RAQ Pension and Benefits Committee Report
Our Pension Plan performance welcomes comparisons.
In this issue we would like to provide some information on Queen's Pension Plan matters -- things you may not be aware of, should know, may have forgotten, or at least may find of some interest. In a future column we hope to address medical and other insurance issues.
DID YOU KNOW...?
- As of June 30, 2007, the market value of the Queen's Pension Plan (QPP) assets was $1,478,400,000 - almost $1.5 billion dollars! When the current plan started in 1969, the total value was less than $4 million.
- There are currently more than 3,300 active plan members and 1,555 pensioners.
- The Pension Committee of the Board of Trustees decides all matters relating to the QPP, including its administration, and reviews the fund's investment managers. There are 11 members of the Pension Committee. Four are active employee representatives (Bill Cannon as Chair, James McKinnon, Linda McCauley and Bonnie Cuddon), three are Board appointees (James Angus, Gordon Hall and Kathy Thompson), two are retired employees (John Gordon and Alison Morgan), and two are ex officio - the Vice Principal, Operations and Finance (Andrew Simpson) and the Vice-Principal, Human Resources (Rod Morrison). The day-to-day administration of the plan is carried out by the Pension and Benefits section of Human Resources under its manager, Bob Weisnagel.
- There are eight separate Investment Managers currently responsible for investing the entire pension fund. They are chosen for their particular professional expertise in such various market segments as Canadian Equities, Global Equities, Balanced Funds, Fixed Income and Private Debt Investments. Based on mandates established by the Pension Committee, the total fund's current asset mix is roughly 33% Canadian stocks, 34% global non-Canadian stocks, and 33% regular bonds.
- Compared with other pension plans, the investment performance of the QPP has been quite good. The Royal Bank of Canada provides a regular report of performance for a very large number of pension plans. Their results show a median rate of return of 14.6% for the one-year period ending June 30, 2007, 11.7% for the four-year period, and 8.7% over ten years. The corresponding Queen's figures are 17.7% (1st quartile), 14.1% (1st quartile) and 8.9% (2nd quartile).
- Once a Queen's pension starts for a retiree, future adjustments are entirely based on the investment performance of the Plan. A key component of the provisions is that it will never go down. Pensions provided by other employers may be -- and in most instances are -- quite different. In some, the pension amount never changes; some are increased sporadically at the goodwill of the employer; others are increased based on a formula tied to the Canadian Consumer Price Index (CPI).
- How have we done? As an example, a Queen's person retiring in 1990, and assuming current expected returns, will have seen their actual pension doubled with an increase of about 100% over that period. The CPI for the same period went up by about 40%. Another example is a person retiring under the QPP in 1995, whose pension has increased by 45%, whereas the CPI over the same period went up 24%.
Financial markets fluctuate significantly, but the evidence is strong that over a long period of time since the Plan's inception in 1969, we have all been very well treated by sound and successful financial investing and a uniquely beneficial plan design.
BILL WRIGHT, Chair
More recent information is available in the 2012 Moreau Report.
The newsletter contains additional updates.