Actuarial valuation shows Plan with a small surplus

The Plan recently filed an actuarial valuation, as of January 1, 2011, with the provincial and federal regulators. Electronic copies of the valuation report are available upon request for Plan members to review. You can see a summary of the results of the going concern valuation here.

A going concern valuation assumes that the Plan will continue indefinitely. It is used to determine the required contribution rates.

Several factors have had a negative effect on Plan funding since 2008. Due to asset smoothing – the averaging of investment gains and losses over a five year period – the plan is still recognizing the poor investment returns of 2008. Combined with ongoing low long-term interest rates, and the need to account for additional pension payments for each member due to improvements in life expectancy, the Plan made some difficult decisions about funding to keep the Plan healthy and secure. More details about these changes can be found in our last newsletter, here.

With the changes, this valuation shows the Plan with a going concern surplus of $88 million. As a result, the Board of Trustees was able to authorize inflation protection increases for the years 2012 to 2014, for service earned in years after 2007. Ad hoc inflation protection increases on pre-1992 service were previously announced, and inflation protection increases on service for 1992 to 2007 are guaranteed.

Along with the going concern valuation, the Plan also prepares and files a solvency valuation. It shows the status of the Plan as if it had been wound up on the valuation date. This type of valuation does not provide a realistic measure for jointly sponsored plans like ours, and therefore the province has provided an exemption for jointly sponsored plans to fund according to solvency valuations.

The Plan’s solvency position as of January 1, 2011 shows a deficit of $1.58 billion, and a solvency ratio of 0.77. (This is the net assets divided by the solvency liabilities.)

Mercer Human Resource Consulting is the Plan's actuary.