Account B

 

Actuarial Valuation Results – Account B (Province Account)

The most recent actuarial valuation of TRAF prepared by the independent plan actuary was as at January 1, 2018, which included an assessment of the financial condition of Account B. The valuation results for Account B are summarized in the following table.

pg 27 Account B Funded Status as at Jan. 1 2018

The next actuarial valuation is scheduled to be performed as at January 1, 2021.

Actuarial valuations of the fund, including Account B, can be found here.

On a going-concern basis, as at January 1, 2018, Account B had an accrued deficit of $1,537.5 million (which is a deterioration from the $1,392.4 million accrued deficit at January 1, 2015). This equates to an accrued funded ratio of 61.3%.

Reconciliation to the Prior Valuation

The table below reconciles the items that contributed to the increase in the Account B accrued deficit for both base pensions and cost of living adjustments (COLA). The deficit increased from $1,392.4 million as at January 1, 2015 to $1,537.5 million as at January 1, 2018.

pg 28 Reconciliation of Account B surplus deficit

The primary positive contributor to the reconciliation was strong investment returns for the years 2015 to 2017. The impact in dollar terms was $128.6 million. The primary factor with a negative impact on the reconciliation was the interest on the deficit at the prior discount rate of 6.00% per annum. Similar to deficits in Account A, any deficit with respect to Account B has a carrying cost equal to paying interest at a rate equal to the discount rate. This resulted in the Account B deficit increasing by $266.0 million. The other main factor with a negative impact on the reconciliation was the change in the assumed discount rate from 6.00% to 5.75%. This change increased the Account B deficit by $121.1 million.

January 1, 2019 Extrapolated Results

The accrued funded ratio of Account B was extrapolated to be 58.1% as at January 1, 2019. This figure was based on an extrapolation of the January 1, 2018 funded status. An extrapolation incorporates actual investment results, contributions received and benefits paid since the last formal valuation. The limitations are that the plan's actual experience with respect to mortality, retirement and termination since the date of the last valuation will not be accounted for until the next formal actuarial valuation (ie. the extrapolation will continue to rely on assumptions for these variables). The formal actuarial valuation as at January 1, 2018 revealed an accrued funded ratio of Account B of 61.3%. The decline in the funded ratio is primarily due to investment returns less than assumed and negative cash flow of $88.2 million (deposits of $118.9 million less benefit payments of $207.1 million).