Evaluation of the Administration of the Royal Canadian Mounted Police Pension Continuation Act - Full Report

Final

March 19, 2019

Table of contents

• Acronyms and abbreviations
• Executive summary
  • Introduction
  • Program Profile
  • What we examined
  • What we found
  • Recommendations
• 1.0 Introduction
  • 1.1 Purpose of the Evaluation
  • 1.2 Evaluation Scope and Context
• 2.0 Program Overview
  • 2.1 Program Description
  • 2.2 Program Resources
• 3.0 Evaluation Methodology
  • 3.1 Evaluation Approach and Design
  • 3.2 Data Sources
  • 3.3 Methodological Limitations and Mitigation Strategies
• 4.0 Findings
  • 4.1 Roles and responsibilities for the administration of the PCA
  • 4.2 Effectiveness of the administration of the PCA
  • 4.3 Efficiencies of the administration of the PCA
• 5.0 Conclusions and Recommendations
• End Notes

Acronyms/definitions

MS

Morneau Shepell

PAC

Pension Advisory Committee

PCA

Pension Continuation Act

PFOC

Pension Finance Oversight Committee

PSPC

Public Services and Procurement Canada

PWGSC

Public Works and Government Services Canada

RCMP

Royal Canadian Mounted Police

RCMPSA

Royal Canadian Mounted Police Superannuation Act

SLA

Service-level Agreement

Executive summary

Introduction

This report presents the results of the Evaluation of the Administration of the Royal Canadian Mounted Police Pension Continuation Act (PCA) conducted by National Program Evaluation Services of the Royal Canadian Mounted Police (RCMP) in 2018-19.

Program Profile

The objective of the PCA is to provide a lifetime pension for RCMP members and their survivors before March 1, 1949, excluding those under the RCMP Superannuation Act. The administration of the PCA is guided by three parts: Part II (Officers' Pensions); Part III (Constables' Pensions); and Part IV (Widows' and Orphans' Pensions). A statutory grant provides payments for Parts II and III of the PCA while a contributory dependents fund pays the pensions to survivors under Part IV. As of October 2018, there were 223 recipients under the PCA.

On July 2, 2014, there was an administrative transfer of the PCA from Morneau Shepell to the Public Services and Procurement Canada (PSPC) Pension Centre. While the RCMP National Compensation Services is responsible for the overall management of the PCA, the PSPC Pension Centre is responsible for the day-to-day administration.

What we examined

The objective of the evaluation was to determine whether the PCA was administered in an effective and efficient manner from April 1, 2013 to March 31, 2018. The following evaluation questions were examined:

1. Are roles and responsibilities for the administration of the PCA clearly defined and understood?
2. Are pensions under the PCA being administered in a timely and effective manner?
3. Has the administrative transfer of the PCA to PSPC resulted in efficiencies?

The PCA was previously evaluated in 2013-14. The evaluation found that the program was managed in an efficient and effective manner and thus, had no recommendations.

What we found

1. Roles and responsibilities for the administration of the PCA are clearly defined in foundational documents and individual roles and responsibilities are understood.
2. PCA recipients received payments in a timely and effective manner.
3. There are no identified barriers or challenges for the overall administration of the PCA.
4. There is no change in the efficiency of the administration of the PCA as a result of the administrative transfer to the PSPC Pension Centre.

Recommendations

No recommendations are required as the administration of the PCA continues to be managed in an effective and efficient manner.

1.0 Introduction

1.1 Purpose of the Evaluation

This report presents the results of the Evaluation of the Administration of the Royal Canadian Mounted Police Pension Continuation Act (PCA) conducted by National Program Evaluation Services of the Royal Canadian Mounted Police (RCMP). The objectives of the evaluation were to examine the effectiveness and efficiency of the administration of the PCA.

The evaluation commenced in September 2018 and concluded in March 2019 with a presentation to the RCMP Performance Measurement and Evaluation Committee. The report received the Commissioner's approval on March 19, 2019.

1.2 Evaluation Scope and Context

The objective of the evaluation was to provide a neutral, timely and evidence-based assessment of the administration of the PCA to determine whether it was administered in an effective and efficient manner. The scope of the evaluation covered the five-year period from April 1, 2013 to March 31, 2018.

The evaluation assessed whether:

• Roles and responsibilities for the administration of the PCA are clearly defined and understood
• Pensions under the PCA are being administered in a timely and effective manner
• The administrative transfer of the PCA to PSPC has resulted in efficiencies

The evaluation was undertaken in line with the Treasury Board Policy on Results (2016), which requires departments to measure and evaluate performance, using the resulting information to manage and improve programs, policies and services.

Previous Evaluation

The previous evaluation completed in 2014 found that the PCA was managed in an effective and efficient manner; therefore, no recommendations were made. The evaluation also found that the PCA is a legislative obligation for the RCMP; therefore, its mandate and relevance were not formally assessed in this evaluation.

2.0 Program Overview

2.1 Program Description

The objective of the PCA is to provide a lifetime pension for RCMP members, and their survivors, engaged prior to March 1, 1949, excluding those who elected to come under the RCMP Superannuation Act (RCMPSA). The administration of the PCA is guided by three parts: Part II (Officers' Pensions); Part III (Constables' Pensions); and Part IV (Widows' and Orphans' Pensions)^{Footnote a}. Pensions for RCMP members under Parts II and III are paid from a statutory grant introduced in 1959 while a contributory dependents fund pays the pensions to survivors under Part IV.

The overall management of the PCA is the responsibility of RCMP National Compensation Services; however, as per the Government of Canada Pension Modernization Project, the day-to-day administration of the PCA was transferred to the Public Services and Procurement Canada (PSPC) Pension Centre from the third-party administrator, Morneau Shepell (MS), on July 2, 2014.

Given that all current regular and civilian members fall under the RCMPSA, all plan recipients are either existing pensioners or survivors; no new pensioners are entering the plan. As the information in Figure 1 shows, the number of PCA recipients declined by 46% (from 412 to 223) between 2012 and 2018. On average, 31.5 PCA files are closed per year with the passing of past Officers, Constables, and their survivors.

2.2 Program Resources

Consistent with the trend of the number of PCA recipients, the total amounts paid to PCA recipients has declined steadily (see Figure 2).

3.0 Evaluation Methodology

3.1 Evaluation Approach and Design

A theory-based approach was used for this evaluation. Extensive use of triangulation was undertaken as an analytical method, where multiple lines of evidence helped corroborate findings.

The evaluation focused on the effectiveness and efficiency of the administration of the PCA, as well as considered areas of interest identified by RCMP senior management. Qualitative and quantitative information was used to determine findings for improvement and to help inform senior management decision-making.

3.2 Data Sources

The following lines of evidence were used to determine the findings and recommendations:

1. Document Review: Internal and external documents such as foundational documents, performance related reports, previous assessments, operational documents and policies, were reviewed.
2. Key Informant Interviews: A total of seven interviews were conducted with RCMP (n=5) and PSPC Pension Centre (n=2) personnel involved with the administration of the PCA. One interview was conducted with two participants.
3. Data Analysis: Available financial, administrative, and statistical data from the Total Expenditures and Asset Management system was collected and analyzed.

3.3 Methodological Limitations and Mitigation Strategies

A key limitation of the evaluation was the ability to determine the exact number of recipients receiving payments under the PCA. Performance data was inconsistent across multiple data sources due primarily to different collection periods (i.e. beginning versus end of the reporting cycle).

In addition, the sample size for key informant interviews was limited. As a result, themes unique to the small set of interviewees may not be generalizable nor representative of all individuals involved with the administration of the PCA.

In order to mitigate the limitations, the evaluation used multiple lines of evidence, triangulation of data and validation by National Compensation Services. National Program Evaluation Services used this approach in order to demonstrate reliability and validity of the findings and to ensure that conclusions and recommendations were based on objective and documented evidence.

4.0 Findings

4.1 Roles and responsibilities for the administration of the PCA

The intent of this evaluation question is to assess whether roles and responsibilities regarding the administration of the PCA were clearly defined and understood. Specifically, it seeks to establish whether roles and responsibilities between the RCMP and the PSPC Pension Centre were clearly defined and understood, as well as whether clearly defined service-level standards and policies were in place.

Roles and responsibilities regarding the administration of the PCA, for both the RCMP and the PSPC Pension Centre, are clearly defined throughout foundational program documents such as: the Service Level Agreement Between the RCMP and PWGSC^{Footnote b} Respecting Pension Administration Services 2014-2017 (SLA) and RCMP policies, such as the RCMP Pension Administration Costs Charging Principle Guidelines (Charging Guidelines). These documents establish that the PSPC Pension Centre is the service provider responsible for the delivery of pension administration services, including:

• day-to-day administration
• reporting on activities
• implementing new RCMP legislation
• making arrangements with third party suppliers and service providers
• maintaining pension systems/applications and any required changes to them
• the certification on financial controls (i.e. measures to mitigate risks of financial errors and fraud)^{Footnote 3}

The overall accountability for the administration of the PCA remains with the RCMP. Key responsibilities of the RCMP include determining and communicating to the PSPC Pension Centre all plan-specific requirements, providing pension data, and providing funding for PSPC Pension Centre services.^{Footnote 4}

The SLA outlines the administrative services for the RCMPSA, inclusive of PCA. The SLA states pension benefits to survivors must be processed within 30 days of receipt of all required documents.

Evidence gathered through interviews indicated that there was general awareness of service-level standards for the administration of the PCA. For example, half of the interviewees (3/6) reported that they were aware of clear service level standards for the administration of the PCA.

The roles and responsibilities regarding the administration of the PCA are clearly defined in foundational documents, and the majority of interviewees (4/6) understood their specific roles and responsibilities. The overarching roles and responsibilities pertaining to the administration of the PCA as a whole were not as well understood, however this did not negatively impact the administration of the PCA. Half of the interviewees (3/6) considered the PCA administrative roles and responsibilities to be "well defined" within the department. Those who were not clear on the overall roles and responsibilities (3/6) noted a lack of awareness/knowledge of the parts of PCA that did not directly impact their respective work, including: Part II (Officers' Pensions); Part III (Constables' Pensions); and Part IV (Widows' and Orphans' Pensions).

4.2 Effectiveness of the administration of the PCA

The intent of this evaluation question is to assess whether pensions under the PCA are being administered in a timely and effective manner. Specifically, it seeks to establish whether PCA recipients are receiving PCA payments according to the service-level standard and that there are oversight mechanisms for the administration of the PCA.

The evaluation found that the administration of the PCA and delivery of pensions were facilitated in a timely and effective manner within the service-level standard that the first pension payment to a surviving spouse/dependent must be processed within 30 calendar days of receipt of all required documents.

According to the SLA, the PSPC Pension Centre's performance will be reported every month, detailing incoming work and the service standard achieved, as well as any necessary qualitative descriptions or explanations of special circumstances.^{Footnote 5} Annual reporting on the performance of pension services conducted by Cost-Effective Measurement Benchmarking Inc. found that the RCMP had made no late payments for pensions under the PCA between 2013 and 2017. During this period, the RCMP was given a score of 100/100 for not having any late pension payments.^{Footnote 6} Interviewees who were aware of the 30 day service-level standard (3/6), all stated that it was timely and effective in the delivery of pensions under the PCA.

The RCMP has put in place governance structures to provide financial oversight and accountability that include the Pension Advisory Committee (PAC) and the Pension Finance Oversight Committee (PFOC).

PAC oversees matters related to the administration, design and funding of the RCMPSA, and upon request also provides advice concerning the management of the PCA.

The PFOC assists the Chief Financial and Administrative Officer and Chief Human Resources Officer on matters related to the financial administration and management of the RCMPSA. In addition, PFOC performs a challenge function and provides advice and recommendations on the review, management and control of the total administrative costs for the RCMPSA including the PCA.^{Footnote 7}

Acting as an external oversight mechanism, the financial statements of pensions are subject to an audit on an annual basis by the Office of the Auditor General.

There were no identified challenges or barriers impacting the overall administration of the PCA during the reference period of the evaluation. For example, almost all interviewees (5/6) stated there were no challenges or barriers that affected the administration of the PCA.

However, considering the diminishing number of files and pension recipients in the future, the Office of the Chief Actuary identified that a key challenge will be that the Part IV fund (which currently has 85 recipients) had a projected surplus of $1.35 million.^{Footnote 8} In addition, key foundational documents noted that, while current forecasting is good at projecting the rate of mortality of large groups of individuals, however as the group size under Part IV decreases random fluctuations will play a larger role in the average rate of mortality.^{Footnote 9} These challenges were also reported by a few interviewees (2/6).

Given that this challenge was identified early; it is currently being addressed through an Order of the Governor in Council to increase pension benefits, as provided in Part IV of the PCA by 1.9% on April 1 in each of the 2017, 2018 and 2019 plan years.^{Footnote 10}

4.3 Efficiencies of the administration of the PCA

The intent of this evaluation question is to assess whether the administrative transfer of the PCA to the PSPC Pension Centre from MS resulted in any efficiencies. Specifically, it seeks to establish whether the administrative transfer impacted the administrative costs and the processing of payments for pensions under the PCA.

Based on the costs per account for the administration of the PCA, there has been no change as a result of the administrative transfer of the PCA to the PSPC Pension Centre from MS. Figure 3 shows that the cost of administrating the PCA per account^{Footnote c} by fiscal year prior to, during and after the administrative transfer of the PCA to the PSPC Pension Center from MS^{Footnote 11} has remained fairly stable. With the exclusion of 2015-16, on average, the administrative cost per account was $138.85 from 2012-13 to 2017-18.

Based on documentation, the 16.7% increase in cost per account in 2015-16, is attributable to efforts related to the conversion of paper files to electronic files by the PSPC Pension Centre.

Interviews with RCMP and PSPC personnel support this finding. Almost all interviewees (5/6) stated there was no impact on the administration of the PCA (processing of payments) with the administrative transfer from MS to the PSPC Pension Centre.

5.0 Conclusions and Recommendations

Roles and responsibilities of the RCMP and the PSPC Pension Centre regarding the administration of the PCA are clearly defined and individuals understand their respective roles. There are clear service-level standards in place.

The administration of the PCA and delivery of pensions was facilitated in a timely and effective manner, as demonstrated by having no late pension payments between 2013 and 2017 and the existence of internal committees that oversee pension services.

There are no identified challenges or barriers impacting the administration of the PCA overall; however, the RCMP should continue to monitor and manage any surplus Part IV funds in the account.

The evaluation found the administration of the PCA remained essentially unchanged after the administrative transfer to the PSPC Pension Centre from MS.

No recommendations are required as the administration of the PCA continues to be managed in an effective and efficient manner.

End Notes

Date modified:

2019-05-03