scenic photo of the rocky mountains in the background and trees starting to turn yellow in the foreground

Management Discussion
and Analysis Plan Funding

The Plan’s funded status is a point in time indicator of its financial health, highlighting the Plan’s security of benefits.

112%

Funded Status (as of December 31, 2021)

Funding status as at December 31, 2021

Although PSPP conducts an actuarial funding valuation every year to assess the financial health of the Plan, it is only required to be filed with the regulators once every three years.

As at December 31, 2021, the Plan had a funding status of 112% on a going-concern basis.

Happy older mature classy couple hugging bonding thinking of good future carefree mid age couple

Funding Valuation Summary ($ millions)

Going Concern Funded Status 2021 2020
Total Actuarial Assets $16,983 $15,768
Total Actuarial Liabilities $15,162 $15,255
Surplus $1,821 $513

The regulatory funding valuation is:

  • A point in time look at the Plan’s financial health
  • Comparing the Plan’s liabilities to its assets
  • Performed on a going-concern basis (assumes Plan will continue indefinitely)
  • Prepared by an independent actuary
  • Based on best estimate assumptions about member life expectancy, future earnings, economic conditions and investment returns
  • Filed with Alberta provincial and federal regulators at least every three years. The PSPP Sponsor Board may choose to file a valuation on a more frequent basis

Funding Policy Statement

The PSPP Sponsor Board has established a Funding Policy which provides a framework to ensure that sufficient assets are accumulated to meet the cost of accrued benefits and guide decisions about the funding of the Plan.

The Funding Policy documents funding controls and risks to the Plan’s financial health. The Funding Policy also sets a margin of 15% which is added to the liabilities and current service costs to help manage contribution rate stability and benefit security.

A PSPP pension means not having to worry about making ends meet. I will be financially secure for the rest of my life. And most importantly, the COLA (cost of living adjustments) increments will help keep up with inflation.

Nashila

Plan funding balances the following three Principles:

Benefit Security

The Plan’s funding level is a measure of how much money is available to pay current and expected pensions for all Plan members. A higher funding level generally means a higher level of benefit security.

Intergenerational Equity

The Plan’s funding should be managed so as to ensure a reasonably consistent level of cost is experienced across different generations of contributors.

Contribution Rate Stability

While contribution rates have to vary over the long term given different economic environments, any volatility can hurt the Plan’s sustainability, so an important goal is to ensure that the contribution rates remain as stable as possible.

Contribution Rates

Employers and employees contribute to the PSPP at the same rates. These contributions, when combined with other investment income, are expected to provide for the benefits members earn while they participate in the PSPP.

After the 2021 valuation, the PSPP Sponsor Board assessed the sufficiency of the contribution rates based on the funded status reported in the Actuarial Valuation as at December 31, 2021. With a funding surplus of 112% the PSPP Sponsor Board approved a contribution rate decrease effective January 1, 2023.

  2023 Rates 2022 Rates
Below YMPE* 8.3% 9.6%
Above YMPE* 11.9% 13.7%

* Yearly Maximum Pensionable Earnings, set annually by the Government of Canada

8.3%

up to YMPE

11.9%

Above YMPE

Management Discussion and Analysis

Plan Funding Investment Performance Plan Financial Highlights Pension Administration