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What's Up Pension Stuff? The Möbius Strip

Hi all...cool dad here!

Over the years, I’ve found that much of the media attention is spent on the jumbo pension plans in Canada, especially those in the east... I know this is really hard for you believe!  I thought it might be interesting to showcase some of the medium to large sized plans in Saskatchewan over the next few months to show all the great things that are happening in our own province.  On that note, today’s post will be focusing on the Regina Civic Employees’ Superannuation & Benefit Plan (Plan).  I had a chance to sit down with Colyn Lowenberger (CEO of Möbius Benefit Administrators) last week to discuss where the Plan is at and what is keeping them busy.  It's worth noting that Colyn is a math geek like me, so our conversation was complicated, confusing, thought provoking and in the end, we both agreed it made sense to no one but us :)  

Before I jump right in, I wanted to spend a few minutes on origination of Möbius.  Prior to 2016, all pension plans sponsored by the City of Regina were administered by the pension and benefit department of the City of Regina.  With the complexity of managing 5 different pension plans, a LTD plan and benefit plan, and the fact that not all employees within these plans were actual City of Regina employees, it was agreed that one stand alone entity should be tasked with the day to day administration of these plans.  So on April 1, 2016 Möbius Benefit Administrators Inc. was officially launched and began administering all City of Regina plans, including the Civic Pension Plan.  I thought it was a very creative name in that the Möbius strip or Möbius band represents a surface with only one side and only one boundary component.  In other words, once you start on one part of the strip, you will eventually end up back at the same point…just like when you join a pension and benefit plan and retire 30 years later.  So why did the chicken cross the Möbius strip... to stay on the same side! On fire!

Alright, let’s get down to the facts… 

The Civic Pension Plan currently sits at $1.6B of invested assets with a total membership of approximately 7,000.  Most people think that the Plan is a single employer plan covering only City of Regina employees (other than police), however, it also covers all or a portion of employees of the Regina Public Library, Saskatchewan Health Authority, the Regina Public Schools, Buffalo Pound Water Administration Board, Möbius Benefits Administrators, and EPCOR Water Prairies.  So, in reality, it’s a multi-employer plan.  The Plan is administered by a board of trustees (6 employee reps, 6 employer reps) who are the legal fiduciaries of the Plan.  In addition, there is a Sponsor Board (7 employer reps, 7 employee reps and 2 retirees) who has the unilateral authority to amend or terminate the Plan. 

In 2013, the City of Regina was faced with a significant deficit in their Civic Pension Plan.  It even got to a point where the Superintendent of Pensions was threatening to wind-up the Plan unless the two sides could come to an agreement on a possible solution.  Many hours were spent at the bargaining table, and in 2015 the two sides reached an agreement to change contribution rates, benefit levels, the funding arrangement and the governance structure.  This also included changes to pension legislation to allow the Plan a longer period to pay back the deficit that had accumulated.  Colyn indicated that the Plan is on track to the original funding schedule that was set out in 2015… so this is great news.   If you want a “good” read on a Sunday afternoon, I would encourage you to go onto the Möbius website and read up on all the changes that were made.   

When asked what is keeping them busy these days, Colyn was quick to identify his “top 3” list:

1)    Risk – With the changes to the Plan in 2015, the Board is keenly interested in keeping contributions as stable as possible, and hence reducing the risk of contribution volatility.  So they continue to spend a great deal of time on risk management and attempting to better align the liabilities and assets within the pension plan.  This is music to an actuary's ears...

2)    Internal Operations – With only 3 years under their belts, Möbius is still maturing as a stand alone entity from the City of Regina.  Obviously when you start up something new, there are growing pains and you need to do more than just order new letterhead!  From ensuring proper processes are in place, to getting investment contracts set up properly, these things take time.  

3)    Board Governance – This seems to finds its way onto everyone’s list!  Since board members come from different backgrounds, mostly non-pension, there is a continuous effort that goes into ensuring proper training is done with new board members and that the board composition is the right fit.   

I’m glad to see things are moving along nicely at Möbius!  Stay tuned in January to hear about what is happening at the SHEPP…

PS: An actuarial friend once told me his girlfriend was the square root of a -100... a perfect 10, but imaginary.

Cool dad out...  

Troy

Troy Milnthorp is a Fellow of the Society of Actuaries, Senior Managing Director of Corporate Fund Services at Saskatchewan Teachers' Federation, and Volunteer Content Creator for CPBI Saskatchewan. 

CLICK HERE to learn more about CPBI Saskatchewan!


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