News Archive


August 2017

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May 2017

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December 2016

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  •  Member Newsletter - December 2016

  • Retiree Newsletter - December 2016

     

  • 2017 Statement of Investment Policy and Goals - December 21, 2016
     
  • 2017 Cost-of-Living Adjustment (COLA) announced - December 20, 2016
    The Cost-of-Living Adjustment for 2017 is a 0.78 per cent increase on the base pension. This increase is effective as of January 1, 2017. The adjustment will automatically be applied to your pension.

Members who retired during 2016 will receive a prorated portion of this increase. Those who retired in, or prior to, 2015 will receive a full COLA.

COLA is granted at 60 per cent of the increase in the Alberta Consumer Price Index (ACPI). For more information on how COLA is calculated, see the Explanation of the COLA Calculation or the Frequently Asked Questions. For more details on the ACPI, visit the ACPI Explanation page.

Your T4A statement will be mailed out in February 2017. It will also be available on mypensionplan.ca.


November 2016

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October 2016

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The LAPP Board advises LAPP members and employers that there will be no contribution rate increase for 2017 and none is currently proposed for 2018, based on expectations of how economic and demographic factors will impact the Plan over the next two years. The decision is part of the Board's unanimous approval of its 2015 Actuarial Valuation.

The Board's practice is to set rates far enough in advance to allow employers and members time to budget. As such, there is some small possibility that 2018 rates might need to be modified in a future valuation if the funded position of the Plan varies significantly from what is currently projected. However, that does not appear to be an issue today.

LAPP Contribution Rates 2016 2017 2018
Members' Rate up to YMPE* 10.39% 10.39% 10.39%
Members' Rate over YMPE* 14.84% 14.84% 14.84%
Employers' Rate up to YMPE* 11.39% 11.39% 11.39%
Employers' Rate over YMPE* 15.84% 15.84% 15.84%

*YMPE refers to the Year's Maximum Pensionable Earnings level determined by the Canada Pension Plan annually. In 2016, the YMPE is $54,900. The YMPE in 2017 is $55,300.


September 2016

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  • VP Investment Policy & Risk Management Recruitment - September 7, 2016
    Alberta Local Authorities Pension Plan Corp. is recruiting to the position of Vice President, Investment Policy and Risk Management.

As a key member of the LAPP Corp. executive team this person is focused on investment policy and monitoring, as well as enterprise-wide risk management matters, which are of utmost importance to the Plan's strategic plans, goals and long-term viability.

Primary areas of responsibility include providing investment policy information, education, research, analysis and advice to the LAPP Board of Trustees; collaborating with Alberta Investment Management Corporation (AIMCo) and LAPP's outside investment consultant to monitor investment performance and risk position; and, leading LAPP's enterprise-wide risk management processes.


July 2016

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June 2016

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February 2016

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  • 2015 Tax Slips - February 1, 2016

Tax slips will be mailed to pensioners the week of February 15, 2016. You can also view your tax slips on mypensionplan.ca after February 10, 2016.

Please Note: If you moved to a different province during the tax year, multiple tax slips will be mailed to you and will be available on mypensionplan.ca.


January 2016

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  • Investment Update from the CEO - January 28, 2016
    In my last investment update, I noted that we had not yet seen the full impact of lower oil prices and equity market volatility in our fund performance to the end of the second quarter. Looking at the LAPP's Q3 Investment Report, we can see that more of that impact was felt in the third quarter ending September 30, 2015 as we posted a negative 1.8% return. As a result, the year-to-date investment return declined from 5.1% at the end of Q2 to 3.3% at the end of Q3.

An area where lower oil prices have impacted the Plan has been through the performance of the Canadian equity market. As indicated by the chart below, the Canadian equity market has been a rollercoaster ride through the year. The S&P/TSX Composite Index started the year reasonably well, rising almost a 1000 points to a high of 15524.8 early in the year and then declining to a low of 12,617.7 in December. The key driver in market performance was lower oil prices given the heavy weighting of energy in the index.

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S&P/TSX Composite Index:

Equity market volatility in general was also an issue in Q3. This was dramatically demonstrated in the performance of the US equity market as measured by the S&P 500 index in the chart below. Unlike the Canadian index, the US has been able to recover a significant amount of its Q3 losses.

US S&P 500 Index


In terms of LAPP returns to the end of the year, given our well diversified structure, the bounce back in US equities should to some degree off-set the continued weakness in Canada. More importantly, the global diversification inherent in our structure means that we are not only diversified by country and industry but also by currency.

The Canadian equity market was not the only thing impacted by lower oil prices. The Canadian dollar also depreciated substantially against other currencies. As indicated by the chart below, the Canadian dollar declined by over 10 cents against the US dollar during 2015. This will serve to further buffer our returns from the volatility we have seen in equity markets.




So what can we learn from the market and our investment performance to the end of September 2015?

The key outcome for us is the importance of maintaining a well-structured diversified fund. Diversification can be an important tool to manage volatility and funding risk for the plan. While there are times when the effect of diversification is limited (e.g. the financial crisis of 2008), there are also times (like 2015) where diversification can blunt the effect of a single negative factor or event like the collapse in energy prices. Our diversified approach will allow the plan's assets to continue to grow and keep pace with the growth in the plan's liabilities, which is ultimately our key financial objective.

2015 Q3 Investment Results
 

Financial/Investment Related Documents/Links can be found here:   

Funding & Investment Publications

 

  • New Annual Statements for Retirees - January 27, 2016
    Retirees are now receiving an annual statement. This new communication replaces the annual Cost-of-Living Adjustment (COLA) letter and provides retirees with:
    • New member identifier number
    • Retirement date, date of birth, pension benefits start date
    • Pensioner partner and listed beneficiaries

Retirees can go online to mypensionplan.ca to access this information as well as view their pension dates and history, send and receive messages through a secure mailbox, manage banking and direct deposit information and update contact information.

  • LAPP Retiree Newsletter - January 2016 - January 25, 2016
     
  • Greetings for 2016 - January 6, 2016
    On behalf of the Board of Trustees of the Local Authorities Pension Plan (LAPP), I would like to extend best wishes for the New Year. It is our hope that 2016 will be a year of good health and prosperity for you and your loved ones.

I am pleased to begin a term as the Board's newly elected Chair and I would like to take this opportunity to pass on our profound thanks to fellow Trustee Terry Agoto, who just completed a term as Chair and has been newly elected to the position of Vice Chair.

We will update you on the appointment or reappointment of members to the LAPP Board as soon as we hear from the Alberta Government about pending Board vacancies. In the meantime, if you are interested in learning more about the Board and how LAPP is governed, you will find more information at the following link on Governance Structure.


December 2015

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  • Cost-of-Living Adjustment Increases LAPP Pensions - December 30, 2015

The Cost-of-Living Adjustment for 2017 is 0.78 per cent on base pension. This increase is effective as of January 1, 2017. The adjustment will automatically be applied to your pension.

Members who retired during 2016 will receive a prorated portion of this increase. Those who retired in, or prior to, 2015 will receive a full COLA.

COLA is currently granted at 60 per cent of the increase in the Alberta Consumer Price Index (ACPI). For more information on how COLA is calculated, see the explanation of the COLA calculation.

Your T4A statement will be mailed out in February 2017. It will also be available on mypensionplan.ca.
 


October 2015

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  • LAPP's 2014 Actuarial Valuation - October 1, 2015
    The LAPP Board of Trustees is pleased to share the results of its 2014 Actuarial Valuation with members, employers and other stakeholders of the Local Authorities Pension Plan.

This valuation report is the most recent chapter in the Board's ongoing strategic approach to risk management of the Plan.

At LAPP, we take a balanced approach to financial security by managing risk in the short, medium and long term. We look at all three legs of our sustainability stool, investments, funding and Plan design, as we strive to achieve the LAPP mission:

"Financially secure pensions for members at a reasonable cost to all."

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We work closely with our professional staff at ALAPP Corp. to analyze changing economic and demographic circumstances. We carefully monitor financial markets and labour trends, adjusting assumptions when appropriate to keep the Plan on a strong financial footing for decades to come.

Our approach to risk management recognizes the importance of holding on to our gains and building margin in good times to provide a financial cushion for bad times.

The 2014 valuation shows the Plan's funded position has improved to 88.5% compared to 81.9% in 2013. By setting a funding margin of 80 basis points (bps), which reduced the Plan's discount rate to 5.5% from 5.75%, the Board has maintained an appropriate cushion to help manage future adverse events.

The discount rate is the measure used to value the current cost of future pension obligations. It is set based on expected rates of return from investments over the long term and it may also include a cushion for adverse deviation, which we call margin.

Although we don't have a crystal ball when it comes to investment earnings, we know enough to expect that the current economic cycle of double-digit returns won't last forever.

LAPP's funded position has steadily improved since the losses sustained in the 2008 financial crisis. However, those gains were primarily the result of continued growth in equity markets over the past seven years.

Expecting that all growth cycles will end eventually, we have been analyzing the probability and potential impact of another negative market event occurring in the near term. Faced with this end-of-cycle risk, our strategy is to hold on to recent gains and keep things on an even keel by building margin so we have a suitable funding cushion.

We do not want the Plan to suffer significant losses from a sudden downturn in the markets. A look at the history can show how quickly things can turn. In the chart below, you can see how LAP's funded status has changed over time.

By the time the dot.com bubble had completely deflated in October 2002, the Plan had moved from a surplus in 1999 to only 80 per cent funded. Through the years that followed we gradually improved our funded status until in 2007, it seemed like full funding was just around the corner. Then the 2008 financial crisis hit and we dropped to our lowest funded level ever.

The chart is a reminder of how important it is to hold on to our gains as we go; building margin when times are good so we can "spend" the margin when needed. When markets are volatile, we don't want to be managing the inevitable ups and downs with contribution rate adjustments each year.

For now, our strategy allows us to hold contributions rates at current levels for 2016 and probably for 2017 as well.

One of our key risk management practices is to conduct an actuarial evaluation every year, even though we are only required to file a valuation once every three years. We constantly monitor the financial health of the Plan. We do this to keep on top of economic and demographic changes so we are ready to respond in a prudent and timely fashion.

Terry Agoto,
LAPP Board Chair

 

  • ​​​​​LAPP's Q2 2015 Investment Update - October 1, 2015

A quick look at the positive results of LAPP's Q2 Investment Report will reveal that the high volatility we have experienced in oil prices over the past summer is not yet reflected in this report.

At the same time we post these results on our website, the latest financial news is that Alberta economy's is now expected to contract by 1.3% in 2015 instead of the 1% decline in GDP predicted in June.

For LAPP, the renewed downturn in oil prices is likely to show itself in our Q3 Investment Report as will increased market volatility and the continued downward pressure on interest rates. To date, however, market volatility has been somewhat buffered in Canada by our devalued currency.

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Declining oil prices and the resulting impact on the Alberta economy creates its own kind of risk to LAPP though, as job losses and possible restraint measures in Alberta can lead quickly to demographics changes in the public sector that could increase Plan liabilities.

Risks to LAPP on the funding side continue to include long bond yields which are still low (see chart below) compared to the 4.0% yield we hoped for at the beginning of 2014.

Also of concern is the duration of the current equity market cycle, which has been on an upward trend since March 2009. This scenario raises appropriate questions about the potential timing and likelihood of the next bear market.

Key Numbers

However, setting aside caveats about what is still to come, results in the Q2 Investment Report show returns were quite good, in absolute terms, for the first half of the year. On a year-to-date basis, the Plan returned 5.1% compared to our policy benchmark of 4.9%. Looking at results on a relative basis, our investment manager, AIMCo, is adding value relative to the benchmarks, considering the difficult year-end in 2014 and a difficult first quarter.

Another key number in this report reflects our four-year return. For the four years to the end of June, our annualized return was 10.7%. This is well above expectations and relative to our benchmark, we are running 50 basis points (BPS) ahead on a net basis.

While the second quarter report shows that returns were good to the end of June, our expectations for the next quarter and to year-end are tempered by current economic realities. The current volatility of markets and uncertainty about economic growth, reinforce the LAPP Board's decision to build margin in the current valuation cycle.

Christopher Brown
President & CEO
ALAPP Corp.

Q2 2015 Investment Report


September 2015

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  • LAPP Actuarial Valuation Report - September 15, 2015

    The LAPP Board of Trustees is pleased to share the results of its 2014 Actuarial Valuation to members and stakeholders. This actuarial valuation, based on data at December 31, 2014, was completed by an independent actuary for the LAPP Board and is an important indicator of the financial health of the pension plan. On the basis of this valuation, the Board projects there will be no contribution rate increase for the years 2016 and 2017. However, If the funded position of the plan were to vary significantly from what is projected, there is a slight possibility 2017 rates might need to change, but no change is indicated at this time.

The Board has instructed its actuary to file this report with the Canada Revenue Agency.
 

  • 2015 Commuted Value Change - September 2, 2015

    Effective October 1, 2015, the Canadian Institute of Actuaries (CIA) has implemented new mortality tables to be used when determining a Commuted Value (CV). The CIA implemented these new mortality tables to reflect increased life expectancy. As a result of this change, CV option on termination calculations will be impacted.

The CV is the amount of money that may be paid out to you as a one-time payment should you leave the Plan (and given that you are vested). This CV is equal to the expected amount of money you would need to put aside today, to grow with tax-sheltered investment earnings, to provide you with a future benefit similar to the Local Authorities Pension Plan (LAPP) pension you've earned.

As this change is being implemented by the Canadian Institute of Actuaries, all Canadian defined benefit pension plans, including the LAPP, are required to follow this new standard.

How does this affect me?

In most cases, the commuted value does not affect you if you choose a monthly pension at retirement, as your pension is based on your highest average salary and years of service.

If you terminate from the Plan on or after October 1, 2015, the pension payout option (CV) will be determined based on the new mortality tables the CIA has implemented.


July 2015

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  • 2016 Contribution Rate Advisory - July 27, 2015

The LAPP Board advises LAPP members and employers that there will be no contribution rate increase for 2016 and none is currently proposed for 2017, based on expectations of how economic and demographic factors will impact the Plan over the next two years. The decision is part of the Board's unanimous approval of its 2014 valuation, which will be posted to the website as soon as the document is completed by the actuary.

The Board's practice is to set rates far enough in advance to allow employers and members time to budget. As such, there is some small possibility that 2017 rates might need to be modified in a future valuation if the funded position of the Plan varies significantly from what is currently projected. However, that does not appear to be an issue today.

Contribution Rates

The rates for 2015 (current rates) along with the proposed rates for 2016 and 2017 are as follows:

LAPP Contribution Rates 2015 2016 2017
Members' Rate up to YMPE* 10.39% 10.39% 10.39%
Members' Rate over YMPE* 14.84% 14.84% 14.84%
Employers' Rate up to YMPE* 11.39% 11.39% 11.39%
Employers' Rate over YMPE* 15.84% 15.84% 15.84%

*YMPE refers to the Year's Maximum Pensionable Earnings level determined by the Canada Pension Plan annually. In 2015, the YMPE is $53,600.