Canada Life Staff Pension Plans

Valuation Report as at January 1, 2003

 

Canada Life has filed the actuarial report for the Canada Life Pension Plans as at January 1, 2003 with FSCO.    Here are some salient points pertaining to the report.

 

1.      Assets, Liabilities and Surplus

 

The following table shows the comparative financial positions as at January 1, 2003 and January 1, 2000.  All amounts are in $million.

 

	1.1.2003	1.1.2000
Assets   Liabilities Active and Disabled Members Pensioners and Survivors Deferred and Inactive Members Crown DC Members Total Liability   Surplus (Assets – Liabilities)	591.5     203.6 163.2 43.4 1.4 411.6   179.9	677.8     163.7 149.1 27.2 1.7 341.7   336.1

 

 

Some observations on the results:

 

·        The value placed on the assets at 1.1.2000 for the purpose of valuation was lower than the market value of the assets (viz. 708.5).  In determining this value, the capital gains in the previous three years had been amortized over a three-year period.  If the same approach had been adopted for the valuation at 1.1.2003, the asset value would have been higher than the market value.  Hence the market value was used.

 

·        The inter-valuation period (2000-2002) experienced capital losses of 111.2.

 

·        The yield on assets (that takes into account both the dividends/interest and capital gains/losses) for the inter-valuation period was

 

2000 :      8.6%

2001 :    -6.7%

2002 :  -10.7%

 

The drop in the surplus of 156.2 was caused by the negative yield.

 

·        The yield shown above is net of expenses.  The expenses are assumed to be 0.5% of the assets.  For this purpose, only the assets supporting the liabilities (viz. 411.6) need to be taken into account.  Thus, the maximum expense provision should be 2.1.  This can be compared with the actual expenses charged to the fund.

 

2.      Employer Costs

 

The employer costs for the years 2003 – 05 are estimated to be 18.4, 19.3 and 20.3 respectively.  Due to the surplus exceeding two years’ costs, Canada Life is paying no money into the fund.

 

3.      Valuation Assumptions

 

Some changes in the assumptions have been made since the last valuation.  The following are of interest:

 

Valuation Interest Rate   – Change from 7.5% to 6.5%

Inflation Rate                 – Change from 3.5% to 3.0%

Salary Increases            – Change from 5.5% to 5.0%.

 

4.      Membership Statistics

 

The following membership statistics will be of interest:

 

Active (including those on disability)     : 3,662

Deferred pensions or inactive               :    772

Pensioners                                           :    851