Carleton University Retirement Plan Update Carleton University Retirees

Agenda • Pension Fund Returns • New Investment Managers • Update on Financial Position

Pension Fund Investment Returns • Market value of assets – June 30, 2016 –

New Investment Managers Emerging Markets Equity – William Blair • Based in Chicago •

Asset Class Allocation, January 2018 Asset Class Percent of Total Canadian Equities 30 Canadian

Solvency funding relief • Approved for stage 3 relief, October 2016 • Special payments

Expected Changes to Ontario Regulations • New framework for funding of pension plans •

University Sector Plan • Exploratory work on this continues • First draft suggests that

Responsible Investing • Carleton has had a policy in place for many years •

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Carleton University Retirement Plan Update Carleton University Retirees Association February 2, 2018 Betsy Springer Director, Pension Fund Management 1

Agenda • Pension Fund Returns • New Investment Managers • Update on Financial Position • Expected Changes to Ontario Regulation • Responsible Investing 2

Pension Fund Investment Returns • Market value of assets – June 30, 2016 – June 30, 2017 – January 31, 2018 1, 102. 8 1, 219. 2 1, 268. 1 • Investment returns, years ending June 30 – – – – – 2009 2010 2011 2012 2013 2014 2015 2016 2017 - 11. 44 % 8. 95 16. 01 - 1. 30 15. 44 20. 63 8. 77 2. 44 12. 66 3

New Investment Managers Emerging Markets Equity – William Blair • Based in Chicago • Initial Mandate of C$50 million Global Small Cap Equity – Brandes Investment Partners • Based in San Diego • Initial Mandate of C$60 million 4

Asset Class Allocation, January 2018 Asset Class Percent of Total Canadian Equities 30 Canadian Fixed Income 20 Global Equities: Large cap Emerging Markets Small cap 30 5 5 US High Yield Debt 4 Global Infrastructure 6 100 5

Solvency funding relief • Approved for stage 3 relief, October 2016 • Special payments will be $12. 6 million annually for three years. • Without Stage 3, special payments would be $34. 3 million annually. 6

Expected Changes to Ontario Regulations • New framework for funding of pension plans • Eliminates solvency funding for plans that are at least 85% funded • However, a new “provision for adverse deviations” will be required and must be funded • For Carleton, this could be about 10% of pension plan liabilities (i. e. accrued benefits) • Expect large special payments to continue. 7

University Sector Plan • Exploratory work on this continues • First draft suggests that a sector plan would be expensive for Carleton (both members and university) • Governance implications are a concern 8

Responsible Investing • Carleton has had a policy in place for many years • Posted on Pension Fund Management website • Based on best practices (United Nations Principles for Responsible Investing) • Policy does not include divestment • Policy requires investment managers to incorporate analysis of environmental, social and governance (“ESG”) issues into the investment decision-making process. 9

Questions? 10