2021 Annual Report

future
focus.

message from the board

The results from 2021 further demonstrate Provident10’s ability to deliver on its promise to provide a secure income to every member throughout their retirement. In a year that once again saw fluctuating markets, Provident10 was able to stay the course and chart an impressive journey that looks ahead.

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message from the Board of Directors

The results from 2021 further demonstrate Provident10’s ability to deliver on its promise to provide a secure income to every member throughout their retirement. In a year that once again saw fluctuating markets, Provident10 was able to stay the course and chart an impressive journey that looks ahead.

The stability of the Public Service Pension Plan (PSPP) highlights the diligent work of the investment team and the strength of the approved asset mix. This combination brought fruitful results and we are pleased to report that the PSPP Fund exceeded the 9% policy benchmark in 2021, earning a rate of return of 11.2%. The Plan ended the year with a funded ratio of 109.2%, a 8.2% increase year over year.

The achievements from our investments run parallel with the success that the Provident10 team continued to sustain. From enhancing the member experience to advancing the maturity level of the organization’s internal control and risk management frameworks, the organization made significant advancements in 2021. We extend our thanks to the entire team who pushed our strategic initiatives forward.

Throughout 2021, the Board continued to adapt business practices to meet the challenges of the ongoing pandemic, and the experience and leadership of our Directors guided the development of the new strategic plan, Now to Next: Our Path to 2026. Collectively we are proud of the foundation that has been laid and are equally proud to endorse the plan and support leadership in its implementation.

The world today is undoubtedly characterized by a high degree of uncertainty and a rapid pace of change. The risk-balanced strategy of the organization and Board will work to enhance the organization’s long-term sustainability by planning proactively. Having rigourous decision-making frameworks and disciplined processes ensures stakeholders’ best interests are always front and centre.

In 2021, the Board welcomed new director, Theresa Heffernan who brings immense knowledge and expertise to Provident10. We also offer our appreciation and well wishes to outgoing Directors, Michelle Jewer and Louise Poirier-Landry. Their significant contributions aided the Board and organization in its success, and we owe them many thanks for their service.

To all Plan members we affirm that the continued structure of joint governance safeguards equal representation for Plan Sponsors and members and is the cornerstone for a mutually beneficial partnership between the Government of Newfoundland and Labrador and the representative unions.

The successes that the Provident10 team accomplished in 2021 are evident within this annual report and act as a catapult to a future that will continue to provide members with a retirement that is bright and assured.

message from our CEO​

2021 marked a critical moment in Provident10’s strategic journey. Since our inception, Provident10 has been laying a strong foundation for our organization and the PSPP to prosper. This year, the Provident10 team and Board of Directors turned our focus to our future aspirations and strategic objectives for the next five years, while continuing to meet the Plan’s promises.

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message from our CEO

2021 marked a critical moment in Provident10’s strategic journey. Since our inception, Provident10 has been laying a strong foundation for our organization and the PSPP to prosper. This year, the Provident10 team and Board of Directors turned our focus to our future aspirations and strategic objectives for the next five years, while continuing to meet the Plan’s promises.

With the ongoing pandemic, staying dedicated to building a secure, stable future for our members has continued to be challenging but of the upmost importance. Not only did Provident10 securely manoeuvre the year’s turbulence, our team adapted and remained unwavering in its commitment to our over 55,000 members.

The Fund remains poised for the long-term and is fully funded for a third year in a row. An accomplishment that is due to the immense determination and flexibility of our investment team and to a portfolio that provided returns beyond our stated benchmarks. Though uncertainties will always exist, over the past 10 years the financial health of the Plan has improved and is well situated for the years to come.

The team at Provident10 continues to be committed to ensuring pensions are paid and our operational service standards meet the needs of our members. I am proud to continue to lead a team that not only strives for, but achieves, a high level of success.

Though 2021 in some ways mirrored 2020, we accelerated our journey forward by focusing on the future. We shifted from the inaugural strategic plan, that was transitionary in nature, to a new chapter in becoming a best-in-class, scalable pension administration and investment management organization. This journey included the development of our five-year strategic plan, Now to Next: Our Path to 2026, that aims to make Provident10 “Brilliant at the Basics.”

Our strategic plan allows us to continue to support our members and stakeholders as we aspire to be an industry leader in pension and investment services, a trusted brand that leads in member satisfaction, and a recognized employer of choice.

As we look back at the foundation we have laid, we also remain focused on what is truly the heart of the organization: our promise to our members. A promise of a future that offers security and predictability even in the most uncertain times.

On behalf of our dedicated team, I offer our commitment and assurance to this promise as we chart a new path forward and continue on our journey to become brilliant at the basics.


2021

year in review

In another unpredictable year, Provident10’s commitment to the future remained steadfast. Throughout a turbulent year, the organization was successful in maintaining the business continuity and service coverage members expect and deserve.


Important programs like the internal control framework, enterprise risk management, and lifecycle education advanced, driven by Provident10’s commitment to modernize, improve, and adapt processes and tools to ensure a secure and stable pension fund for its members.

Established a new five-year strategic plan (2021–2026)

Supported members through 4,899 life events retirement, terminations, survivor benefit, purchase of service

Welcomed 973 new pensioners to retirement

Remained fully funded (109.2%) for the third year in a row

Achieved a total return, net of fees, of 11.2%, exceeding benchmarks by 2.2%

Attained a 95% member satisfaction rating

Completed pensioner payroll transition for 19,042 pensioners

2,559 members participated in online member education webinars

10-year average net return 10.3%

Proudly supported local organizations The Community Food Sharing Association, CHANNAL, and The Gathering Place

management commentary

Management Commentary

funding your pension

For some members retirement may be decades away; for others it could be just around the corner. How those pensions are funded and dispersed both in the present and long-term is determined by the Plan’s Sponsor BodyThe Sponsor Body is comprised of 10–14 individuals representing Government, the Unions, non-union employers, and pensioners. The Sponsor Body is responsible for setting the Plan’s benefit levels, making plan amendments, amending the Funding Policy, and determining the level of risk associated with the Plan’s asset mix., the Board of DirectorsComprised of 14 individuals appointed by Government, the Unions, non-union and an inactive member. The Board has overall responsibility for pension administration, corporation management, actuarial reporting, and investment management. It acts independently of the Sponsor Body and executive leadership team and makes decisions in the best interest of plan beneficiaries., and Provident10 as the Plan’s Administrator. Providing each member with a secure income throughout their retirement is at the heart of everything Provident10 does.

sustainability of the fund

Since 2015, financial management and future planning of the Fund has evolved and Provident10 has been at the centre of that transformation. As the organization overseeing the management of the Public Service Pension Plan, Provident10 must continue to adapt to the changing financial landscape to ensure continued success and sustainability for members.

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Though the Plan has been fully funded for the past three years, and the overall health of the Plan has improved over the past 10 years, there are important on-going considerations and uncertainties that can impact the Plan’s funded status, including, an aging Plan member profile, the global investment and economic environment, continued effects of the pandemic, and heightened global political tensions.

The PSPP Funding Policy is designed to guide the Plan towards full funding to ensure retirement security. It lays out defined thresholds that must be met before implementation of any Plan improvements are allowed and identifies whether changes are required to improve Plan funding. Growth of the Fund is generated through three main components: Member and Employer ContributionsEach pay period members and participating employers contribute equally to the Plan and these contributions are collectively invested and managed to support future benefits., investment earnings, and repayment of a promissory noteIn accordance with the Joint Sponsorship Agreement, Government issued a promissory note of $2.685 billion to Provident10 during pension reform. The promissory note will amortize over a 30-year period, through quarterly special payments. This asset is a non-investment asset and is used solely for the purpose of determining the funded ratio of the Pension Plan. from the Government of Newfoundland and Labrador.

The promissory note is currently 20% of the total net assets of the Fund, and provides steady cashflow and liquidity to the Fund, which is beneficial in providing stability to the funded status.

The Plan’s financial standing is shown through funding and financial statement valuationsPerformed every year as an interim review of the Plan’s financial position and are normally based on an extrapolation of the Funding Valuation. They are reported in the Plan’s financial statements and allow ongoing monitoring of the Plan’s financial health in years when a Funding Valuation is not performed.. Each of these funding valuationsPerformed every three years in accordance with the Funding Policy. These valuations assess the ability of the Fund to pay accrued pension benefits, and whether ongoing member and matching employer contributions are sufficient to cover the cost of benefits that continue to be earned by members each year. The results of Funding Valuations determine whether any benefit or contributions changes are required under the Funding Policy. helps to ensure the Plan remains secure and continues to be on the path to full funding.

As of December 31, 2021, the Fund’s net assets available for benefits was $11.7 billion, an $805 million increase from 2020. The Plan’s net assets consist of investments of $9.3 billion and the promissory noteIn accordance with the Joint Sponsorship Agreement, Government issued a promissory note of $2.685 billion to Provident10 during pension reform. The promissory note will amortize over a 30-year period, through quarterly special payments. This asset is a non-investment asset and is used solely for the purpose of determining the funded ratio of the Pension Plan. balance of $2.4 billion. The Plan’s Accrued Benefit ObligationA measure of the Plan’s current liabilities. This includes pensions that are currently in pay to retirees or beneficiaries, and benefits from the accrued service of active members that are expected to be paid in the future. It is determined in the valuations of the Plan, performed by the Plan Actuary, and is based on a number of assumptions about the future, such as expected investment earnings on the Fund, rates of salary increase, and life expectancy to name a few. as of December 31, 2021, was $10.7 billion.

As a result, the Plan had a surplus of $1.0 billion at the end of 2021 resulting in a funded ratio of 109.2%, compared to a funded ratio of 101% in 2020. The significant increase in funded ratio resulted from strong investment returns and changes to the actuarial assumptions - which decreased the accrued benefit obligation for the year. The discount rateThe discount rate is used to calculate the present value of future pension benefits that the plan expects to pay to members as well as contributions it anticipates receiving.was updated to reflect the current economic environment, resulting in an increase from 5.85% in 2020 to 6.00%. In addition, the assumptions relating to termination rates were updated to reflect recent experience, and the mortality rates were updated to reflect current life expectancies.

investment strategy and performance

The Provident10 investment team oversees the investment strategy as set out in the Statement of Investment Policies and Procedures (SIP&PAddresses key matters including the Fund governance, investment objectives and beliefs, philosophy, asset mix policy, risk management, permitted types of investments, and the responsible investing strategy.) with the goal of producing a well-diversified portfolio of investments, which will ultimately support future member benefits.

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Asset mix

The Provident10 investment team oversees the investment strategy as set out in the Statement of Investment Policies and Procedures (SIP&PAddresses key matters including the Fund governance, investment objectives and beliefs, philosophy, asset mix policy, risk management, permitted types of investments, and the responsible investing strategy.) with the goal of producing a well-diversified portfolio of investments, which will ultimately support future member benefits. The most important aspect of Provident10’s investment portfolio is strategically selecting the appropriate mix of assets to invest in.

The current mix includes four key areas: equities (stocks), fixed income (bonds), absolute return (hedge funds), and real assets (real estate and infrastructure). This mix is reassessed every three to five years to ensure it remains aligned with the Plan’s funding policy and investment goals.

Strategic Asset Mix Summary
Current Asset Mix Summary

Performance

The Fund’s portfolio performance is measured by two key metrics:

Generating long-term returns on invested assets in excess of the Funding Policy’s 6% discount rate

Exceeding the return of the Policy benchmark on a 4-year annualized basis.

For the year ending December 31, 2021, the Fund achieved both performance targets. In terms of the primary target, the 10-year net annualized return of 10.3% is well ahead of the Plan’s 6% discount rate. On a four-year net annualized basis, the Fund achieved a return of 9.3% versus a policy benchmark of 7.7%, producing 1.6% of annual value added and exceeding the secondary target.

This outperformance, or “added value,” allows for the evaluation of the effectiveness of the investment strategy and its implementation at the total Fund level. Benchmarks are valuable tools Provident10 uses to measure performance of individual asset classes and the managers who invest in them on Provident10’s behalf.

Provident10 uses a thorough and rigourous risk-controlled approach by choosing an optimized risk level within a multi-year framework and by selecting and weighting asset classes to achieve a target return. By identifying an acceptable risk threshold, Provident10 can determine the mix of assets with the best chance to achieve its goal.

The Fund earned a net 2021 return of 11.2% compared to the benchmark policy return of 9.0%, producing 2.2% of added value. On an absolute basis, Canadian, global, and private equites primarily contributed to the Plan’s overall return for 2021. Value added was largely attributed to the Plan’s private assets and mainly via the Plan’s private equity allocation.

Public Equities

Canadian and global equites performed well on an absolute basis, generating returns of 24.1% and 14.6% respectively. Overall value added for public equities was negative for the year, largely attributed to growth style managers which struggled to keep up with benchmarks in the wake of a broader reopening of the economy. 2021 saw a general reversal of the impressive returns generated in 2020 in the wake of pandemic oriented technology disruptors. In contrast, value managers exceeded benchmarks year-on-year in 2021, in comparison to under-par performance in 2020. Overall, the Plan has benefitted from the diversification of offsetting growth and value styles over a total market cycle. Despite a challenging year, the Plan’s public equity value add remains strong over a four-year horizon and beyond.

Fixed Income

The Plan’s Canadian and global public fixed income generated negative returns driven mainly by rising yields. Canadian fixed income returned -1.7% and global credit generated -0.3% on an absolute basis. On a relative basis, both asset classes exceeded benchmark with Canadian managers achieving 0.8% of value added and global managers contributing 0.7% of value added. Relative to benchmarks, the Plan benefited from managers’ active security selection and harvesting of credit premia. Commercial mortgages generated satisfactory absolute returns of 3.1% and superior value added of 4.2%, benefiting from an overall lower duration profile in the wake of rising yields and active harvesting of illiquidity premiums.

Private Equity

The Plan’s most impressive returns in 2021 were contributed by private equity. On an absolute basis, private equity generated returns of 52.0% and value added of 32.5%. These extraordinary results – which are not expected to set a precedent for the upcoming year - are a function of the stage of life of the program. After a patient 5 years of progressively investing along what is known as the “J-Curve,” the Plan’s program is approaching a maturity phase where various buyout and growth-oriented programs have achieved their business plan and valuation objectives. This has led to significant exits or realized distributions and unrealized gains to the Plan. Private equity valuations, in general, remain anchored by strong investor demand for the asset class.

FIGURE 4: TOTAL NET OF FEES CAD $ RETURNS

Fund LevelBenchmarkValue Added

Total Plan

11.24%

9.03%

2.21%

Canadian Equity

24.05%

25.09%

-1.04%

Global Equity

14.59%

17.53%

-2.94%

Private Equity

52.02%

19.53%

32.49%

Fixed Income

-1.72%

-2.54%

0.82%

Global Credit

-0.31%

-0.97%

0.66%

Commercial Mortgages

3.05%

-1.13%

4.18%

Listed InfrastructureWeighted approximation return calculation

16.29%

14.47%

1.82%

Private Infrastructure

15.06%

9.72%

5.34%

Real Estate

16.83%

8.72%

8.11%


Key Figures

Net Investment return for 2021 11.2%

Contributions $364.5 million vs Benefits $666.4 million paid
Net Assets Available for Benefits $11.7 billion


Real Assets

Real assets have provided strong absolute returns and impressive value add in 2021. Real estate was a strong contributor, earning 16.8% on an absolute basis and 8.1% of value add relative to benchmark. The Plan’s core Canadian held portfolio has benefited largely from investments in the industrial sector, based on strong logistical demands of the economy. Paired with lagging supply, industrial properties have experienced strong rental growth and investor demand which have moved property valuations significantly higher in 2021.

Similarly, the Plan’s infrastructure program produced strong returns of 15.1% and value add of 5.4%. Within the infrastructure program, the Plan has benefited from strong investor and economic demand for digital infrastructure assets—such as data centers—a need which has been further catalyzed by lasting structural consumer demands of the pandemic. In addition, strong investor demand for energy transition assets such as wind, solar and smart monitoring technology has furthered the Plan’s gains in the asset class. Similar to private equity, overall institutional demand and commitment to the asset class has, in general, been increasing and has maintained strong returns in the asset class in most categories.

2021 investment environment

Following 2020’s intense pandemic drawdown and a subsequent rebound, 2021 was a story of continued economic momentum and recovery. Investor confidence increased with COVID-19 vaccine distributions and a progressive re-opening of economies, although periodic challenges remained with ever evolving virus variants, notably Delta and Omicron later in the year.

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During the first quarter of 2021, institutional investors digested rising bond yields, strong consumer demand, and concerning inflation indicators in the face of pandemically disrupted supply chains. By the second quarter, initial market worries subsided, as inflationary pressures were deemed manageable and “transitory” in nature. Fears however resurfaced later in the year and despite a continued economic recovery, the supply - demand inflation narrative continued, with global central banks acknowledging the issue and signalling a potential reversal of decades – long accommodative monetary policies.

Equity markets fared well during the year, with the MSCI All Country World Index and S&P 500 Index netting double digit returns, as institutional investors celebrated a strong economic recovery and discounted any persistent inflation concerns. Value styles outperformed growth stocks as institutional investors rotated away from the virtual economy back to a more fulsome pre-pandemic economy.

Canada and the S&P TSX Composite Index performed equally well. Notable returns stemmed from the energy sector, which benefitted from a global supply imbalance, alongside significant demand resulting from the global economic rebound.

Most fixed income indices around the world earned negative rates of return during 2021. Both the FTSE Canada Bond Universe Index and Bloomberg Global Bond Aggregate Index produced moderately negative returns, following a general rise in bond yields during the year. In Canada, with the exception of High Yield and Real Return bonds, all other categories - not including T-Bills - had total negative returns. The Canadian versus US Dollar value was flat over the period.

Figure 6: Market Index Table

Q1Q2Q3
Q4
Total
SP TSX Composite

8.1%

8.5%
0.2%
6.5%
25.0%
S&P 500 (CAD$)
4.7%
6.9%
2.9%
10.7%
27.6%
MSCI AC World Index (CAD$)
3.2%
5.8%
1.2%
6.4%
17.5%
FTSE Canada Bond Universe Index
-5.0%
1.7%
-0.5%
1.5%
-2.5%
Bloomberg Global Bond Aggregate Index (CAD $ Unhedged)
-5.7%
-0.2%
1.4%
-1.0%
-5.5

investment outlook uncertainties 2022 and beyond

The world’s Central Banks have been suggesting increasing interest rates to manage an ever-growing inflation problem.

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  • Worsening geopolitical issues are raising the overall level of volatility of many asset classes.
  • Central Banks are withdrawing their asset purchases and limiting the upside potential of markets.
  • Actual inflation results are significantly higher than anticipated.
  • The recurrence of a COVID-19 epidemic as opposed to the forecasted endemic scenario has shaken markets.

Management Commentary

a plan that works for you

Provident10’s priority has always been and remains to create and sustain a Plan that works for members above all else. In 2021, the organization focused on finding new opportunities to connect with valued members and stakeholders on the topics that are important to them. These opportunities included expanding the lifecycle education program, developing useful member resources, and launching a LinkedIn profile to reach more members. Provident10 also hosted employer information sessions, including the first in-person employer symposium, sought increased feedback through telephone surveys to gage member satisfaction, and prioritized consistent service standards for the organization’s pension administration processes.

active members Icon
27,898
active members
pensioners Icon
23,107
pensioners
ratio of active members to pensioners Icon
1.21
ratio of active members to pensioners
new pensioners Icon
973
new pensioners
new members Icon
2,331
new members
participating employers Icon
40
participating employers
pensioners over 100 years old Icon
11
pensioners over 100 years old

active members by age

<25: 2%
25-34: 17%
35-44: 26%
45-55: 33%
>=55: 21%

active members gender profile

F: 69%
M: 31%

putting our members first

Provident10 strives to meet members where they are in their financial journey and provide helpful resources and educational tools so they can rest assured that their retirement is in safe hands. This year the organization continued to advance and innovate on these services.

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In 2021, Provident10 completed the final phase of transitioning over 19,042 pensioners to the new payroll provider, CIBC Mellon. The transition of pension payroll from the Government of Newfoundland and Labrador (GNL) began in 2018 with 4,500 pensioners. The overall project involved multiple stakeholders including Provident10, GNL, and the payroll provider, who formed a steering committee to ensure the remaining transition would be as seamless as possible. It is thanks to this collaborative effort that the transition has been such a success.

In an effort to meet members with the information they need when they need it, 2021 also saw a significant overhaul of Provident10’s educational programming. As a valuable member tool the lifecycle education program, also known as Member Webinars, were a key focus area this year. When the program first began in 2020, its goal was to transform the standard three-hour employer-sponsored retirement sessions into virtual education modules that would ready members for retirement. After a year of offering Retirement Ready webinars, the organization undertook a fulsome review of the Life Cycle Education Program, informed by member feedback on the virtual sessions and offered opportunities for further enhancement.

The Retirement Ready webinars were repackaged from three presentations to two, and two new webinars, “New Members” and “Enhancing Your Pension Benefit,” have been added to increase member knowledge of the value of the Pension Plan. This approach has resulted in a complete menu of webinar options for members to choose from depending on the stage of their career and their interests. The virtual webinars continue to be well received with 2,559 members participating throughout the year.

To assess the program’s success and opportunities for enhancements, webinar attendees are invited to complete a survey. The results from the members who attended in 2021 are shown in Figure 7.

Figure 7: Member Webinar Satisfaction Results

QuestionsAvg Rating from 1–5
Average
4.7
The information presented was relevant and met my expectations?
4.6
The content was easy to understand?
4.5
The module increased my knowledge about my pension benefits and the Public Service Pension Plan?
4.7
I feel that the information provided will help in the planning for my retirement?
4.6
I would recommend this presentation to my colleagues?
4.8


welcoming new members

Each year the Plan welcomes an average of over 1,500 new members, each of whom play a vital role in the growth of the Plan and the overall health of the Fund. In 2021, the organization exceeded that average, welcoming 2,331 new members. Some may be coming from other pensions plans but to many a pension is a new benefit.

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Providing educational resources to new members is a priority that enhances their understanding of the Plan and how their financial future is protected.

New members now receive a welcome package from Provident10—an initiative designed to support the learning process and inclusion of new members. The package includes a letter from the CEO that promotes the new member webinar sessions and a newly created Plan at a Glance. This summary serves as a digestible introduction to the PSPP, covering the most important aspects of their Pension Plan.

expanding our reach

As Provident10 moves toward exploring new and exciting evolutions, establishing itself as a trusted brand remains one of the organization’s top priorities. In 2021, Provident10 introduced a new Stakeholder Relations Department that has been assessing external communication activities that support brand awareness among members and key stakeholders. In co-ordination with the release of the first digital annual report, the organization launched the first phase of its social media strategy with a public profile on LinkedIn.

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The platform provides the opportunity for the organization to connect directly with Plan members and other key stakeholders and acts as a medium for building brand awareness and profiling key accomplishments. The platform is also a means of enhancing Provident10’s recruitment strategy by promoting employment opportunities within the organization.

As Provident10 implements its new five-year strategic plan, continuing to enhance the organization’s relationship with members and participating employers, in part through digital engagement that can capture the attention of existing and potential partners, will continue to drive Provident10’s work and people-centric mission.

serving our members

Earning and keeping members’ trust is what drives Provident10. How members rate their experience interacting with the organization’s pension administration team is essential to evaluating the organization’s success.

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The organization received over 14,000 calls. At the end of each call, members are invited to stay on the line to complete a short three-question survey on their experience and the service they received. Over 2,000 members took the time to provide their feedback on the experience and the results of the inquiries show high levels of satisfaction with the service and support they received.

On average, in 2021, Provident10 exceeded the targeted service standards. The team prioritizes retirement pensions and survivor benefits — ensuring members and their families can transition as seamlessly as possible to receiving pension benefits. Provident10 will continue to look for ways to enhance processes for targets that were not fully attained in 2021.

Notably, 2021 saw a 54% increase in the volume of membership terminations compared to 2020. Subsequently the organization did not meet the service target. It is premature to predict if this will be a new normal or if it is a result of the current shift in mass resignations due to the pandemic, however, in response to the increase in volume, the organization is prioritizing operational improvements that will enhance terminations and other similar processes, with the addition of team members to support these requests and a new fulsome case management solution that will be fully operational in 2022.

For each inquiry and transaction, Provident10 strives to uphold the following service standards:


Survey Results

Figure 8: Member Life Events

ProcessNumber of cases in 2021
1st Retirement Pensions837
Terminations/Refunds1,549
Process Plan Member Termination Election422
Survivor Benefits
238
Purchase of Service
1,853
Total
4,899



Figure 9: Interactions with Members

Interactions
Phone Call Volume14,41
Phone Responses (Voicemail)
341
Written Responses
17,554
Total
32,305



Figure 10: Service Standards Achievement

Process

Target (100%)Achievement

1st Retirement Pensions

90% income continuance from submitted payment date

98.7%

Terminations / Refunds

90% within 30 days

74.1%

Process Plan Member Termination Election

90% within 30 days

95.8%

Purchase of Service

90% within 90 days

91.1%

Survivor Benefits

95% within 30 days

98.7%

Phone Answer Rate

90%

95.5%

Phone Responses

95% within 2 business days

96.2%

Written Responses

95% within 5 business days

94.0%



partnering with our employers

Finding ways to connect with participating unions, employers, and key associations was identified as an essential activity for the organization. The objective of this outreach was to provide educational resources, streamline processes, and identify potential collaboration areas to enhance ongoing communication with Plan members.

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In 2021, the organization launched Asked & Answered, a new education program focused on and driven by employers. Provident10 held four sessions over the course of 2021, each of which centred around frequently asked questions about the day-to-day administration of the PSPP. The sessions served as a form of professional development and provided greater insight and role clarity for both the employer and Provident10. Over 30 employers regularly attended the sessions, representing 99.7% of active members in the Plan.

Additionally, the organization sought out further opportunities to enhance the employer’s payroll data reporting process by introducing an Employer Data Portal (EDP). The EDP allows participating employers to submit payroll files where data is tested, providing opportunities to correct any data errors and properly validate information. The portal has been successfully implemented across 11 participating employers in 2021 and will continue to transition to the remaining employers in 2022.

building our culture

When Provident10 says that people drive us, the organization is referring to its Plan members, but Provident10 also thinks about its employees and the positive experience they deserve. As COVID-19 continued to shape the days and months of 2021, the organization was successful in maintaining business continuity and service coverage. Provident10 focused efforts on supporting employees and their diverse needs, while ensuring the business operations remained stable.

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In 2021, the organization worked to enhance the employee experience by encouraging personal and professional growth through unique wellbeing offerings, staying competitive with compensation through short-term incentives, providing opportunities to give back to the greater community, and promoting the existing learning and development program.

A key goal of the organization is to create a culture of engagement, development, and recognition. In 2021, Provident10 selected a new recognition solution which will launch in 2022 to ensure strategic alignment with key employee engagement initiatives, including Provident10’s five-year anniversary.

In 2021, Provident10 welcomed external partners to provide educational conversations surrounding physical and mental wellbeing, and the organization recognized the first National Day of Truth and Reconciliation by offering a corporate wide training session with First Light, St. John’s Friendship Centre about Indigenous cultural diversity.

As a relatively new organization with evolving programs, Provident10 continues to look for opportunities to promote and implement enhancements that offer further value to employees and the organization. The organization knows that working to be recognized as an employer of choice and building a culture of diversity, equity, and inclusion is an ongoing mission that Provident10 must continually seek to amplify.

Management Commentary

now to next: the path to 2026

The strategic vision and journey for the organization has always been grounded in becoming Brilliant at the Basics. While the PSPP has a long history, the story of Provident10 is still in its early stages. Since Provident10’s beginnings, a great deal of work has taken place to position the organization for long-term success.

The year 2021 marks a critical moment in the organization’s strategic journey, turning its focus to future aspirations through a five-year strategic plan, Now to Next: Our Path to 2026. However, to understand the commitments and decisions needed to position Provident10 as a leader in the industry, the organization will build on its accomplishments, emerging track record, ability to exercise agility in times of uncertainty, and external market forces to inform and guide future direction and decisions.

During the development of the five-year strategic plan, Provident10 placed a significant emphasis on enterprise risk management (ERM) and the strategic and operational risk registers. This led to more focused discussions and mapping of the organization’s strategic risks onto the five-year strategic priorities and initiatives.

Provident 10 is committed to setting the next direction and foundation for its five-year strategic plan (2022–2026) – a vision that continues to elevate PeopleProvident10 strives to create a seamless experience for members and a positive culture for employees. , ProcessProvident10 aims to remain an efficient and agile organization, reacting and adapting to the evolving times and continuing to be deliberate in approach for the benefit of Plan members. , and Technology Provident10’s philosophy is to embrace technology in a big way as the organization modernizes to reduce the burden of pension administration. Protect and mitigate digital risks to the business. Ensure transparency, accountability, and a consistent experience for members. as the critical factors to building the right foundation for the organization’s long-term success. Looking ahead to what 2026 will look like for Proivdent10, the organization has a vision that is modern, focused, and people-centric.

Becoming Brilliant at the Basics

Brilliant at the Basics is a theme and an integral part of the organization’s multi-year journey. It is not only a statement, but also a promise – that Provident10 will continue to elevate its success with good governance, key relationships, and innovation. The next phase of the organization’s journey reflects the effort that is required to realize the returns from the foundation laid.

DRIVING STABLE LONG-TERM GROWTH

+ Provident10 will evaluate new opportunities based on criteria that align with the organization’s values, aspirations, and operational readiness. The organization’s continuous growth will be grounded in prudent financial decisions and strategic actions including expanding service offerings while protecting the promise for members of the Plan and ensuring fairness in the Plan costs and benefits is achieved across generations of members.

ENABLING SERVICE EXCELLENCE THROUGH TECHNOLOGY ADAPTATION AND MODERNIZATION

+ The organization understands the importance of technology in enabling modernization of pension administration service delivery. Modernization will advance member and stakeholder experiences as well as generate business efficiencies and mitigate risk associated with current systems. Provident10 is committed to improving the pension administration system and making the necessary enhancements to introduce robust technologies that improve business processes while developing user friendly member engagement tools.

ENHANCING TRANSPARENCY AND ENGAGEMENT WITH MEMBERS AND STAKEHOLDERS

+ The team at Provident10 is dedicated to continually building trust and protecting the relationship with its members and stakeholders through transparent communications throughout all aspects of the organization. Committed to understanding the evolving needs of members and stakeholders, the organization will engage with stakeholders to inform brand development and member service offerings and increase financial literacy.

DEVELOPING TALENT AND FOSTERING A PURPOSE-DRIVEN CULTURE

+ Committed to fostering a values-based and purpose driven organization, Provident10 is building an organizational culture where its core values and beliefs are modelled top-down and lived bottom-up. Provident10’s team is a critical factor of its long-term success and as a result, is allocating training and funds to elevate the talent experience. The organization rests in the strength of a diversified talent pool across all teams and aims to attract and retain skilled talent to reflect the members it serves.

LEADING WITH STRONG GOVERNANCE

+ Good governance is a fundamental principle at Provident10 and provides the organization with its license to operate. The organization is committed to investing in IT governance and risk management to maintain the highest standards of ethical conduct.

Management Commentary

governing the plan

Provident10 operates in a joint trustee governance structure, between government and the five participating unions. Provident10’s governance structure includes three groups as prescribed in the Joint Sponsorship Agreement (JSA)On December 10, 2014, Government and the Unions ratified a Joint Sponsorship Agreement (JSA) for the purpose of setting out the terms and conditions of the joint sponsorship of the Pension Plan and establishing the Funding Policy. : the Board of DirectorsComprised of 14 individuals appointed by Government, the Unions, non-union and an inactive member. The Board has overall responsibility for pension administration, corporation management, actuarial reporting, and investment management. It acts independently of the Sponsor Body and executive leadership team and makes decisions in the best interest of plan beneficiaries., the Sponsor BodyThe Sponsor Body is comprised of 10–14 individuals representing Government, the Unions, non-union employers, and pensioners. The Sponsor Body is responsible for setting the Plan’s benefit levels, making plan amendments, amending the Funding Policy, and determining the level of risk associated with the Plan’s asset mix., and the Provident10 management team. The Board have experience in pension plan governance, asset-liability management, investment strategies and capital markets, as well as pension laws, risk management, and compliance.

They have overall responsibility for pension administration, corporation management, actuarial reporting, and investment management. The Board acts independently of the Sponsor Body and Provident10’s management and, as fiduciaries, are legally bound to act in the best interests of all Plan members.

In addition to the three groups, there are three sub-committees that play an advisory role to the Board: the Audit and Finance CommitteeThe Audit and Finance Committee advises the Board on financial reporting, accounting systems, and internal controls. They review the annual financial statements, recommend, and support internal accounting policies, and develop a management profile for risk assessment., the Investment CommitteeThe Investment Committee advises the Board on the investment management and oversight of the Fund. They provide guidance on, and monitor implementation of, investment policies, strategies, and mandates. They also review total fund and investment manager performance., and the Governance and Human Resources (G&HR) CommitteeThe G&HR Committee advises the Board on best practices with regards to matters of governance and human resource policy, procedures, and practices. They provide guidance on corporate governance and ethics, executive review and compensation, and corporate communication policies and practices..

board oversight

The Board of Directors was engaged and consulted on key initiatives throughout the year, specifically Enterprise Risk Management, Strategic Planning, and the creation of the Corporate Objectives and Balance Scorecard. These initiatives play a pivotal role in ensuring alignment on priorities and the organization’s approach to leading them. The creation and implementation of these initiatives mark a significant milestone for the organization, and the organization is very pleased to receive the Board’s full endorsement on each of these initiatives.

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The Provident10 Board of Directors Remuneration Policy details the payment received by each Director, which includes an annual honorarium and a per-meeting attendance allowance. Government and Union employees are not eligible for the per-meeting attendance allowance.

Directors are also reimbursed for reasonable travel expenses. Meeting attendance and remuneration details for each Director are reported in the following table. The table includes attendance at duly constituted and ad hoc meetings. The Board Chair and Vice Chair are ex-officio, non-voting members of all committees.

Figure 11: Meeting Attendance and Remuneration

NameBoardAuditInvestmentG&HRRemuneration

Bert Blundon • Board ChairThe Board Chair and Vice Chair are ex-officio, non-voting members of all committees.

6/7

3/4

2/3

7/8

$12,375.00

Loyola Sullivan • Board Vice ChairThe Board Chair and Vice Chair are ex-officio, non-voting members of all committees.

7/7

4/4

3/3

8/8

$13,625.00

Dawn Learning • Chair Investment Committee

6/7

-

3/3

-

$2,500.00

Donna Brewer • Chair Audit and Finance Committee

7/7

4/4

-

-

$10,000.00

Doug Laing

7/7

4/4

3/3

-

$7,500.00

Jennifer Dove

7/7

4/4

-

8/8

$10,000.00

John Vivian

7/7

-

3/3

8/8

$1,250.00

Kevin Dumaresque

7/7

-

3/3

6/8

$8,250.00

Louise Poirier-LandryLouise Poirier-Landry – Reported up to June 8, 2021

2/3

-

2/2

4/4

$3,125.00

Mary Galway

6/7

-

3/3

7/8

$8,750.00

Michelle JewerMichelle Jewer – Reported up to May 16, 2021

1/3

1/1

-

-

$625.00

Randell Earle • Chair G&HR Committee

6/7

-

-

8/8

$9,000.00

Robert Cashin

5/7

4/4

-

-

$1,250.00

Sharon Sparkes

6/7

4/4

-

2/2

$7,250.00

Theresa HeffernanTheresa Heffernan - Reported as of August 16, 2021

2/2

1/1

-

-

$468.75

Nancy-Beth Foran • External investment expert

-

-

3/3

-

$3,250.00

Will Small • External investment expert

-

-

3/3

-

$3,250.00

risk management and internal controls

Strong internal governance is essential to ensuring fortified operational commitment to Provident10’s 55,000 members. The organization’s culture of accountability, where every member of the team must protect the assets under their authority, ensures regular policy compliance and plays a role in the continuous improvement Provident10 strives for.

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The establishment of an Internal Control Framework (ICF) is the foundation of that culture and has been an early priority for Provident10 that will continue to shape the future. An ICF enables an organization to assess its internal controls and provide reasonable assurance that they are working as intended. The ICF strengthens Provident10’s ability to ensure the risks related to the stewardship of the Plan and its resources are adequately managed.The ICF is integral in the progression of Provident10’s Enterprise-wide Risk Management Framework (ERM), which informs the risk exposure and risk assessment of the organization. Both frameworks will remain closely linked as the organization continues to evolve.

In 2021, Provident10 developed a systematic risk-based internal audit planning process, which informed the development of the first approved risk-based internal audit plan for execution in 2022.

The organization also advanced the maturity level of its internal control and risk management frameworks with the addition of key resources and risk training and awareness, including risk impact and likelihood assessment, evaluation of inherent and residual risk, and identification of risk mitigation strategies. This past year, Provident10 welcomed a new Director of Risk and Compliance and a new Internal Auditor.

employee rewards and compensation program

Provident10 has a progressive compensation philosophy, known as the Total Rewards Program, that follows a pay-for-performance model for each employee’s compensation (bargaining and non-bargaining), including the executive team.

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The Total Reward Program is comprised of base salary, variable compensation driven by the Short-Term Incentive Program (STIP)The Short-Term Incentive Program (STIP) has been designed to promote a shared understanding of the priorities, expectations, and performance delivery for participants. It further aligns with the Strategic and Business Plan priorities and offers reward opportunity for successful achievement. The STIP program has Corporate and Individual targets assessed for 0%–150% attainment with minimum, target, and excellence performance metrics. The maximum total reward is capped. The variable pay STIP is assessed and paid annually. Employees re-earn payments each year by successfully achieving annually defined individual and corporate objectives., a group insurance program, and membership in the PSPP, and is consistently applied at all levels of the organization.

The program was developed by reviewing the compensation programs of comparable organizations according to various factors such as industry, size, assets under management, regional demographics, and the ability to attract, retain, and reward talent.

The Board of Directors approves the compensation principles and philosophy for the organization as well as the salary and variable compensation of the CEO.

Annually, the Board of Directors is presented with the Corporate Objectives Performance Report in support of the organization’s Short-Term Incentive (STI) Program. The Program is designed to ensure alignment of priorities between the organization and Board of Directors and provides the Board with the opportunity to assess corporate performance metrics.

compensation disclosure

The organization is committed to transparency with respect to the compensation of members of Provident10’s Executive Team. The following summary includes the compensation details for the Executive Leadership Team in 2021.

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Figure 12: Executive Compensation Reporting

PositionYearBase SalarySTIPTotal Cash Compensation
Chief Executive Officer2021$ 340,000$ 136,000$ 476,000
2020$ 285,000$ 85,500$ 370,500
Chief Investment Officer2021$ 306,793-$ 306,793
2020$ 300,000$ 120,000$ 420,000

Vice President Finance

2021$ 184,026$ 46,229$ 230,255
2020$ 180,318$ 45,322$ 225,640
Vice President Systems and Quality2021$ 177,950$ 44,650$ 222,600
2020$ 175,102$ 43,990$ 219,092
Vice President Human Resources & AdministrationReported up to December 10, 20212021$ 162,001-$ 162,001
2020$ 168,149$ 42,343$ 210,492
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