Statement of Investment Policies and Procedures for the Improved Retirement Plan for Teaching, Administration and Other Employees of St. Francis Xavier University

I. Definitions

For the purposes of this document, the following words, phrases and abbreviations are assigned.

"Administrator" means the entity responsible for overseeing the operational aspects of the Group Retirement Plans.

"CAP Guidelines" means the Guidelines for Capital Accumulation Plans issued by the Canadian Association of Pension Supervisory Authorities.

"Employer" means St. Francis Xavier University

"Group Retirement Plans" means the following plans:

• Improved Retirement Plan for Teaching, Administration and Other Employees of St. Francis Xavier University (the "DC Plan")
• Group Retirement Savings Plan of St. Francis Xavier University (the "RRSP")
• St. Francis Xavier University Tax-Free Savings Account (the "TFSA")
• St. Francis Xavier University Locked-In Retirement Account (the "LIRA")
• St. Francis Xavier University Group Retirement Income Plan, which includes:
  • The Group Registered Retirement Income Fund (the "RRIF")
  • The Group Life Income Fund (the "LIF")

"Member" means a member or former member of the Group Retirement Plan

"Policy" means this Statement of Investment Policies and Procedures

II. Background

The Employer sponsors the Group Retirement Plans for employees who are Members of these plans. The Employer and member’s contributions, investment fund selection, plan’s expenses, time horizon, and fund performance determines the amount of retirement income and capital accumulation benefits. Additionally, members have the option to make additional voluntary contributions. 

The retirement income accrued to Members of the Group Retirement Plans is dependent on the accumulated Member and Employer contributions, and the investment return earned thereon. Thus, Members have a direct exposure to investment risk. The Employer assumes no investment risk in respect of the benefits payable to the Members. 

The Group Retirement Plans encompass the retirement income and capital accumulation package offered by the Employer. 

The Employer’s objectives in providing the Group Retirement Plans are as follows:

• To offer employees a competitive tax-deferred saving vehicle, enabling them to save for their personal financial goals during retirement.
• To empower Members to determine their own risk profile and select investments aligned with their financial goals.
• To provide Members access to diverse asset classes with different risk and return characteristics.
• To provide information and tools that assist Members in making informed investment choices.

Purpose of Statement of Investment Policy

This policy aims to:

• Define the investment philosophy for Group Retirement Plans.
• Provide clear guidance on selecting and monitoring investment options available to Members.
• Specify the responsibilities of involved parties in plan investments.
• Document processes related to investment selection, performance monitoring, service provider review, and member communications.

Investment Beliefs

The Employer has outlined several investment beliefs for consideration within the Group Retirement Plans. These are as follows:

III. Roles, Responsibilities and Selection Criteria

Administrators Responsibilities

The Employer, acting as the Administrator, holds overall responsibility for administering the Group Retirement Plans. The Administrator is responsible for administering and investing the pension fund in accordance with the administrator’s standard of care, in a prudent manner, and in the best interests of the Group Retirement Plans’ beneficiaries. Although the Employer may engage third-party service providers to assist in administrative tasks, it cannot delegate away its fiduciary duty to Members and beneficiaries. If delegation occurs, new responsibilities arise regarding the selection and monitoring of delegates.

The Administrator is responsible for:

• Ensuring compliance with legislative and regulatory requirements.
• Regularly reviewing this policy (at least every three years) and making necessary revisions based on changes in law, regulation, or circumstances.
• Designing the structure of investment options for Members.
• Review the investment options at least annually and monitor, select, remove and replace investment options as deemed appropriate.
• Providing communication and education tools to assist Members in making informed investment decisions.
• Review material and information provided by the Group Retirement Plans’ record keeper(s), investment manager(s), auditors, investment consultants and other involved parties.

Record Keeper Selection

The Employer has engaged a record keeper to efficiently manage and diversify investment options. When evaluating and selecting a record keeper, the Employer considers the following factors:

• Investment performance of the record keeper’s funds.
• Fees charged for administration and other services.
• Quality of member communication services, including plan information and investment education.
• Track record and experience in providing bundled services for similar plans.
• Service level for contributions, plan monitoring, and fiduciary responsibilities.
• Ability to offer investment funds covering appropriate risk categories for retirement savings plans. 

Other factors may be considered, at the discretion of the Employer.

Record Keeper Evaluation

The Administrator will periodically engage an independent third-party advisor to review the record keeper’s performance based on the original selection criteria taking into account market trends and best practice guidelines.

Investment Selection

The Employer will document the process and criteria used to select investment options for the Plan. These criteria will align with the investment and risk philosophy outlined in this Policy. Factors considered will include both qualitative and quantitative attributes of each investment fund and manager, such as (but not limited to):

• Investment objectives.
• Historical performance.
• Firm stability.
• Diversity of styles and objectives.
• Approach to Environmental, Social, and Governance (ESG) considerations.
• Fee levels.

The Employer acknowledges the benefits of both active and passive investment management and has accordingly provided both kinds of investment options to the Members. Permitted asset classes from which investment funds can be selected are listed in Appendix A. 

The Employer considers factors outlined in the Canadian Association of Pension Supervisory Authorities’ Guidelines for Capital Accumulation Plans (CAP Guidelines) and Guideline No. 6: Pension Plan Prudent Investment Practice. Additionally, the Employer selects default investment options for Members who do not actively choose from the available options. When determining suitable default options, the Employer takes into account Members’ demographics, investment knowledge, the appropriateness of default options for retirement savings, risk diversification, and associated fees. The current investment options offered to Plan Members are detailed in Appendix A.

Investment Monitoring and Evaluation

Annually, the Employer collaborates with an independent third-party advisor to review the selected investment funds. For each fund, the advisor assesses:

• Performance relative to the manager benchmark and peer group over a rolling four-year period (or as specified by the fund manager).
• Historical performance.
• Methodology for calculating fund performance.
• Suitability of default investment option.
• Adequacy of fund selection for Members’ risk and return preferences

An investment fund may be put on “Watch” if it experiences any of (but not limited to) the below concerns: 

• Significant changes in fund personnel, ownership, or management.
• Lack of acceptance or a sharp decline in usage by Members.
• Unfavourable market conditions expected to persist for an unacceptably long period.
• Changes in tax laws or regulations rendering the fund unsuitable.
• Poor performance compared to the manager benchmark.
• Significant or repeated Member complaints.
• Less competitive fee levels.
• If considered at onset, shifts in the approach to Environmental, Social, and Governance (ESG) considerations.
• Other operational deficiencies related to the fund or its management.

If the investment fund demonstrates improvement in the areas of concern, it will be removed from the “watch” list. If the investment fund fails to show adequate improvement within a reasonable time frame, the Employer may consider removing the fund from the investment lineup.

The Employer will annually review Members’ investment activities and encourage regular investment reviews by Members.

Member's Risks and Responsibilities

Capital accumulation plans, such as the Group Retirement Plans, involve specific investment risks related to Member choices. These risks include ensuring appropriate diversification of investment options, Members making suitable investment decisions based on their risk profile, and effective communication of risks. 

Members of the Group Retirement Plans can choose from various investment options provided by the Employer. Members are provided information on available investment options, their investment choices as well as information specific to each member such as account balances and personal rates of return and how and when they can change their investment selection.

While the Employer acknowledges its obligations under the CAP Guidelines, Members bear individual investment risks associated with their chosen investments. 

The Employer and/or the record keeper may offer retirement and investment education materials, but these do not constitute investment advice. Members are encouraged to seek independent financial and tax planning advice to meet their individual objectives. 

Ultimately, each Member is responsible for using the educational resources provided to make informed investment decisions.

IV. Revisions to the investment policy

The Employer will review this policy periodically (no less frequently than every three years) and may amend, revise or restate this policy at any time.

V. SIGNATURES

DOCUMENT

Appendix A

• Unless specified, funds offered in accumulation will also be offered in decumulation
• A = Active, P = Passive