This year’s annual meeting of the McGill pension plan, held in May, provided plan members with an overview of 2013 pension activities. Lynne B. Gervais, Associate Vice-Principal Human Resources chaired the meeting in her role as Chair of the Pension Administration Committee, the body that administers the pension plan.
Madame Gervais described the plan structure. She also introduced McGill’s new Chief Investment Officer, Sophie Leblanc who will be responsible for providing input to senior management, the Pension Administration Committee and the Pension Investment Committee on the review and development of investment plans and objectives.
Results were given of the voting procedure – whether plan members are for or against continuance. This means the continued use of proportional voting versus the one-person-one-vote method in decisions affecting administration of the pension plan. Of a total of 9,616 eligible voters, 18% of members cast their vote. A tally of 1,258 members voted for continuance while 60 members voted against.
Strong performance of the McGill pension plan
What followed was a 2013 market overview and how it affected plan performance. Last year was a good year for returns on investment in the McGill plan. The Balanced Account generated a one-year gross rate of return of 16.1% as of December 31, 2013, beating the benchmark at 13.2%. The Balanced Account has two types of asset classes: equity allocation which represents 70.5% and fixed income allocation with 29.5%. The Equity Pool showed a gross return on investment of 24.1% while the Fixed Income Pool showed a negative return of -0.5%. The majority of McGill plan members invest in the Balanced Account. This was followed by a brief outlook of what to expect from financial markets in 2014.
John D’Agata, Director, Pension and Benefits, talked about the cost sharing of funding requirements to the pension plan whereby, effective January 1, 2014, members of the hybrid plan have been subject to a 2.2% increase in contributions to ensure long term sustainability of the McGill pension plan. He emphasized that these special member contributions are deposited into their defined contribution pension account.
New Group Retirement Savings Plan
John demonstrated the features of the new pension plan record-keeping platform, now managed by Morneau Shepell. He also described a new option available to plan members: enrolling in a Group Retirement Savings Plan. This plan will allow members to accumulate money in a personal account for their retirement or for other important life events. Members can contribute any amount of their available RSP contribution room as reported by the Canadian Revenue Agency through payroll deductions. Members choose how to invest their contributions using the Equity Pool and /or Fixed Income Pool investment options.
The investment options offered through the group RSP are managed by Philips Hager & North and TD Asset Management, two of the same portfolio managers as the McGill pension plan. If you already have a personal RRSP, you may consider transferring it to the McGill savings plan and possibly benefit from lower administrative costs.
Finally, John explained the status of the plan deficit, based on the latest three-year valuation (as of December 31, 2012) conducted by outside actuarial experts, as required by law. Full details of these numbers and other aspects of the meeting can be accessed by clicking here.