CIA Pension Seminar – Alberta Superintendent Ellen Nygaard Deputy Superintendent of Pensions, Alberta Toronto, Ontario April 16, 2007

Today I’ll talk about … Funded and solvency status of Alberta registered plans Evolving government policies on minimum funding standards The PPFRC’s Statement of Principles document (March 2005)

Funded Status, AB Plans Funded Ratio Comparison March 31, 2006SMEPPsAll OthersTotal Ratio < Ratio Between 0.85 & Ratio >= ALL PLANS # Plans with Ratio < % March 31, 2007SMEPPsAll OthersTotal Ratio < Ratio Between 0.85 & Ratio >= ALL PLANS # Plans with Ratio < %

Solvency Status, AB Plans Solvency Ratio Comparison March 31, 2006SMEPPsAll OthersTotal Ratio < Ratio Between 0.85 & Ratio >= ALL PLANS # Plans with Ratio < % March 31, 2007SMEPPsAll OthersTotal Ratio < Ratio Between 0.85 & Ratio >= ALL PLANS # Plans with Ratio < %

Solvency Ratios 2006

Solvency Ratios 2007

AB Legislative Developments Temporary (3-year) solvency moratorium for SMEPPs, effective August 2006 To be approved, Plans must –Pay off all going-concern unfunded liabilities over 10 years or less –Make no benefit improvements –Continue to report solvency position

AB Legislative Developments Letters of Credit – regulation to be passed Can cover up to 100% of solvency deficiency Letter of Credit must be –Issued by a Scheduled Bank –Irrevocable –Callable by fund holder

Funding Rules: Basic Questions What is an accurate measure of liabilities? What is an accurate measure of sensitivity to adverse events? If benefits are not secure, what steps will be required to rectify the situation –In particular, how long will plan sponsors have to make adjustments?

Many “Pension Deals” Classic single-employer DB Multi-Unit DB plan DC plan Negotiated contribution DB Shared-cost DB plan Is Quebec’s MFPP another type?

Funding rules and different “deals” Standards should aim at –Establishing true picture of funded status and costs –Timing and method of paying off deficiencies The “deal” dictates who bears the costs and how Rules have been written with standard single-employer DB plan in mind – one size does not fit all

Harmonization: will it happen? CAPSA unable to get consensus from stakeholders on funding and surplus rules Jurisdictions left to deal with issue in their own ways – and are starting to do so Often, harmonization develops over time

Thank you for listening – Questions?

PPFRC Statement of Principles (March 2005 document) We like emphasis on wind-up status as it fits regulator emphasis on benefit security –We like the idea of estimating annual incremental cost on wind-up basis Not ready to abandon standards for going concern valuations due to goal of stable systematic funding –Best estimates should be actuary’s call –Explicit PfADs preferable to implicit conservatism