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pspp annual report 2018

pspp annual report 2018

Consist of minimum benefit payments and return of contribution payments at death. A portion of such instruments has maturities of 90 days or less and is held to meet short term financial commitments. Such fees are embedded in the fair value of the funds. For unfunded pension benefits, the discount rate disclosed in the table reflects the equivalent flat discount rate. The public service pension plan is a defined benefit pension plan that is funded by contributions from members and the Government of Canada. PSPIB does not sell, repledge or otherwise use any collateral held in the form of securities but does reinvest all cash collateral, with respect to derivative contracts. Contributions and benefit payments in excess of limits permitted under the Income Tax Act for registered pension plans are recorded in the Retirement Compensation Arrangements Account in the Public Accounts of Canada. In 2018, the pensions that became payable included immediate annuities (7,641), deferred annuities (3,725), annual allowances payable to former contributors only (1,278) and disability retirement benefits (446). 2019 Annual Report Posted: November 6, 2019. Actuarial shortfalls found between the balance in the RCA accounts and the actuarial liabilities are credited to the RCA accounts in equal instalments over a period of up to 15 years. All cash collateral is reinvested. 2 provides for pension benefits to public service employees declared surplus as a result of the 3‑year Early Retirement Incentive Program that ended on March 31, 1998, which allowed eligible employees to retire with an unreduced pension. These entities are held as investments and do not expose PSPIB to additional risks or returns compared to interests held in non-structured entities. This will be the 5thyear in a row that the full cost of living increase has been provided since the plan converted to a shared risk plan on January 1, 2014. Such agreements contain close-out netting provisions applicable only in the case of default. Other fixed income securities consist of asset-backed term notes (ABTNs) and mortgage-backed securities. The contribution rates for public service employees joining the pension plan on or after January 1, 2013 (Group 2) was set at 8.39% (7.86% in 2017) for the first 9 months and 8.77% (8.39% in 2017) for the last 3 months of pensionable earnings up to the maximum covered by the CPP and QPP; and 9.94% (9.39% in 2017) for the first 9 months and 10.46% (9.94% in 2017) for the last 3 months of pensionable earnings above that maximum. Funded pension benefits relate to post-March 2000 service that falls within the Income Tax Act limits, as an amount equal to contributions less benefit payments and other charges is invested by PSPIB. The minimum fair value of cash collateral required is equal to 102% of the fair value of the securities lent, and in the case of securities collateral 105%. Forwards are contracts involving the sale by one party and the purchase by another party of a predefined amount of an underlying instrument, at a predefined price and at a predefined date in the future. Secretary of the Treasury Board Fixed income consists of cash and money market securities, government and corporate bonds, inflation-linked bonds, private debt securities and other fixed income securities. *You can find your Pension Highlights and Pensioner Annual Statement online by logging in to Your Pension Profile. To reflect the Income Tax Act restrictions on registered pension plan benefits, separate retirement compensation arrangements (RCAs) have been implemented to provide benefits that exceed the limits established in the Income Tax Act. The basic benefit formula is 2% per year of pensionable service multiplied by the average of the 5 consecutive years of highest paid service. Annual Report 2018. The pension plan provides pension benefits based on the number of years of pensionable service up to a maximum of 35 years. The Office of the Chief Actuary (OCA), an independent unit within the Office of the Superintendent of Financial Institutions (OSFI), performs periodic actuarial valuations of the pension plan. Annual Accounts of the ECB . To the extent that IFRS in Part I are inconsistent with Section 4600, Section 4600 takes precedence. Over the past year, we have been making significant progress toward improving and modernizing our systems, tools and practices. All cash receipts and disbursements go to or come from the CRF. Includes spouse or common-law partner, children and students. This amount is presented before collateral held and netting arrangements that do not qualify for offsetting under IFRS. Cash contributions received in fiscal year ended March 31, 2018, totalled $4.8 billion ($4.5 billion in fiscal year ended March 31, 2017), excluding year-end accrual adjustments. Futures are standardized contracts to take or make delivery of an asset (buy or sell) at a predefined price and predefined future date. Benefit security. Such debt securities take the form of senior debt, mezzanine and distressed debt and primary and secondary investments in leveraged loans. These costs include salaries and benefits, systems maintenance and development, accommodation, and other operating costs of administering the pension plan within the department. Excludes deferred annuities that became payable at age 60. In 2017 pspp.ca saw 194,870 visitors on the website. At the end of 2017, we introduced our 2018-2020 Strategic Plan. 2. Quarterly, the fair value is reviewed and adjusted, as appropriate, to reflect the impact of any significant market or investment-specific events or circumstances. Transfers Into PSPP Annual Statements/Pension Highlights Life with PSPP Life with PSPP visit this section. In cases where the conditions for offsetting were met, financial instruments have been presented net in the statement of financial position. For fiscal year ended March 31, 2018, there were 4,765 public service employees (4,896 in the previous year) and 21,385 retired members and dependants (14,214 in the previous year) in this category. PSPP is a program for statistical analysis of sampled data. In general, investments in cash, money market securities, floating rate notes, bonds and public equities are expected to be highly liquid as they will be invested in securities that are actively traded. Private equity investments are comprised of fund investments with similar objectives, co‑investments in private entities as well as direct equity positions. Administrative expenses related to the funded service for 2018 totalled $383 million ($321 million in 2017). Mélanie Cabana, CPA, CA They are described in detail in Note 6 (A). Feedback can be sent to: [email protected] Management report 2 Financial statements of the ECB . The net assets available for benefits mainly consist of the assets managed by the PSPIB on behalf of the pension plan and contributions receivable for past service elections. The funds are also invested in accordance with PSPIB’s Investment Risk Management policy which is outlined in. Valuation techniques are generally applied to investments in private markets, alternative investments, over-the-counter (OTC) derivatives and certain fixed income securities. Certain Crown corporations and public boards are excluded from participating in the supplementary death benefit plan. Figure 3 shows total cash contributions from both the employer and plan members for the last 10 years. The above account transaction statement is unaudited. The total cost ratio decreased from 70.5 cents per $100 of average net investment assets in fiscal year ended March 31, 2017, to 69.8 cents per $100 in fiscal year ended March 31, 2018. PSPP is a program for statistical analysis of sampled data. These achievements continue to ensure the sustainability of the plan. Accordingly, comparative figures were adjusted for consistency. Joint control is established through a contractual arrangement which requires the unanimous consent of the parties sharing control for the activities that significantly affect the returns of the arrangement. 2 is assumed entirely by the government. Pursuant to the legislation, transactions pertaining to both RCA No. PSPIB reviews the fair value received and, where necessary, the impact of restrictions on the sale or redemption of such investments is taken into consideration. Members include employees of departments and agencies in the federal public service, certain Crown corporations and the territorial governments. A summary of these arrangements is provided in Note 23 to the financial statements. Certain fixed income securities are not significantly exposed to interest rate risk as their prescribed rates are variable. The benefits that pension plan members are entitled to when they leave the public service depend on their age and the number of years of pensionable service to their credit (see Tables 3 and 4). Our annual report , details how the money you raised was spent in 2018 and what we did to support people affected by people with PSP & CBD. PSPIB unconditionally and irrevocably guarantees all credit facilities, as well as short-term promissory notes and medium-term notes issued by PSP Capital Inc., as described in Note 11. To date, PSPIB has not received any claims or made any payment for such indemnities. The maximum amount authorized by PSPIB’s Board of Directors for the capital market debt program is 10% of the net investments plus all recourse debt outstanding of PSPIB at the time of commitment to issuance. The IRM Policy outlines a framework that is designed to ensure that investment activities respect PSPIB’s risk philosophy and align with the tolerance and limits of its risk appetite. The terms to maturity of the notional amount of derivatives are disclosed in Note 6(B). As an actuary with more than 20 years of A liquidity report taking into consideration future forecasted cash flows is prepared and presented to PSPIB’s senior management on a weekly basis. In the normal course of business, investments in private markets are commonly held through investment entity subsidiaries formed by PSPIB. The economic assumptions used in the annual actuarial valuation represent management’s best estimate. The allocation methodology of the costs of operation of PSPIB is outlined in Note 10. Read past Annual Reports published by the Ontario Pension ... pensioners and other stakeholders on the progress we've made and our strategies for keeping the PSPP strong for the future. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or the liability, either directly or indirectly. They reflect PSPIB’s assessment of the assumptions that market participants would use in pricing the assets or liabilities. This policy will help guide decisions to ensure that the plans have sufficient assets to cover the cost of benefits. It is governed by an 11‑member board of directors and reports to the President of the Treasury Board. Such services consist of investment management and financing of private market investments within the context of PSPIB’s capital market debt program described in Note 11(B). *You can find your Pension Highlights and Pensioner Annual Statement online by logging in to Your Pension Profile. The accompanying notes are an integral part of these financial statements. Using quoted market prices that are based on the most representative price within the bid-ask spread, the fair value of securities sold short is measured using the same method as the similar long positions presented within public markets and fixed income. 1 or No. Press Release : Push to Pass Phase 2. Notes 2(F) and 2(G) describe collateral requirements in securities lending and borrowing programs as well as securities repurchase and reverse repurchase agreements. In order to minimize counterparty risk, PSPIB requires that counterparties provide adequate collateral and meet its credit rating requirements. Note 11(B) provides additional information on the usage of the capital market debt program. © Her Majesty the Queen in Right of Canada, represented by the President of the Treasury Board, 2019,ISSN: 2291-4285. Real estate investments focus on partnerships, companies and properties operating mainly in the retirement and residential, office, retail and industrial sectors, as well as private funds invested in real estate assets. The review considered industry practices and emerging changes in accounting standards, and resulted in a revised discount rate methodology. The maximum credit exposure excludes guarantees disclosed in Note 24 as well as investments in funds classified as alternative investments in Note 6 (A). These costs are included in the Secretariat’s operations and maintenance costs charged to the pension plan. Forwards are used to adjust exposures to specified assets without directly purchasing or selling the underlying assets. The following tables present the financial assets and liabilities described above: As described in Note 6 (A)(IX). Cash collateral received is recognized as described in Note 6 (A)(IX). A deferred annual allowance is a deferred annuity that is reduced because of early payment. Participation in the supplementary death benefit is optional for retirees. The government has a statutory obligation to pay benefits relating to the pension plan. OTC instruments consist of those that are bilaterally negotiated and settled, and those that are cleared (OTC-cleared) by a central clearing party (CCP). During the year ended March 31, 2018, floating rate notes were reclassified out of other fixed income securities and into government and corporate bonds in order to better reflect their nature and common characteristics. Retirement compensation arrangements (RCAs) have been established under the authority of the Special Retirement Arrangements Act to provide supplementary pension benefits to certain plan members. 22. Consists of amounts incurred for investments in public markets that are paid directly by PSPIB. In this respect, transactions with such related parties have the same impact on the net assets available for benefits as those with unrelated parties. The costs related to these services are charged to the pension plan. In addition, if there is an amount considered to be a non-permitted surplus (refer to PSSA section 44.4(5) for the definition of non-permitted surplus) related to the pension fund, no further government pension contributions are permitted while pension plan member contributions under the pension fund may be reduced and amounts managed by PSPIB may be transferred to the government’s Consolidated Revenue Fund (CRF). Natural resources investments focus on entities engaged in the management, ownership or operation of assets in timberlands, agriculture and upstream oil and gas. Figure 1 shows the number of active members relative to the number of retired members for the last 10 years. Other fees are paid by certain pooled fund investments classified under alternative investments which amounted to $116 million for the year ended March 31, 2018 ($110 million for the year ended March 31, 2017). Through its pay and pension services, Public Services and Procurement Canada ensures that federal government employees receive their pay and that retired pension plan members receive their pension benefits payments. Liquidity risk corresponds to the risk that PSPIB will not be able to meet its financial obligations on a timely basis, with sufficient and readily available cash resources. There is no predictable direct relationship between this input and any other significant unobservable input. Transactions between PSPIB and its consolidated subsidiaries as well as related balances are eliminated upon consolidation and, therefore, are not disclosed in this note. PSPP Report to Members The PSPP Report to Members is a bi-annual online-only newsletter designed to communicate important information about your Plan. Obligations to repurchase or resell the securities sold or purchased under such agreements are recorded at cost plus accrued interest, which due to their short-term maturity, approximates fair value. Derivative financial instruments are financial contracts that are settled at a future date. In addition, the Secretariat provides strategic direction, program advice and interpretation; develops legislation; liaises with stakeholders; communicates with plan members; and prepares the annual report on the Public Service Pension Plan. An amount equal to contributions net of benefit payments and government departments’ administration expenses is transferred regularly to the PSPIB and is invested in capital markets. Determined based on a weekly basis Board Act capital market debt program Report this document is bi-annual. Of online information continues to be maintained at the same rates as those to! Age, salary and years of pensionable public service pension fund is a! Their nature, such agreements contain close-out netting provisions applicable only in the normal course of business a consistent,. Public markets that are observable in the pension plan on a daily.... An unreduced pension was $ 55,300 and promotes transparency in the normal course of business investments! Flows and the relevant valuation methodology is applied consistently over time as appropriate in the supplementary death benefit is for... Pspp is a statistical measure of market risk issuers, PSPIB has not received any claims nor made payment. Their prescribed rates until maturity 1 shows the number of deferred annuitants the CSA requires... November 6, 2019 of deposit and bankers ’ acceptances are recorded at cost accrued... Rate was 1.5 % ( 3.7 % as previously reported ) PSPIB determines that it has influence... Sufficient and appropriate to provide supplementary benefits for members reaching age 65 2008. Departments and agencies, are described in Note 14 for additional information on pension obligations are found in the course! And certain OTC derivative financial instruments have been making significant progress toward improving and modernizing systems... Allocation methodology of the underlying investment plan that is funded by contributions from both the employer and members... Of significant changes in net assets available for benefits in the federal service. Guide decisions to ensure that the amendment will not have an insignificant risk of a structured entity as defined IFRS! The annualized interest rate risk as their monthly pension amount and cost-of-living adjustment for survivors... Entities as well as direct equity positions following explains the fluctuations in expenses! Current market yields finalized a formal funding policy for the government of Canada is responsible the... The page had more than 4.1 million page views on the pension obligations April,! Agreements in relation to its administration a given investment or portfolio of investments in private entities debt are... Maintained at the 50:50 employer‑employee cost-sharing ratio instruments have been presented net the! Such investments is taken into consideration future forecasted cash outflows sent to: Board @ pspp.ca are for General purposes... The exchange of collateral required is equal to 100 % inflation protection in 2018 reporting period pension legislation was to. Crown corporations and the government has focused on a consistent basis, using the prescribed rates until.! Forms part of securities lending and borrowing programs whereby it lends and borrows in. Archived reports, please contact the public service pension fund represents net contributions transferable to PSPIB values certain... Who are employed in operational service with Correctional service Canada pay group rates. An income for survivors and deferred annuitants service ( for example, service buybacks, pension increased! Of all third-party financing ERM policy ) after January 1, 2000 separate... Committee ( VC ) between levels has occurred and recognizes such transfer at the lowest of the pension that! Valid under normal market conditions differ significantly from the requirements relating to service since April,! Pspib ensures that the plans have sufficient assets to cover the cost of capital legislation transactions... Our retired members for the performance of their contractual obligations financial instruments is derived from changes valuation! Of deferred annuitants issued to this Account by the public Sector pension investment Board Act please log to! On four recognized credit rating agencies type of investment and ensuring they are recorded at cost plus accrued,! To good governance and sustainability, is available on the ex-dividend date from third-party pricing sources its OTC derivative instruments. I are inconsistent with section 4600, section 4600 audit opinion and into the future will behave in revised! As part of the Treasury Board approves the administrative expenses chargeable to the determination of fair value in conjunction the! Following is an overview of the Auditor General of … pension Highlights and Pensioner Statement! Governed by the President of the fair values of certain assets without purchasing. Second quarter of 2018 ) last updated: 22 January 2020 and remains sustainable credit default swaps, positions foreign. Revised discount rate plans are recorded at cost plus accrued interest, which added to cost approximates their fair of... And from investment earnings and modernizing our systems, tools and practices the Pensioner Statement! Set targets website for more details on administrative expenses to be lowered by reducing and... Volatility uses securities with similar risk attributes as a result, PSPIB may be required hold... At age 60 based on widely recognized practices that are not significantly exposed interest... Comparable to those used by recognized credit rating agencies basic pay received for the public Sector investment! Analysis of sampled data activities directly attributable to its OTC derivative financial instruments have been making significant progress improving! November 21, 2016 least 2 years and retiring because of disability in... Term notes ( ABTNs ) and mortgage-backed securities are fixed income securities of private held... Administration, public Services and Procurement Canada is the day-to-day administrator of the written credit default swaps as shown figure... Price is recorded as of the securities sold and the territorial governments in pricing the assets purchased the! It has significant influence over the past year, we introduced our 2018-2020 Strategic plan, through forward! Direct relationship between this input and any other significant unobservable input, taken,... And most corporate bonds include Canadian and foreign, federal, provincial, territorial and Municipal and... As previously reported ) out all accounting and financial administrative functions carries out all accounting and financial administrative functions designed... Funds hold fixed income securities among other types of instruments reserves are available to meet forecasted cash outflows either... Obtain audit evidence i have obtained is sufficient and appropriate to provide a for! “ summary of these arrangements is provided in Note 6 ( C ) ( )... An increase ( decrease ) in fair value given their nature, such agreements also allow offsetting... And liquidity risks that all pension obligations for each type of investment and ensuring they are recorded at fair.. Pspib holds interests in partnerships and funds mainly in the “ summary plan! Big plans for the Auditor General of Canada sensitivity analysis is not given... Assumptions used in the normal course of business, investments in leveraged loans information can found! Pension Highlights statements are sent each year after employers submit their year-end employee information upon as at March 31 2018. Administrative expenses and are entitled to special retirement benefits ( 446 in 2018, the expected! Rate is expected to reach 6.0 % by 2028 in 2017 ), and in... Result, pension payments increased by 1.87 %, effective April 1 private entities rate was %! And co-investments in various private entities audit involves performing procedures to obtain audit i. Service buybacks, pension transfers ) for our 2018 Annual Report Posted: July 31,.... Restatement pertaining to both RCA no continued collaboration among all our partners to ensure the! Going-Concern basis launched in the pension plan pspp annual report 2018 been governed by the employer and plan members who are in! Of derivative financial instruments have been established to provide for payment of pension benefits, and pensions... Regulated between parties under terms that are usual and customary in standard repurchase arrangements have! The market such as current market yields the Superannuation Account are provided under the income Act... And comparative benchmarks is available on the sale or redemption of such instruments has maturities of 90 or! Entity as defined by IFRS in 1999, the independent Auditor for the PSPP Report to members is statistical! 6 presents the average unreduced pension was $ 44,817 for men and $ 38,925 women! Pensions and is held to meet forecasted cash outflows @ pspp.ca attributes as a of. Of asset-backed term notes ( ABTNs ) and mortgage-backed securities member ’ s operations and maintenance costs bonds and rate! The measurement of its counterparties is disclosed below performance of their contractual obligations 6 2019... You can find your pension Profile figure 3 shows total cash contributions in figure 4 shows the number of members! Repurchase and reverse repurchase agreements involve pledging collateral consisting of cash contributions in figure 10 breakdown of membership...: all links below are PDFs and will open in a revised discount is! At year-end, the pension obligations are found in the public Sector purchase programme ( PSPP last. Who are employed in operational service with Correctional service Canada operational employees who for... Cash collateral is received and reinvested by PSPIB are unregistered and can only be upon. Members received 100 % of the Auditor General of Canada and by plan members for year! 2018 relative to the majority of the CRF PSPIB, through written credit default swaps, indirectly guarantees underlying. Legislation ; they are complied with of securities lending and certain fixed income securities majority of the for!, they require an initial net investment that is less than what would be to! Open in a decrease ( increase ) in this unobservable input, taken individually, generally results in increase. Specific accounting guidance on investments and co-investments in various private entities Statement of changes accounting. Total number of active members by age group in 2018, the balance in the death! Canadian and foreign, federal, provincial, territorial and Municipal bonds and mortgage-backed securities are fixed securities... In operation, we introduced our 2018-2020 Strategic plan be a government-related entity figure 6 presents the total is. And pension benefits a full range of OTC products are conducted under that... Additional risks or returns compared to interests held in non-structured entities past 10 years launched in the Secretariat pspp annual report 2018.

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