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2006 ANNUAL REPORT 2006 HIGHLIGHTS (July 29, 2007)
Full report available in PDF here. TRUSTEES
ESTABLISH STABILIZATION FUND
Toronto (June 26, 2007): The Canadian Commercial Workers Industry Pension Plan (CCWIPP) has sold its majority interest in a landmark Bahamian commercial property. The transaction involves a 13-acre, mixed-use, waterfront property in downtown Nassau. The transaction includes the 291-room British Colonial Hotel and adjoining commercial and retail buildings, as well as several acres of undeveloped, harbourfront land. CCWIPP’s sale of its majority interest is valued at US$71.7 million and the proceeds will be received over a period of time. The transaction is part of a strategy initiated by the CCWIPP Board of Trustees in 2001 to rebalance its investment portfolio. Transformation of CCWIPP-owned London office/retail complex enters final phase London (June 26, 2007): The transformation of Galleria London from a struggling shopping centre into a vibrant office/retail destination in downtown London is nearing completion as a key asset in the real estate portfolio of the Canadian Commercial Workers Industry Pension Plan (CCWIPP). The transformation of the property continues with the signing of Citi Cards Canada (part of Citigroup) as a major office tenant. Approximately 700 employees in Citi’s Canadian credit card and bankcard business are scheduled to move into 110,000 square feet of renovated space at Galleria London in the spring 2008. As part of the Citi Cards build out, Galleria London will add a new restaurant court area, a new lobby to the second floor offices and a new street façade. With Citi Cards as a tenant, Galleria London will have approximately 400,000 square feet of office space, including educational, medical and other service uses, and a further 200,000 square feet of retail. The complex will employ 3,500 people. London Mayor Anne Marie DeCicco-Best described the transformation of Galleria London as “another positive step toward fulfilling our downtown revitalization plan for a thriving, bustling and attractive downtown streetscape.” Galleria London is the only income-producing real estate property 100 percent owned by CCWIPP. The redevelopment and lease out of the property are part of a strategy initiated by the CCWIPP Board of Trustees in 2001 to rebalance its investment portfolio. Bahamian resort property under sales agreement Toronto (June 26, 2007): The Canadian Commercial Workers Industry Pension Plan (CCWIPP) has agreed to sell the South Ocean Golf and Beach Resort on New Providence Island in The Bahamas. The terms of the agreement provide for CCWIPP to receive US$77.3 million, including a $35 million secured mortgage on the property. Closing is scheduled for later this year. The South Ocean site includes 1,500 feet of beachfront property, a marina, the rights to operate a casino, a newly constructed, 18-hole, championship golf course designed by Greg Norman, and developable land with substantial entitlements. The Purchaser, a New York based developer, is planning to construct a total of 1,000 hotel rooms, operated by both four and five-star hotel brands, a casino, commercial space for several restaurants and retailers, entertainment facilities, a convention centre, an enlarged marina and a residential development. The transaction is part of a strategy initiated by the CCWIPP Board of Trustees in 2001 to rebalance its investment portfolio. PENSION PLAN TRUSTEES DENY REGULATORY NON-COMPLIANCE TORONTO (June 28, 2006): The Trustees of the Canadian Commercial Workers Industry Pension Plan (CCWIPP) confirmed today that charges have been filed for regulatory non-compliance by the Financial Services Commission of Ontario (FSCO) for the period February 15, 2002 to December 31, 2003. The charges are regulatory and not criminal, and are being vigorously defended by the Trustees. If proven, the charges may result in fines. The alleged non-compliance relates to a federal regulation requiring that no more than 10 percent of a pension plan’s book value assets be invested directly or indirectly in two or more affiliated corporations; and provisions of Ontario’s Pension Benefits Act regarding the supervision by the Board of its investment committee, and due diligence on two private equity investments and certain property loans. The charges followed a three-year examination by FSCO. The regulator’s report confirms that there was no evidence to support allegations that Trustees benefited personally, received improper payments or committed fraud. The Trustees, who cooperated fully with FSCO throughout the examination, deny that they breached their statutory obligations to the Plan members, and state that they have always acted in the best interests of the Plan and its members. No investments were made, or assets sold, without professional advice. The primary focus of the FSCO examination was limited-liability companies incorporated by CCWIPP to facilitate direct investment in private equity, real estate, mortgages and other loans. Assets owned by these companies represent approximately 20 percent of the $1.4 billion Fund. The remaining 80 percent of the assets are invested in stocks, bonds and other securities managed by external firms. FSCO raised no concerns about these investments. CCWIPP reported returns of $126 million in 2005, compared with $69 million in 2004 -- the fourth consecutive year of positive returns. Assets available to pay future benefits increased to $1.4 billion, compared with $1.3 billion a year earlier. CCWIPP provides benefits to 310,000 current and former members of the United Food and Commercial Workers Canada (UFCW Canada) union who work for 328 participating employers across Canada. In 2005, the Plan paid out $111 million in benefits, with approximately 17,000 members receiving pensions. The Plan is governed jointly by union and management trustees, who receive no personal benefit, financial gain or fee payment for their role as fiduciaries. CANADIAN COMMERCIAL WORKERS INDUSTRY PENSION PLAN 2005 MEMBERS’ REPORT INVESTMENT PERFORMANCE The investment return rose to $127 million from $69 million in 2004. This income consisted of interest, dividends, gains on asset sales, and unrealized gains. The investment rate of return exceeded 9.7 percent, compared with 5.7 percent a year earlier, the 9th positive return in 10 years and 18th positive return in 20 years. Approximately 80 percent of investments were portfolios of equities and fixed income securities managed by external investment firms. The other 20 percent were investments directly owned by the plan, including loans secured by five properties in the Caribbean and ownership interests in six real estate properties in Ontario. Further information may be found in the 2005 Annual Report. HIGHER EMPLOYER CONTRIBUTIONS The net value of assets available to pay benefits increased by $121 million to $1.4 billion by year-end. Adding to the value of assets were the $127 million of investment return and higher employer contributions. Offsetting these gains were higher benefit payments and the costs of administering the plan. Administrative expenses were well below one percent of plan assets. Your plan provides pension benefits to 310,000 current and former members of the United Food and Commercial Workers Canada (UFCW Canada) employed by 328 participating employers. In 2005, employers contributed $115 million, compared with $108 million in 2004, in accordance with collective bargaining agreements negotiated with UFCW Canada. HIGHER PAYOUTS TO PLAN MEMBERS The plan paid out $111 million to members in 2005, compared with $87 million in 2004. Pension payments increased by $5 million to $71 million, mainly due to 1048 members receiving pensions for the first time. Termination payments rose by $19 million to $39 million, although the number of members leaving the plan declined from 8,700 in 2004 to 8,200 in 2005. The increase in termination payments was the result of updated mortality tables as members are living longer. The plan also paid out $1.3 million in lump sum death benefits to surviving spouses and other designated beneficiaries, the same amount as in 2004. GOVERNANCE AND COMPLIANCE The Trustees continue to enhance plan governance and compliance. An external compliance officer appointed in 2005 has expanded the compliance monitoring program. The Trustees recently revised the plan’s Statement of Investment Policies and Procedures that sets out the investment objectives, policies, goals, risk management, asset allocation and investment performance measurements. The Trustees receive no personal benefit, financial gain or fee payment for their role as fiduciaries of the plan. FUNDING STATUS The plan had a going concern funding deficiency of $307 million as at December 31 2004 (the date of the most recent independent funding valuation). Despite the positive 2005 investment performance, the funding deficiency is expected to grow. Decisions on asset/liability management are critical to eliminating the shortfall and ensuring the long-term health of the plan. Board of Trustees June 2006 For further comments or questions, please EMAIL us. A Progress Report on Our Commitment to Best Governance PracticesThe Trustees of the Canadian Commercial Workers Industry Pension Plan (CCWIPP) are committed to achieving best governance practices in ensuring that the plan’s invested assets and pension obligations are managed for the benefit of plan members. 1. Retaining the Right Resources The Trustees believe that it is in the best interests of the plan to engage external pools of professional talent through service contracts. This approach provides arm’s length services that enable the plan to take advantage of the knowledge and skills of specialists with proven records of success. Approximately 80 percent of the plan’s $1.4 billion of assets are managed by external balanced investment managers and specialist investment managers who apply their expertise to portfolios of stocks, bonds and other investments in Canada, the United States and globally. The remaining 20 percent are investments owned directly by the plan. Balanced investment managers are given mandates to invest in a combination of stocks, bonds and cash-equivalent assets. They are: Acuity Investment Management of Toronto Goodman & Company Investment Counsel of Toronto Leith Wheeler Investment Counsel Ltd. of Vancouver Natcan Investment Management, a unit of National Bank of Canada, in Montreal Wise Capital Management Inc., a Toronto investment firm. Traditional specialist investment managers are given mandates to invest in a single asset class, such as stocks and bonds. They are: CIBC Global Asset Management Inc. (bonds) Harris Investment Management, a U.S.-based firm owned by BMO Financial Group ( U.S. equities) Voyageur Asset Management Inc, of Minneapolis ( U.S. equities). Alternative specialist investment managers have mandates to invest in non-traditional securities and investment vehicles, such as venture capital, private equity and hedge funds. They are: Goodman & Company Investment Counsel of Toronto Performance Group of Funds, a Toronto fund-of-funds manager. Direct investments are owned directly by the pension plan or through an intermediary corporation. Investments are approved by the Board of Trustees based upon recommendations from a four-member investment committee and supported by the advice of investment specialists. Direct investments currently consist of real estate properties and a small number of private companies. These investments are administered on a day-to-day basis by a two-member staff at I.F. Propco 100 Ltd., a company owned by CCWIPP, in accordance with approved direct investments policies and procedures. Third-party specialists manage the investments. Custodial services for all investments except direct investments are provided by RBC Dexia Investor Services. This large financial institution is responsible for registering and holding the plan’s ownership of stock certificates and other assets, such as fixed income securities and cash; ensuring that all investment transactions are recorded and reconciled; and recording investment income from dividends, interest payments and capital gains or losses. Pension plan administration is provided by Prudent Benefits Administration Services Inc. (PBAS), a pension and benefits plan administrator which has six regional offices across Canada . Among other things, it records the pension entitlements of each current and past CCWIPP member and ensures that benefits are paid to retirees accurately and on time. PBAS provides services to more than one million beneficiaries, including CCWIPP’s 290,000 members. Actuarial and compliance services are provided by Buck Consultants Limited, a Toronto-based human resources consulting company. Among other services, it files independent funding valuations on the plan’s financial position with pension plan regulators and assists CCWIPP with asset-liability modeling studies. The plan’s auditors are BDO Dunwoody LLP, one of Canada’s top six auditing firms. These professional resources, complemented by other external legal, financial, investment, real estate and pension benefit specialists, enable CCWIPP to perform on a basis comparable to other public and private sector pension plans in Canada . 2. Policies and Procedures Since inception, CCWIPP has had policies and procedures to ensure that the plan is managed in a prudent manner. Recently, the Trustees took substantive actions to enhance governance and regulatory compliance. The following summarizes major policies and initiatives already in place or being developed. Statement of Investment Policies and Procedures Every year, the trustees review the plan’s Statement of Investment Policies and Procedures (SIP&P). The current annual review is being conducted in conjunction with a plan risk management analysis called an asset-liability modeling study. The revised statement follows the format of the Office of the Superintendent of Financial Institutions (OSFI) and incorporates the legal requirements of the Financial Services Commission of Ontario (FSCO). The SIP&P: Sets out the investment objectives, policies, goals and procedures that are reasonably expected to meet the needs and objectives of the plan; Specifies the financial risks that the plan is exposed to and the maximum level of investment risk the Trustees are prepared to tolerate; Sets out the asset allocation policy supported by an asset-liability modeling study -- that is, how much will be invested in publicly traded equities (including income trusts), bonds, mortgages, real estate, venture capital, private equity, and short-term securities; Defines the standards against which the investment performance of total assets, separate asset classes and individual investment firms will be measured; and Ensures ongoing communications among the Board, the investment committee, the independent actuary and specialists providing investment, custodial and other related services. The SIP&P also prohibits equity investments in Canadian publicly traded companies that are participating employers in the plan operating in the food processing, food distribution or food retailing. Such investments could cause conflicts of interest for CCWIPP Trustees. 3. External Compliance Officer The Trustees have appointed Peter C. Arnold CFA, national practice leader, investment consulting, at Buck Consultants Limited as the pension plan’s external compliance officer. Mr. Arnold’s mandate is to assist the Board in ensuring that the plan is in compliance with federal and provincial regulations as well as the Statement of Investment Policies and Procedures. He deals directly with the investment firms that manage the pension plan’s assets. Initially, he will report to the Board monthly. Once procedures and practices are established, he will report to the Board quarterly. 4. Compliance Monitoring Program A comprehensive compliance monitoring program is being developed by Buck Consultants Limited under the leadership of Peter Arnold, the plan’s external compliance officer. The program calls for on-site spot checks to examine compliance protocols. Among other things, the program will examine:
The Trustees have retained API Asset Performance Inc., of Vancouver to provide the Board with quarterly performance measurement services. API is an independent national consulting firm focused solely on consulting, risk analysis and performance measurement in the financial services and pension management sectors. It evaluates the performance of the plan’s external investment firms that manage equity and fixed income portfolios in relation to the objectives outlined in the Statement of Investment Policies and Procedures. 5. Hiring External Investment Managers The Trustees have retained Vaino Keelman of API Asset Management Inc. as an independent investment advisor to assist the Board in selecting external investment managers. Following Mr. Keelman’s review of the roster of managers, a sub-committee of the Board’s investment committee interview and recommend the selection of managers to the full Board. 6. Direct Investments Policies and Procedures The Trustees are developing direct investments policies and procedures to formalize, clarify and update past policies and practices to ensure full compliance with federal and provincial regulations. The revised policies and procedures set out the responsibilities of the Board in approving and overseeing direct investments recommended by the investment committee, the administrative responsibilities of I.F. Propco 100 Ltd. (a company owned by CCWIPP), and the day-to-day asset management by third-party specialists. The revised policies and procedures address: due diligence and approval processes; the ownership structure for each investment company to mitigate investment liability risk; and, the valuation of assets that do not trade on public markets. 7. Conflicts of Interest PolicyThe Board of Trustees has adopted an investment-related conflicts of interest policy. Central to this policy is that the Trustees receive no personal benefit, financial gain or fee payment for acting as fiduciaries. They are reimbursed for reasonable expenses incurred in performing their Trustee duties. The policy prescribes rules and procedures for Trustees and related entities. Related entities are a Trustee’s spouse, a relative in the same residence, a trust in which the Trustee or an immediate family member is a beneficiary, a company over which a Trustee or Trustee’s spouse exercises control, or a business partner or associate of the Trustee. The policy also regulates relations with services providers. The objective is to avoid conflicts of interest, and to manage them should they occur. A Trustee’s duty of loyalty is first and foremost to the beneficiaries of the pension plan. Trustees are expected to behave ethically and conduct themselves with integrity and dignity. Should actual, possible or perceived conflicts arise, the policy sets out the disclosure process. If the Board determines that an actual, possible or perceived conflict has or might occur, the Trustee, firm or organization in conflict is prohibited from participating in any discussion and decision-making process concerning the area of conflict. The policy also restricts the investment activities of Trustees and their spouses. For example, it prohibits them from investing in private companies in which the pension plan owns securities. It also prohibits them from trading in the securities of publicly traded companies in which CCWIPP owns more than 3 percent of the common shares or other voting securities. Such investments owned by a Trustee or spouse prior to that Trustee joining the Board must be disclosed and trading is prohibited without the consent of the Board. Trustees owning such investments cannot participate in Board discussions related to those investments.8. Asset-Liability Modeling Study Defined benefit pension plans like CCWIPP increasingly commission asset-liability modeling studies to determine whether investment risks and expected returns are properly matched with the long-term costs of pension obligations (the plan’s liabilities). An asset-liability modeling study helps the Trustees to understand how risk factors can be mitigated by, for example, adjusting the asset allocation. Such a study also tests whether the current investment return target is realistic based on long-term statistical results. (CCWIPP’s current investment target is a 4.5 percent real rate of return, or 7.5 percent when inflation is included). The Trustees have retained Buck Consultants Limited, to conduct an asset-liability study for completion in 2006. CCWIPP appoints External Compliance Officer To Strengthen Pension Plan's Regulatory Compliance Toronto (March 31, 2006): The Canadian Commercial Workers Industry Pension Plan (CCWIPP) announced today that it has appointed Peter C. Arnold of Buck Consultants Limited as the pension plan’s external compliance officer. CCWIPP is a $1.4 billion pension plan that provides benefits to 290,000 current and former members of the United Food and Commercial Workers (UFCW Canada) union who work for 328 participating employers across Canada. The plan is jointly governed by union and management trustees. Mr. Arnold is national practice leader, investment consulting, at Buck Consultants, which is also CCWIPP’s actuarial firm. A chartered financial analyst, he has worked as a human resources and benefits consultant for more than 13 years with a focus on public, corporate and multi-employer pension plans. Mr. Arnold also works with insurance assets, endowments and foundations, and specialty investment situations. Mr. Arnold’s mandate is to assist CCWIPP’s Board of Trustees to ensure that the plan is in compliance with federal and provincial regulations as well as CCWIPP’s Statement of Investment Policies and Procedures. He will conduct on-site spot checks to examine compliance protocols, review the accuracy of investment information filed with regulators, and check that investments comply with regulatory limits. He deals directly with all external professional investment management firms that manage the pension plan’s assets. “Peter’s appointment is key to our new compliance monitoring program and he reports directly to the Trustees,” commented Board chair Bernard Christophe. “We are committed to ensuring that CCWIPP achieves best governance practices and full regulatory compliance. This initiative is one of several to improve plan oversight.” Other recent initiatives include revisions to the Statement of Investment Policies and Procedures, the hiring of a firm specializing in pension plan performance measurement, and the adoption of clearer investment-related conflict-of-interest guidelines. Statement by Board of Trustees Canadian Commercial Workers Industry Pension Plan January 12, 2006 The Board of Trustees of the Canadian Commercial Workers Industry Pension Plan (CCWIPP) has received the addendum issued by the Financial Services Commission of Ontario (FSCO) following its original report on anonymous allegations made against the plan. The original report dated March 2005 was released in May 2005 and is based on a lengthy FSCO examination. The trustees recognize the seriousness of the findings in the FSCO report and they have taken substantive actions in response. The trustees are pleased that FSCO found no evidence to support allegations that trustees or plan officials benefited personally or received improper payments. As well, FSCO stated that many other allegations were not substantiated. The trustees are also pleased that FSCO corrected errors made in the original report and acknowledged that CCWIPP is moving in the right direction. During and subsequent to the examination, CCWIPP co-operated fully with FSCO. It responded to every request for information, delivered more than 150 boxes of investment-related documents, and assisted at on-site searches and numerous meetings with trustees and staff as well as with investment professionals, legal advisors, and the plan’s independent financial auditor. The examination has been expensive to CCWIPP in defending its reputation against anonymous allegations magnified by egregious and inflammatory reports in certain news media. The trustees are making every effort to ensure that the pension benefits of plan members are secure. These benefits are backed by approximately $1.4 billion of assets. Most of these assets are stocks, bonds, cash and short-term liquid assets. Real estate and private equity assets now constitute less than 25 percent of the total. The plan has earned positive rates of return in 9 of the past 10 years and 18 of the past 20 years. Since inception in 1979, the plan has earned an average annual rate of return of 8.97 percent. CCWIPP continues to work with FSCO to keep it informed of progress being made to improve governance and investment practices and ensure full compliance with federal and provincial regulations. The Board continues to take steps that include: 1. Requiring a formal annual review, with external advisors, of all governance, legal and related policies and procedures. 2. Requiring an annual report by the external auditor on the compliance status of all investments in relation to federal and provincial regulations. 3. Retaining a firm specializing in performance measurement and regulatory compliance to ensure that all investments conform with pension regulations and the plan’s Statement of Investment Policies and Procedures. 4. Strengthening operating policies and procedures for investments managed by the Board’s investment committee, including more rigorous due diligence. 5. Revising the plan’s Statement of Investment Policies and Procedures to clarify asset management rules for external professionals and trustees. 6. Adopting an improved conflict of interest policy for investments. Anonymous allegations were made against CCWIPP. Most were without substance.
FREQUENTLY ASKED QUESTIONS (F.A.Q.) How safe is my pension? Your pension is backed by more than $1.4 billion in assets. The plan has a current funding deficiency on a going concern basis. This is not unusual for defined benefit plans. We may have further deficiencies – or surpluses – in the future. Actions are being taken to eliminate the current deficiency over 10 years. The main responsibility of the trustees, along with professional advisors, is to ensure the safety of the plan assets for the beneficiaries. What is the funding deficiency? On December 31, 2004 the plan had actuarially valued assets of $1.4 billion and actuarial liabilities of $1.7 billion. The funding deficiency, on a going concern basis, was $307 million. Consequently, current assets cover about 82 cents of every future pension dollar. The plan will eliminate this deficiency over 10 years. This is a conservative strategy as Ontario legislation allows funding deficiencies to be amortized over 15 years. What’s the role of the trustees? Like publicly traded companies, the role of the board is to establish a long-term strategy and provide governance oversight. Five trustees are appointed by employers and five trustees are appointed by the union. Together, the trustees represent the best interests of the plan and its beneficiaries. Did you roll back future benefits because of investments in Caribbean real estate and private equity firms? No. The trustees decided to restructure future accrued benefits to strengthen the security of current benefits in the plan. How has the plan performed? Since inception in 1979, the plan has earned an average annual rate of return of 8.97 percent. The plan has recorded only one year of negative returns in the past 10 years and only two in the past 20 years. Have you lost millions of dollars in bad investments? Some investments have lost money and others have done exceptionally well. For example, we had $18 million invested in index-linked mortgages in 1993. Since then, we have received $14.8 million in income and received back $14.6 million of the principal when the portfolio was sold in 2005. In another case, we invested $13 million in Royalty Pharma, which owns interests in several government-approved industry leading medical products and drugs in late stage development. Since 1996, this investment, has produced $45 million in income and fair market value adjustments. In addition, if sold today, the investment would return the original capital of $13 million. Real estate value gains are often only realized when the properties are sold. For example, in 2003 we sold an office building in Ottawa in which we had invested $18 million. The property produced approximately $40 million in income and return of capital. What’s going on with the Caribbean properties? We have completed a thorough analysis of each property and created master plans to exit from these investments. In view of strong buyer interest by major international developers and investors, we believe these properties should realize positive gains for the plan. What other real estate does the plan own? Industrial, commercial and residential land sites in Ontario and a small hotel in Niagara Falls – all of which are available for sale. We also own a shopping mall in Ontario that is being redeveloped to enhance its value as well as various small equity investments in Canada. Why did you invest in real estate and private equity? These investments were designed to hedge against the volatility of publicly traded stocks and bonds – a strategy used by many pension plans. This diversification added value to our plan when stock markets experienced one of the worst declines in a century between 2000 and 2002. Who initiated the real estate and private equity investments? Two independent advisory firms retained between 1979 and 2000. These firms were responsible for conducting due diligence and preparing all financial reporting. Did the FSCO investigation uncover anything wrong? Yes it did. First, the plan’s investments in real estate and in certain corporations exceeded the percentage limits set by pension regulations. These situations are being corrected. Second, FSCO concluded that some of our due diligence processes were not as good as they could have been for real estate and private equity investments. This has also been corrected. FSCO, however, found no evidence of trustees and employees benefiting personally or receiving improper payments. FSCO stated that other allegations were not substantiated. Will anyone be charged as a result of the FSCO examination? We have cooperated fully with FSCO and continue to correct past regulatory compliance issues as well as take substantive actions to strengthen our governance and investment policies so that regulatory breaches do not recur. Has anyone been fired or been asked to resign from the Board? There is no reason for anyone to resign or be dismissed. FSCO made no findings of trustees or employees benefiting personally or receiving improper payments. What did the FSCO investigation accomplish? It allowed us to review and strengthen our governance and investment policies so that regulatory mistakes do not recur. What actions have you taken in response to the FSCO investigation? Actions taken and being taken include: 1. Requiring a formal annual review, with external advisors, of all governance, legal and related policies and procedures. 2. Requiring an annual report by the external auditor on the compliance status of all investments in relation to federal and provincial regulations. 3. Retaining a specialist firm to ensure that all investments are in compliance with pension regulations and the plan’s Statement of Investment Policies and Procedures. 4. Strengthening operating policies and procedures for investments managed by the Board’s investment committee, including more rigorous due diligence. 5. Revising the plan’s Statement of Investment Policies and Procedures to clarify asset management rules for external professionals and trustees. 6. Adopting an improved conflict of interest policy for investments. Do you know who made the anonymous allegations that triggered the FSCO investigation? Our legal counsel is seeking to identify the pension plan’s accusers. Do you have investment professionals managing the plan’s assets? Yes we do. A dozen investment management companies are responsible for more than 75 percent of plan assets. The remaining assets are managed with guidance and advice from specialists in real estate and private equity investing. Who are the trustees? The current trustees are: Gordy Cannady, Former Vice President, Human Resources, Canada Safeway Limited Bernard Christophe, Former President UFCW Canada Local 832 (Manitoba) and current Board Chair Antonio Filato, Secretary-Treasurer, UFCW Canada, Local 500 (Quebec) Michael Fraser, National Director, UFCW Canada Lucy Paglione, Vice President, Pension & Benefits, Loblaw Companies Ltd. Alain Picard, Vice President, Human Resources, Metro Inc. Wayne Hanley, President UFCW Canada, Local 175 (Ontario) Tom Zakrzewski, Senior Vice President, Labour Relations, The Great Atlantic & Pacific Company of Canada There are two board vacancies. PENSION PLAN TRUSTEES CORRECT REGULATORY ERRORS IN RESPONSE TO FSCO EXAMINATION TORONTO (January 12, 2006): Following a lengthy examination, the Financial Services Commission of Ontario (FSCO) found no evidence to support anonymous allegations that trustees or plan officials of the Canadian Commercial Workers Industry Pension Plan (CCWIPP) benefited personally or received improper payments from the plan. The plan provides pension benefits to 290,000 current and former members of the United Food and Commercial Workers (UFCW) union who work for 328 participating employers. CCWIPP (pronounced quip) is jointly governed by 10 trustees appointed by the union and employers such as Canada Safeway, Loblaws, A & P, and Metro Richelieu. In a statement released to coincide with the regulator’s final report, the trustees said that most allegations were unfounded. However, the trustees said that they recognize the seriousness of the findings in the FSCO report and have taken substantive actions in response. “FSCO discovered no evidence that trustees or officials were self-dealing or structured transactions for personal benefit. Allegations that trustees or officials had conflicts of interest are unfounded. There is no evidence that any trustee received payments other than those contemplated by the Pension Benefits Act, such as re-imbursement of legitimate expenses.” As well, FSCO stated that many other allegations were not substantiated. However, the plan was previously offside with respect to pension regulations that restrict permissible quantitative investments in real estate and the securities owned in any one company. “In some cases, this occurred due to follow-on investments made by CCWIPP to protect the original investments. These breaches have been, or are in the process of being, corrected.” The trustees said past due diligence processes were not always as rigorous as they could have been for real estate and private equity. This has been corrected. CCWIPP continues to work with FSCO to ensure that past regulatory errors do not recur. The FSCO examination has been expensive to CCWIPP in defending its reputation against anonymous allegations magnified by egregious and inflammatory media reports. The trustees are making every effort to ensure that the pension benefits of plan members are secure, backed by more than $1.4 billion of diversified assets that have earned positive rates of return in 9 of the past 10 years and 18 of the past 20 years. Since inception in 1979, the plan has earned an average annual rate of return of 8.97 percent. The FSCO examination focused on four hotel and commercial properties in the Bahamas and Jamaica. In view of strong buyer interest by major international developers and investors, the Board believes these properties should realize positive gains for the plan. The trustees said steps have been and are being taken to ensure full compliance with federal and provincial regulations. They include a formal annual review of all governance, legal and related policies and procedures; the hiring of a specialized firm to ensure all investments conform with regulations and the plan’s investment policies; more rigorous due diligence processes; clarification of asset management rules for external professionals and trustees; and a new conflict of interest policy for investments. For further information , please see FAQ For further comments or questions, please EMAIL us. |
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