2015-18 Provincial Judges Pension Board business plan

Executive summary

The Provincial Judges Pension Board (the "Board") is the trust agency responsible for the administration of pension benefits of retired provincial judges and their survivors. For the plan year ended March 31, 2015 that meant overseeing the calculation and timely delivery of just under $32.6 million in annual pension payments to 260 plan beneficiaries.

Pensions are paid from the Provincial Judges Pension Fund (the "Fund") which is an Account under the Consolidated Revenue Fund of the Province of Ontario ("CRF"). The Fund consists of contributions made, interest earned and monies paid or credited to the fund by the Ministry of Finance ("MOF"), less monies, pensions and survivor allowances paid out under the Provincial Judges Pension Plan (the "Plan"). The Minister of Finance is the custodian of the fund and no payment can be made from the fund without the consent of the board.

All plan expenses are paid directly by the Treasury Board Secretariat ("TBS" or "the Sponsor"). For the plan year ended March 31, 2015, Plan expenditures were almost $175,000 (see Table 10.1 on page 22 for description of financial resources). These expenses include Board support and general pension payroll administration provided under agreement with Ontario Pension Board ("OPB"). Fees for Plan administration are fixed in a service level agreement between the board, TBS and OPB.

The Province of Ontario is managing its fiscal situation through a deficit elimination plan designed to reduce program spending growth and contain costs. At the same time, the PJPP is undergoing changes in the form of the Income Tax Act compliance amendment and Remuneration Commission recommendations, including those affecting the division of pension assets on marriage breakdown that will change key administrative processes and create operating cost pressures for the board and Sponsor. These challenges are being compounded by on-going litigation that has delayed full implementation of the changes and triggering additional but necessary legal costs. The fact that all plan expenses are paid by the Sponsor, contributes to a challenging environment for the board to manage its operational risk which is a key consideration in the board’s business planning.

Government continues to focus on improving accountability, transparency and financial management in the Broader Public Sector. These themes continue to be important in 2015 and are present in this business plan as the board continues with its three-pronged approach to aligning its strategic priorities with these important goals.

Specifically the board will continue to focus on the following strategies:

1. strengthen plan governance;
2. deliver excellent cost effective client service;
3. monitor regulatory compliance.

Strengthening plan governance

Responsibility for a variety of daily pension administration activities are spread across several departments within three Ministries: TBS, MOF and Ministry of Government and Consumer Services (MGCS), and include a service agreement with OPB. When compared to traditional defined benefit plan administrative frameworks the resulting governance and management structure of the plan is considered "atypical". The board was concerned over a number of years that the current governance and management structure could pose a risk to effective plan governance and engaged in discussions at senior levels of government to address the issue. As a result of these discussions, "management" has been defined, but remains complex in comparison to other pension plans.

The board continues to develop its ability to evaluate and improve effectiveness of risk management, control and governance processes. Ordinarily a governing board receives these assessments through on-going internal audit programs. Financial constraints adopted by the province posed a resourcing challenge for the board to engage an internal auditor. The board was successful in obtaining internal audit resources to complete a report on pension processes within the OPB. That work is now complete and the board is monitoring the implementation of its recommendations. A cost benefit analysis was commissioned through a 3^rd party consulting firm and its recommendations will be submitted to the board for consideration.

A report on roles and responsibilities prepared by the firm of Deloitte LLP ("Deloitte") was completed in April 2012, and provides some good insight on opportunities for clarification within the PJPP’s operating environment. The board continues to make progress in several areas and some longer term work remains.

In December 2013, the PJPB was named a respondent in a court proceeding triggered by the restatement of the plan for ITA compliance. Since then, an agreement was reached among the parties to permit the board to administer the restated plan with the same administrative practices in place prior to its effect. This is affecting the board’s ability to fully implement the ITA compliance amendment and the Remuneration Commission recommendations. This in turn has also slowed movement on some of the board’s program activities related to the Deloitte Report from last year, the Service Level Agreement (SLA) and Memorandum of Understanding (MOU) reviews and will be taken into account in this business plan.

The appointment of the current chair expires November 14, 2015. The board does not expect this situation to affect its ability to meet and approve pensions since there is provision for the chair to continue indefinitely until an appointment is made.

Deliver excellent cost effective client service

In the twelve months ended March 31, 2015, the board continued to deliver high quality cost effective services to 260  beneficiaries receiving pensions or survivor allowances from the plan. The board met formally four times to specifically consider applications for payment from the fund. Over those four meetings, the board reviewed and approved twenty-five new annual pensions and survivor allowances with an annual value of just over $3.84 million. The board also approved a payment of just over $253K, representing a retroactive 1.9% cost of living increase under the "old plan" rules and slightly over $18K under a 1.7% CPI adjustment.

The board also met by conference call several times during this period and OPB staff and the chair spoke on a regular basis about numerous matters. OPB Staff were invited on behalf of the board to present an overview of the plan at a pre-retirement seminar for judges organized by the Association of Ontario Judges ("AOJ"). Feedback on the content and format has been positive and the board continues to monitor client feedback and will update information as needed. The chair will continue to seek meetings periodically with stakeholders to discuss the plan with the goal of developing strong relationships with the Sponsor and both the Chief Justice Office and the AOJ.

Monitor regulatory compliance

The PJPP provides benefits that exceed those permitted by a registered retirement plan under Canadian tax law. While the plan was always administered according to the limits of the Income Tax Act ("ITA"), amendments to the plan were required to maintain the plan’s registered status with Canada Revenue Agency ("CRA"). Maintaining the plan’s registered status is a major Board concern and the board strongly encouraged the Sponsor to make the necessary amendments. The Sponsor prepared amendments to bring the plan into compliance with the ITA and CRA’s regulatory requirements, which received Cabinet approval and became effective October 31, 2013.

As mentioned earlier, the plan amendments are the subject of current litigation proceedings. The board continues to monitor its compliance with the Income Tax Act relative to the "Standstill Agreement" and is seeking legal advice as needed to ensure on-going registration of the plan.

In December 2014, a working group composed of individuals representing the Sponsor and the AOJ was formed. The working group is a forum for resolution of the issues identified within the court application that commenced November, 2013. The board has agreed that it should act as a neutral party serving as a resource on an as-needed basis and that it should satisfy itself that the working group has taken appropriate precautions to ensure CRA will not act to deregister the plan while these important discussions are in progress.

Mandate

On October 31, 2013, Ontario Regulation 290/13 (the "Regulation") replaced Ontario Regulation 67/92. The Regulation continues to establish the board as the body with responsibility for administering pension benefits of retired provincial judges and their surviving spouses and children. The board derives its powers and discretionary authority from the Regulation.

The board is a trust agency with financial authority and responsibilities as described under the new Agencies and Appointments Directive effective February 1, 2015. A background and overview of the board is provided under Section XV "Organizational Chart".

Board members are guided by the recently updated Memorandum of Understanding (the "MOU") dated March 23, 2015 between the chair of the board and the President of Treasury Board (the "Minister") which outlines the relationships, arrangements and expectations between the board, the Ministry and the Province.

It is the specific duty of the board to administer the pension and survivor allowance benefits provided to retirees under the plan. The board relies on terms of the plan prescribed in the Regulation to determine eligibility for, and the amount of, pension to be paid. It is also responsible for resolving spousal claims for survivor benefits under the plan or under the Family Law Act, providing pension estimates to Plan members, approving refunds of contributions in situations where no pension is payable and pensioner communication. In carrying out these duties the board has a fiduciary obligation to act in the best interests of the judges and other Plan beneficiaries.

The scope of the board’s authority is prescribed in the Regulation and is somewhat distinctive in that it does not include key responsibilities ordinarily associated with a public sector pension administration. For example, the board is not responsible for the investment of plan assets, or receiving and accounting for contributions by, and communicating with, sitting Judges. The table in Appendix "A" provides more detail on how administrative roles and responsibilities are shared among the various Plan stakeholders.

All Plan benefits are paid from the fund and no payment may be made out the fund unless it is authorized by the board or made in accordance with its established procedures. The board is not responsible for managing the investment of the fund. The Fund, including contributions of sitting Judges, is held in the accounts of Ontario. The Minister of Finance is the custodian of the fund.

The board operates in accordance with all administrative policies established and specified in all applicable Management Board or Treasury Board Directives or Guidelines, or any amendments to those Directives or Guidelines and any new applicable Directives or Guidelines. These Directives and Guidelines include, but are not limited to, the most recent versions of the following:

• Agencies and Appointments Directive
• Advertising Content Directive
• Travel, Meal & Hospitality Expenses Directive
• Records Management Guideline
• Visual Identity Directive
• Procurement Directive on Advertising, Public and Media Relations and Creative Communications Services
• Procurement Directive (to the extent applicable to the board as an "Other Included Entity")
• Freedom of Information & Privacy Directive
• Disclosure of Wrongdoing Directive

The board has no authority or responsibility for the:

• administration and investment of the fund;
• collection and remittance of pension contributions to the fund;
• interest earned by the fund;
• interest payable on sitting Judges contributions;
• enrolment of Plan members;
• communications to sitting Judges;
• actuarial valuations of the plan and Fund;
• regulatory filings with government authorities; and
• administration of insured benefits for retired judges.

Strategic directions

1. Overall mission

   The mission of the board is to excel in the administration of pension benefits under the plan by delivering high quality, cost-effective services to the beneficiaries of the plan.

2. Core values

   The board defines its core values as a commitment to:

   • trust, fairness and respect in the treatment of the beneficiaries of the plan;
   • good governance, accountability and transparency of actions to stakeholders and beneficiaries of the plan;
   • teamwork from within and outside the board and results focused leadership;
   • excellence in client services delivery.
3. Key directions

   Three strategies form the foundation of the board’s business plan. These strategies support the government priorities in accountability, transparency and financial management, as well as the TBS focus on modernizing frontline public services:

Strategy 1: Strengthen plan governance

The introduction of the new Agencies and Appointments Directive shows that governance and accountability continues to be a priority for the government and its agencies, boards and commissions. As a trust agency and pension plan administrator, an even higher standard of care applies to the board since it is also expected to act in the best interests of its members and beneficiaries. Clearly defined roles, responsibilities, rules and controls help ensure these fiduciary obligations are met. The board will continue to focus on strengthening its governance framework by implementing the remaining recommendations of the 2013 Deloitte report and the 2014 Internal Audit:

1. Governance framework roles and responsibilities – The benefits under the plan are administered by the board. However, operational responsibilities are shared between three Ministries and a third party service provider OPB which creates a complex matrix of responsibilities. Improving the clarity of the respective roles and responsibilities of the board and management which has now been clarified, will support more effective delegation and provide clearer lines of accountability to the board.
2. 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 will continue to pursue opportunities that enhance communications and improve relations with stakeholders and beneficiaries.
3. Improving accountability – The financial statements of the fund are audited annually by the Office of the Auditor General of Ontario. While that audit provides important information about the management of the plan’s operations, its scope is limited because its findings are made relative to the financial statements not specific business processes. Given those limitations, the board is 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.

Strategy 2: Deliver excellent cost effective client service

Since 1999, the board has delivered pension administration services to the plan’s beneficiaries through a service agreement with OPB. The board monitors client service delivery through regular status reports on Plan expenses, Plan presentations, complaints, timeliness and accuracy of pension payments. These measures are useful in assessing basic service delivery and the board will continue to use them to evaluate and improve performance. The board is also developing a Client survey as a means of getting deeper insight into the state of the client service delivery.

Courts are increasingly holding administrators and employers responsible for pension communications with employees and plan beneficiaries. Members and beneficiaries may lack information they need to make informed decisions about how they plan for retirement and receive their entitlements. Ensuring timely access to consistent Plan information, however, is a service area that has proven to be challenging for the board due to limitations on both electronic communication capability and access to member contact information.

Naturally, the board views itself as the authority on the plan and in the best position to assist clients in making informed decisions about their pension entitlement. Currently, there is no dedicated communication channel for promoting that message to retired Plan beneficiaries. The board does not have the resources to pursue a formal communication strategy, at this time. However, we can use informal stakeholder feedback to identify opportunities for more proactive communication that is current, informative and written in plain language.

Strategy 3: Monitor regulatory compliance

Pension plans provide members with a tax effective means to accumulate and then receive retirement savings in the future. As a result, they are heavily regulated under the ITA and must comply with tax rules to maintain their registered status. The plan Sponsor is responsible for the bulk of the plan’s tax filing and compliance requirements. However, the board recognizes the importance of preserving the on-going tax assisted treatment for the plan’s beneficiaries and plays an active role identifying and resolving emerging regulatory issues.

Overview of current and future program activities

For the three-year period ending March 31, 2018, three projects ("a", "c" and "e" below) are expected to be completed by the end of the current fiscal year March 31, 2016. Item "b" below, is on-going and part of continuous improvement efforts. Finally, the remaining activity "d" is on hold due to litigation. It will be monitored to ensure completion once the legal issues are resolved and TBS policy direction is clarified.

1. Implement internal audit recommendations - (Status: In progress expected completion: Q2/2015)

   Ministry of Finance, Internal Audit Division completed its audit of OPB’s pension payment process in April, 2014. The report identified 3 improvement opportunities for the board’s consideration. Specifically they recommended: documenting roles and responsibilities within the pension processes; updating policies and procedures that underpin the services offered by OPB; and considering whether some form of automation of pension calculations would reduce risk and improve efficiency. Action on the first two opportunities is complete. In response to the third, the board has engaged a professional services consultant to develop and deliver a cost benefit analysis report that will inform a decision by the board and TBS whether the automation opportunities are feasible. With the final report of the Professional Services consultant, the board’s commitments agreed to under the Internal Audit Recommendations are completed. Should the professional services consultant recommendations be accepted, that project is expected to commence 2016/2017 subject to a successful procurement competition.

2. Improving Service and Reducing Cost - (Status: In progress, expected completion: On-Going)

   The plan and the fund are administered by a number of branches and areas within the Government, some of which operate outside the authority of, or without review by, the board. In order to improve service and reduce cost, the board will work with the various stakeholders to streamline and clarify their working relationships, accountabilities, roles and responsibilities, and operating mechanisms using opportunities identified in both, the Deloitte report and recent plan audits.

3. Governance framework roles and responsibilities - (Status: In progress, expected completion: Q4/2015

   There are a number of branches and areas within the government that are involved in administering the plan and Fund and communicate on related issues with one or more classes of Plan beneficiaries. The board was concerned that this operating model posed a risk to effective Plan governance. In response a report, known as the Deloitte Report, was completed to clarify roles and responsibilities relating to the plan’s administration. A number of recommendations have been implemented and the board continues to use the report as a benchmark to monitor progress. In March 2015, the board finalized its Memorandum of Understanding with TBS which provided some important clarification on the Deloitte recommendations. The next step in the process will be to reconcile the responsibilities within the Service Level Agreement to ensure there are no gaps. The board will work with TBS and OPB to finalize that agreement.

4. Implement ITA Compliant Plan Provisions - (Status: Deferred Expected completion: On Hold)

   Pension contributions/entitlements that exceed maximum amounts prescribed under the ITA cannot be remitted to/paid from the fund of a registered pension plan. Plans that provide pensions in excess of ITA limits typically establish a supplementary fund/account to hold assets and pay pensions that cannot be administered under the registered plan. The compliance amendments were filed and effective October 31, 2013. Court proceedings began in December 2013 to set aside the compliant provisions and revert to the former Plan provisions. An agreement is in place between the parties that effectively defers the implementation and prohibits changes to the former administrative arrangements. A working group composed of representatives of the Sponsor and the AOJ was established in the Fall of 2014. The board will work with the working group, TBS and OPB to ensure full regulatory compliance once the matter is decided.

5. Implement the remuneration commission recommendations - (Status: In progress, expected completion: Q4/2015)

   The mandate of the Provincial Judges Remuneration Commission (the "Remuneration Commission") is to inquire into and make recommendations relating to the salaries, pensions, and benefits for Ontario provincial judges to the Ontario government as Plan Sponsor. The most recent Remuneration Commission considered remuneration for the four year period ending March 31, 2014. Among its recommendations the Remuneration Commission called on the government to amend the plan for the division of pension assets in the event of marital breakdown. When these changes become effective they will trigger revisions to administrative practices and require communication.

   Litigation proceedings initially put the Sponsor’s ability to consider and implement any plan changes relating to Family Law on hold. A decision has now been reached to move forward to implement the Family Law recommendations, while efforts to resolve the litigation continue separately. The board will work with all stakeholders to achieve full implementation.

Resources needed to meet goals and objectives

The board expects to meet the objectives of its mandate and its strategic directions through the ongoing application and operation of its Service Level Agreement ("SLA") with the OPB. Where the SLA does not suffice to meet these objectives or directions, or where an unanticipated expense occurs, the board will apply directly to TBS for specific assistance and additional resources.

During 2013, the board expected to proceed with a review and update of the SLA. The main terms of the SLA had expired January 1, 2011, and are in a period of automatic renewal on an annual basis. Several factors contributed to growing uncertainty around the scope of the administrative arrangements including the status of the Memorandum of Understanding, the ITA compliance initiative, the Provincial Judges Remuneration Commission and finally, commencement of litigation in December, 2013. Consequently the board agreed to defer the update until the new requirements could be determined.

Under the terms of the existing agreement the next scheduled review of OPB’s service fees can be implemented effective January 1, 2015. OPB provides services on a cost recovery basis and any proposed cost adjustments will reflect that principle. The board is aware of pressures on OPB’s service fees; three factors are driving the need for fee adjustments: 1) rising cost and risk of using manual pension processes; 2) an increase in the overall volume of transactions and secretarial support required by the board; and 3) the introduction of new services that will be required to administer the ITA compliant plan provisions and Remuneration Commission recommendations (i.e. Family Law amendment). The impact of these pressures on fees was expected to be known by in the last quarter of 2014 however, as mentioned earlier; the scope of the administrative arrangement is still being resolved.

In April 2014, the board received its report on the audit of OPB’s pension payment processes. The audit identified opportunities for improving controls and OPB is taking action in response. Included in the report was a recommendation that the board assess the benefits of automating parts of the pension payment process with the goal of improving efficiency and reducing risk. The costs and benefits of automation in this context must be determined before proceeding. A procurement process for professional services to prepare an assessment was completed in April 2015 and the successful vendor is working with the OPB. The results of that review are expected by the end of June 2015 and will inform the board’s discussions with the Sponsor on a proposed IT solution and development of a business case to support a capital investment.

In the second half of 2015 the board is planning to convene a special Board meeting to engage in a discussion of strategic issues that cannot be accommodated within the regular quarterly Board meetings. A half-day session will allow the board to come together and focus on assessing its objectives, strategy and risks. The session will be an important source of content for the 2016 - 2019 Business Plan which must be submitted by January 1, 2016.

The projects mentioned above will generate additional expenses and require access to OPB and TBS staff resources. Project cost estimates and resource requirements will be defined in consultation with TBS and OPB.

Neither the board nor the plan generates revenue. Details concerning projected plan expenditures are presented in Table 10.1 found at Section X "Financial Budget and Staffing".

From time to time the board may require external service providers (e.g. actuarial, legal, and auditing) to satisfy its plan administration responsibilities. Under the terms of the SLA approval must be sought from TBS to incur the additional expenditures. On approval the expenses are invoiced to TBS at cost.

Environmental scan

The environmental scan below provides a description of the business environment in which the board is operating. It identifies and briefly discusses the considerations used to inform the risk assessment reflected in Table 7.1, 7.2 and 7.3 under Section VII "Risk Identification and Mitigation Strategies".

IT opportunity and cost

The board’s service provider, OPB, has processes in place to administer an agreed upon schedule of services under the PJPP. Over the years the small size of the plan has contributed to limited investment in IT solutions and a heavy reliance on processes involving manual templates and inputs. It is likely not feasible to fully automate existing processes to eliminate risk of processing errors in the current environment. However, there may be opportunities to reduce the risk and improve the cost effectiveness of the pension administration services delivered by OPB through targeted solutions.

Automation was an area that was discussed within the 2014 internal audit and OPB advised that it believes that improvements in risk mitigation, quality and cost effectiveness may be achieved with an investment in process and calculation automation. Before pursuing an IT solution the board agreed that the feasibility of the investment should be assessed through a cost benefit analysis. A professional services organization has been engaged to prepare the report and completion is expected in June 2015. Should the report recommend system modifications that generate additional costs for TBS, their written consent and approval will be required.

Sponsor’s fiscal constraints

Expenses of the plan are paid directly by TBS. Basic pension administration and secretarial services account for the bulk of the plan’s expenditures. The services are outsourced to OPB and are provided on a cost recovery basis. OPB has indicated changes to the fee and service schedule will be required to take into account increasing transaction volume and expanded scope of services. The board and the Sponsor must balance any proposed changes with the fact that returning to a balanced budget is a key priority for the government.

Stakeholder involvement

Membership of the plan is composed of individuals who are considered legally and financially sophisticated. In the past, Board-related pension issues were typically raised by individuals and resolved in that context. Over the past several years the AOJ has signaled a greater interest in the Pension Plan and its governance framework. As a stakeholder, the AOJ represents sitting and retired Judges who are also members of the plan. While this group has engaged the government on issues affecting remuneration, the board’s efforts to engage the stakeholder have had limited success. The board values the AOJ as a key stakeholder and continues to pursue on-going discussions with them in an effort to develop good relations and improve transparency without unduly influencing Board decision-making. It is expected that once the litigation is resolved, communication channels will improve.

On-going litigation

Ontario Regulation 290/13 amended the PJPP to bring its terms into compliance with the ITA. The amendments do not affect the amount of pension payable to a retiree or survivor but do affect certain payroll processes which are the responsibility of Ontario Shared Services ("OSS") and OPB since the funds will be allocated between two accounts.

In December 2013, an application was filed with the Ontario Superior Court of Justice asking for an order declaring the amended plan provisions unconstitutional and unlawful. The Application has since been adjourned and the Standstill Agreement was established to maintain administration of the plan according to the old provisions until at least June 30, 2015. The board continues to monitor legal costs and increasing administrative complexity associated with the delay and ongoing compliance with the Standstill Agreement.

Provincial Judges Remuneration Commission (the "Remuneration Commission")

Compensation for Judges is determined through a commission process prescribed within the Framework Agreement. On October 30, 2013 the Eighth Judicial Remuneration Commission completed its report on Judges remuneration. The majority of the recommendations have been implemented and proposals to amend the plan to provide for division of assets on marital breakdown are in progress. The Ninth Judicial Remuneration Commission will make recommendations relating to the period from April 1, 2014 to March 31, 2018. Proceedings for the Ninth Judicial Remuneration Commission Hearings have not started.

Agency accountability requirements

In an effort to strengthen accountability and clarify roles and responsibilities in the Broader Public Sector the government has been providing more frequent guidance to its agencies, boards and commissions. Most recently the government consolidated its Agency Establishment and Accountability Directive with the Government Appointees Directive to create the new Agencies & Appointments Directive. Many organizations, including this Board, have found the directives helpful in more precisely defining their obligations and government expectations. Owing to its structure and mandate, the board recognizes that it is reliant on both TBS and OPB processes and resourcing for compliance. Despite this reliance, the board consistently and firmly asserts its independence in all actions and decisions affecting interests of Plan beneficiaries.

SLA/MOU refresh

The Memorandum of Understanding (the MOU) between the chair of the board and the Minister was restated in March 2015. The new MOU provides some important clarification to the board about its role and responsibilities and helps to identify gaps in administrative support. This information is vital to the renegotiation of the Service Level Agreement (the SLA) that defines the services and associated fees that are procured by TBS to support the board. The board is seeking to update the terms of the SLA to ensure its currency and that it reflects the board’s operational needs. Changes to the services will have an effect on the plan’s operating expenses and the board expects the fee schedules will require renegotiation.

Sensitivity of judges data

Personal information belonging to sitting or retired judges is extremely sensitive and if accidentally disclosed could have a serious effect on the personal safety of the individual. The board recognizes the special circumstances that apply to judges and requires that OPB ensures personal information is adequately secured prior to transmission by mail or electronic means. In addition, the board relies on OPB’s well-established privacy and disaster recovery policies that reduce the risks associated with a major event. This is especially important in years where a triennial valuation is being prepared and there are unusual amounts of data moving between service providers.

Risk identification assessment and mitigation strategies

Table 7.1 Risk identification assessment and mitigation strategies

Table 7.2 Risk Identification Assessment and Mitigation Strategies (Continued)

Table 7.3 Risk identification assessment and mitigation strategies (Continued)

Human resources

The board has no staff. There is, as a result, no human resources impact, and no need for a compensation strategy or benchmarking against other public sector bodies. See paragraph (b) under Section XV below for additional details.

Performance measures

Performance measures, such as the 60-day limit for case processing and the double verification requirement, are established by the board and are performed by OPB on behalf of the board through the SLA. Compliance with these measures is monitored at the board’s regular meetings to ensure timely, quality service and accuracy. The board is also considering opportunities to enhance performance reporting that were identified in the Deloitte report.

One of the challenges to improved performance reporting is the state of automation within OPB’s business processes. In fact, this was the subject of a recommendation, within the most recent internal audit, calling for the board to assess opportunities for process automation. The board will be looking for cost effective proposals to enhance collection of performance related information in conjunction when it begins assessing the Cost Benefit Analysis for process automation later this summer.

Financial budget and staffing

Daily administration of the plan is outsourced to OPB at an annual cost of just over $111K, which is paid by TBS. Pension administration services are supplied by OPB on a cost recovery basis only. Fees are evaluated on a three year cycle and the next fee update will be effective 2015. The work being performed by OPB in respect of the plan has increased over the past triennial period in terms of both volume and scope. While fees were reduced at the last triennial review they are expected to rise beginning in 2015. A fee adjustment proposal will be prepared and submitted to the board and TBS for review later in 2015. The table has been adjusted to reflect an estimate of higher fees commencing in 2015 but the true value will only be known later this year once accountability and costs are determined for new responsibilities that were created when the Memorandum of Understanding was updated in March. Services provided outside the scope of the SLA are charged back to TBS at cost. The board does not generate revenues.

Table 10.1: Financial budget and staffing (figures exclude HST)

Information technology/electronic service delivery plan

Plan membership is extremely small relative to other Broader Public Sector plans. The PJPB does not have a website and use of information technology is limited to record keeping and data transmission to support payroll. Costs of implementing electronic service delivery are presumed to be prohibitive especially given the government’s current financial constraints.

In May 2014, the board received recommendations within an internal audit report suggesting it should determine whether automating current manual processes might produce efficiency gains and mitigate certain data risks. Under the Service Level Agreement between OPB, TBS and the PJPB, any system modifications that generate additional costs for TBS will require their written consent and approval.

As a first step toward understanding cost and viability of developing new or modified information technology, OPB engaged a management and technology consulting firm to prepare a cost benefit analysis on PJPP process automation.

Once complete, the Cost Benefit Analysis will inform the board’s decision on whether to proceed and the business case for acquiring the proposed solution. Completion of the Cost Benefit Analysis is expected by the beginning of July. Depending on the findings the board would be seeking Q1/Q2 2016 start.

Initiatives involving third parties

At present, the only third party with whom the board has an SLA is OPB. The board commits itself to monitoring its agreement with OPB as well as the services provided by OPB and to maintaining harmonious working relationships with other stakeholders administering the plan and Fund.

From time to time the board requires advice on emerging legal issues affecting its obligations and the administration of the plan. The firm of Borden, Ladner, Gervais (BLG) was retained in February 2014 to provide legal services to the board relative to current litigation arising from the government’s restatement of the plan to bring it into compliance with the Income Tax Act. The engagement complies with Ministry of the Attorney General’s guidelines for engaging external counsel and TBS is responsible for payment of invoices and is expected to continue for the balance of 2015.

In addition, the plan’s actuaries, Aon Hewitt, provide actuarial consulting services under contract to TBS. These services include preparation of on-going funding valuations of the plan and more complex entitlement calculations such as determining the commuted value of individual entitlements for the purpose of family law valuations.

Actuarial calculations relating to the split of the plan’s Fund for ITA compliance were performed as at March 31, 2012. However, in accordance with the "standstill agreement", no action has been taken to establish a supplementary account. Once litigation is resolved the board and the Sponsor will determine whether additional actuarial work is required to complete the fund Split.

Implementation plan

During the three-year period covered by this Business Plan, the board will oversee the following processes, tools and opportunities to monitor, assess and review the specific items or issues listed below.

Judges plan ITA compliance amendments

• Regular updates from PJPB Counsel regarding status of litigation.
• Regular updates from TBS regarding status of ITA compliance amendment implementation

Pensioner communications

• Co-operate with Chief Justice’s Office to maintain Plan information hosted on their Intranet site which is accessible by all sitting and per diem Judges
• Have OPB advise and seek approval from PJPB of all OPB communications on behalf of PJPB including those related to Family Law amendments
• Review and approve beneficiary communications relating to the above-noted compliance amendment
• Identify other communications opportunities as required

Audit services

• Implement remaining internal audit recommendations
• Determine the feasibility of an IT solution for greater calculation efficiency and risk management
• Obtain TBS approval for recommendations with implications for service fees
• Continue to work with TBS and the Internal Audit Division to develop on-going audit services of the plan.

Governance framework roles and responsibilities

• Strategic review of Board objectives and risk
• On-going dialogue with Plan stakeholders.
• Monitoring progress on Deloitte report recommendations
• Regular briefing on status of the Family Law amendment implementation, the Standstill Agreement and any related legal issues
• Ensure policy issues are resolved and Board decisions minuted to support future procedure development
• Monitor compliance with Ministry and Government Directives

Accurate payments and entitlement calculations

• Provide calculation materials and entitlement information in timely manner to the board for its review and approval at Board meetings
• Make OPB staff available at Board meetings to clarify and explain all payments when necessary
• Require verification and staff signatures for all calculations
• Ensure Provincial Auditor performs random checks of all calculations

Communication plan

Responsibility for communication of Plan related information has historically been determined by the beneficiaries’ status under the plan. Communication with sitting Judges is generally undertaken by the CJO and in some cases the COJ, while responsibility for communication with retirees and survivors rests exclusively with the board. Anomalies do exist; for example, a sitting Judge may seek personal entitlement information (e.g. pension estimate) directly from the board to support decision making. Although the board has no formal mandate to proactively communicate with sitting Judges, it nevertheless takes an active interest in monitoring Plan information prepared by other stakeholders.

During the 2013/2014 fiscal year, sitting and retired judges and surviving spouses were affected by three key developments involving the PJPP.

1. In October, the government filed O.Reg. 290/13 to bring the plan provisions into compliance with the Income Tax Act;
2. in November, the Eighth Provincial Judicial Remuneration Commission delivered its recommendations to the government; and
3. in December the AOJ began proceedings against the government challenging the constitutionality of O.Reg. 290/13.

The introduction of the "standstill agreement" in 2014 stabilized administrative conditions for the plan and at least temporarily postponed the need for communication on plan changes. In 2015, the Sponsor is expected to introduce changes to the plan to implement the Remuneration Commission recommendations for division of pension on marital breakdown.

The board will continue to monitor these situations as they evolve and will identify opportunities for communication that will help members, retirees and survivors make informed decisions concerning their pensions. The board will also be consulting the CJO and COJ more frequently on these and other pension administration services for client feedback on satisfaction and suggested changes.

Finally, the board is committed to exploring opportunities identified in the Deloitte report to enhance communications between the board and plan beneficiaries.

Organizational chart and reporting structure

• Deborah Oakley - chair - Eligible for reappointment: November 14, 2015
  • Lisa Philipps - Member - Eligible for Reappointment: February 26, 2017
  • Elizabeth Boyd - Member - Eligible for Reappointment: April 10, 2016

1. Board composition

   The Province appoints board members by Order-in-Council for specific terms. Ordinarily there are three board members, each of whom initially holds office for up to three years. One of the members is designated by the Province as the chair of the board. Members may be re-appointed when their terms of office expire. The board normally meets four times a year, but may schedule additional meetings as workload demands.

   During the fiscal year 2014/2015, Deborah Oakley, a retired senior executive with OMERS, served as chair on an interim basis until her appointment was formally confirmed effective October 22, 2014. Ms. Oakley established her own consulting firm in 2008 and provides interim executive and association management services, largely in the not for profit/charitable justice sectors.

   Elizabeth Boyd was appointed a Board member in April 2013. Ms. Boyd is a Partner with a major law firm in Toronto and her practice focuses on Pensions, Benefits and Executive Compensation.

   Lisa Philipps joined the board effective February 26, 2014. Ms. Philipps is a Professor at Osgoode Hall Law School of York University, teaching taxation law and fiscal policy.

2. Accountability relationships

   The chair is accountable to the President of Treasury Board for the performance of the board in fulfilling its mandate. Specific responsibilities are assigned to the chair by Regulation, its Memorandum of Understanding and the applicable Ministry/Government policies and directives.

   The Deputy Minister is accountable to the Secretary of Cabinet and the President of the Treasury Board for the performance of the Ministry in providing administrative and organizational support to the board so that it can perform its responsibilities.

3. Administrative and organizational support

   The board has no staff so secretarial support and its actual day-to-day work is outsourced to OPB through a tripartite Service Level Agreement (SLA) that includes TBS, the plan Sponsor. Effective governance of the plan requires a high degree of coordination and cooperation between each of the parties.

   Implementation of pension design and policy changes is the responsibility of the plan Sponsor, as represented by TBS. Management within the Employee Relations Division, Total Compensation Strategy Branch, also ensures the plan’s regulatory reporting requirements are met and that all expenses associated with running the plan, including expenses related to legal and actuarial support are paid.

   OPB is the provincial trust agency with responsibility for administering the Public Service Pension Plan and investing its fund. In addition it has delivered both, pension administration services and board secretarial services to the board on a cost recovery basis using its operational infrastructure, management and staff resources since 1999.

Appendix "A"

PJPP stakeholder roles summary