Fund Performance Annual Pension Meeting
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Transcript of Fund Performance Annual Pension Meeting
York University Pension Fund
Leona FieldsManager, Pension Fund
Annual Pension Information Session
April 21, 2006
2
York’s Pension Governance - Internal
• Plan/Benefits side
– Board of Governors
– Vice President, Finance & Administration
– Pension & Benefits Office
– All University Committee on Pensions
• Fund/Investments side
– Pension Fund Board of Trustees
– Sub-Committee on Investment Performance
– Manager, Pension Fund
3
York’s Pension Governance - External
• Investment Managers
• Custodian - CIBC Mellon
• Auditor - Ernst & Young
• Investment Consultant - Towers Perrin
• Manager Search Consultant - Brockhouse Cooper
• Actuary - William M. Mercer
• Third Party Administrator – Seclon Logic
4
Key Differentiating Factors for York Pension Fund
• Primarily a Defined Contribution Plan
– But members do NOT have investment options
• Benefits depend on investment returns
– Adjustments after retirement continue to depend on investment returns – not inflation
• Investment policy decisions must consider multiple risk profiles
– Plan Sponsor
– New plan members
– Members close to retirement
– Retirees
5
York’s Pension Investment Objectives
• The Fund shall be managed with the primary objective of providing high rates of return and moderate levels of risk
– Securing minimum guarantee pensions for all active members while providing potential for growth
– Managing volatility of money purchase balances
– Providing a reasonable level of inflation adjustment for pensioners
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Diversification Reduces Risk
“Don’t put all your eggs in one basket”
• Various parts of the Fund have different characteristics and risk levels
• Overall risk level of the Fund can be reduced by diversifying across
– Security holdings
– Asset classes
– Investment strategies and styles
– Investment managers
7
The York U Pension Fund is Well Diversified
• 5 Asset Classes
– 40% Canadian bonds
– 30% Canadian equity
– 15% U.S. equity
– 15% International equity
– Up to 10% Cash
• 10 Investment Portfolios
– 2 Canadian bonds (active & passive)
– 3 Canadian equity (active, complementary styles)
– 2 U.S. equity (active & passive)
– 3 International equity (active, complementary styles)
8
Current Pension Investment Policy
Asset Mix
Cdn Bonds40%
Cdn Equity30%
U.S. Equity15%
Int'l Equity15%
Manager Structure
Foyston Gordon &
Payne10%
Gryphon5%
Alliance Bernstein
5%
WEDGE5%
TD U.S. Equity10%
McLean Budden10%
Sceptre10%
Addenda10%
TD Bonds30%
LSV5%
9
Investment Results 4-Years ending Dec. 31, 2005
10
Investment Return Summary for 2005
Returns Benchmark
Canadian Equity 26.0% 24.1%
Bonds 6.2% 6.5%
U.S. Equity 3.3% 3.5%
Int’l Equity 10.9% 10.0%
Total Fund return (gross) 12.1% 11.8%
Total Fund return (net) 11.7%
4 year Fund return (net) 7.6%
Pension Adjustment 1.5%
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Cash Flow Summary
Budget/ Estimated
2006 2005 2004 2003
Beginning of Year Fund Value 1,185,599,383 1,068,852,403 982,023,304 862,404,555
Contributions University Contributions 24,660,000 23,911,895 22,328,714 20,610,658 Members' Contributions 14,400,000 13,909,632 12,851,595 11,849,379 Transfers-in from other plans 1,800,000 2,446,046 909,562 852,809Total Contributions 40,860,000 40,267,573 36,089,871 33,312,846
Investment Income ?? 128,824,929 99,370,620 129,157,445
Benefits Paid Monthly Pensions 39,600,000 37,051,448 33,762,700 30,975,703 Lump Sum Payments 10,000,000 9,889,761 9,737,746 7,394,798Total Benefits Paid 49,600,000 46,941,209 43,500,447 38,370,501
Investment Expenses Investment Mgmt Expenses 3,349,173 3,489,022 3,604,693 2,979,429 Other Investment Expenses 730,930 679,338 462,127 334,548Total Investment Expenses 4,080,103 4,168,360 4,066,821 3,313,977
Administrative Expenses Actuarial & Consulting 315,000 240,340 292,284 361,669 Pension Administration 1,095,000 995,614 771,840 805,395Total Administrative Expenses 1,410,000 1,235,953 1,064,124 1,167,065
End of Year Fund Value ?? 1,185,599,383 1,068,852,403 982,023,304
12
Issues for 2006
• Review, research and explore alternative sources of investment returns
– Currency management
– Long / short market neutral strategies
– Hedge funds
– Infrastructure
– Private equity
– Global investing