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.

The Board is classified as a Trust Agency and operates at arm’s length from the Government. Treasury Board Secretariat (TBS) is responsible for Sponsor related activities such as regulatory reporting, plan expenses and the implementation of plan design changes. The Board reports to the President of Treasury Board.

Members of the Board are appointed by the Lieutenant Governor in Council. For the period April 1, 2017 through March 31, 2018, the Board’s members were:

Members of the Board

ItemDate First AppointedCurrent Term Expiry Date
Deborah Anne Oakley, Chair
Former Sr. Vice–President Corporate Affairs
OMERS Pension Plan
October 22, 2009November 14, 2018
Elizabeth Boyd, Member
Partner
Blake, Cassels & Graydon LLP
April 10, 2013April 10, 201916
Lisa Philipps, Member
Professor
Osgoode Hall Law School
York University
February 26, 2014February 26, 2020

The Board administers the Provincial Judges Pension Plan (the "Plan" or "PJPP"); overseeing pension payments and refunds from the fund ensuring they are made 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 formally met four times during the period April 1, 2017 through March 31, 2018, each occasion representing a regular quarterly Board meeting. During this fiscal year the Board adopted a different review process so unlike prior years additional meetings were not required to develop the annual business plan.

Cost of administration

Administrative support cost for the operation of the Board was subsumed in the estimates of the Centre for Public Sector Labour Relations and Compensation at Treasury Board Secretariat.

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 totalling a maximum of $5,000 for attendance at Board meetings and preparation time were chargeable as at March 31, 2018. The Board incurred no other direct costs.

Plan activity

Plan membership and pensioner changes – Members

MembersMarch 31, 2017IncreaseDecreaseMarch 31, 2018
Active28043(26)297
LTIP30(1)2
Total Membership28343(27)299

Plan membership and pensioner changes – Pensioners

Pensionersfootnote 1March 31, 2017IncreaseDecreaseMarch 31, 2018
Normal20920(13)216
Survivors7411(3)81
Total Pensioners28331(16)298

Plan membership and pensioner changes – Deferred Pensioners

ItemMarch 31, 2017IncreaseDecreaseMarch 31, 2018
Deferred Pensioners footnote 21001

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 as at March 31, 2018 – Deposits

Deposits2018($ 000)2017($ 000)
Contributions – Participants4,8704,452
Contributions – Province of Ontario (Note 4)34,51234,512
Interest earned (note 1 (l))48,14447,798
Total87,52686,762

Financial statement as at March 31, 2018 – Payments

Payments2018($ 000)2017($ 000)
Pension payments and survivor allowances44,34140,795
Refund of contributions76592
Total45,10640,887

Financial statement as at March 31, 2018 – Net increase in the fund

Item2018($ 000)2017($ 000)
Net increase in the Fund42,42045,875

Financial statement as at March 31, 2018 – Fund balance with the Minister of Finance

Fund Balance with the Minister of Finance2018($ 000)2017($ 000)
Beginning of year942,647896,772
End of year985,067942,647

See accompanying notes to the financial statement.

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

Description and administration of the fund

The Treasury Board Secretariat is responsible for overall oversight of the Provincial Judges Pension Fund [Fund] including administration of all contributions to the funds and interest earned. 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 challenging the constitutionality of the Provincial Judges Supplementary Pension Account, 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 the litigation 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 continue 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 eligible dependents of these Judges.

Funding policy

Participants are required to contribute 7% of their salary up to the earlier occurrence of either 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 policy – 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.

The Standstill Agreement requires that the Provincial Judges Pension Plan be administered and solely funded through the Provincial Judges Pension Fund as it was on October 30, 2013, notwithstanding that Regulation 290/13 requires that the Provincial Judges Pension Plan be funded through the Provincial Judges Pension Fund and a separate Provincial Judges Supplemental Pension Account.

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 Ninth and Tenth Provincial Judges Remuneration Commission released on April 18, 2018, covering the periods of April 1, 2014 to March 31, 2018 and April 1, 2018 to March 31, 2022 respectively. For the period of April 1, 2014 to March 31, 2018, the report did not recommend any salary increases in addition to the annual inflationary increases already received. The report recommendations for the period April 1, 2018 to March 31, 2022 are included in note 5.

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 2018 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 when the litigation is resolved, will be accounted for in the period the valuation is performed. Management has estimated that the amount of additional government contributions is approximately $29 million as at March 31, 2017. Estimates as at March 31, 2018 are not available due to the ongoing litigation.

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

AssumptionMarch 2011 valuation
Expected Return on Plan Assets4.60%
Discount Rate on Future Cash Inflows4.60%
Salary Rate Increases4.00%
Age of Retirementgraduated scale from age 60 to 75
Method of ValuationAggregate Cost Method

Subsequent events

(A) The ninth and tenth Provincial Judges Remuneration Commission

The Ninth and Tenth Provincial Judges Remuneration Commission recommended that judicial salaries be fixed at 95.27% of federal judicial salaries, to be phased in over the four year period from April 1, 2018 to March 31, 2022.

In addition to the salary recommendations, the report recommended a new pension plan design consisting of a fully funded registered pension plan, a partially funded (3 – 5 years’ worth of benefits) retirement compensation arrangement, and a supplemental plan funded through a special purpose account in the Consolidated Revenue Fund. While the plan design is different, the report did not recommend any changes to the benefits accruals or other pension benefits provided by the pension plan. Commission recommendations on pensions are not binding on the Province of Ontario but the Province of Ontario has agreed to make the necessary plan changes.

As a result of these changes, the Standstill Agreement has been extended to May 1, 2019 to permit time to implement the new design.

Analysis of operational performance

Delivery of pensions

  • In the 12 months ending March 31, 2018, the PJPB continued delivering high quality cost effective services to 299 beneficiaries receiving pensions or survivor allowances from the PJPP.
  • The Board conducted four regular meetings in that period to consider applications for approval of payments from the Fund.
  • The Board monitors its service performance through reports on outstanding work at its regular meetings. This combined with summary presentation of facts supporting pension applications ensure timely and high quality service.
  • The PJPB met or exceeded its client service standards over the period of this report which were that no application for pension or other benefit from the Plan, or pension estimates, take longer than 60 days in total to process.
  • There were no requests for adjudication or appeals of decisions made during the reporting period.
  • At its regular quarterly meetings, PJPB reviewed and approved 31 new annual pensions and survivor allowances, representing two additional applications when compared to the prior year.
  • The PJPB also approved $764K in lump sum payments in respect of family law settlements and refunds of contributions on resignation.
  • The corresponding annual value of new pensions approved for the year was $4.4 million.
  • All pension payments commenced on time and within service commitments.
  • The PJPB also approved payments totalling just over $68K representing a retroactive 0.7% cost of living increase under the "old plan" rules for Provincial Judges and slightly over $32.6K under a 1.6% CPI adjustment.

Accurate payments and entitlement calculations

  • Calculation materials and entitlement information were provided in a timely manner by OPB to PJPB for its review and approval at PJPB meetings.
  • OPB staff were available at all PJPB meetings to clarify and explain payments when necessary. All calculations bear evidence of managerial review and verification by OPB staff.
  • The Fund is audited annually by the Office of the Auditor General of Ontario (the Provincial Auditor). There were no findings in the current audit relating to either pension payment accuracy or entitlement calculations.

Strengthening stakeholder relations

  • The Board continued to build on its efforts to engage key stakeholders in discussion about issues affecting the Plan. During the 2017/2018 plan year, Board interaction with senior leadership of both the Sponsor and the Association of Ontario Judges increased and our relations continue to strengthen. Due to scheduling challenges, the Board was not able to meet with Ontario’s Chief Justice in the 2017/2018 plan year. We value the Chief Justice’ perspective on the service needs of sitting judges and we are committed to meeting with her before the end of the current year.
  • We firmly believe these interactions contributed to greater transparency around the Plan and its operations, and reinforced the Board’s status as a trust agency that performs its role independently and in the best interests of the Plan’s beneficiaries.
  • Stakeholders continue to be supportive of the Board’s efforts to build stronger relations and have grown even more receptive to the meetings in spite of the challenges of on–going litigation and leadership changes.

Communications with Pensioners and Stakeholders

  • Either the PJPB or Chair continues to review and approve all Plan communications prior to distribution.
  • The bulk of the Board’s written communications with Plan beneficiaries are prepared to convey information about personal entitlements. Communication highlights for 2017/2018 include:
    • 419 letters describing annual escalation adjustments
    • 16 pension estimates
    • 20 initial communications to new retirees
    • distribution of close to 300 notices to retirees explaining the new rules for division of pension on the breakdown of a spousal relationship.
  • In 2016, the Board added a new dedicated telephone line to give clients quick and reliable access to a knowledgeable Client Care Associate. One of the benefits of coming into OPB’s telephone system is the new call reporting functionality that allows OPB to collect data on our behalf and report on service performance. The first reports were presented to the Board at its Quarterly meeting in September 2017. We know that for the plan year ending March 31, 2018 the Board made 222 service offerings through the dedicated line. We have been pleased with the performance results throughout the year. The Board now has some insight into the client experience through service statistics such as the average delay on pick up, maximum wait time and number of abandoned calls.
  • The Board will continue to look for opportunities to improve communications to pensioners and advise on communications to other key stakeholders.

Performance targets

In its 2017–2020 Business Plan the Board adopted three strategic themes that would define its performance in executing its responsibilities under its mandate. Our accomplishments relative to each theme follow below:

Deliver high quality cost effective client service

The Board recognizes that it needs to understand its clients’ service experience so it can assess and make suitable improvements to its service offerings. Measuring and interpreting the value clients place on specific services requires specialized expertise and a convenient platform to communicate and collect information. After considering the resources required to establish and maintain a formal client satisfaction program, the Board determined that direct engagement of clients and stakeholders would be the most cost effective option at this time.

In 2017/2018 the Board continued to engage its stakeholders through regular face to face meetings. These interactions, which included senior leadership at the Association of Ontario Judges, the Chief Justice Office and Treasury Board, have been productive. In addition to regular updates on progress of the Working Group and Remuneration Commission, the Board received positive feedback on the state of client service experiences. Based on these discussions we were able to identify priority initiatives (i.e. Annual Pension Statement and Membership Welcome Letter) and begin defining information requirements needed to generate value for clients.

Communications explaining new rules on how pensions are valued and divided on spousal relationship breakdown were developed and delivered according to a Board approved communication plan adopted early in 2017. Cost savings were realized by including the notices with regular escalation mailings in October and January. Template letters were also developed and approved to support efficient processing of Family Law transactions. In addition, PJPB worked with the Chief Justice Office to support an intranet posting of the communication to ensure sitting judges had access to the same information.

Like any pension administrator, we are acutely aware that our clients expect reliable information from the Plan to support personal financial decision making. The Plan’s current processes rely heavily on manual administration which is susceptible to error and not particularly efficient in today’s world. At the end of the fiscal year the Board began a procurement process to engage a service provider to document the source and processes used to support creation of reliable member data by stakeholders; and how data elements are mapped between stakeholder data models. The report is expected to be complete in 2018 and is a first step toward supporting service improvements through greater automation of the Judges Plan administration.

Foster effective stakeholder relations

Effective stakeholder relations play a vital role in the delivery of high quality client service. We believe positive relations with our stakeholders create an environment where interests, issues and concerns are identified early so they can be resolved to the mutual benefit of all. Establishing open and regular communications with our stakeholders was a priority for the Board in 2017/2018.

During the year the Board continued to build on previous years efforts, acting on opportunities to improve relations through more frequent interaction. We are now meeting with stakeholder leadership several times a year to provide updates on the Plan’s operation and solicit feedback on initiatives and proposals.

One of the priorities in our business plan for the 2017/2018 fiscal year was to develop a stakeholder engagement strategy. The Board agreed that a more strategic and structured approach to Stakeholder Relations was required especially given the imminent fund design changes being discussed by the Working Group in connection with the Standstill Agreement. Our stakeholder engagement strategy is expected to consistently guide our interactions, contributing to better informed and more effective policies, processes and overall administration. We are pleased to advise that objective was completed in March 2018.

Strengthen plan governance

Strong governance is a priority for any fiduciary and is essential for the Board to ensure it is meeting its obligations and acting in the best interests of the members and beneficiaries of the Plan. In its business plan, the Board committed to focus on strengthening its governance by building structure and processes that are grounded in the following principles: Access to information; Increasing transparency; Improving Accountability; Performance of fiduciary duties; and Monitoring compliance.

Access to information

In 2017, the Board indicated that it would request funding to implement a recommended solution from a cost benefit analysis commissioned to report on the feasibility of automating pension calculations. Automation would help the Board manage risks associated with manual administration by providing access to relevant, timely and accurate information. A couple of factors have affected how we will proceed.

First, the Board understood that it was likely the 9th and 10th Provincial Judges Remuneration Commission would introduce recommendations for plan design changes that would have a major impact on the Plan’s administration and governance. We did not think it would be prudent to proceed without understanding the Plan’s changing administrative requirements.

Second, our service provider, OPB is developing pension consolidation plans that could improve the efficiency and cost effectiveness of PJPP administration. Since pension consolidation could yield a more cost effective solution and there was no practical administrative urgency for the Board to commit to deploying a pension automation solution we are deferring our decision until more information becomes available.

Increasing transparency

Disclosure and transparency are often cited as best practices in a governance framework. In effect, transparency brings another independent level of oversight to bear on Board business which, in turn, enhances its credibility with stakeholders. The Board demonstrated its commitment to increasing transparency as follows:

  1. Working with the Chief Justice office in June 2017 to provide Family Law messaging for Judges Manual;
  2. Ensuring Board review of all major communication including escalation letters, family law announcements and individual template communications relating to family law;
  3. Consulting with the stakeholders on data elements relating to our APS proposals and collaborating on the development of a welcome letter for new plan members as a direct result of consultation with the AOJ.

Improving accountability

The Board committed to obtaining an independent assessment of its risk exposure through regular internal audit. The Board will also pursue improved accountability through consistent ongoing documentation of its procedures, regular monitoring and evaluation of performance and training as required. In the 2017/2018 fiscal year we :

  1. Adopted a revised reporting format for work in progress that could be produced more efficiently and customized to meet the Board’s needs;
  2. Continued to document and approve PJPP policies relating to the new family law rules for the Plan;
  3. Completed our first annual governance self– assessment in December, 2017;
  4. Secured a funding commitment from TBS to support a data process mapping project in lieu of an internal audit in 2017;
  5. Completed individual on–line governance training offered through Public Appointments Secretariat.

Performance of Fiduciary duties

The members and beneficiaries of the Plan depend on the Board to act in their best interests, so we believe we have an obligation to participate in discussions relating to future plan design changes. While the Remuneration Commission did not report in the 2017/2018 fiscal year, we continued to leverage our regular interactions with key stakeholders throughout the year to help shape the future PJPP governance.

Board members are informed of conflict of interest rules that govern our service and as mentioned earlier we participate in agency appointee learning and development opportunities including on–line offerings.

Monitoring compliance

As a provincial Trust Agency the Board is subject to the rules and accountability framework within the Agencies and Appointments Directive and as a pension plan we are regulated by Canada Revenue Agency and must comply with tax rules under the ITA.

While the Plan Sponsor is responsible for the bulk of the Plan’s tax filing and compliance requirements, there are operational tax requirements that are the responsibility of the Board in its role as administrator (e.g. PAR reporting, T4A Slips and Information Return). The Board monitors compliance with these operational tax rules through special status reporting at its Quarterly meetings. In the 2017/2018 fiscal year the Board was compliant with the applicable tax rules.

The 2017/2018 plan year was busy with respect to the Board’s compliance with guidelines for agency accountability. The Board received 11 notices relating to new or changing agency guidelines and other related information. Each one was tabled for discussion at our quarterly meetings and action taken as required. In addition, the Board completed its data inventory according to the requirements of the Open Data Directive. This was the program introduced in 2016 to create a comprehensive list of data assets and make the data publicly available. Due to the nature of data used in pension administration the Board classified the information as exempt from release.

Finally the Board had committed to review and assess its Records Management system for compliance agency policy and directives. Our first step was to develop a new Records Retention Schedule (RRS) for submission to the Information, Privacy and Archives (IPA) of Ontario for approval. By endorsing the RRS, the Chair not only ensured her obligations under legislation and the Memorandum of Understanding have been satisfied, but that the PJPB will avoid the cost and administrative burden of establishing and maintaining an independent record management processes.

Chair’s comments

The Board is responsible for administering the pension and survivor allowance benefits provided under the Provincial Judges Pension Plan. As a trust agency of the Crown, the PJPB oversees the delivery of an annual pension payroll that now exceeds $44.3 million. As a board, we are committed to delivering cost effective high quality service to the plan’s beneficiaries. A summary of some of last year’s operational achievements appears in Section IV.

The Board wishes to express its appreciation for the assistance rendered by the management and staff of the Total Compensation Strategies Branch of Treasury Board Secretariat, the Pay and Benefits Operations Branch of the Ministry of Government and Consumer Services, and the Ontario Pension Board and staff.