1. A Plan for Growth ASCC / COFO Session 2 October 29, 2013 Kevin Rorwick – Chief Financial Officer

2. Today’s topics  Financial growth  Funding stability  Service growth  Membership growth  Advocating efforts  Stakeholder survey 2

3. FINANCIAL GROWTH 3

4. Adding value 4 “Our 2012 net return of 11.3% added $50 million in value compared to the policy benchmark return of 10.4%.” Julie Cays Chief Investment Officer

5. 5 5 Year ending December 31 GrossNet 201211.8%11.3% 20114.1%3.4% 201013.3%12.6% 200915.2%14.7% Solid returns, low costs

6. Positive returns from all asset classes 6

7. Returns in excess of requirements 7

8. CAAT Plan is well-positioned 8 “The Plan is 103% funded with a reserve to provide some cushion during this period of continued economic uncertainty.” Derek W. Dobson CEO & Plan Manager

9. Growing surplus 9

10. FUNDING STABILITY 10

11. Agreement reached with province Jointly Sponsored Pension Plan (JSPP) Framework Agreement 11 October 2012

12. Contribution Rates – stable to 2017 12 to the YMPE to RCA limit Over RCA limit MembersEmployers 201310.8%14.4% 43.2% 2014-1711.2%14.8% 44.4% YMPE (Year’s Maximum Pensionable Earnings) - $51,100 in 2013 RCA Limit - $152,718.50 in 2013

13. JSPP Framework Agreement Highlights  Exempted from special legislation, including forced participation in pooled investment fund  Granted 4-year valuation cycle for flexibility and stability  Governance remains with Plan Sponsors 13

14. JSPP Framework Agreement Highlights  Funding Policy temporarily changed – until 2017  Contribution rates stay at announced levels  Phase-in of 2012-14 adjustments finishes  Any shortfall would be addressed with temporary reductions to future benefits  Could be restored when Plan funding improved 14

15. Plan is financially stronger because:  Healthy demographic mix  Realistic assumptions  Solid returns  More diversified investments aligned with liabilities  Prescriptive Funding Policy 15

16. 16 Active members: 21,400 Retired members: 12,600 (including survivors) 16 Healthy demographic mix

17. Plan is financially stronger because:  Realistic assumptions  Longer lifespan - age 88 versus national avg. 85  Discount rate – 5.8% 17

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19. Plan is financially stronger because:  Prescriptive Funding Policy  Uses mix of reserves, stability contributions and conditional benefits to manage through volatility 19

20. Outlook  Interest rates up  Investments continue to perform strongly 20

21. SERVICE GROWTH 21

22. Service growth Plans for:  People  Processes  Tools 22

23. People  New Director, Client Services: Angela Goodchild  Additional staff  2 Permanent for service improvement  2 Temporary for part-time enrolment, manual processes before new system  Training support for employer administrators 23

24. Processes  Realigned employer services team  Centralized support for employers through their main Plan contact (Pension Analyst)  Broader data collection allows Plan to do more  Part-time notification  Estimating liabilities  Proper calculations 24

25. RCA changes  Needed to adjust way administrative expenses were charged  Separate charge for portion of administrative expenses  Offset by lower contribution – no change in overall amount  Still one remittance – change to form only 25

26. Tools  Pension administration system will reduce manual processing, risk and help improve service experience, including timeliness  Data collection tool being rebuilt 26

27. MEMBERSHIP GROWTH It’s in our best interests 27

28. Growth benefits the Plan 28  Growth in Plan membership improves stability of pension funding  Accelerates contribution rate reductions  Similar demographic profile makes for lower risk and better alignment  Further reduces administration and investment costs

29. Growth benefits funding levels 29

30. Drummond Report – Recommendation 7:27 “Establish a single pension fund administrator for all university and college pensions, while recognizing differences in pensions.” Commission on the Reform of Ontario’s Public Services February 15, 2012 30

31. How universities benefit 31  Avoids solvency funding requirements  Substantially lowers cost and risks associated with pension administration, investments, governance and compliance  Stabilizes contribution rates

32. How Ontario benefits 32  An efficient postsecondary sector pension plan achieved without legislation  The proposal offers an immediate solution  High interest in its success  Recognizes post-secondary sector alignment trends

33.  Growth must be in the best interest of CAAT members  CAAT members will not subsidize university debts 33 Fundamental principles

34. Preparing for growth 34

35. Earlier eligibility for part-time employees  On Jan. 1, 2014 all OTRFT employees can choose to join anytime  vs. 24-month continuous service qualification  Change made to manage legal risk with minimal administrative work, especially by employers 35

36. ADVOCATING EFFORTS 36

37. FATCA  Would have required withholdings for any retirees who are US citizens.  Exemption for pension plans received. 37

38. Bill C-377  Would require “labour trusts” to disclose personal information about those in receipt of payments  Written submission by Plan requesting exemption  Bill may be reintroduced 38

39. HST Relief  Relief for accounting for tax on deemed taxable supplies made by an employer to a pension plan  Response to advocacy Plan participated in  College does not have to remit HST where GST portion of deemed taxable supply is less than $5,000 (about $70,000 in activities)  Do NOT make election to ignore HST on actual taxable supplies 39

40. STAKEHOLDER SURVEY 40

41. Broad response received  Nearly 5,000 responses from 24 stakeholder groups  Over 3,500 active members responded for a 16% participation rate 41

42. Key findings  65% said pension plan was important part of decision to join college system  90% said pension plan was important part of remaining employed in college system  90% said pension is important part of total compensation received  90% said having an independent organization manage the plan is important  1.3% do not believe they are deriving good value for money from the plan 42

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