MEPP Matters online at www.peba.gov.sk.ca Fall 2017

Join us on an adventure!Meet Penny — your guide to learning more about the Municipal Employees’ Pension Plan (MEPP).

Penny will guide you through a series of videos answering common questions about your plan, no matter what stage of life you’re in.

Visit MEPP’s website or follow MEPP on Facebook (SaskMEPP) and/or Twitter (@SaskMEPP) to check out MEPP’s new and upcoming videos.

Begin your adventure today by viewing MEPP’s first video and learning more about your pension plan. The video is available NOW on the MEPP website at: http://www.peba.gov.sk.ca/pensions/mepp/home.html

You have a routine; you get up at a certain time, commute, interact with co-workers and spend your allotted eight hours, Monday to Friday, at work. When this all goes away, many new retirees can experience an identity crisis or depression.

When planning for retirement many focus only on the financial side; however, there is a psychological side to retirement too. Setting goals prior to retirement will help you manage the stresses that comes with ending your working life and help with the transition into your next stage of life.

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Up to this point your identity has been built around your working world.

After much anticipation, and day dreaming, it’s finally your “last day” — your retirement day. In preparation, you met with a Retirement Information Consultant, attended the RetireWithEase workshop and determined your retirement income sources. You excitedly pack up your things and look forward to the next chapter.

The psychological side of retirement

2016 Going-concern results The Commission uses the actuarial valuation to assess the financial health of the Plan. Two types of valuations are done for defined benefit pension plans, Going-concern and Solvency.

The Going-concern Valuation determines whether the Plan has the resources needed to continue to operate indefinitely.

In the Going-concern Valuation process, an actuary determines the total value of the liabilities (current pensions in pay and future pensions) of the Plan and compares them to the Plan’s assets. If assets are greater than liabilities, the Plan is fully funded and in a state of surplus.

The table summarizes the results of the Going-concern Valuation completed as of December 31, 2016. The valuation shows that MEPP had a surplus of $198.4 million; this increased in comparison to last years surplus of $130 million.

The Going-concern Valuation shows the Plan is 110.1 per cent funded which increased from 107.1 per cent. MEPP has now reached the funding target of 110 per cent.

Going-Concern Basis(Millions of Dollars)

Assets

Liabilities & Reserves*Surplus

Funded Ratio (%)

$2,153.3

1,954.9

$198.4

110.1*Reserves are established to provide protection for the Plan.

May consider:● Restoration of previous benefit reductions● Temporary benefit improvements● Additional indexing for retired members● Reduction in contribution rates

125% - 140%

May consider:● Restoration of previous benefit reductions● Contribution decrease● Indexing for current and past years that were not indexed

115% - 125%110% - 115%

Keep contribution and benefit levels steady

Funding Level

May consider:● Restoration of previous benefit reductions● One year ad-hoc indexing

Below 100% Over 140%

● Contribution increase● May also require benefit reduction

100% - 110%

Consider:● Contribution increase● Benefit reduction

Other factors:When considering the actions above, the Commission may take into account factors other than the management and solvency funded ratios, including the ratio of the actuarial value of assets to the market value of assets and change in economic conditions since the valuation date. If the management funded ratio (the actuarial value of assets, divided by the sum of management valuation liabilites plus reserves) is just above one of the thresholds, the Commission may choose to be more conservative in its actions. If the fund sustained investment losses since the valuation date, or if interest rates used to determine solvency discount rates have fallen since the valuation date, the Commission may consider the impact of such events on the management and solvency funded ratios which may lead to more conservative decisions.

Decision Threshold 2016

110%Funding Target

2016 Solvency results A Solvency Valuation helps the Commission assess whether the Plan has enough assets to pay the Plan’s liabilities, if it were to close on the valuation date. The Solvency Valuation results also determine the holdback rate applied to termination benefits.

The 2016 Solvency Valuation shows a deficit of $325.6 million. This means that had the Plan closed on December 31, 2016, there would not have been enough assets to cover the Plan’s liabilities.

The Plan’s solvency ratio at December 31, 2016, is 87.5 per cent which has increased from last year’s funded ratio of 85.1 per cent. Because the Plan has a solvency deficiency, there is a requirement for holdbacks on payouts of commuted values for a period of five years. The holdback rate decreased to 12.5 per cent — a 2.4 per cent decrease from 2016. This change came into effect September 30, 2017.

All pensions continue to be paid in full. Contribution rates did not increase in 2016.

Solvency Basis(Millions of Dollars)

Assets

Liabilities & Reserves*Deficit

Funded Ratio (%)

$2,284.4

2,610.0

($325.6)

87.5For details on the holdback and contribution rates, visit our website.

May consider:● Restoration of previous benefit reductions● Temporary benefit improvements● Additional indexing for retired members● Reduction in contribution rates

125% - 140%

May consider:● Restoration of previous benefit reductions● Contribution decrease● Indexing for current and past years that were not indexed

115% - 125%110% - 115%

Keep contribution and benefit levels steady

Funding Level

May consider:● Restoration of previous benefit reductions● One year ad-hoc indexing

Below 100% Over 140%

● Contribution increase● May also require benefit reduction

100% - 110%

Consider:● Contribution increase● Benefit reduction

Other factors:When considering the actions above, the Commission may take into account factors other than the management and solvency funded ratios, including the ratio of the actuarial value of assets to the market value of assets and change in economic conditions since the valuation date. If the management funded ratio (the actuarial value of assets, divided by the sum of management valuation liabilites plus reserves) is just above one of the thresholds, the Commission may choose to be more conservative in its actions. If the fund sustained investment losses since the valuation date, or if interest rates used to determine solvency discount rates have fallen since the valuation date, the Commission may consider the impact of such events on the management and solvency funded ratios which may lead to more conservative decisions.

Decision Threshold 2016

110%Funding Target

Municipal Employees’ Pension Planc/o - Public Employees Bene�ts Agency1000-1801 Hamiltion StreetRegina SK S4P 4W3In Regina: 306.787.2684Toll Free: 877.506.6377Fax: 306.787.0244

www.peba.gov.sk.ca

@SaskMEPP

facebook.com/SaskMEPP

mepp@peba.gov.sk.ca

RetireWithEase WorkshopsSaskatoon November 9

Regina November 30, December 11

Register today! Visit MEPP’s home page and click on the PEBA Hosted Workshop Image!

*Workshop dates are subject to change. Watch the MEPP website for workshop dates, added workshops, and space availability.

What’s next?Asking yourself “Who am I now?” and “What is my purpose?” can be a scary, challenging task. It’s okay to take some time out and figure out your goals. Many people approach retirement differently and may combine a variety of paths to get to their happy place.

Different approaches of retirees entering retirement:

• continue to keep and use existing skills and interests;

• start entirely new endeavours and/or take an adventure;

• explore new options through trial and error;

• enjoy unscheduled time letting each day unfold;

• stay connected to the world, but engage in less-active ways; and

• retreat by taking time out or disengage from life.

Staying busy with activities will help provide fulfillment and structure to your days. Research shows those engaged in post-retirement activities will reap the psychological rewards and can help stave off depression, dementia and high blood pressure.

Common activities retirees enjoy are:

• volunteering;

• exercising;

• part-time employment;

• continuing education;

• traveling; and

• time with family.

The cultural belief is that you’re “living the good life” in retirement — it’s your job to ensure you are. It is key to plan for both the financial and psychological side of retirement. You may feel ups and downs throughout retirement, but how you handle them will determine how you spend, potentially, the longest phase of your life.

The psychological side of retirement...continued from page 1 Challenge yourself:

What are you going to do in retirement?Write down one thing you would do when you retire. Do not use generic language such as travel, hobbies, relax, etc. BE SPECIFIC.

Avoid language that encourages you to do nothing.

Sign Up for

Less clutter and more �exibility, sign-up for e-comm on the MEPP homepage today.

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Example:

John wants to travel to Eastern Canada in his RV in the summer of 2020, while visiting family in Ottawa and Winnipeg on the way.

Instead of:

John wants to travel.