Account B

 

Account B (Province Account) Projection Valuation

A 40-year projection of the funded status of Account B has been prepared at the same date as the actuarial valuation. The most recent projection of the funded status was prepared as at January 1, 2018. The following chart sets out the historical funded status of Account B since 2001, and the projections to 2058.

pg 3 Account B Status Historical and Projected graph

Projection valuation reports for Account B can be found here.

As illustrated by the chart, the funded ratio of Account B was 61.3% as at January 1, 2018. This means that, based on the various assumptions adopted, the Province account is expected to have assets that are sufficient to fund 61.3% of its 50% share of the pension obligation for all members in the plan as of that date. In dollar terms, the Account B deficit as at January 1, 2018 was approximately $1.5 billion.

Unlike Account A, the funded ratio of Account B is projected to decline more rapidly over the long term, declining to 0% in 2052. The funded ratio is expected to decline as the investment income will not be sufficient to offset the negative cash flow resulting from benefit payments exceeding contributions under Account B. At the time of depletion, the deficit in Account B is expected to be approximately $10.9 billion.

Next Steps – Account B

The independent plan actuary determined that the funded ratio of Account B is 61.3% at January 1, 2018, and is expected to decline to 0% in 2052 if all actuarial assumptions are realized and the current funding practices of the Province continue. Unlike Account A, the reversal of this downward trend will not occur through investment returns alone. In the opinion of the actuary, additional contributions to Account B should be considered if the Province wants to avoid the depletion of the assets in Account B, or if there is a desire to bring Account B to a fully funded status.

TRAF regularly communicates financial information on the plan to the Province and The Manitoba Teachers' Society. Consistent with our mission statement, we are committed to ensuring all stakeholders have accurate and timely information on the plan's funded status so they can make informed decisions regarding contribution rates and benefit levels.