2016-19 Provincial Judges Pension Board business plan

The Agencies and Appointments Directive requires the Provincial Judges Pension Board (the “Board”) to prepare to submit a business plan annually. Development of this business plan began in the final quarter of 2015 and is finalized in time for the submission deadline of December 31^st. As a result, the reader may find references to dates or events that have already occurred or since been resolved. In preparing the Business Plan the Board has used the submission deadline date as the reference point for discussion.

Executive summary

The Provincial Judges Pension Board (“PJPB” or 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 are expected to be almost $220,000 (see Table 10.1 on page 20 for description of financial resources). These expenses include general pension payroll administration and Board support 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 (“ITA”) compliance amendment and the implementation of new Plan provisions that will clarify Plan rules for the division of pension assets on marriage breakdown. There is also a new and much more rigorous transparency and accountability regime with multiple reporting and compliance requirements. Each of these modifications affects key administrative processes and creates 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. Integrating these themes into our business plan is vital to our success and the Board continues to align its strategic priorities with these important goals. Specifically the Board remains focused on two fundamental strategies:

1. delivery of excellent cost effective client service; and
2. strengthening Plan governance.

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. Each fiscal year the Board meets formally four times to specifically consider applications for payment from the Fund, approve policy and procedure as required, monitor client service performance and receive updates on plan operations. 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.

As part of our business planning process the Board held a strategic planning session in November of 2015. During these discussions the Board determined that communications with all beneficiaries including sitting judges, plan automation and stakeholder relations should form our priorities for improvement in the planning period. More detail on specific initiatives is provided in the Implementation Plan.

We consider effective stakeholder relations to be a vital source of client service feedback and the Board is committed to improving relations through more frequent interaction. Each year OPB Staff are 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 over the years. This year the Chair will look to attend the session to offer an opportunity for direct feedback. In addition, 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.

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 since it includes several parties (e.g. TBS, OPB and Ontario Shared Services) it 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 assigned from within government to complete a report on pension processes within the OPB. That audit is now complete and the Board is monitoring the implementation of its recommendations. A cost benefit analysis of automation solutions was commissioned through a 3^rd party consulting firm and its recommendations will be submitted to the Board for consideration. Planning for another internal audit will get underway in 2016.

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 recommendations, the Service Level Agreement (“SLA”) and Memorandum of Understanding (“MOU”) reviews and will be taken into account in this business plan.

Over the last several years the Board identified Monitoring Regulatory Compliance as a distinct strategy within its business plans. After its strategic planning session in the fall of 2015, the Board concluded that monitoring regulatory compliance is a governance activity that can be engaged as part of the Board’s strategy to strengthen governance. As a result we have simplified our strategies by integrating the discussion of regulatory compliance into strengthening plan governance.

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 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 priority 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 ITA relative to the “Standstill Agreement” and is seeking independent 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.

As the Working Group discussions proceed the Board will be seeking regular updates and will participate in discussions where its experience in administering the Plan will contribute to a more effective Plan governance model in the future.

Mandate

The Board’s mandate is to administer pensions and survivor allowances for provincial judges, their surviving spouses and eligible children. The three member Board is constituted as a Trust Agency operating at arm’s length from the Sponsor. It determines eligibility for, and the amount of pensions to be paid according to the terms of the Plan as prescribed in Ontario Regulation 290/13 (the “Regulation”). In carrying out these duties the Board has a fiduciary obligation to act in the best interests of the judges and other Plan beneficiaries.

A Chair is appointed from among the Board members and is accountable to the President of the Treasury Board (the Minister) for:

• The performance of the Board in fulfilling its mandate;
• Carrying out its assigned roles and responsibilities;
• Reporting to the Minister as requested on Board activities and agency compliance; and
• Timely communication about issues affecting the Minister’s responsibilities for the Board.

All pensions and survivor allowances are paid from the Fund and no payment may be made 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 Agency Directives and Guidelines, 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 listed within Appendix “B”.

While the Board acts as the Plan Administrator, it currently 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;
• actuarial valuations of the Plan and Fund;
• regulatory filings with government authorities;
• administration of insured benefits for retired judges; and
• public communications strategies and publications for sitting Judges.

Strategic directions

1. Mission of the Board

   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:

   • Excellence in client services delivery.
   • 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;
3. Key directions

   Two strategies form the foundation of the Board’s business plan. Our focus on excellent client service delivery and good governance will help the government achieve its priorities in accountability, transparency and financial management, as well as TBS’ priority of modernizing frontline public services.

Strategy 1: Deliver excellent cost effective client service

Services offered by pension plan administrators are continually evolving in response to increasing needs of participants, who are looking to understand and make informed decisions about how they will receive their pension in retirement. Asset division for family law purposes and estate planning are two common examples of situations where a beneficiary may approach the Plan with a request for service. In order for the Board to deliver excellent service we are attempting to better understand our client needs and what they value.

Since 1999, the Board has delivered pension administration services to the Plan’s beneficiaries through a service agreement with OPB. Historically, client interactions have been focused on payment of the pension or survivor allowance. As a result, the Board has assessed the quality of client service delivery through informal consultation with our stakeholders and regular service status updates at the Board’s quarterly meetings. This feedback continues to be useful in assessing basic service delivery; however, we believe that our ability to deliver excellent service requires deeper insight into the client experience and the state of their expectations. For this reason we were pleased to learn that the recently completed cost benefit analysis suggests opportunities may emerge from the proposed automation solutions to integrate key performance indicator reporting. In addition we plan to work with the Plan Sponsor to obtain cost effective feedback directly from clients, i.e. a customer satisfaction survey, in the coming year.

Courts are increasingly holding administrators and employers responsible for pension communications with employees and plan beneficiaries. Beneficiaries may lack information they need to make informed decisions about how they plan for retirement and receive their entitlements. In our view, sitting judges are particularly vulnerable since they receive little if any communication from the Board during the period of their appointment. 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. We intend to address this gap by engaging our stakeholders and the Sponsor on the subject of expanding the Board’s responsibilities to include communication of pension entitlements with sitting Judges, working toward the production of an annual pension statement.

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 plans to pursue approval of resources to implement a formal communication strategy. We will use stakeholder feedback to identify opportunities for more proactive communication that is current, informative and written in plain language.

Strategy 2: Strengthen plan governance

We are acutely aware that governance and accountability continues to be a priority for the government and its agencies, boards and commissions (“ABCs”). 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. Strong governance is essential for the Board to ensure all obligations under the Plan are satisfied. The Board will continue to focus on strengthening its governance by building processes and structure that are grounded in the following principles:

1. Access to information – In order to perform its responsibilities and support informed decision making the Board should have access to relevant, timely and accurate information. In some cases, processes do not support timely retrieval of member and Plan information because the Plan relies heavily on manual processing. Acting on the recommendations of a recent internal audit, a pension consulting firm was engaged to assess the feasibility of automating pension processes. The Board will be seeking an allocation from the Sponsor to address the information and data challenges by funding a modest but effective pension automation solution. The Board will consult with affected stakeholders including Ontario Shared Services (“OSS”) to ensure a smooth transition.
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, including sitting judges.
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, regular monitoring and evaluation of performance and training as required.
4. Performance of fiduciary duties – Representatives appointed by the Sponsor and the AOJ are striving to resolve litigation relating to the Plan’s administration. Although the Board has not been involved, we are advised that the “Working Group” is engaged, among many topics, in a discussion about the future governance of the Plan. Given our on-going and stated interest in improving plan governance and our unique perspective as a fiduciary, we believe the Board will play important role to play in any dialogue on restructuring the Plan’s governance. 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 the discussion by contributing our experiences and insights in administering the Plan to ensure the future governance model is viable and effective.
5. Monitor 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. In addition the Board must also assure the Sponsor that it is operating within guidelines for agency accountability and administering the entitlements according to the terms of the Plan. The Board will continue to track its compliance with these requirements at its quarterly meetings and through on-going discussions with the Sponsor.

Overview of current and future program activities

For the three-year period ending March 31, 2019, two projects ((a) and (e) below) are expected to be completed by the end of 2017 but both are dependent on Sponsor approval and action. Items (b) and (c) below are 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 feasible automation solution - (Status: In progress, expected completion: Q4/2017)

   Ministry of Finance, Internal Audit Division completed its audit of OPB’s pension payment process in April, 2014. The last remaining improvement opportunity to be considered is automating pension calculations to reduce risk and improve efficiency. A Cost Benefit Analysis Report is complete and concludes that a range of proposed automation solutions are feasible and beneficial. Should the business case be approved by the Sponsor, that project is expected to commence in 2017, subject to a successful procurement competition.

2. Improving service and reducing cost - (Status: In progress, expected completion: Ongoing)

   Providing excellent cost effective service is a central strategy for the Board. In the past our key measure was based on satisfying service commitments for response times. More robust performance indicator(s) will provide better insight to the Board on where it could make the most effective service improvements. Before adopting new performance indicators, however, the Board needs a better understanding of what its clients expect and need from a service interaction with the Board, hence the proposed client satisfaction survey. Coincidentally, the Board will be considering an automation proposal in 2016 that could be leveraged to facilitate performance reporting. The Board will work with OPB to develop a project plan and timeline for completion of a report in 2016. Once complete the Board will share its findings and recommendations with the Plan Sponsor.

   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 internal 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 - (Status: In progress, expected completion: Ongoing)

   General pension plan governance principles recommend a plan administrator conduct a regular review of its plan governance. The Board is committed to selecting and completing an appropriate governance self-assessment by the end of 2016/2017 fiscal year.

   An important part of plan administration is records management. A review of the Board’s compliance with provincial standards should occur periodically. The Board relies on OPB practices for satisfaction of its responsibilities and will seek confirmation from OPB that it is, in fact, compliant and satisfying its obligations under the MOU.

   Policies and procedures provide clear direction to the service provider and ensure consistent administration of pension entitlements. A significant update to procedures was completed in 2015. The Board will continue to document and approve its policies and procedures on an on-going basis.

   In March 2015, the Board finalized its MOU with TBS which provided some important clarification on Plan related roles and responsibilities. The next step in the process will be to reconcile the responsibilities within the SLA to ensure there are no gaps. The Board will work with TBS and OPB to finalize the service and fee schedules in that agreement in the first quarter of 2016.

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 family law amendment - (Status: In progress, expected completion: Q2/2016)

   The most recent Provincial Judges 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 was 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 of the new provisions.

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 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 MOU, 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 and in keeping with past practice OPB’s service fees can be adjusted retroactively to be 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; four 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; 3) much greater compliance with reporting requirements; and 4) 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 in 2015; however, as mentioned earlier, the scope of the administrative arrangement is still being assessed.

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 has taken 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 a cost benefit analysis was completed in November 2015 and the results of that review were presented to the Board. The Board will be working with the Sponsor on a proposed IT solution and development of a business case to support a capital investment.

For the first time in its history, the Board convened a special meeting to engage in a discussion of strategic issues that cannot be accommodated within the regular quarterly Board meetings. The session was held in the Fall and allowed the Board to come together and focus on assessing its objectives, strategy and risks. The session was a helpful exercise for developing content for the 2016 - 2019 Business Plan and we are proposing to make this a regular practice.

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 the Table 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.

Automation was the subject of a recommendation within the 2014 internal audit and OPB agreed that improvements in risk mitigation, quality and cost effectiveness could be achieved with an investment in process and calculation automation. Before pursuing an IT solution the Board sought a report on financial feasibility. The Cost Benefit Analysis was completed in November, 2015 and indicates that there are a range of cost effective solutions that would mitigate risk. Since the report recommends 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 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 original Standstill Agreement, which was established to maintain administration of the Plan according to the old provisions, was extended to December 31, 2015. A further extension to June 30, 2016 is being finalized. The Board continues to monitor its legal costs and the 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 only recommendation yet to be implemented is the proposal to amend the Plan to provide for division of assets on marital breakdown. The Board has had an opportunity to review draft amendments to the Plan to implement this recommendation, and understands the Sponsor is moving the amendments through the approval process. 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 ABCs. 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 refresh

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 SLA that defines the services and associated fees that are procured by TBS to support the Board. 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.

Risk identification assessment and mitigation strategies

Table 7.1: Risk identification assessment and mitigation strategies

Table 7.2: Objective high quality cost effective client service

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 (see page 24) 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 by adopting more sophisticated measures.

One of the challenges to improved performance reporting is the state of automation within PJPP business processes. In fact, the lack of process automation in the Plan makes it less cost effective to administer since performance information must be collected and organized manually. The Board will include better performance reporting as part of its business requirements for the process automation initiative.

Financial budget and staffing

Daily administration of the Plan and Board secretarial support is outsourced to OPB. Currently these services are supplied on a cost recovery basis and paid by TBS. Fees are evaluated on a three year cycle and the next fee update is 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. In addition, expected amendments to the Plan permitting the division of pensions on marital breakdown will introduce a new set of services not reflected in the current agreement. While fees were reduced at the last triennial review they are expected to rise beginning in 2015. A fee adjustment proposal is under review by the Board and TBS. The table reflects an estimate of higher fees commencing in 2015, but the true value will be confirmed later this fiscal year once accountability and costs are finalized relating to the new responsibilities created within the revised MOU. 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.

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 SLA between OPB, TBS and the PJPB, any system modifications that generate additional costs for TBS will require their written consent and approval.

In 2015, OPB engaged a management and technology consulting firm to prepare a cost benefit analysis on PJPP process automation. The report was completed in November 2015 and provides a range of solutions that would improve efficiency and mitigate risk. In 2016 the Board will proceed with the development of a business case for acquiring the most cost effective solution. On approval of the business case, the Board will be required to undertake a competitive procurement process to select a qualified vendor.

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 ITA. 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 into 2016.

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. Most recently the Sponsor engaged the Actuary to assess the Plan’s funded status as at March 31, 2015.

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 the nature and scope of any additional actuarial work.

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.

Deliver pension automation solution

• Obtain agreement on proposed project scope with affected stakeholders.
• Get Sponsor approval of business case for Pension Automation solution.
• Procure a vendor in accordance with government procurement guidelines.
• Complete the project plan and oversee delivery.

Increasing transparency

• 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.
• Board review and approval of all PJPP communications on behalf of PJPB including those related to Family Law amendments.
• Provide consultation opportunities for stakeholders including the Office of the Chief Justice and Association of Ontario Judges on Board initiatives and communications.

Improving accountability

• Establish revised key performance indicators for Board’s service provider.
• Continue to document and approve new PJPP policies and procedures.

Adopt a governance self-assessment process for the Board

• Continue to implement the Board’s strategy for regular internal audits.
• Participate in any agency appointee learning or development opportunities as required.

Performance of fiduciary duties

• Shape the future of PJPP governance by participating in discussions with and sharing the Board’s experience with its key stakeholders.
• Ensure that Board members and employees are informed of conflict of interest rules that govern the Board.
• Fair and impartial interpretation of the Plan provisions.

Monitor compliance

• Track compliance with regulatory and agency guidelines through regular reporting at quarterly Board meetings.
• Obtain support from TBS or OPB on interpreting new or amended requirements and update Board members.
• Review and assess the Board’s Records Management system for compliance agency policy and directives.

Deliver excellent cost effective client service

• Establish the Board’s performance indicators for assessing the effectiveness of client service.
• Determine a performance indicator data set that can be feasibly collected, interpreted and reported to the Board.
• Identify options for collecting client satisfaction feedback and make recommendations to the Sponsor for implementation.
• Prepare and begin implementation of a strategy for beneficiary communications.
• Engage the Sponsor and the stakeholders in a dialogue on expanding the Board’s mandate to include responsibility for pension entitlement related communication with sitting judges.
• Work with the Sponsor and stakeholders to identify and resolve data requirements needed to support pension communication initiatives.

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 AOJ, 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, plan administration was 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 ITA;
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 about the changes. As a result, an expected amendment to the Plan implementing the Remuneration Commission recommendations for division of pension on marital breakdown was deferred. We are advised that changes to the plan provisions are now proceeding and expect communications with the Plan beneficiaries will be required once the provisions become effective.

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 consult the CJO and AOJ more frequently on these and other pension administration services for 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, 2018
  • 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.

   Deborah Oakley’s reappointment as Chair was formally confirmed effective November 14, 2015. After retiring as a senior executive with OMERS, Ms. Oakley established her own consulting firm and provides interim executive and association management services, largely to organizations in the justice sector.

   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 MOU 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 SLA that includes TBS, the Plan Sponsor.

   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 PSPP 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

Appendix "A"

PJPP stakeholder roles summary

Appendix "B"

Classified agency directives and guideline applicable to the Provincial Judges Pension Board

• Agencies & 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

Appendix "C"

Risk Assessment - Scale Descriptor Definitions

Likelihood scale

Impact scale