2015 Provincial Judges Pension Board Annual Report

The Provincial Judges Pension Board (the “Board” or “PJPB”) was established in 1992 and is continued by Ontario Regulation 290/13 as amended (the “Regulation”) under the Courts of Justice Act. The Board is the successor to the Provincial Judges Benefit Board established in 1984 by Ontario Regulation 332/84 under the Provincial Courts Act.

Members of the Board are appointed by the Lieutenant Governor in Council.

For the period April 1, 2014 through March 31, 2015, the Board’s members were:

Members of the Board

The Board administered the Provincial Judges Pension Plan (the “Plan” or “PJPP”) and approved pension payments and refunds in accordance with the Regulation.

The Ontario Pension Board (“OPB”) provided pension administration and secretarial services to the Board in accordance with the Service Level Agreement.

The Board met five times during the period April 1, 2014 through March 31, 2015, four of which were regular Board meetings, and the remainder dealt with other Board business including, various stakeholder issues that arose during the period and development of the annual business plan.

After the June 12^th, 2014 election, the Government of Ontario completed a series of organizational changes affecting the governance of the Plan. The changes resulted in the creation of Treasury Board Secretariat (TBS) and the Ministry of Government and Consumer Services (MGCS). In its new role TBS became responsible for Sponsor related activities including those delivered by the former Ministry of Government Services. The Board now reports to the President of Treasury Board.

Cost of administration

Administrative support cost for the operation of the Board was subsumed in the estimates of the Employee Relations Division of TBS (formerly Human Resources Division, Ministry of Government Services).

The Chair and Board members are all private sector appointees and received per diem fees of $200 for the Chair and $150 for the members. Fees totalled $4,525 for attendance at Board meetings and preparation time. The Board incurred no other direct costs.

Plan activity

Plan membership and pensioner changes - Members

Plan membership and pensioner changes - Pensioners

Plan membership and pensioner changes - Deferred Pensioners

Description of the year’s activities

The year’s activities are described in the Analysis of Operational Performance under Section IV.

Analysis of financial performance

Financial statement - Deposits

Financial statement - Payments

Financial statement - Net increase in the fund

Financial statement - Fund balance with the Minister of Finance

See accompanying notes to the financial statement.

Approved on behalf of the Board
D. A. Oakley
Chair

Notes to financial statement - March 31, 2015

Description and administration of the fund

The then-Ministry of Government Services is responsible for overall oversight of the Provincial Judges Pension Fund [Fund] including administration of all contributions to the funds and interest earned. As of March 2015, these responsibilities were transferred to the Treasury Board Secretariat. The Provincial Judges Pension Board [Board], as originally designated by Ontario Regulation 67/92 of the Courts of Justice Act, is responsible for the administration of pension payments and survivor allowances.

On Oct 31, 2013, Ontario Regulation 67/92 was repealed and was replaced by Ontario Regulation 290/13 under the same legislation. The new Regulation splits the Provincial Judges Pension Fund into two plans, the Provincial Judges Pension Fund and the Provincial Judges Supplementary Pension Account.

The Fund is registered for income tax purposes and provides for pension benefits up to the limit permitted under the Income Tax Act. The Provincial Judges Supplementary Pension Account provides for pension benefits above the limit prescribed by the Income Tax Act for post-1991 service.

On December 20, 2013, a Court Order was issued, based on an agreement among parties to the litigation, that effectively ordered management to administer the Fund as one plan with the same administrative practices as were in place under Ontario Regulation 67/92, until litigation challenging the constitutionality of the Provincial Judges Supplementary Pension Account is resolved (Memorandum of Agreement called the “Standstill Agreement”). Pursuant to the direction of the Canada Revenue Agency, the administrative practices for the Provincial Judges Pension Plan were and continues to be to administer the Plan in a manner consistent with the requirements of the Federal Income Tax Act and related Income Tax Act Regulations.

As a result, this financial statement continues to be presented as one Fund.

The Fund is held within the Consolidated Revenue Fund of the Province of Ontario and is included as an employee future benefit liability within the consolidated financial statements of the Province.

The Fund is not subject to the reporting requirements under the Pension Benefits Act and Regulations.

The following brief description of the Fund is provided for general purposes only. For more complete information, reference should be made to the Regulations.

General

The purpose of the Fund is to provide pension payments to retired Provincial Judges who are members of the Plan or survivor allowances to the dependents of these Judges.

Funding policy

Participants are required to contribute 7% of their salary to the earlier occurrence of meeting their basic service requirement or attaining age 70 years.

The contribution required from the Province is determined by an actuarial valuation as described in note 4.

Pension payments

A pension payment is available based on the age and the number of years of full-time service for which the participant has credit upon ceasing to hold office and is based on the salary of a full-time judge of the highest judicial rank held by the participant while in office. The participant is entitled to these payments during his/her lifetime.

Disability pension payments

A full pension is available at age 65 for participants with a minimum of five years of full-time service who are unable to serve in office due to injury or chronic illness.

Survivor allowances

A survivor allowance equal to 60% of the qualifying judge’s pension payment is paid to the spouse during the spouse’s lifetime or to children who meet the age, custody, education or disability criteria defined by Regulation.

Death refunds

A death refund can be payable to the personal representative of a participant where there is no further entitlement to a survivor allowance. The amount of the refund is equal to the participant’s contributions in the Fund plus interest, less entitlements already paid out.

Withdrawal refunds

Upon ceasing to hold office for a reason other than death, participants not eligible to receive pension payments are entitled to receive a refund of their contributions to the Fund plus interest.

Annual inflationary escalation of entitlements

Judges Retired Before June 1, 2007

The annual inflationary increase for judges who retired before June 1, 2007 is based on changes in the Average Weekly Earnings published by Statistics Canada and subject to a maximum of 7% in any one year, and is effective on April 1 in every year. In addition, the pensions are adjusted based on the salary increases of sitting judges as recommended by the Provincial Judges Remuneration Commission.

Judges Retired On Or After June 1, 2007

The annual inflationary increase for judges who retired on or after June 1, 2007 and elected to be paid under the plan provisions effective on that date is based on changes in the Consumer Price Index, and is effective on January 1 in every year.

Interest revenue

Interest is credited to the account for the Fund, held in the Consolidated Revenue Fund of the Province of Ontario, at the average of the monthly Ontario Borrowing Rates for a 25-year maturity as follows:

• on the net monthly increases to the account accumulating during the fiscal year at the interest rate for the fiscal year; and
• on the net increases to the account for each of the preceding 25 years at the interest rates applicable to those years, providing the funds remain on deposit with the Consolidated Revenue Fund.

Significant Accounting Policies

Basis of accounting

The financial statement is prepared by management in accordance with the Memorandum of Agreement between the Ontario Conference of Judges and the Lieutenant Governor in Council, the then-Minister of Government Services and the Provincial Judges Pension Board (the Standstill Agreement). The basis of accounting prescribed by the Standstill Agreement is consistent with both the repealed Regulation 67/92 and the current Regulation 290/13 under the Courts of Justice Act and consists of contributions and money paid, transferred or credited to the Fund, less money paid out, except for the fact no Supplementary Pension Account was established.

Administrative expenses

Administrative expenses are paid by the Province of Ontario and are not reflected in this financial statement.

Liability for Future Benefits

The Provincial Judges Remuneration Commission (Commission) was established under the Courts of Justice Act to conduct an independent review of the salary, pension and benefits for all provincial judges. The Commission’s salary and non-pension benefits recommendations are binding; recommendations on pension benefits are non-binding. The most recent report of the Commission was the Eighth Provincial Judges Remuneration Commission released on November 12, 2013, covering the period April 1, 2010 to March 31, 2014. The report did not recommend any salary increases in addition to the annual inflationary increases already received. A new Commission, once appointed, is expected to issue recommendations covering the period from April 1, 2014 to March 31, 2018.

The Province is responsible for the unfunded liability of the Provincial Judges Pension Fund and funds this liability in amounts recommended by periodic actuarial valuations of the Plan. The Provincially determined contribution for fiscal 2015 was $34,512,000, which maintained contributions consistent with recommendations in the March 31, 2011 actuarial funding valuation, as a current actuarial valuation had yet to be performed. Any required adjustments to contributions, as a result of performing a current actuarial valuation, will be accounted for in the period the valuation is performed.

Significant assumptions in the March 31, 2011 actuarial funding valuation, the most recent valuation conducted, are as follows: