ARCHIVED - 2007 Annual Report of the Board of Trustees of the Public Service Management Insurance Plan (PSMIP)

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What is the PSMIP?

The PSMIP is a group insurance plan established by the Treasury Board of Canada. It provides Long-term Disability (LTD), Life, Accidental Death and Dismemberment (AD&D), and Dependants' Insurance for federal employees who are excluded from collective bargaining because they are working in managerial or confidential capacities. Executives, parliamentarians, and judges are also covered by the Plan and have distinct benefits. The PSMIP is insured through the Industrial Alliance Insurance and Financial Services.

Board of Trustees

A Board of Trustees, appointed by the President of the Treasury Board, monitors the financial operations of the Plan and oversees its administration. The current members of the Board are:

The Chairperson, Judith LaRocque, Deputy Minister, Canadian Heritage
Larry Murray, Deputy Minister, Fisheries and Oceans Canada
Maria Barrados, President, Public Service Commission of Canada
Alain Jolicoeur, President, Canada Border Services Agency
Michael Wernick, Deputy Minister, Department of Indian Affairs and Northern Development
Monique Boudrias, Executive Vice-President, Canada Public Service Agency

Scope of the Plan

Since its inception in 1968, the Plan has paid $760 million in cash benefits under the various classes of insurance to 13,476 members and their beneficiaries. As of December 31, 2007, 49,154 members were covered under the Plan including 35,560 employees excluded from collective bargaining, 6,949 from the executive group, 1,041 judges, 394 members of parliament and 5,210 members under Post-retirement life insurance. In addition to Dependants' Insurance, members were insured as estimated below:

Line of Insurance	Amount (in thousands)
Basic Life	$3,965,327
Supplementary Life	$1,816,710
Accidental Death and Dismemberment (AD&D)	$6,689,820
Long-term Disability (LTD)	$3,619,857
Post-retirement Life (PRLIP)	$215,244

Premiums and Benefits

Premiums paid into the Plan during 2007 are shown in the following table and are compared with the amount paid out to claimants or set aside as reserves.

Line of Insurance	Premiums	Claims (and Increases to Reserves)	Ratio of Claims to Premiums
Basic Life	$14,166,040	$10,606,740	74.9%
Supplementary Life	$2,782,800	$1,976,891	71.0%
Members' AD&D	$872,624	$466,674	53.5%
Dependants' Life and AD&D	$335,815	$236,441	70.4%
LTD	$61,112,973	$62,281,695	101.9%
PRLIP	$5,441,376	$1,808,493	33.2%
Total	$84,711,628	$77,376,934	91.3%

Reserves

When a disability claim is received, sufficient funds are set aside to pay all future monthly benefit installments to the claimant. These funds are referred to as "reserves." As of December 31, 2007, plan reserves totaled $238.7 millionincluding life waiver reserves.

Surplus/Deficit

Most of the lines of insurance under the Plan were in a surplus position at year end. The Plan, as a whole, had a surplus of $29.6million at year end.

Plan Disbursements

The total amount paid out of the plan during the year was $65.4 million. Of this amount, 94.3% was paid in the form of benefits to plan members and their families, 3.2% was for expenses, and 2.5% was for premium taxes.

Value of Plan to Member

During 2007, employer costs averaged $1,074 per plan member for disability insurance premiums, $2,835 for Executive life and disability insurance, and $3,919 for Members of Parliament's life and disability.  The following table illustrates the 2007 average employer costs per plan member for Long-Term Disability Insurance, Basic Life, Accidental Death and Dismemberment, Dependants, and Post-Retirement Life Insurance.

EMPLOYEES EXCLUDED FROM COLLECTIVE BARGAINING			PUBLIC SERVICE MANAGERS - EMPLOYER PAID (100%)
Lines of INSURANCE	MAIN PLAN		EXECUTIVES	MEMBERS OF PARLIAMENT	JUDGES
	Employee's share	Employer's share
LTD	$190 (15%)	$1,074 (85%)	$2,080	$2,544	Coverage not available
Basic Life, ADD and Dependants	$204	$0	$755	$1,375	$4,6111
Supplementary Life	$136	$0	Employee paid 2	Employee paid 2	Employee paid2
TOTAL	$530	$1,074	$2,835	$3,919	$4,611
PRLIP	Coverage not available		$854	$1,534	$5,425

¹Denotes a Premium Holiday.

²Available data does not permit calculation of a representative average.

Recommendations Approved By Treasury Board

The Treasury Board approved the Board of Trustees' recommendations for the following premium decisions to be effective January 1, 2008.

• 12-month premium holiday for Basic Life under the Judges' Plan;
• 12-month premium holiday for Accidental Death & Dismemberment under the Executive Plan;    
• 12-month premium holiday for Dependants' insurance under the Executive Plan;  
• 12-month premium holiday for Accidental Death & Dismemberment under the Members' of Parliament Plan;
• 50% increase in the government monthly premium for Members of Parliament Basic Life;
• Deferral of the age-related reduction under the Main Plan Basic Life and Supplementary Life insurance from age 61 to 66; and
• Adjustment to males and female premium rates due to the deferral of the age-related reduction. 

Further Information

If you have questions about your coverage under the Plan or need general information about the benefits available, please contact your compensation advisor or visit the Treasury Board of Canada Secretariat's Website. To access the site, type the following in the address section of your World Wide Web browser:

http://www.tbs-sct.gc.ca/hr-rh/bp-rasp/benefits-avantages/mip-racg/mip-racg-eng.asp

If you would like to have further information on the general experience and operations of the Plan, please contact:

Robert Allard, Secretary
Board of Trustees
Public Service Management Insurance Plan
Vanier Building
222 Nepean Street, 5^th floor
Ottawa, Ontario  K1A 0R5
e-mail: Robert.Allard@tbs-sct.gc.ca