the Pension Plan governance is to review the Mission Statement on an annual basis. The Pension Committee undertook this review and agreed that commitment to communicate with the Plan members should be added to the Principles.
A statistical report on the plan membership was produced in 1999 to determine the past and future trends in the ages of new ordinands and retirees of the General Synod Pension Plan.
The report contained data on the number of new ordinands and the average ages at ordination by gender for the period 1989 to 1999. The report also compared the number of new ordinands to the number of retirees for the ten-year period and projected the number of ordained members who will be eligible to retire between 1999 to 2008. Each diocese received this report and in addition received the statistical data pertaining to their members.
The following are the highlights of the report:
The total membership of the General Synod Pension Plan as of December 2000 is as follows:
Members can make additional voluntary contributions which are tax sheltered. The additional contributions are subject to the limits set by CCRA (Canada Customs and Revenue Agency) for Registered Pension Plans and RRSP's. At time of retirement, the member may use these additional contributions to purchase additional pension income in the Pension Plan; transfer the savings tax-free to an RRSP or a Registered Retirement Income Fund; or take a lump sum refund which would immediately be subject to income tax withholding. At the present time, there are approximately 600 plan members who participate in this Fund.
The assets of this Fund are invested in a segregated balanced fund which is managed by RT Capital. The assets as of December 31, 2000 were $13,922,467.00 at market value.
2. THE LAY RETIREMENT PLAN
The Lay Retirement Plan is a money purchase plan and is available to all lay employees of the Church who are not members of the General Synod Pension Plan. As of December 31, 2000, there are 567 active members and 114 inactive members compared to 522 active and 102 inactive members in 1997.
The assets of this Fund are invested in a segregated balanced fund which is managed by RT Capital. As of December 31, 2000, the assets were $19,212,000.00 at market value.
3. THE LONG TERM DISABILITY PLAN
The Long Term Disability Plan is self-insured. All dioceses except the Diocese of Montreal plus the National Office, Church organizations participate in the Plan and the Lay Retirement Plan members are also allowed to participate in this Plan.
The financial status of the Plan for the policy year August 1, 1999 to July 31, 2000 was satisfactory for the second consecutive year. According to Eckler Partners analysis, the Plan generated a marginal surplus of $130,825, when added to the opening (surplus) balance of $2,525 at August 1, 1999, the cumulative surplus at July 31 was $133,350. Exceptional investment results were the greatest contributor to these positive results.
The Pension Committee is extremely concerned about the high number of claims and in particular, the high number of psychological claims. The total number of claims as of March 2001 was 57 of which 37% are of a psychological nature. The Committee is also concerned about the high premium costs for this coverage which is totally paid by the Plan members. Since the inception of the Plan in 1994, the employees have seen their premiums increase from 1% to 1.75% of Salary.
It was agreed that it was extremely important that the Pension Committee should continue to raise their concerns about clergy wellness to the Council of General Synod and the House of Bishops. Al Lamb, a member of the Pension Committee, produced a discussion paper on "Clergy Wellness" as a result of his concern about "Clergy Stress" (Appendix 3). It was also suggested that dioceses be encouraged to conduct stress management workshops.
The assets of this Fund are invested in the RT Capital Pooled Funds and as of December 31, 2000, the market value was $5,363,705.
4. THE PENSION ENDOWMENT FUNDS
Over the past number of years, various bequests and gifts have been made to the Pension Fund with the request that they be used to supplement the pensions of retired members and the spouses of retired members. As of December 31, 2000, the market value of the Endowment Funds totalled $3,539,069. The distribution of the income of these funds in 2000 was $393,000.00. Many cards and letters are received from the pensioners expressing their appreciation for the thoughtfulness of the donors and to the Pension Committee for their stewardship in managing these funds.
The following amounts were received since the previous General Synod meeting:
Margaret Kathleen Martin Estate $ 50,000.00
Mrs. Althera Brodie $137,230.00
Mrs. Helen Davis $ 45,000.00
Mrs. Clara Partridge & Mrs. Janette Murphy $ 4,438.00
5. THE GROUP EMPLOYEE BENEFITS PROGRAM
The following insured benefits are provided under the Group Policy which is underwritten by Manulife Financial:
No. of participating
There are currently 16 dioceses providing Health Care coverage for their retirees and 19 dioceses provide dental coverage for their retirees.
As a result of the favourable claims experience under the Life insurance, the Pension Committee was able to waive the Basic Life insurance premiums for 2001. The annual premium for this coverage is approximately $500,000.00.
Members of the Lay Retirement Plan are also eligible to participate in the Group Employee Benefits Program. As of December 31, 2000, 265 members have Life insurance coverage, 226 have Health Care coverage and 203 participate in the LTD Plan.
The annual premiums for the Employee Benefits Program under Manulife Financial are now approximately $4,368,000.00.
The Pension Office continues to produce an annual summary of the benefits being provided by all dioceses/organizations. The purpose of this summary is to keep each diocese/organization informed of the benefits being provided by the other dioceses/organizations.
The Self-Insured Death Benefit Plan provides $10,000.00 on the death of an active member, $4,000.00 on the death of a retired member and $1,500 on the death of a spouse of a retired member providing the member has participated in the Plan for at least five years. These benefits are non-taxable. 28 dioceses participate in this Plan.
The assets of this Fund are invested in RT Capital Pooled Funds and as of December 31, 2000, the market value was $684,519.00.
The Pension Committee is responsible for overseeing the administration of the Continuing Education Plan. The Administrative Unit reports to the Pension Committee on a biennial basis. A summary of the work of the Administrative Unit during the period July 1998 to March 2, 2001 is contained in Appendix 4.
SEMINARS & CONFERENCES
The Director during the triennium visited 8 dioceses to participate in either a pre-retirement seminar, financial planning or a clergy conference to provide information on pension and benefits including government benefits. There is no cost to a diocese/organization for the Director's attendance at these seminars/workshops/meetings.
Finance Officers conferences are held on a biennial basis. At the November 2000 conference, 25 of the 30 dioceses sent representatives. Travel costs are pooled by the dioceses and the accommodation and conference costs are shared by the Financial Management and Development Committee and the Pension Committee.
Bishop Bob Townshend thanked the members of the Committee for their contribution to the work of the Pension Committee over the triennium. Expressions of appreciation were given to those members who serve on the Board of Trustees and the Central Advisory Group for the expertise which they bring to the Pension Committee. Those members, who would not be returning to the Committee following the General Synod, expressed their appreciation for having had the opportunity to serve on the Committee and for the care and compassion with which the Pension Committee and the Pension Office Staff carry out their responsibilities.
If you have any questions about any aspect of the Pension or Employee Benefit programs, we will again have a Pension Office at the General Synod where staff will be available to provide information on pension policies and answer questions.
The Rt. Rev. C.R. Townshend,
Mrs. J.R. Mason
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