Legislative Assembly Supplementary Retiring Allowances Fund — Audited Financial Statements (FY 2023–24) (TD 12, English, SO 7(2))

TD-12-7(2)-EN

Nunavut — Committees

LEGISLATIVE ASSEMBLY SUPPLEMENTARY RETIRING ALLOWANCES FUND IQALUIT, NUNAVUT FINANCIAL STATEMENTS MARCH 31, 2024 Management’s Responsibility for Financial Reporting 1 Independent Auditors’ Report 2 - 4 Statement of Net Assets Available for Benefits and Accrued Pension Benefits and Surplus 5 Statement of Changes in Net Assets Available for Benefits 6 Statement of Obligations for Pension Benefits 7 Notes to the Financial Statements 8 – 13

2 Independent Auditors' Report To the Members of the Legislative Assembly of Nunavut Report on the Audit of the Financial Statements Opinion We have audited the financial statements of the Legislative Assembly Supplementary Retiring Allowances Fund (the Fund), which comprise the statement of ne t assets available for benefits and accrued pension benefits and surplus as at March 31, 2023 and the statements of changes in net assets available for benefits, and obligations for pension benefits for the year t hen ended, and a

summary of significant accounting policies and other explanatory information. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Fund as at March 31, 2024 and its financial performance and its cash flows for the year then ended in accordance with Canadian accounting standards for pension plans. Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements

section of our report. We are independent of the F und in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and f air presentation of the financial statements in accordance with Canadian accounting standards for p ension plans, and for such internal control as management determines is necessary to enable the pr eparation of the financial statements that are free of material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intend s to liquidate the Fund or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Fund’s financial reporting process.

3 Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of as surance, but is not a guarantee that an audit condu cted in accordance with Canadian generally accepted audi ting standards will always detect a material misstatement when it exists.

Misstatements can aris e from fraud or error and are considered material i f, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit.

We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit pro cedures responsive to those risks, and obtain audit evidence that is sufficient and approp riate to provide a basis for our opinion.

The risk of not detecting a material misstatement r esulting from fraud is higher than for one resulting from error, as fraud may involve coll usion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevan t to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast signi ficant doubt on the Fund’s ability to continue as a going concern.

If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report.

However, future events or conditions may cause the Fund to cease to continue as a going concern. • Evaluate the overall presentation, structure and co ntent of the financial statements, including the disclosures, and whether the financia l statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independenc e, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

4 Report on Other Legal and Regulatory Requirements We further report, in accordance with the Supplementary Retiring Allowances Act , in our opinion, the financial statements are in agreement therewith and the transactions that have come under our notice have, in all significant respects, been within the statutory powers of the Legislative Assembly Supplementary Retiring Allowances Fund. Iqaluit, Nunavut Chartered Professional Accountants July 2, 2024 Lester Landau Accounting Professional Corp.

2024 2023 ASSETS Investments set aside by Sponsor (Note 4) 34,431,873 $ 30,524,714 $ Accounts receivable 1,757 11,965 TOTAL ASSETS 34,433,630 30,536,679 LIABILITIES Accounts payable 30,804 6,894 Benefits payable - - TOTAL LIABILITIES 30,804 6,894 NET ASSETS AVAILABLE FOR BENEFITS 34,402,826 30,529,785 ACTUARIAL VALUE OF ACCRUED PENSION BENEFITS 23,406,700 21,376,300 SURPLUS 10,996,126 $ 9,153,485 $ AS AT MARCH 31, 2024 STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS AND ACCRUED PENSION BENEFITS AND SURPLUS LEGISLATIVE ASSEMBLY SUPPLEMENTARY RETIRING ALLOWANCES FUND 5

2024 2023 INCREASE IN ASSETS Investment income Interest and dividends 983,166 $ 1,598,832 $ Gain on sale of investments 21,170 7,829 1,004,336 1,606,661 Change in fair value of investments 2,067,223 (484,808) 3,071,559 1,121,853 Other income Other income 1,757 1,602 Funds set aside by the sponsor 1,823,700 1,774,400 TOTAL INCREASE IN ASSETS 4,897,016 2,897,855 DECREASE IN ASSETS Payment of benefits 907,599 1,024,742 Investment management fees 116,376 105,630 TOTAL DECREASE IN ASSETS 1,023,975 1,130,372 INCREASE IN NET ASSETS 3,873,041 1,767,483 NET ASSETS AVAILABLE FOR BENEFITS, OPENING 30,529,785 28,762,302 NET ASSETS AVAILABLE FOR BENEFITS, CLOSING 34,402,826 $ 30,529,785 $ FOR THE YEAR ENDED MARCH 31, 2024 STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS LEGISLATIVE ASSEMBLY SUPPLEMENTARY RETIRING ALLOWANCES FUND 6

2024 2023 CHANGE IN ACCRUED BENEFITS Benefits earned 1,831,400 $ 2,139,800 $ Interest accrued on benefits 1,114,700 978,100 Sponsor contribution receivable (Note 5) (915,700) (1,030,900) Experience loss - (3,540,000) NET DECREASE IN ACCRUED BENEFITS 2,030,400 (1,453,000) 21,376,300 22,829,300 23,406,700 $ 21,376,300 $ ACTUARIAL PRESENT VALUE OF ACCRUED PENSION BENEFITS, OPENING ACTUARIAL PRESENT VALUE OF ACCRUED PENSION BENEFITS, CLOSING LEGISLATIVE ASSEMBLY SUPPLEMENTARY RETIRING ALLOWANCES FUND STATEMENT OF OBLIGATIONS FOR PENSION BENEFITS FOR THE YEAR ENDED MARCH 31, 2024 7

8 LEGISLATIVE ASSEMBLY SUPPLEMENTARY RETIRING ALLOWANCES FUND NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2024 Note 1 DESCRIPTION OF PLAN The Fund was established on March 6, 2002 pursuant to the Legislative Assembly’s Supplementary Retiring Allowances Act (SRAA) and is administered by the Management and Services Board. The following description of the Legislative Assembly Supplementary Retiring Allowances Fund is a

summary only. For a complete description of the Plan, reference should be made to the Supplementary Retiring Allowances Act . In January 2010 the Management and Services Board t erminated its arrangement with its investment fund manager (UBS Global Asset Managemen t (Canada)) and on January 11, 2010, appointed Beutel Goodman & Company Limited as fund manager. Assets appropriated to provide pensions under the Supplementary Retiring Allowances Act are held within the Government of Nunavut consolida ted revenue fund. At all times, the Government of Nunavut (“GN”) will retain ownership of these assets.

The GN will not contribute amounts to a trust in respect of the Fun d and the GN will ensure that assets set aside do not constitute trust property. The assets will not be subject to direct claim by any of the members, or other persons, who are entitled to receive benefits from the Fund and assets will be subject to the claims of the GN’s ge neral creditors. A custodial agreement exists with RBC Investor & Treasury Services, to hold and report those assets.

a) General The Legislative Assembly Supplementary Retiring All owances Fund (SRAF) is a contributory defined benefit plan for c redited service after March 31, 1999. Newly elected Members are given the opportunity of joining the Plan at the time of their election.

b) Funding Current service costs are set aside in the consolid ated revenue fund of the Government of Nunavut at rates that are expected to provide for a ll benefits payable under the Plan. To participate in the Plan, Members must file an elect ion in accordance with

Section 7 of the Supplementary Retiring Allowances Act . If an election has been made, the member shall contribute to the Legislative Assembly Retiring All owances Fund, in each month, an additional 2 1/2% of pensionable salary to the defi ned benefit limits as prescribed by the Income Tax Act (Canada). Funds set aside are equal to the amount certified by an actuary as being necessary to fully fund the benefits accru ing under the Plan. The rates are reviewed by the Management and Services Board based on recommendations of the Plan’s actuary as part of the valuation completed April 1 st , following each general election.

9 LEGISLATIVE ASSEMBLY SUPPLEMENTARY RETIRING ALLOWANCES FUND NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2024 Note 1 DESCRIPTION OF PLAN (continued)

c) Retirement Benefits A retirement pension is payable to a Member, based on 3% of the average best earnings over four consecutive years as an MLA multiplied by credited service as an MLA. PLUS Three percent of the average best earnings over four consecutive years in each position of Minister, Speaker or Chairperson multiplied by cred ited service for each position. A position must be held for at least one year for a pension to be paid, and the pension for each position is calculated separately.

d) Normal Retirement Age The earliest of: Age 60 30 years of service Age plus service equals 80

e) Early Retirement A Member may retire at any time upon ceasing to be a Member of the Assembly. A Member retiring prior to Normal Retirement Age shall receive a pension reduced by 0.25% for each month a Member Retires before the Normal Retirement Age.

f) Late Retirement Up to age 69.

g) Maximum Allowance For benefits earned, the Member’s combined allowanc es payable in respect of a member or former member of the Legislative Assembly Retiring Allowances Act and the Supplementary Retiring Allowances Act shall not exceed 75% of the sum of: (

i) the average annual pensionable remuneration as a MLA, multiplied by the years of credited service to a maximum of 15 years and adjusted by the Consumer Price/Benefit index. (ii) the average annual pensionable remuneration in each position of Minister, Speaker or Chairperson multiplied by credited service for each position to a maximum of 15 years and adjusted by the Consumer Price/Benefit index.

10 LEGISLATIVE ASSEMBLY SUPPLEMENTARY RETIRING ALLOWANCES FUND NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2024 Note 1 DESCRIPTION OF PLAN (continued)

h) Form of Pension The normal form of payment for service is joint between the Member and their spouse and is payable at 66 2/3% to the survivor on the death of the Member with a guarantee of 100% of the first 60 monthly payments in any event. Each dependent will receive a pension of 10% of the retirement pension (to a maximum total of 25%) if the spouse survives. If there is no surviving spouse, a benefit of 100% shall be divided by the number of children for the first 60 monthly payments after the Member’s pension commencement and then 25% of the benefit thereafter.

i) Increase in Pension Pensions in pay and deferred pensions are increased every January 1 based on increases in the Consumer Price Index up to the preceding September 30.

j) Pre-Retirement Death Benefits If a Member or former Member dies before retirement and is not eligible to receive a pension, their accumulated contributions with inter est will be returned to the beneficiary. If a Member was eligible to receive a pension, it w ill be assumed that the Member retired on the day preceding their death and elected the normal form of pension.

k) Withdrawal Benefit A Member who terminates with four or more years of service or serves at least one full term as a Member of the Assembly is entitled to a r etirement pension. Benefit payment options include: immediate pension, deferred pension, lump sum payment, or an immediate or deferred fixed term allowance (15 years).

l) Fixed Term Benefit Payout Within 90 days of leaving office, a former Member may elect to receive pension payments over a fixed term of 15 years. In addition a former Member may elect to defer the start of payments to a date of the Members’ choice.

11 LEGISLATIVE ASSEMBLY SUPPLEMENTARY RETIRING ALLOWANCES FUND NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2024 Note 2 SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Presentation These financial statements are prepared on the goin g concern basis and present the aggregate financial position of the Plan as a separate financial reporting entity independent of the sponsor and plan Members. The financial sta tements are prepared to assist plan Members and others in reviewing the activities of the plan for the fiscal period but they do not portray the funding requirements of the plan or the benefit security of individual plan Members. The financial statements have been prepare d in accordance with Canadian accounting standards for pension plans.

b) Funds Set Aside by the Sponsor In accordance with

Section 5 of the Supplementary Retiring Allowances Act all allowances and benefits are payable out of the Consolidated Re venue Fund of the Government of Nunavut out of monies appropriated for that purpose. As a result the GN has set aside monies for the SRAF. These contributions are reflected as Funds Set Aside by the Sponsor on the Statement of Changes in Net Assets Available for Benefits. The accumulated funds are shown as Inves tments set aside by the Sponsor on the Statement of Net Assets Available for Benefits and Accrued Pension Benefits and Surplus. These investments are recorded at fair value.

c) Valuation of Investments Investments in units of pooled investment funds are recorded in the financial statements at fair value. The fair value of the units is based o n the fair value of the underlying investments in the pooled investment funds. Fair va lue is the amount of consideration agreed upon in an arm’s length transaction between knowledgeable, willing parties who are under no compulsion to act.

d) Fair Value Hierarchy Investment assets are classified and disclosed in one of the following categories reflecting the significance of inputs used in making the fair value measurement: • Level 1 – quoted prices (unadjusted) in active mark ets for identical assets or liabilities; • Level 2 – inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly; and • Level 3 – unobservable inputs.

12 LEGISLATIVE ASSEMBLY SUPPLEMENTARY RETIRING ALLOWANCES FUND NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2024 Note 2 SIGNIFICANT ACCOUNTING POLICIES (continued)

e) Revenue Recognition Interest income is recognized on an accrual basis o ver the term of the interest-bearing instrument. Dividends are recognized as revenue on the declaration date of the respective amounts. Realized gains and losses on the sale of investments are reported as the net amount. Note 3 ACTUARIAL VALUATION An actuarial valuation of the plan was performed at April 1, 2018 and at April 1, 2022, by AON using the projected accrued benefit method pror ated on service and the plan administrator’s best estimate assumptions. The rep ort was prepared in accordance with accepted actuarial practice.

The liabilities are extrapolated from the April 1, 2022 actuarial valuation. Each plan’s liabilities have been estimated at April 1, 2023 by increasing the April 1, 2022 liabilities by the cost of accruing benefits and interest and subtracting the estimated benefit payments. The assumptions and methods used in the calculation of accounting costs for the 2024 fiscal year are based on the funding valuations performed at April 1, 2022, with two exceptions.

The discount rate used to calculate the liabilities has been determined based on the yields on high quality Canadian corporate bonds as a proxy for the Government of Nunavut’s cost of borrowing. At March 31, 2024, this discount rate was determined to be 4.9% per annum. The previous year used a discount rate of 4.9%. Sec ondly, the expected return on assets was determined to be 5.85% per annum for the year ending March 31, 2024. The previous year used a discount rate of 5.1%.

Other assumptions include inflation rate of 2.8% and an increase in pensionable earnings commensurate with annual increases per the Collective Bargaining Agreement between the Nunavut Employees Union and the Minister Responsible for the Public Service Act as approved by the Management and Services Board. Note 4 INVESTMENTS SET ASIDE BY THE SPONSOR As at March 31, 2024, the investments set aside by the Sponsor had a cost base of $31,439,919 (2023 - $29,598,982).

Note 5 RELATED PARTY TRANSACTIONS The Fund’s sponsor for the year incurred $96,847 (2023 - $72,296) in actuary fee expense and $7,920 (2023 - $7,920) in audit fee expense on behalf of the Fund.

13 LEGISLATIVE ASSEMBLY SUPPLEMENTARY RETIRING ALLOWANCES FUND NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2024 Note 6 CAPITAL MANAGEMENT The purpose of the Fund is to provide benefits to plan members. As such, when managing capital, the objective is to preserve assets in a manner that provides the Fund with the ability to continue as a going concern, to have sufficient assets to meet future obligations for benefits and to have sufficient liquidity to meet a ll benefit and expense payments. The capital of the Fund consists of its surplus.

Excluding the impact of investment income, the Fund is financed through member contributions. The surplus represents the difference between the net assets available for benefits and the actuarially determined accrued pension benefits on a going-concern basis. Actuarial valuat ions, which aid in the determination of the extent of the Fund’s capital, are performed Apr il 1 st following each general election. Surpluses, as well as other relevant aspects of the Plan, are managed in order to comply with the externally imposed requirements of the Income Tax Act and the PBSA.

As at March 31, 2024, the Plan is not in violation of any externally imposed legal or regulatory requirements.

Document details

Collection	Nunavut — Committees
Citation	TD-12-7(2)-EN
Type	statute
Volume / chapter	TD 012 7(2) EN 2023 2024 Audited Financial Statements SRAA
Language	en
Format	pdf
Source	TERRITORIAL
Identifier	408263f833ec6a4ef41bfa62d8ffddd5059f0761

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