Staff Report #4
May 31, 2023
To All Commissioners
Re: 2022 Pension Fund Audit
Recommendation
That the Commission:
- APPROVE the draft financial statements, as set out in Enclosure I, relating to the non-insured pension fund as at December 31, 2022 noting the statements have not changed from those presented at the April 13, 2023 meeting; and
- DIRECT the administration to forward the 2022 Pension Statements to the Financial Services Regulatory Authority as required under the Pension Benefits Act.
Background
The draft 2022 Pension Statements were presented to the Commission at its April 13, 2023 meeting. The statements were presented in draft and could not be finalized given KPMG’s outstanding audit requirements related to the receipt of the audited fund statements from Manulife and the finalization of their IT audit related work. The outstanding audit work has been finalized with no changes required to the 2022 Pension Statements.
The audit of the pension fund applying to the pre-February 1, 1989 pension plan benefits and the preparation of the related report and financial statements are in accordance with the requirement of the Pension Benefits Act 1987. The 2022 Auditors’ report and related financial statements deal with one of three parts of the funding program for the Commission’s pension plan.
As indicated in Note 1 of the notes to the financial statements, the fund’s net assets provide for:
- applicable active members, benefits in respect of services rendered on or after January 1, 1987 up to and including January 31, 1989 in accordance with the terms of the February 1, 1989 plan amendments and/or as amended from time to time;
- applicable active members, an amended pre and post-retirement surviving spouse’s benefit for all pre-February 1, 1989 service; and
- disabled members at February 1, 1989 plan benefits in accordance with the terms of the pre-February 1, 1989 pension plan document, for the period of January 1, 1987 to January 31, 1989.
Pension benefits accrued up to December 31, 1986 are provided for under a fully insured group annuity policy, and the liability and related assets are not reflected in the attached financial statements, except as noted above.
Post-January 31, 1989 pension benefits for active members are provided by OMERS. Changes by OMERS to the plan since January 31, 1989 apply to service after January 31, 1989 only. The liability and related assets for post-January 31, 1989 service are not reflected in these financial statements.
In October 2022, Manulife completed the most recent actuarial valuation for funding purposes as at January 1, 2022. This valuation showed the fund as having an excess going concern surplus of approximately $5.2 million with $5.6 million calculated as the solvency excess. Since the ratio of solvency assets to solvency liabilities is more than 85%, the next actuarial valuation of the plan will be required no later than January 1, 2025 or in the event of a prior plan change affecting the cost of the plan, in accordance with the minimum requirements of the Ontario Pension Benefits Act. The report validates the stability of the plan and its ability to meet its future obligations to retirees.
Summary
Copies of the audit report will be provided to the Manulife Insurance Company, the Pension Advisory Committee and FSRA. A meeting with the Pension Advisory Committee will be scheduled subsequent to the completion of the filings.
Enclosure
I – 2022 Draft Pension Statements
Recommended by:
Mike Gregor, Director of Finance
Joanne Galloway, Director of Human Resources
Concurred in by:
Kelly S. Paleczny, General Manager