2012-11-13_Supplemental Agenda Packet--Dossier de l'ordre du jour supplémentairep4
City of Saint John
Common Council Meeting
Tuesday, November 13, 2012
Location.: Council Chamber
Supplemental to Agenda
17.1 Committee of the Whole: Request for Deferral of 2012 Increased Pension
Contributions
17.2 Committee of the Whole: City of Saint John Pension Plan — 2012 Contributions
The City of Saint John
S6ance du conseil communal
Le mardi 13 novembre 2012
Lieu: Salle du Conseil communal
Ordre du jour supplementaire
17.1 Comite plenier: la demande de report de 2012 a augmente les cotisations de retraite
17.2 Comite plenier: City of Saint John du plan de retraite 2012 contributions
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'Me City of Saint john
November 13, 2012
Common Council of the City of Saint John
Mayor Norton, Deputy Mayor Rinehart and Councillors,
Subject: Committee of the Whole Report — Request for Deferral of 2012
Increased Pension Contributions
The Committee of the Whole, having met on November 13, 2012, directed the Clerk to
add the following proposed resolution to Council's open session agenda:
"RESOLVED that as recommended by the Committee of the Whole, the
Commissioner of Finance and Administrative Services be directed to request from the
Superintendent of Pensions deferral of additional contributions required as a result of the
2011 Actuarial Valuation until such time as the result of the reform process has been
finalized."
Respectfully Submitted,
Jonathan Taylor
Assistant Common Clerk
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The Gay of sent John
November 1, 2012
His Worship Mel Norton and
Members of Common Council
Re: City of Saint John Pension Plan - 2012 Contributions
Your Worship and Members of Common Council
The 2011 Actuarial Valuation for the City of Saint John Pension Plan was filed with the
Superintendent of Pensions on September 28, 2012. A copy was previously provided to the
members of Council. The Board of Trustees felt it would be prudent to advise the plan sponsor of
its obligations resulting from the filing of the 2011 Actuarial Valuation. Based on this valuation,
the unfunded liability on a going concern basis has increased from $131,356,000 as at December
31, 2010 to $195,900,000 as at December 31, 2011. This is principally attributable to a change in
the actuarial assumptions used to value the pension plan liabilities and investment earnings that
were less than expected. The valuation report on page 8 provides a full reconciliation of the
reasons for the change in the unfunded liability.
As a result of this increase in the unfunded liability, the City of Saint John, as sponsor of the
pension plan, is required under the provisions of the Pension Benefits Act (PBA) to make changes
to the contributions it makes to the plan in respect of the unfunded liability. The City must make
adjustments to two forms of contributions:
(1) Regular monthly contributions in respect of current service costs; and
(2) Special Payments in respect of the past service deficit.
These adjustments must be made for future contributions and also retroactively to January 1,
2012 — the "catch -up" contributions. I will address the requirements for each form of
contribution in turn, and then address the required catch up contributions.
Regular Monthly_ Contributions — Current Service Costs
With the filing of the valuation, the monthly payment for current service will increase from
$562,833 to $592,000. These monthly payments must be made within 90 days of the end of each
month. The PBA requires that these new payments be adjusted immediately (section 35(4)).
Thus, the required contribution for July must be remitted by the end of October in the amount of
$592,000. This monthly contribution amount will be required for each month thereafter, until a
new valuation is filed.
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SAINT JOHN P.O. Box 1971 Saint John, NB Canada E2L 4L1 I www.saintjohn.ca I C.P. 1971 Saint John, NA. Canada EA 4L1
November 1, 2012 Page 2
Re: City of Saint John Pension Plan - 2012 Contributions
Special Payments in respect of Past Service
Under the Valuation, the monthly special payment for past service deficits has increased from
$1,132,465 to $1,591,565 in 2012, increasing by 3 per year thereafter. Under the Pension
Benefits Act, the City must make its monthly special payment contributions 90 days after the end
of the month to which the payment relates. With the filing of the valuation report on September
28th by the end of October, the City was required to make the special payment in respect of July
in the new amount.
Catch -up Contributions
The PBA treats the "catch -up" contributions separately. With the filing of the valuation on
September 28th, additional contributions in respect of the period from January 1 to the end of
September will become due. Under section 41(2) of the Regulations, the employer has 60 days in
which to make these payments of contributions, plus interest. Sixty days from September 28th,
2012 is Tuesday, November 27, 2012. The total owing for the "catch -up" contributions as of the
present time is approximately $2,754,600 plus interest.
The Trustees monitor the contributions made by the City each month. Under the Pension
Benefits Act, the Trustees are obliged to report to the Superintendent if any required contributions
are not made. In the event that any required contributions are not made when due, the Trustees
intend to comply with their legal obligations and make the required reports to the Superintendent
no later than 45 days after the due date of any unremitted required contribution.
Thank you,
Gregory J. Yeomans, CGA, MBA
Treasurer /;
City of Saint John Pension Plan