Municipal Pension Board of Trustees Meeting Highlights June 19-21, 2007 Vancouver, BC The Meeting Highlights 1 document is a summary of issues that were considered, or decisions that were made, by the Municipal Pension Board of Trustees (the Board) at their latest board meeting. Items of Note Reports from Service Providers A. Plan Administration Report from the Pension Corporation B. Plan Investments Report from bcimc Committee Reports C. Benefits Committee D. Communications and Education Committee E. Employer Eligibility Committee F. Governance Committee G. Investment Committee H. Valuation Committee I. Appeals Panel Items of Note The Valuation Committee, which was initially established as an ad hoc committee following the 2003 actuarial valuation, is now recognized as a standing committee of the Board. The Valuation Committee developed the Funding Policy approved by the Board at its March 2007 meeting and will co-ordinate preparations for actuarial valuations. An actuarial valuation as of December 31, 2006 is in process and the report will be tabled at the November 2007 Board meeting. The Board approved the 2006 audited financial statements. The Board approved the engagement of PricewaterhouseCoopers LLP as the Plan s auditors starting in 2007, replacing KPMG. The Board approved the 2006 Annual Report, which will be posted on the Plan website in July 2007. Trustees are entitled to a per diem for the time they spend on Board business, in accordance with the Trustee Remuneration Claim Form and Policy. This amount may be paid to the 1 Please note that the Official Board Minutes record the business conducted by the Municipal Pension Board of Trustees and their decisions. If there are any discrepancies between the Meeting Highlights and the Official Board Minutes, the Official Board Minutes shall govern. Disclosure of any document referred to in the Meeting Highlights or the Official Board Minutes is subject to applicable board policies.
Trustee or to the Trustee s employer if the Trustee is being paid by the employer to attend meetings. The Board approved an increase in the per diem amount of $300 effective July 1, 2007 equivalent to the cost of living increase granted to retiree pensions on January 1, 2007 (0.7%) rounded to the nearest dollar. The per diem rate will be adjusted each year, starting January 1, 2008, by the percentage granted to retired members for cost of living benefits. Board policies are posted on the Plan website at www.mpp.pensionsbc.ca; just follow these links: About the Plan / Board Governance / Board Policies and Documents. Reports from Service Providers Administration services are provided by the BC Pension Corporation and investment services are provided by the BC Investment Management Corporation (bcimc). Both agents report to the Board at each regular board meeting. A. Plan Administration Report from the Pension Corporation The British Columbia Pension Corporation Municipal Pension Plan 2007/08 2011/12 Service Delivery Plan, which was approved by the Board at its March 2007 meeting, will be posted on the Plan website. Over the 2006-07 service delivery period, the Pension Corporation met or exceeded almost all on-time service targets, despite higher than expected demand. Member and employer survey results show high levels of satisfaction with the Pension Corporation. The Pension Corporation achieved targeted budget reductions of $0.4 million for the Municipal Plan. Service delivery charges were $17.3 million compared to the 2006/07 budget of $17.7 million. This resulted in a cost per member of $99, below the performance target of $101 per member. Over the three years ending March 31, 2007, the Pension Corporation has completed many critical projects including: Managing communications and logistics for the March 31, 2007 closing of the purchase of service window; Launching My Account web services for active members; Concluding e-remittance, purchase of service and retirement re-engineering; and Developing the 5-Year plan with Board. B. Plan Investments Report from the Investment Management Corporation For the year ending December 31, 2006, the combined return for bcimc s large pension clients was 15.4% compared to the benchmark of 12.5%. As at March 31, 2007 plan assets were just over $20 million in the Basic Account and just over $4 million in the Inflation Adjustment Account. The return for the first quarter of 2007 was 1.8% for both accounts. The Social Investment Organization published the Canadian Socially Responsible Investment Review 2006 in March 2007. This comprehensive survey of socially responsible investment in Canada reported very favourably on bcimc. An excerpt from the report follows. For the full report, visit www.socialinvestment.ca and click on the link to the report.
BC Investment Management Corp. With assets under administration of $76.3 billion as of March 31, 2006, the British Columbia Investment Management Corp. (BCIMC) manages funds on behalf of public sector pension plans in British Columbia, the Province of British Columbia, provincial Crown corporations and institutions and publicly administered trust funds. BCIMC has recently explicitly set out to be a leader in advocating for corporate governance and corporate responsibility. It employs dialogue with corporate management, active proxy voting and collaborative engagement initiatives with other institutional investors. Its proxy voting policy is set out in its Shareholder Engagement Guidelines. In its Guidelines document, published in 2006, BCIMC refers to a number of successful corporate engagement initiatives, including voting in favour of all 20 shareholder resolutions requesting a majority election standard in 2005 (which helped to secure support for majority elections at the Canadian banks and a number of US companies), voting in favour of a split between Chair and CEO at Nestle s (which Nestle s has adopted), and corresponding with Wal-Mart on employment practice issues. BCIMC publicly discloses its proxy guidelines and its proxy voting record, and is a signatory to the UN Principles for Responsible Investment and the Carbon Disclosure Project, and is a member of the Canadian Coalition for Good Governance, the Asian Corporate Governance Association, the International Corporate Governance Network and the Investor Network on Climate Risk. In 2006, BCIMC unveiled a pooled fund for some of its clients that screens US stocks on the basis of the Domini Social Index, a basket of socially responsible US stocks. This represents a screening, or Core SRI strategy, that is quite unique to public pension funds in Canada. However, this fund was launched after June 30, and so is not included in this report. For more information, visit www.bcimc.com and select Responsible Investing. Excerpts from the Quarterly Performance Report, Quarterly Market Report and Responsible Investing Highlights are available on the Plan website at www.mpp.pensionsbc.ca. Select About the Plan and then click the More button in the Investment Holdings section. Committee Reports The Municipal Pension Board has six standing committees: Benefits, Communications & Education, Employer Eligibility, Governance, Investment, Valuation and an Appeals Panel. C. Benefits Committee At its November 2006 meeting, the Board approved a new methodology for determining Pacific Blue Cross administration charges: a flat rate per participant, which will be adjusted annually on January 1 st to reflect changes in the Consumer Price Index (CPI) for Vancouver September over September and to reflect changes in utilization. The Board approved amendment of the approved Pacific Blue Cross methodology for establishing administration charges for EHB and Dental plans to specify that it be applied to each of the public sector plans individually, effective March 1, 2006. The Board also delegated to the Pension Corporation and the Executive Director / Senior Administrative Officer of the four pension plans the authority to revise the flat administration service charge per member each year on the basis of the approved methodology, to negotiate with Pacific Blue Cross with respect to any special cost factors that Pacific Blue Cross might identify, and to recommend the new rates to the Board at the November meeting each year. The new methodology resulted in a savings on administrative charges for 2006 for the Municipal Pension Plan of about $170,000.
D. Communications & Education Committee The Board amended the Trustee Education Policy, by adding the following courses that trustees may take without reducing their education allowance: o Foundations for Trustees course series offered by the International Foundation of Employee Benefit Plans; and o The Essential Tasks of Pension and Benefit Plan Trustees offered by the Pacific Business and Law Institute. E. Employer Eligibility Committee Several new employers were approved. F. Governance Committee The Governance Committee recommended and the Board approved recognizing the Valuation Committee as a standing committee. The Board tasked the Governance Committee with reviewing the Trustee Code of Conduct which took effect on April 1, 2005. The Governance Committee reported to the Board that the Code of Conduct had been an effective guide for trustees over the past two years and recommended only minor housekeeping changes. G. Investment Committee The Board approved amendments to Appendix A of the Statement of Investment Policies and Procedures (SIPP) to change the names of various pooled funds, as recommended by bcimc, subject to the bcimc Board of Directors approving the name changes. The SIPP revisions will be posted on the Plan website once the bcimc Board approves the name changes for the pooled funds. The Board delegated to the MPBT Investment Committee the task of reviewing the final Product Descriptions after they have been implemented, as part of its quarterly education process. The Board clarified the role of the MPBT Investment Committee and directed the Committee to review quarterly investment performance reports provided by bcimc. The Board also clarified that recommendations arising from the Interplan Investment Committee will be reviewed by the Municipal Pension Board Investment Committee and will be presented to the Board with the recommendations/comments of the Municipal Pension Board Investment Committee. H. Valuation Committee The Valuation Committee coordinated preparations for the Actuary s presentations to the Board related to the actuarial valuation as at December 31, 2006. Following the presentations, the Board approved the assumptions that will guide the actuarial valuation. The Valuation Report will be presented to the Board at is November 2007 meeting. The Committee will coordinate any changes required as a result of the Valuation Report, such as amendments to the Plan Rules to increase contribution rates, if required. The Board will hold
a special meeting on December 11, 2007, if required, to consider the Actuarial Valuation Report as at December 31, 2006. I. Appeals Panel No appeals have been referred to the Panel since the March 2006 board meeting. The MPBT Appeals Panel posts decisions issued by the Panel on the Plan website, with all information that could identify an individual removed from the written decision. You can find these decisions at www.mpp.pensionsbc.ca by following these links: About the Plan / Board Governance / Appeals. Municipal Pension Trustees also represent the Board on a number of committees with the other public sector pension plans. These include the Interplan Audit, Interplan Benefits, Interplan Investment, and Interplan Trustee Education committees. Future Board Meeting Dates The next regular meeting of the Municipal Pension Board of Trustees will take place November 14-15, 2007 in Victoria. The 6 th AGM will be held Saturday, October 13, 2007 at the Victoria Conference Centre. The meeting will start at 10:00 a.m., to accommodate participants who may be coming from the mainland by ferry, and will be webcast live. The following dates have been set for Board meetings in 2008: Wednesday and Thursday, March 26 and 27, 2008 Vancouver Tuesday and Wednesday, June 24 and 25, 2008 Victoria Tuesday and Wednesday, November 18 and 19, 2008 Vancouver Contact us: By phone 250 356 6220 By fax 250 356 6245 By email MPBT@pensionsbc.ca By mail PO Box 9460 Victoria BC V8W 9V8