DELIVERINGA GREAT CLIENTEXPERIENCE2017 - 2019 Business Plan

EXECUTIVE SUMMARYThe business plan sets out the priorities for the next three years commencing January 1, 2017 for Alberta Pensions Services Corporation (APS). Since incorporation in 1995, APS has proudly served Alberta’s public sector pension plans, guiding the pension experience of members, pensioners and beneficiaries (together, our Clients) with great care, special expertise and with a focus on service. Our commitment is to provide timely, clear and accurate answers to our client’s questions supported by ethical, effective and risk-managed business practices.

Current Pension Environment, Challenges and OpportunitiesThis plan responds to challenges and opportunities we are seeing all around us, and to evolving long term trends. APS continuously monitors trends in the pension industry and is proactive in identifying and addressing the challenges and opportunities. Factors such as increased life expectancy and the aging demographics translate into the increased need for pension and retirement planning services. In addition to the increased volume of required services, client preferences are also changing. In today’s environment, client expectations are for more personalized services, access to self-serve technology, and expedited and streamlined service.

The sustained low price of oil continues to weaken Alberta’s economic environment compelling Alberta’s government to enact new policies and constraints on its available resources and services. APS is proud of its fiscally responsible business plan and budget which balances constraints with quality and timely service delivery on behalf of the pension plans.

Changes to technology and complex pension legislation for the pension plans APS serves, necessitates that we maintain a highly engaged and talented workforce in order to increase productivity, streamline and improve customer service and facilitate innovation.

APS’ PlanWe are aware of the forces at play, and are prepared to address them with a plan that anticipates and responds to these changes. The multi-year effort to modernize our processes and systems is now substantially complete, which puts us in a stronger position to better handle the rising demand for our services and to better respond to our dynamic environment. This plan will help us achieve the goals set out in APS’ Five-Year Strategic Plan, 2015-2019. Initiatives in this plan will help us provide accurate and timely benefit payments and information to our clients by leveraging the new technology to improve our operational ability, improve data integrity and optimize business processes.

As the overall demand for pension services are changing, so are client preferences and needs for retirement planning services. Members and pensioners are demanding more personalized services, self-serve tools and real time information, as evident by the proportion of members and clients who have registered for our online services. Initiatives in this plan will enable APS to respond to these changing preferences by launching new self-serve tools, and broadening our communication channels to provide real time information to our clients.

APS is dedicated to enhancing our clients’ understanding of the value of their participation in public sector pension plans. Therefore, initiatives in this plan will see newly improved and enhanced plan websites deployed, to include streamlined communication and pension education tools that help plan members make informed pension decisions and create a sense of value for their participation in the plans.

ACCOUNTABILITY STATEMENTThe 2017-2019 Business Plan has been prepared under the direction of, and with full accountability by, the Board of Directors and the President and the Chief Executive Officer (CEO) for Alberta Pensions Services Corporation.

The Board sets the overall strategic focus for the Corporation to carry out its mandate as directed by the shareholder and trustee of the pension plans served (the President of Treasury Board and Minister of Finance on behalf of the Government of Alberta).

The CEO, with the support of the Corporation, will deliver the Board’s objectives with good stewardship and an emphasis on proactive risk management.

APS is focused on delivering high-quality, timely information and benefit services to our clients. We look forward to proudly delivering on our commitments.

Working together, we are committed to success in achieving this plan.

[ Original signed by: ]

Al Mondor, FCABoard Chair

APS recognizes the importance of investing in its staff and maximizing their contribution for the purpose of satisfying client needs. Initiatives in this plan will facilitate the development and implementation of appropriate organizational design principles that align skillsets with APS’ current and future business needs.

OUR VISIONAlberta Pensions Services Corporation is highly valued and trusted to:

▶ Provide clear information and support▶ Deliver service with skill and care▶ Meet obligations and keep promises▶ Demonstrate the value of pension plans▶ Make the pension experience easier

Guided by shared values, our employees make it possible.

OUR VALUES

OUR MISSIONOn behalf of the trustee, obligations for risk managed, efficient and effective pensions services are met; and the needs of plan beneficiaries, employers, and plan governors are met at a cost that demonstrates good stewardship of resources.

All employees at APS take pride in three common elements:

SERVICE - we make every interaction countQUALITY - what we do, we do wellACCOUNTABILITY - we take responsibility

We are driven by our values to always do the right thing.

STRATEGIC GOALSOUR 4 STRATEGIC PRIORITIES ARE:STRATEGIC PRIORITY 1: FOCUS ON CLIENTS1.1: Develop and implement new enhanced services to transform

relationship with clients and employers.1.2: Continuously improve products and services to meet client, employer

and Trustee needs and expectations.1.3: Demonstrate our corporate commitment to a renewed relationship

with plan governors.

STRATEGIC PRIORITY 2: INVEST IN TALENT2.1: Organizational design in alignment with current and future business

requirements.2.2: Improve workforce capabilities through pension education, change

management and knowledge retention.2.3: Maintain a vision of the future skills and capabilities required by APS

to be flexible and agile in its current and future operations.

STRATEGIC PRIORITY 3: DEMONSTRATE OUR VALUE3.1: Establish and promote key value drivers for pension administration

services.3.2: Complete Next Generation business transformation initiative.3.3: Provide assurance that services are being delivered efficiently,

effectively and in a manner that manages risk.

STRATEGIC PRIORITY 4: ENGAGE AND EDUCATE4.1: Work closely with the Trustee, plan governors and employers to

increase engagement of plan members and beneficiaries.4.2: Develop and implement strategies to promote the value and benefit of

pension plans.

STRATEGIC PRIORITY 1:FOCUS ON CLIENTS

OBJECTIVE 1.1: DEVELOP AND IMPLEMENT NEW ENHANCED SERVICES TO TRANSFORM RELATIONSHIPS WITH CLIENTS AND EMPLOYERS.

ACTIONS:• Enhance the timeliness and ease of pension service requests by providing self-

service online tools that enable members to initiate and conclude retirementprocesses online. (2017)

• Ensure accountability for excellent client service standards by incorporatingclient service performance element into employee’s performance standards, andincentivizing exemplary client service. (2017-2019)

MEASURES OF SUCCESS• Successful deployment of the self-serve retirement wizard.• Service standard targets established and incorporated into employee

performance management system goals contributing to the corporatescorecard.

We anticipate demand for the services provided by APS will increase over the next five years driven by demographic trends and labour market dynamics. In addition, how APS provides its services will need to change. Clients are demanding alternative communication and service channels as well as the ability to perform transaction and research on their own terms. At the same time, APS will continue to provide the face-to-face delivery of our services at times when our clients need them. We’ll always take the time to get it right.

Our goals in support of Strategic Priority 1 are to:

• Develop and implement new enhanced services to transformrelationship with clients and employers.

• Continuously improve products and services to meet client,employer and Trustee needs and expectations.

• Demonstrate our corporate commitment to a renewed relationshipwith plan governors.

OBJECTIVE 1.2: CONTINUOUSLY IMPROVE PRODUCTS AND SERVICES TO MEET CLIENT, EMPLOYER, AND TRUSTEE NEEDS AND EXPECTATIONS.

ACTIONS:• Improve the retirement process by proactively contacting clients to obtain

outstanding information on pension service requests resulting in timely paymentinception. (2017-2019)

• Improve overall pension experience of clients by engaging in client segmentation(personas) approach to better understand our clients’ needs, and translate suchunderstanding into tailored communication needs. (2017)

• Improve client experience by developing and implementing a client engagementmeasurement strategy that comprises metrics targeted to meet clientexpectations and needs. (2017)

• Enhance client service quality by upgrading the Customer RelationshipManagement system with more client-centric capabilities, without interruptionin client services. (2018)

MEASURES OF SUCCESS• For 2017, 77% or more of annuity inceptions are paid within 30 days of pension

commencement date with increases to be set in conjunction with strategicplanning.

• Develop a client segmentation approach and the associated tailoredcommunication and service strategy.

• Client engagement strategy developed and implemented.• Upgrade of CRM system successfully completed.

OBJECTIVE 1.3: DEMONSTRATE OUR CORPORATE COMMITMENT TO A RENEWED RELATIONSHIP WITH PLAN GOVERNORS

ACTIONS:• Enhance relationships between APS and plan governors by adopting a renewed

service model for plan governors, focusing on three key elements: relationshipmanagement, Service Level Agreements and consistent reporting. (2017-2019)

• Demonstrate APS’ corporate commitment to a renewed relationship with plangovernors by consulting with key stakeholders on revisions to the Memorandumof Understanding (2002) and Operating Protocol (2008). These documentsare part of a trilateral agreement between APS, the plan boards and AlbertaTreasury Board and Finance and will require all parties input and approval.(2017–2018)

• Continuously demonstrate our commitment to a renewed relationship with plangovernors by reviewing the existing plan cost allocation formula. (2017)

MEASURES OF SUCCESS• Stakeholder communication checklist created to ensure key stakeholder

alignment.• Successfully revised and enhanced Memorandum of Understanding (2002) and

Operating Protocol (2008).• A formal review of plan cost allocation formula is completed and amended in

conjunction with Minister of Finance and the plan stakeholders.

STRATEGIC PRIORITY 2:INVEST IN TALENT

We are committed to the development and growth of our enthusiastic pension experts. As outlined in our previous strategic plan, APS will continue to focus on having the right people, with the right skills, in the right job at the right time. We firmly believe that the future success of APS will be led by our investment in our people.

Our goals in support of Strategic Priority 2 are:

• Organizational design in alignment with current and future businessrequirements.

• Improve workforce capabilities through pension education, changemanagement and knowledge retention.

• Maintain a vision of the future skills and capabilities required byAPS to be flexible and agile in its current and future operations.

OBJECTIVE 2.1: ORGANIZATIONAL DESIGN IN ALIGNMENT WITH CURRENT AND FUTURE BUSINESS REQUIREMENTS

ACTIONS:• Align organization design with business requirements by designing and

implementing team structures that align skillsets with job functions, to improvebusiness processes and client experience. (2017-2019)

• Continuously facilitate the provision of excellent client service by designingefficient processes and workflows that lead to timely delivery of pensionservices. (2017–2019)

• Develop a framework for reviewing APS’ space needs that is in alignment withcurrent and future business requirements and organizational design. (2017)

MEASURES OF SUCCESS• Teams are designed to effectively deliver and meet service level agreements.• Business processes are designed to deliver timely pension services,

evidenced by an incremental increase in CEM service scores.• Space needs are evaluated and a framework developed to accommodate

APS space requirements.

OBJECTIVE 2.2: IMPROVE WORKFORCE CAPABILITIES THROUGH PENSION EDUCATION, CHANGE MANAGEMENT AND KNOWLEDGE RETENTION

ACTIONS:• Provide continuous leadership development and education that empowers APS

leaders to respond to changes in the strategic environment. (2017–2019)• Continuously improve workforce capabilities by promoting a values - based

culture where behaviors, interactions and decisions are in alignment with ourshared values. (2017-2019)

MEASURES OF SUCCESS• All people managers will attend the Manager Tools Effective Manager and

Communication training program by the end of 2019.• Performance appraisals measures the ability of employees to apply APS Values

behaviors in achieving their goals.

OBJECTIVE 2.3: MAINTAIN A VISION OF THE FUTURE SKILLS AND CAPABILITIES REQUIRED BY APS TO BE FLEXIBLE AND AGILE IN ITS CURRENT AND FUTURE OPERATIONS

ACTIONS:• Reevaluate, determine and define organizational skill requirements to achieve

current and future APS business results. (2017–2018)• Develop and implement an enhanced customer service training program that

empowers APS employees to deliver excellent client service. (2018–2019)• Develop and implement a competency model for APS employees to achieve

current and future APS business objectives. (2017–2018)

MEASURES OF SUCCESS• An inventory of organizational skills defined and available to drive business

results.• Enhanced customer service training program developed. Training efficiencies

evidenced by the improvement in service scores annually.• An enhanced competency model developed and implemented.

STRATEGIC PRIORITY 3:DEMONSTRATE OUR VALUE

Next Generation will simplify the delivery of pension services through integration and automation and will allow APS to adapt to changes more quickly and at lower costs. The completion of the Next Generation project positions APS for the future, and will enable us to clearly demonstrate the value of APS and the services it provides to our stakeholders.

Our goals in support of Strategic Priority 3 are:

• Establish and promote key value drivers for pension administrationservices.

• Complete Next Generation business transformation initiative.• Provide assurance that services are being delivered efficiently,

effectively and in a manner that manages risk.

OBJECTIVE 3.1: ESTABLISH AND PROMOTE KEY VALUE DRIVERS FOR PENSION ADMINISTRATION SERVICES

ACTIONS:• Assess operational business alignment after the successful implementation of

the new Pension Administration system (COMPASS). (2017–2018)• Develop a 5 year strategic plan with a long-term vision of increasing organizational

effectiveness. (2017)• Enhance and review Service Level agreements (SLAs) to ensure high service

standards for the entire organization, including all stakeholders, with measurableexpectations and performance. (2017)

MEASURES OF SUCCESS• Recommendations for business optimization developed and implemented.• 5 year strategic plan established and published.• SLAs reviewed and determined in agreement with stakeholders to deliver quality

service.

OBJECTIVE 3.2: COMPLETE NEXT GENERATION BUSINESS TRANSFORMATION INITIATIVE

ACTIONS:• Demonstrate service quality improvement and improved process efficiency by

evaluating the performance of the new pension administration system againstthe established measures of success. (2017-2018)

MEASURES OF SUCCESS• Re-assess and finalize the measures of success.• Meet or exceed finalized COMPASS system performance measures.

OBJECTIVE 3.3: PROVIDE ASSURANCE THAT SERVICES ARE BEING DELIVERED EFFICIENTLY, EFFECTIVELY AND IN A MANNER THAT MANAGES RISK.

ACTIONS:• Continuously demonstrate that APS pension administration service is cost

effective and efficient by benchmarking APS cost against our Canadian peers.(2017–2019)

• Continuously demonstrate the effectiveness and high quality of APS pensionadministration service by benchmarking APS service levels against our Canadianpeers. (2017–2019)

• Continuously enhance and integrate the APS Compliance Management Program,based on an approved charter and resourced implementation plan whichcombines pension legislative compliance and tax legislative compliance. (2017)

• Research enhancements to the technology security services to improve APScybersecurity and deal with the increasing quantity and continuing emergenceof new cybersecurity threats to help secure APS information and data. (2017-2019)

MEASURES OF SUCCESS• Maintain competitive cost ranking among our Canadian CEM benchmarking

peers.• Plan in place to improve service standards evidenced by incremental gains in

targeted and prioritized CEM service scores annually.• Resourced compliance work plan implemented, per approved charter.• Enhanced cybersecurity measures and services implemented.

STRATEGIC PRIORITY 4:ENGAGE AND EDUCATE

While defined benefit pension plans remain a central provision for retirement security in the public sector, there is increased focus on reforms designed to make the plans more secure, adaptable and affordable. As the administrator, we will demonstrate support of the policy initiatives of the trustee and plan governors and work to increase the understanding and value of public service pension plans.

Our goals in support of Strategic Priority 4 are:

• Work closely with the trustee, plan governors and employers toincrease engagement of plan members and beneficiaries.

• Develop and implement strategies to promote the value andbenefits of pension plans.

OBJECTIVE 4.1: WORK CLOSELY WITH TRUSTEE, PLAN GOVERNORS AND EMPLOYERS TO INCREASE ENGAGEMENT OF PLAN MEMBERS AND BENEFICIARIES.

ACTIONS:• Implement a digital communication strategy to improve client engagement by

gathering feedback and responding to client questions in real time, via socialmedia networks. (2018)

• Improve client engagement by broadening the channels of communication withclients, with a focus on providing real time support to clients on their pensionneeds. (2018–2019)

MEASURES OF SUCCESS• Incremental improvements in the client engagement score.

OBJECTIVE 4.2: DEVELOP AND IMPLEMENT STRATEGIES TO PROMOTE THE VALUE AND BENEFITS OF PENSION PLANS.

ACTIONS:• Engage and educate clients by developing a digital communication strategy

that will enable members to readily access and use information, to guide themthrough major life events related to their pension plan. (2017-2018)

• Improve client engagement and education by redesigning the plan websites,and by reviewing and rewriting the contents on the websites with an objectiveof providing a member focused communication. (2017-2018)

MEASURES OF SUCCESS• Digital communication strategy developed and approved.• APS “Voice Guide” developed and implemented to ensure consistency of

communication style throughout communications.• All Plan websites reviewed and redesigned with added pension education

capabilities.

PERFORMANCE MEASURES

Voice of the Customer Voice of the Customer is a measure of the service members receive from APS related to retirement products and services. The measure is derived through a survey.

2017 2018 2019

7.5 7.8 8.0

1: FOCUS ON CLIENTS

Each measure of success in the business plan addresses the key drivers of APS, while the targets articulate the desired operating environment for APS aligned with the relevant strategic priorities.

Employer Satisfaction & Compliance Employer Satisfaction and Compliance is a blended measure of the satisfaction employers express with the services provided by APS and the scores achieved through the Employer Compliance program.

2017 2018 2019

7.5 7.8 8.0

CEM Pension Inceptions Rate Pension Inception Rate is the proportion of annuity inceptions, for retiring active and deferred members, paid within 30 days from the pension commencement date. The measure originated from the CEM Inc. definition, and reflects the new initiative APS started in 2016 to pay pensions in 30 days.

2017 2018 2019

77% 78% 79%

Employee Engagement Employee engagement is an index that measures the emotional and intellectual involvement and commitment of the workforce to organizational success. The measure is derived from the Queen’s School of Business/AON Hewitt “Best Small and Medium Employers in Canada” survey, administered by AON Hewitt.

2017 2018 2019

60% 65% 71%

2: INVEST IN TALENT

Training & Development - Average Hours per Employee Training & development hours per employee measures the volume of training & development received by each permanent full time employee on an annual basis. The training and development may include internal or external training and development based upon the requirements of the organization.External training is approved in advance by the Senior Leadership Team.

2017 2018 2019

12 hours 12 hours 12 hours

CEM Cost per MemberThe target is cost per member, and is based upon the CEM Benchmarking Inc. (CEM) methodology for defined benefit pension plan administrators. This benchmark allows for measurement of the ability of the Corporation to provide pension administration services in a cost effective manner within the limitations of the annual budget.

2017 2018 2019

$178 $170 $167

3: DEMONSTRATE OUR VALUE

Payout Calculation Accuracy Payout Calculation Accuracy is a proxy measure of APS’ ability to meet its legislative mandate to issue accurate pension and termination payments to its clients (pensioners and members). This performance measure assesses the accuracy of calculations only for these payments, on an ongoing basis. Accuracy results must fall within established accuracy threshold limits for pensions and terminations processing. This is an annual measure with results to be reported in Q4 of each year – result will be cumulative. Quarterly progress reports will be provided.

2017 2018 2019

99% 99% 99%

LAPP - Plan Website RedesignAPS has a commitment to keep our clients engaged and educated about their pension plans. The objective of redesigning the plan websites is to promote the values and benefits of pension plans, by augmenting the websites with enhanced communication and education tools that enlighten clients about the various pension services available to them and how they can obtain those services.

2017 2018 2019

Succesfully Launched n/a n/a

4: ENGAGE AND EDUCATE

PSPP, MEPP, SFPP - Plan Website RedesignThe plan websites redesign for pspp.ca, mepp.ca and sfpp.ca is an initiative to accomplish our commitment to engage and educate the clients about their pension plans. Redesigning websites provides clients with enhanced communication and education tools. This initiative is targeted for a successful launch in 2018.

2017 2018 2019

Development Completed Successfully Launched n/a

BUDGET

($ millions)2016

Budget2017Plan

2018Plan

2019Plan

APS OPERATING EXPENSES AND AMORTIZATION

Staff and Related Expenses 30.1 34.3 32.5 33.9

Contract Services 4.2 2.8 3.7 3.5

Materials and Supplies 5.3 5.1 5.1 5.1

Data Processing 6.5 5.3 4.8 4.2

Amortization 4.1 6.0 5.9 5.8

Next Generation Project 1.4 - - -

APS OPERATING EXPENSES AND AMORTIZATION 51.6 53.5 52.0 52.5

PLAN BOARD EXPENSES

1.9 1.8 2.0 2.0Plan Specific

Plan Board Secretariat 2.2 1.8 1.9 2.0

PLAN BOARD EXPENSES 4.1 3.6 3.9 4.0

TOTAL OPERATING EXPENSES 55.7 57.1 55.9 56.5

CAPITAL INVESTMENT

Corporate 3.0 1.9 1.2 1.1

Next Generation Project 5.2 - - -

TOTAL CAPITAL INVESTMENT 8.2 1.9 1.2 1.1

Total CEM Cost per Member $ 181 $ 178 $ 170 $ 167

FINANCIAL ANALYSISThere is a net increase of $1.4 million (2.5%) in the 2017 operating expense budget over 2016. The increase is primarily attributable to:

1. Staff and related expenses increasing due to inflationary costs and a shift in the resourcing strategy fromcontracted resources to temporary employment arrangements to support service delivery in the transitionperiod to the new COMPASS system. It is expected that the majority of these temporary resources will not berequired in subsequent years as efficiencies in the use of the new system are realized.

2. An increase in Amortization costs as 2017 is the first full year of amortization after implementation of theCOMPASS system. The new system also drives the majority of the amortization costs in 2018 and 2019.

3. The completion of the Next Generation project in 2016, lower Contract services, Data processing and PlanBoard expenses budgeted for 2017 partially offset the increases above.

The 2018 budget sees a decrease in operating expenditures primarily as a result of the temporary staff hired to support initiatives in 2017 are no longer required. This decrease is partially offset by anticipated inflationary increases in wages and contracted services. The increase in 2019 operating expenditures is largely attributed to inflationary increases partially offset by lower Data processing costs.

Total capital investment for 2017 is decreasing by $6.3 million from 2016 predominantly as a result of the completion of the Next Generation project. This trend carries forward into 2018 and 2019 as capital investment remains at levels required to sustain existing services and infrastructure.