Business Plan: 2016-2018 - · PDF fileBusiness Plan: 2016-2018 ... than an annual basis. ......

Business Plan: 2016-2018

SPECIAL FORCES PENSION PLAN (SFPP) 5103 Windermere Blvd. SW Edmonton, AB T6W 0S9 www.sfpp.ca

SFPP Business Plan: 2016-2018 of 12

Overview of SFPP .................................................................. 3

SFPP Governance ................................................................ 3

Vision .................................................................................. 4

Mission (Mandate) .............................................................. 4

Our Business Planning Priorities ............................................ 5

Guiding Principles: .............................................................. 5

Strategic Direction .............................................................. 5

2016-2018 Action Plans ......................................................... 6

Strategic Priority #1: Governance .................................. 6

Strategic Priority #2: Risk Management ......................... 8

Strategic Priority #3: Plan Funding and Investment

Management ............................................................... 10

Strategic Priority #4: Communications ......................... 11


Overview of SFPP

SFPP Governance

The Special Forces Pension Plan (SFPP or the Plan) is a defined benefit pension plan

governed in accordance with the Public Sector Pension Plans Act (PSPPA) and

Regulations. The President of Treasury Board and Minister of Finance (the Minister) is the

Administrator and Trustee of the SFPP. However, the Minister does not complete the day-

to-day tasks in operating the pension plan. The following organizations are involved in the

governance and operation of the Plan:

Plan Administrator: Alberta Pensions Services Corporation (APS)

o APS is delegated all functions in relation to the administration of benefits of

the pension plan.

Plan Investor: Alberta Investment Management Corporation (AIMCo)

o AIMCo is responsible for the investment of the Plan funds.

Special Forces Pension Board (the Board)

o The Board reviews the actions of the Plan's administrator, APS, and the

investment manager, AIMCo, on behalf of Plan members.

Alberta Treasury Board and Finance holds ultimate responsibility to monitor its

delegations and the delivery of service each organization provides to public sector

pension plans in Alberta.

AIMCo APS

SFPB Staff

Special Forces Pension Board

Government of Alberta

President of Treasury Board and Minister of

Finance

FIGURE 1: ORGANIZATIONAL STRUCUTRE


The PSPPA identifies and charges the Board with the responsibility to:

set general policy guidelines for the investment and management of the Plan's

assets and indexing fund;

authorize the transfer of any Plan fund surplus to the indexing fund towards post-

1991 cost-of-living adjustments;

establish contribution rates to ensure the Plan is properly funded;

recommend changes to Plan rules;

conduct an actuarial valuation of the Plan at least every three years;

set general policy guidelines for the administration of the Plan; and

review administrative decisions as delegated by the President of Treasury Board

and Minister of Finance.

The Board also reviews the investment results of the Plan’s fund with Alberta Investment

Management Corporation (AIMCo and the Board’s investment consultants. The Board

considers changes to the Statement of Investment Policies and Goals (SIP&G) on no less

than an annual basis.

Because there are a number of different organizations involved in the governance and

operations of the Plan, ongoing communication, cooperation and collaboration is required

of all parties. For that reason, the SFP Board has operating protocols with APS and with

AIMCo that detail how the organizations will work together. The Board also has a Mandate

and Roles document with the Minister to document the roles and responsibilities of both

entities.

Additionally, the SFP Board has a Vision, a Mission, and guiding principles that direct the

Board’s focus. The Board’s Vision outlines its ultimate goal for the Plan, its Mission

summarizes the duties to realize its Vision and its guiding principles list the Board’s

precepts to guide the way it operates and actions it undertakes.

Vision

To ensure the pension benefits promised are secure through the prudent governance of

the Plan.

Mission (Mandate)

The Board will act in the best interests of the Plan beneficiaries, considering the

requirements of the Plan Sponsors and other Stakeholders, ensuring that the Plan is

operated in compliance with legislation and regulations and that the Plan's assets are

managed effectively and efficiently in order to provide a sound financial future for the

Plan's beneficiaries.

The Board is accountable to the Plan's stakeholders: the Minister, members of the Plan

(active, deferred and retired) and employers.


Our Business Planning Priorities

In formulating the Board’s Business Plan, the Board

considered its strategic direction to set the foundation

regarding how the Board will manage its work on a go

forward basis. The Business Plan describes the

proposed new or developmental work to be carried out in

2016-2018, in addition to continuing work that may be

rolled over from previous years and daily operations.

Strategic Direction

STRATEGIC PRIORITY #1: Governance

Sound governance practices shall be maintained and

expanded to support the effective and efficient operation

of the Board. Governance of the Board and Plan will be

reviewed to ensure consistency with the governing

legislation and related agreements.

STRATEGIC PRIORITY #2: Risk Management

Risks inherent in the Plan structure as they pertain to

Sponsor/Industry risk, Funding and Investment risk,

Communications and Governance Risk, and

recommendations for mitigation are communicated to

Sponsors and the Minister of Finance as Trustee.

STRATEGIC PRORITY #3: Plan Funding and

Investments

An effective Funding Policy is put in place to protect

promised benefits and minimize contribution rate

volatility, while recognizing the desire to achieve

intergenerational equity. A blend of contributions,

conditional benefits and margin will be incorporated.

General investment policy guidelines are in place that

are cost effective and achieve long term investment

returns.

STRATEGIC PRIORITY #4: Communications

Through exposure to the Board’s ongoing

communications, members, employers, and other key

stakeholders will increasingly understand the structure,

operations and funding requirements of the Plan.

Guiding Principles:

GOVERNANCE:

The Board will use effective

governance practices so

resources are focused on

enhancing long term value for

Sponsors and Plan beneficiaries

(NEW) RISK MANAGEMENT:

The Board works in partnership

with Sponsors and the Minister as

Trustee to put in place a risk

management system to identify

Plan risks and implement risk

management activities effectively.

PLAN FUNDING AND

INVESTMENTS:

The Board’s long term funding

strategy establishes a transparent

framework for Board and Sponsor

funding decisions.

COMMUNICATIONS:

The Board will be proactive,

collaborative and consultative with

its Stakeholders and ensure

information provided is relevant,

timely, accurate, and

understandable.


2016-2018 Action Plans

Strategic Priority #1: Governance

Goals:

The Board:

1. Actively works in a leadership capacity with its Sponsors to recommend an effective,

efficient and transparent governance structure.

2. Ensures its current governance is clearly articulated and thoroughly documented,

subject to constraints by or under applicable legislation.

3. Enhances Board/Committee effectiveness on an ongoing basis, including monitoring

service providers for effectiveness, value and cost-benefit analysis.

4. Helps ensure Board staff work in an effective and efficient structure in an autonomous

framework.

5. Provides for effective education and training for Board members to carry out objectives

and meet fiduciary obligations.

The regular and/or ongoing tasks related to governance are:

Meet with and provide feedback to AIMCo and APS regarding their business plans and budgets, while continuing to monitor progress and costs of APS and AIMCo system upgrades. Annual evaluation and feedback of these legislated services providers and contracted service providers.

Maintain and update a rolling three year SFPB Business Plan and budget.

Annual self-assessment of the Board to continue to improve Board and Committee effectiveness.

Annually update governance policies.

Specific key actions for the next three years are:

2016 2017 2018 Submit a report to Plan Sponsors for a revised governance structure, and obtain Government feedback.

Work with Sponsors and Government to facilitate an effective and efficient governance structure.

Work with Government to revise the Mandate and Roles document, while building consensus for a different governance structure moving forward.

Initiate an annual Board governance and strategic planning session.

Conduct a Board governance and strategic planning session.

Finalize a Board Governance Manual.

Annually review Governance Manual.


2016 2017 2018 Formalize Board action plans to continue to enhance Board governance:

Implement Board member identified development plans

Continue to enhance the knowledge of the Board members through in-house education

Review agendas, format and organization of all meetings

Review structure and mandates of Board Committees

Provide in-house education on current and relevant issues

Continue to make opportunities available to develop knowledge about pensions

Update and streamline Board and Committee agendas and briefings according to best practices


Strategic Priority #2: Risk Management

Goals:

The Board:

1. Undertakes Enterprise Risk Management (ERM) and quantifies pension plan risks,

their adverse effects, and monitors and reports on the risks.

2. Identifies the specific risk mitigation tools in the development and/or update of an

investment policy, benefits policy and a funding policy.

The regular and/or ongoing tasks related to risk management are:

Maintain a risk management framework identifying significant risks to achieving the Plan’s objectives, who owns each risk; the risk tolerance for each risk; the risk mitigation strategy and risk measurement techniques to be applied.

Annually provide a Risk Report to the Minister identifying risk activities within and outside the Board’s purview, along with mitigation strategies.

Monitor the financial position of the SFPP and keep Sponsors apprised of relevant risks and opportunities.

As a risk mitigation proposal for the government, finalize and submit to the Province reports and recommendations on Governance and Plan Design.

Submit Funding Policies to the Province based on a current and possible future Plan design.


2016 2017 2018 Confirm with Plan Sponsors a Funding Policy that identifies Plan benefits, strategic use of margins, and risk mitigation tools and their priority.

Review continued effectiveness of the Funding Policy with Sponsors. Apply the Funding Policy to the 2016 actuarial valuation results.

Review continued effectiveness of the Funding Policy with Sponsors.

Confirm with Plan Sponsors risk tolerance for contribution rate changes, deferring of compensation, and transfer of risk (investment, longevity, inflation) in order to reshape Plan Design

Continue to model variances and combinations of cost and funding dependencies to provide to Sponsors, in order to confirm risk tolerances.

Continue to model variances and combinations of cost and funding dependencies to provide to Sponsors, in order to model risk tolerances.

Further identification of risk activities within and outside the Board’s mandate for the 2017-2018 business planning years, including risk appetite and tolerances.

Continue to assess risk based on objectives and appetite for risk.

Identify all risk owners in the system who have the accountability and authority to manage risks.

Consult with external risk owners on risk mitigation strategies.

Identify a measurement for monitoring and reporting the likelihood of consequences and severity of each risk, with quantitative measures identified as well as narrative


descriptions of risk mitigation strategies and predetermined responses.


Strategic Priority #3: Plan Funding and Investment Management

Goals:

The Board:

1. Ensures the Plan is fully funded or an appropriate amortization schedule is in place to

address any unfunded liabilities (on a going-concern basis).

2. Ensures the return on investments is maximized while balancing the risk and return

profile of the Plan.

The regular and/or ongoing tasks related to Plan funding and investment management are:

Conduct extrapolations as of December 31, which may be used for accounting valuations and determining annual Cost of Living Adjustments (COLA).

Monitor costs charged for investment management services.

Monitor AIMCo Scorecard semi-annually and annually.

Monitor asset mix implementation plan and timeframe in conjunction with AIMCo,

to ensure any asset mix changes are completed in a timely and cost effective

manner.

Monitor and adjust risk exposures for AIMCo and the Board by adopting a risk

matrix.

Monitor ongoing and project based external investment performed by AIMCo.

Review and revise the Statement of Investment Policies and Goals (SIP&G) as necessary.

Review the effectiveness of investment consultants on an annual basis. Specific key actions for the next three years are:

2016 2017 2018 Conduct a triennial actuarial valuation as of December 31st which is used for funding purposes and setting contribution rates.

Consider an interim actuarial valuation for information purposes.

Ensure linkage of Funding Policy to investment policies in SIP&G.

Consider an Asset Liability Study to confirm asset mix.


Strategic Priority #4: Communications

Goals:

The Board:

1. Proactively manages issues and information and enhances all Plan communications

to Sponsors and Stakeholders.

2. Builds positive relationships with the Sponsors and Stakeholders.

3. Clearly outlines and documents communication responsibilities for the Board and

service providers.

The regular and/or ongoing tasks related to communications are:

Provide Plan Sponsors proactive support and information regarding the funded status of the Plan, and assist them in communicating to their stakeholders on funding and benefit issues.

Continue to provide ongoing member information on the value of the SFPP to attract, retain and help members plan for their retirement.

Continue to communicate the “case for change” based on risk assessment and risk mitigation.

Provide information to Plan Sponsors on the current and future impacts of the Funding Policy.

Formalize a communications plan to communicate the risks and mitigation tools (plan design, governance, funding policy) to Sponsors and Stakeholders.

Formalize a change management communications plan to ensure Sponsors and Stakeholders have a transparent and comprehensive roadmap to the future vision of the Plan.


2016 2017 2018 Update and implement the next three year strategic communications plan, specifically focused on using in-house resources where possible.

Update and implement the three year strategic communications plan, ensuring appropriate responsibilities between the Board, staff and service providers.

Update and implement the three year strategic communications plan.

Confirm and communicate key messages to various Sponsor groups for the case for change and risk mitigation.

Confirm key messages for Sponsors and members on the workplan for change and risk mitigation.

Develop a strategy to ensure long term communications needs for the Board are met, and commence implementation to have resources in place.

Implement resourcing strategy.

Review resourcing strategy.

Consider new distribution protocols using Sponsor resources.

Develop a Sponsor Relations Policy.

Review and update Sponsor Relations Policy and Government Relations Policy.

Develop a more cost-effective, electronic solution for


communication with Sponsors (i.e. e-newsletter).

In partnership with APS, participate in:

the redesign of the SFPP website;

improved SFPP branding and presence on mypensionplan.ca; and

revision and updating of the Plan Member handbook.

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