Quarterly Review of Retirement Plan with GMCL Financial
On Friday November 7, 2014 Mike Powell and Garry Marnoch met with Dave Courtney at GMCL Headquarters to review the status of the pension plan for the quarter ending June 30, 2014.
Assets in the plan increased slightly since December 31, 2013, and stand at $11.3 billion. Payouts were higher than last year because of the number of folks who opted for retirement by June to capture benefits in retirement, who also chose commuted value instead of pension payments. The remainder of the year will see much less of that, so payouts will trend down to a normal rate.
Overall fund performance for the quarter was 2.8% overall return, slightly less than the benchmark; most of the folders in the portfolio were similar. Calendar year-to-date was quite good, and one-year performance was excellent at 12.9% return for the salaried plan (and favourable to the benchmark). Five-year returns look good, now that the awful year of 2008 has fallen off the chart. For the seven quarters prior to this last, the fund managers taken together have bettered the benchmark One underperforming management firm has been dropped.
The GMAM policy for asset mix that was approved in February was completed by October. To date the salaried and hourly plans have shared the same asset mix, which minimizes management fees. However, the salaried plan is closed, there will be no new participants, so we anticipate asset mix differences in the future in keeping with the now less risky profile of the Salary plan.
Interest rates have for some time been unhistorically low; at some point they will have to rise. Dave showed a graph which displayed how a small increase in the prevailing rate increases by hundreds of millions of dollars the ability of our fund to meet its future commitments.
In summary, a weak quarter but a good year.