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 AIMCo & LAPP Model Worth Copying – World Bank Group

Canadian public pension funds and public sector pension plans are regarded as some of the best in the world. For that reason, the World Bank Group released a study today that details why our model and others are so successful and why they are worth copying in other parts of the world.

The 104-page report, entitled, The Evolution of the Canadian Pension Model: Practical Lessons for Building World-class Pension Organizations was released in Toronto this morning as part of a Canadian Club panel discussion called, The Evolution of Canadian Pensions.

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The World Bank Group says it will use the report to help strengthen retirement security in emerging economies and to increase discussion about successful pension models in Canada. 

The report focuses on the success factors found in studying four top pension funds in Canada, including LAPP’s investment manager, Alberta Investment Management Corporation (AIMCo). The report covers the “essential components of pension plan organizations” and is based on interviews with CEOs of some successful pension plans and pension fund in Canada, including AIMCo CEO, Kevin Uebelein and our own Chris Brown, President and CEO of Alberta Local Authorities Pension Plan Corp. (ALAPP Corp.)

“The World Bank Group study is an important reminder to Canadians that public sector, defined benefit pensions in Canada are very successful and highly-regarded in other parts of the world as successful models worth emulating,” says Brown.

“Sometimes the true value of our plans are underestimated at home, both in Canada and in Alberta, because of ill-informed political campaigns that seek to fuel pension envy and spread misinformation about the cost and sustainability of these superior retirement income models.

“This report identifies all the factors that make these pensions a success, including the importance of independence from government in the managing of these funds and the need for collaborations between important stakeholders like our plan sponsors, our boards and our partners in the delivery of pensions,” says Brown.

The report covers all aspects of pension plan organizations including governance, people and organization, investments, administration, plan design and funding, and regulation and public policy – and presents a four-phase framework for the evolution of pension. It includes case studies done on AIMCo and three other pension funds/plans including: Healthcare of Ontario Pension Plan (HOOP), Caisse de dépôt et placement du Québec (CDPQ) and OPTrust.

According to the World Bank Group there are 14 key lessons that can be learned by the evolution (trials and successes) of these pension plans and funds. The report also draws out a number of success factors including:

  • Strong collaboration between diverse stakeholders – labour, government, business, and finance – and a sustained relationship built on trust,
  • Strong, independent governance,
  • Singularity of purpose – to run the organization like a business and focus on delivering retirement security for plan members,
  • Presence of strong, ethical leadership at the top and throughout the organization,
  • Recruitment and retention of top global talent with a competitive and performance-based compensation framework,
  • Critical “founding” stage of a new or reformed pension organization,
  • Governments creating the right regulatory environment, and
  • Investments managed in-house rather than outsourced to third-party fund managers

World Bank Group (WBG) officials, presenting the report in Toronto today, conclude that, “Over the past three decades, a Canadian model of public pension has emerged that combines independent governance, professional in-house investment management, scale, and extensive geographic and asset-class diversification.”

This report aims to document the emergence and evolution of this “Canadian model”, distilling practical lessons for stakeholders in emerging economies working to improve their pension arrangements and retirement systems, says Joaquim Levy, Managing Director and Chief Financial Officer, WBG, and Christine Hogan, Executive Director for Canada, Ireland and the Caribbean, WGB.


 LAPP Board Reduces Member and Employer Contribution Rates

Through prudent planning and effective risk management, the LAPP Board of Trustees has significantly improved the funded position of the Plan over the past few years to where it can now make a reduction in the contribution rates paid by employers and employees of the Local Authorities Pension Plan.

The Board voted unanimously at a recent Board meeting to reduce contribution rates by 1% for employees and 1% for employers, effective January 1, 2018. This is the first contribution rate reduction in 20 years.

For a LAPP member earning $60,000 a year, this will mean a $600 reduction in contributions in 2018, before taxes.

The Board conducts an actuarial valuation once every year to ensure the Plan is adequately funded to meet its pension obligations and that it has made adequate funding provision for future risks that might impact the Plan. This year the Board was able to reduce rates as well as strengthen benefit security by improving its capacity for dealing with future risks, like market volatility or a sudden downturn in the economy.

In 2018, the Board will be conducting a review of its long-term funding strategy in addition to doing another actuarial valuation. After that work is done, the Board will have a better sense of where contribution rates will be in the future as well as the ongoing funded-status of the Plan. It is the Board’s ultimate goal to reduce contributions further and this review will help provide information on how soon that can happen.

See Contribution rates

 2016 Annual Report

2016 Annual Report - June 26, 2017

 Annual Statements Ready Soon

Pension Highlights Statements

Your Pension Highlights (formerly the member annual statement) gives you a high level look at the activity of your pension for the last year, including:

  • your pensionable salary,
  • the service you have earned, and
  • how much pension you have earned so far, if any.
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Pension Highlights are sent each year after employers submit their year-end member information. Even if you are no longer contributing, but have left funds in the Plan, this annual statement lets you make sure all of your information is correct and up-to-date.

The statements are sent in the mail, unless you have chosen to Go Green. In that case, your statement will be available on mypensionplan.ca. To Go Green and get e-mail notifications when annual statements, newsletters and other publications are available online, visit mypensionplan.ca and select “Address and Contact Information.”

I would like to see a sample Pension Highlights with explanations of each section on it.

I would like to learn more about mypensionplan.


Pensioner Annual Statements

Retired members will receive their Pensioner Annual Statement soon. This yearly statement gives you a high level look at your pension benefits, including:

  • the amount of your cost of living adjustment (COLA),
  • the amount of your pension payments, and
  • information about your pension partner and listed beneficiaries (if it applies to you).
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The statements are sent by mail or electronically if you have chosen to Go Green. In that case, your statement will be available on mypensionplan.ca. To Go Green and get e-mail notifications when annual statements, newsletters and other publications are available online, visit mypensionplan.ca and select “Address and Contact Information.”

You can also go online to mypensionplan.ca to see the history of your pension, send and receive messages online through the Secure Mailbox, manage your banking and direct deposit information, and update your address and contact information.

I would like to see a sample Pensioner Annual Statement with explanations of each section on it.


 2016 Tax Slips are coming. Update your address today!

The 2016 tax slips will be mailed out in the last two weeks of February 2017. Please go online to mypensionplan.ca to confirm that we have your correct mailing address.  Don’t want to wait for the mail? You can also view and print your tax slips online at mypensionplan.ca starting on February 8, 2017.

 Quarterly Report

LAPP Quarterly Investment Report 2016 Q3

 Contribution Rate Advisory for 2017

The LAPP Board of Trustees is pleased to announce that there will be no contribution rate increase for members and employers in 2017 and none is currently proposed for 2018.

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LAPP contribution Rates have remained the same since 2014, and as the funded position of the Plan continues to improve, the Board is comfortable projecting that rates should not have to increase in the next two years either.

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.


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