APEX Board Update

October 5, 2016

Scope of Retirement Programs

• APEX Supplementary Pension Plan (APEX)

• MuniSERP

• Alberta Communities Pension Plan

• Group RRSP and Tax Free Savings Account

APEX Governance Board Directors

• Chair Helen Rice, Councillor Grande Prairie

• Vice Chair Elaine Noel–Bentley, BA, MA

• Robert Kallir, BA, LLB, Independent Director

• Ellen Nygaard, BA, MBA, Independent Director

• Norbert Van Wyk, CPA, ICD.D, Independent Director

Financial Overview of Retirement Programs

*As of August 31, 2016

APEX December 31 2015 Financial Results

Regulatory Requirement – APEX Actuarial Valuation Report

Is there enough money to cover the cost of future guaranteed pension benefits?

• What are the liabilities (current and future pension benefits)?

• What are the assets (contributions from employers and employees and investment earnings)?

• What employer and employee contribution rates are needed to pay for benefits?

Unfunded Liability

APEX 2017 Contribution Rates

• Employee contributions are 2.84%(current rate is 2.5%)

• Employer contributions are 3.78%(current rate is 3.00%)

• 2017 Review of APEX Plan

Other APEX Initiatives

• Develop and Implement the APEX External Auditing program

• Secure a Fund Holder and Investment Manager

• Introduce Investment Advice Service (provided by Fund Holder)

• Review Governance and Oversight

What You Need to Know About Pension Programs

Pension Navigating into Retirement…Are you retirement ready?

…what retirement looks like today

• What retirement savings do you have?

• Do you contribute regularly?

• Do you leave money “on the table”?

• Are there other saving options?

• Are your investments diversified?

Understand where you are today

…how do I see my retirement?

Your retirement lifestyle will change

How much pre-retirement income will you need?

my retirement lifestyle… what will it cost?

How long should your money last?

Source: Canadian Institute of Actuaries – 1994 Uninsured Pensioner Mortality Table Projected to 2020.

95

25% chance one spouse will live to

age 95

50% chance onespouse will live to

age 91

Retirement

9165

my retirement lifestyle…prepare today for tomorrow

Age

55 60 65 71

Earliest

company

pension may

be available

Earliest

CPP is

available

Traditional

retirement age

Earliest

OAS is

available

Latest registered savings

plans must be converted to

retirement income

Personal savings

Work part time

Employer pension

RRSP converted to income

Old Age Security* (for life)

Canada Pension Plan (for life)Reduced CPP

*Recent OAS changes impact anyone born on or after April 1, 1958

Sources of retirement income

Next steps

Put your plan into action

• Talk with your family

• Review your group/individual savings plans

• Set up a meeting with your advisor

LIFE IN RETIREMENT

Source: Sun Life Financial Retirement Now Report 2016

Thank you!

LAPP:

Update and Future Directions

APEX Board Update at

2016 AUMA Annual Convention

Christopher Brown, CEO

Alberta Local Authorities Pension Plan Corp.

October 5, 2016

2

7

Largest pension plan in Alberta

7th largest pension plan in Canada

216th largest pension plan in the world

LAPP

LAPP Membership(Dec. 31, 2015 unaudited)

426 employers

49 unions

244,621 members

(2014: 237,612)

156,141 active

(2014: 152,583)

30,393 inactive

(2014: 29,607 )

58,087 retirees

(2014: 55,422)

Retirees

Inactive

Active

28

2

9

LAPP Stakeholders

Sectoral membership

approximately:

51% Health

30% Municipal

19% Education

health

municipal

education

Financial Statements($ millions)

2015 2014

Net assets available

for Benefits

$34,419.6 $30,790.4

Pension Obligation $35,343.0 $33,245.0

Surplus (Deficiency) ($923.4) ($2,454.6)

% on Accounting

Basis

97.4% 92.6%

3

0

3

1

Actuarial Valuation($ millions)

2015 2014

Assets $34,724.3 $30,427.5

Liabilities $36,904.9 $34,385.6

(Deficit) ($2,180.6 ) ($3,958.1 )

% Funded 94.1% 88.5%

Funded Status

60%

70%

80%

90%

100%

110%

120%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Fu

nd

ed

Ra

tio

(%

)

Year

LAPP Historical Funded Ratio

Funded Ratio Market Value Funded Ratio Smoothed Value

3

2

Contribution Rate

Structure

15.88

17.4518.78

19.7120.65

21.78

24.16 24.16 24.16 24.16

12.8514.02 14.42 14.42 14.42 14.82

16.76 17.08 16.7717.94

0

5

10

15

20

25

30

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Aggregate Rate Current Service Cost

33

Contribution Rates

2014 – 2017

Employees’ Rate up to YMPE* 10.39%

Employees’ Rate over YMPE* 14.84%

Employers’ Rate up to YMPE* 11.39%

Employers’ Rate Over YMPE* 15.84%

Total 24.16% of pay

2016 YMPE**Year’s Maximum Pensionable Earnings

$54,900

2016 Salary Cap $160,970

34

CPP Reform

Agreement in principle reached in June, 2016:

Income replacement level to increase to 1/3 of income from

the current ¼

Upper earnings limit will be targeted at $82,700 upon full

implementation in 2025

Gradual 7-year phase-in beginning on January 1, 2019

Increase to the Working Income Tax Benefit to help low-

income earners

Employee contributions to the enhanced portion of the CPP

will be deductible

Impact on LAPP benefits and contributions to be

assessed once details to implement the changes are

tabled in legislation 35

36

Minister

of Finance

APS

ShareholderLegislator

Plan

Trustee/

Administrator

RegulatorAIMCo

Shareholder

APS Board

APS

AIMCo Board

AIMCo

LAPP

Boards &

ALAPP

Current Governance

Structure

Governance Issues

Lack of clear roles & accountabilities (including

sponsors, APS, AIMCo)

Lack of coordinated decision making

Inability to make change quickly

Minister wears many hats, with conflicting priorities

Employees / Employers bear the risk, with no direct

decision-making role

Government does not backstop the Plan

37

Governance Renewal

Awaiting formal mandate from government

In the meantime, LAPP Board and ALAPP focused on

education and engagement of sponsors in the process

Board’s strategic plan calls for moving ahead to allow

greater sponsor voice

Reviewing potential options for governance structuring

Identifying issues of importance to sponsors requiring

input and agreement

Identifying sectoral representation

38

Municipal Sector

Representation

Municipal sector in LAPP includes both AUMA and

AAMD&C members

With sheer number of employers, not all will be able to

directly participate in discussions

Can AUMA/APEX play a role in choosing someone

from your membership to represent your portion of the

municipal sector in governance discussions?

39

AMSC

RETIREMENT

PROGRAMS

Group RRSP

Employer:

• Determines plan parameters, such aswho is eligible

whether the employer wants to make any contributions

Any restrictions on removal of employer contributions

Employee:• Contribute by payroll deduction and make

investment choices

• Can transfer in from an existing RRSP

Tax Free Savings Account

• No financial obligation for employer

• Savings tool after tax dollars withdrawals tax free

• Investment earnings accrue tax free

• Choice to withdraw funds at any time and re-contribute the following calendar year

• Contribute by payroll deduction and make investment choices

Alberta Communities Pension Plan (ACPP)

• Defined Contribution Plan for employee(s) who do not participate in Local Authorities Pension Plan

• Participation is voluntary

• Employer and employee make matching contributions

• Contribution rates: 3.0% to 9.0%

• Higher contribution rates for management or long-service employees

• Contribute by payroll deduction and make investment choices

Investment Choices – Group RRSP, TFSA & ACPP

• Same investment choices available to participants in the Group RRSP, TFSA and ACPP

• Investment choices available recommended by AUMA investment consultant and reviewed periodically

• Fund management fees lower than most financial institutions

• Ability to change asset allocation at any time

More Information?

Contact Us!

Toll Free: 310-AUMA(2862)

or

Email: pensions@amsc.ca

Questions?