Actuarial valuation results – Account A (Member account)

January 1, 2021 actuarial valuation results

The most recent actuarial valuation of TRAF prepared by the independent plan actuary for funding purposes was as at January 1, 2021, which included an assessment of the financial condition of Account A. The valuation results for Account A are summarized in the following table.

The next actuarial valuation is scheduled to be performed as at January 1, 2024.

Actuarial valuations of the fund, including Account A, can be found in your Online Services account.

On a going-concern basis, as at January 1, 2021, Account A was determined to have total assets that exceeded its total liabilities, resulting in a surplus of $83.6 million (which is an improvement over the $34.7 million deficit at January 1, 2018). This equates to a funded ratio of 101.5%. It is noted that there was a surplus of $323.3 million in respect of service accrued as of the valuation date, but this surplus was offset in part by the deficit of $239.7 million in respect of future service.

The fact that the present value of future contributions from current members (i.e., assets) is $239.7 million (or 17.5%) less than the present value of the corresponding liabilities related to benefits for future service indicates that, based on the assumptions used in the valuation, future contributions from current members are not expected to be sufficient to fund their expected future benefits.  Based on the results of the January 1, 2021 valuation, such shortfall is covered by the accrued surplus resulting in a total surplus of $83.6 million.

Reconciliation to the prior valuation

The table below reconciles the items that contributed to the Account A total deficit of $34.7 million as at January 1, 2018, improving to a total surplus of $83.6 million as at January 1, 2021.

The primary contributor to the improved funded status was the strong investment returns for the years 2018 to 2020. The impact was an improvement of $202.1 million to the funded status. The primary factor with a negative impact on the funded status of Account A was the change in the discount rate assumption. The discount rate was reduced from 5.75% to 5.50%. The impact was a decrease of $198.9 million to the funded status.

January 1, 2022 Extrapolated Results

The total funded ratio of Account A (excluding the PAA) was extrapolated to be 109.9% as at January 1, 2022. This figure was based on an extrapolation of the January 1, 2021 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 (i.e., the extrapolation will continue to rely on assumptions for these variables). The formal actuarial valuation as at January 1, 2021 revealed a total funded ratio of Account A (excluding the PAA) of 101.5%. The increase is largely due to net annualized investment earnings of approximately 16.56% during 2021, which was greater than the assumed rate of 5.50%.

January 1, 2023 Extrapolated Results

The total funded ratio of Account A (excluding the PAA) was extrapolated to be 103.2% as at January 1, 2023. This figure was based on an extrapolation of the January 1, 2021 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 (i.e., the extrapolation will continue to rely on assumptions for these variables). The formal actuarial valuation as at January 1, 2021 revealed a total funded ratio of Account A (excluding the PAA) of 101.5%. The increase is primarily due to net annualized investment earnings of approximately 7.76% during 2021 and 2022, which was greater than the assumed rate of 5.50%.