1. New Member Mid-CareerNearRetirementAfterRetirement Municipal Pension Plan Operations and Financial Review December 31, 2002

2. 2 Municipal Pension Plan Board of Trustees British Columbia Investment Management Corporation (bcIMC) British Columbia Pension Corporation Pension Corporation Up to 17 trustees appointed by plan partners and key stakeholders Investment management agent Benefit administration agent Plan Governance

3. 3  Plan Profile  Membership Profile  Employer Profile  Financial Structure  Basic Account  Inflation Adjustment Account  Supplemental Benefits Account  Retirement Annuity Account  Annual Financial Statements  Statement of Net Assets Available for Benefits  Statement of Changes in Net Assets Available for Benefits  Actuarial Valuation Agenda

4. 4  Active membership increased about 2% in 2002  Number of retired members grew 7% in 2002, about 3,300 new pensions granted  Continued retired membership growth expected as a result of aging membership * Members no longer employed but with money in the plan 2002 Membership Profile Retired 32,932 21% Active 123,662 69% Inactive * 17,847 10%

5. 5 Percent Age Age Profile of Active Members 27% 37% 18% 12% 4%

6. 6. Females special closed group (0.01% not shown on pie) 2002 Active Members by Group Females (other than Police/Fire) 69% Police / Fire 5% Males (other than Police/Fire) 26% Total Active Members 123,662

7. 7 Total Regular Contributions by Employer Sector Approximately 665 plan employers Health Sector 51% Municipal and Regional Districts 31% School Districts 12% Colleges 3% Miscellaneous 3%. 2002 Employer Profile

8. 8 Normal Retirement, Age 65 Normal Retirement, Age 60 Percentage of 2002 Regular Pensions Granted by Age

9. 9 Plan Financial Structure Inflation Adjustment Account (IAA) BasicAccount Supplemental Benefits Account (SBA) Member $ Employer $ Member $ Employer $ Basic Pension (Dec. 2002: $11.6 billion) Future Indexing (Dec. 2002: $2.7 billion) Group Benefits * Retirement Annuity Account also exists that accumulates special agreement contributions used to fund retirement annuities purchased (Dec. 2002: $0.3 billion).

10. 10 Basic Account (Dec. 2002: $11.6 billion)  Funds and pays the defined benefit portion of the pension  Receives member and employer contributions as well as investment income  Focus of actuarial valuation

11. 11  Funds indexing of basic benefits  Receives member and employer contributions as well as investment income  Increases to pensions at January 1, based on Cdn. CPI - Sept. to Sept.  Subject to availability of funds in the IAA, i.e. not guaranteed Inflation Adjustment Account (Dec. 2002: $2.7 billion) IAA Balance History 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 1990199119921993199419951996199719981999200020012002 Year Dollars ($000)

12. 12  No actuarial valuation required as liability limited to funds in account  Board monitors performance of IAA  Assists the board to identify some years in advance, the point at which full indexing benefits may not be able to be granted  As long as there are IAA contributions, there will be some measure of inflation protection for retired members Inflation Adjustment Account (Dec. 2002: $2.7 billion)

13. 13  Account is for non-registered benefits  Group health benefits for retired members  Contributions and benefits that are greater than income tax limits  Up to 1% of employer IAA contributions available to fund group health benefits Supplemental Benefits Account

14. 14  Receives special agreement contributions  Transfers made to Basic Account at retirement to fund retirement annuities purchased  Account allocated a share of Basic Account investment income  More information on special agreement changes later in today’s presentation Retirement Annuity Account (Dec. 2002: $0.3 billion)

15. 15  Prepared by Pension Corporation, board’s administrative agent  Audited by KPMG LLP, board appointed independent auditor  “clean” audit report  Board reviews and approves  Financial statements include:  Statement of Net Assets Available for Benefits  Statement of Changes in Net Assets Available for Benefits  Notes to the Financial Statements (actuarial valuation information included in notes) Annual Financial Statements

16. 16 Net Assets Available for Benefits Cash & Investments$14,513,746 Contributions Receivable28,500 Accrued Investment Income 1,376 Prepaid Expenses1,220 Net Investment Settlements23,330 Other Accounts Payable (17,009) Total (Basic, IAA, RAA)$14,551,073 Net assets 4% from Dec. 2001 December 31, 2002

17. 17 Changes in Net Assets Available for Benefits Net Assets on December 31, 2001$14,144,071 Investment Income/(Loss)*(670,919) Contributions710,648 Pension Benefits(475,007) Post Retirement Group Benefits (51,003) Termination & Refunds(57,688) Net Transfers with Other Plans(32,042) Administration(16,987) Total Increase/(Decrease)(592,998) Net Assets on December 31, 2002$14,551,073 * Net investment loss includes management fees of $17.3 million

18. 18 $14.0 $15.2 $15.1$14.6 Net Assets Available for Benefits (Basic, IAA & RAA) $12.2

19. 19 Investment Assets – (Market Value of Basic, IAA & RAA) Private Placements $0.4B 3% Real Estate $1.4B 10% Short Term $0.5B 4% US Equities $1.8B 12% CDN Equities $23B 22% Mortgages 4% Bonds $4.2B 30% International Equities $2.2B 15% As of December 31, 2002 Total Portfolio $14.6 billion

20. 20  Contributions  9% over 2001 $711 million vs $653 million 2% re increased purchases; 2% re increased active members, balance re salary base increases 565 574 617 653 711 Pension Contributions – 5 Year History

21. 21  Pension payments  10% over 2001 $475 million vs $432 million 7% re increased # retired members 2.6% indexing at January 2002 330 357 393 432 475 Pension Payments – 5 Year History

22. 22   Retiree group benefit costs  29% over 2001     88% from 1998; 29% retired member growth in same period Retired Group Benefits - 5 Year History (Extended Health, Dental & MSP)

23. 23  Actuarial valuation of Basic Account every 3 years  defined benefit portion  independent actuary appointed by board  Most important indicator of the long term financial health of the basic account  Looks at plan’s future assets and benefit obligations and the adequacy of contribution rates for funding basic benefit obligations in the long term  Results of valuation and key assumptions (eg. investment returns) reviewed by the board for reasonableness Basic Account Actuarial Valuation: “defined benefit portion”

24. 24  Key long-term assumptions used include: annual investment return annual salary escalation rate mortality turnover and termination rates retirement age Long Term Actuarial Value of Basic Account Assets Long Term Actuarial Liability of Basic Account Investment Fund Investment Fund Future Member Future Member Contributions Contributions Future Employer Future Employer Contributions Contributions Current pensions Current pensions being paid being paid Value of pensions Value of pensions for current active & for current active & inactive members inactive members Other future expenses Other future expenses Assets - Liabilities = Surplus / (Unfunded Liability) Basic Account Actuarial Valuation: “defined benefit portion”

25. 25  Financial health improved  Surplus indicates basic benefits fully funded  Joint Trust Agreement specifies  objectives for which surplus can be used  if increased contribution rates required, shared equally by plan members and employers   December 2003 valuation  2004 Annual Report ($ Millions) Funding of the Total Basic Benefit Liability