Evaluation of Pensions under the Royal Canadian Mounted Police Pension Continuation Act (PCA)

Final Report: February 21, 2014

This report has been reviewed in consideration of the Access to Information and Privacy Acts. The published information is UNCLASSIFIED.

Table of contents

Acronyms/definitions

CHRO
Chief Human Resources Officer
DPR
Departmental Performance Report
NCS
National Compensation Services
NPES
National Program Evaluation Services
PAA
Program Alignment Architecture
PAC
Pension Accountability Committee
PCA
Royal Canadian Mounted Police Pension Continuation Act
PFOC
Pension Finance Oversight Committee
PWGSC
Public Works Government Services Canada
RCMP
Royal Canadian Mounted Police
RCMPSA
Royal Canadian Mounted Police Superannuation Act
RPP
Report on Plans and Priorities
TB
Treasury Board

Executive summary

What we examined

The evaluation of the Pensions under the Royal Canadian Mounted Police (RCMP) Pension Continuation Act (PCA) transfer payment program was conducted by National Program Evaluation Services between September 2013 and January 2014. The purpose of the evaluation was to assess the relevance and performance of the transfer payment program against its stated objective of providing a lifetime benefit for RCMP members and their survivors. Specifically, the payment of pensions to Officers, Non-Commissioned Officers and Constables engaged prior to March 1, 1949, except those who elected to come under the Royal Canadian Mounted Police Superannuation Act (RCMPSA).

The evaluation was national in scope and payments to eligible recipients ranged from $22.5 million to $15.2 million yearly for a total of approximately $131 million over a seven year period from (2005 to 2012).

The evaluation examined monitoring and oversight activities within the RCMP and focused on the relevance and performance of the transfer payment program against its objective.

Why it is important

The transfer payment program supports the organization's strategic outcome of "Incomes are secure for RCMP members and their survivors affected by disability or death". The PCA is a statutory payment that provides income to pensioners or survivors of members of the RCMP who served prior to March 1, 1949 and who did not elect to come under the RCMPSA. In 2012-13, the PCA made up 8.5% of all transfer payment programs in the RCMP.

The cost of the transfer payment program and the number of eligible recipients has been steadily decreasing and is expected to sunset in the future due to the advancing age of the recipients added to the fact that there will be no new recipients.

What we found

  • There is a continued need for the transfer payment program. The mandate is relevant and aligned with the RCMP and Government of Canada priorities.
  • Roles and responsibilities of the RCMP (National Compensation Services and Finance) and Morneau Shepell, the private third-party administrator, are clear.
  • The transfer payment program has strong processes and criteria in place.
  • The PCA is achieving its objectives of providing a lifetime benefit for RCMP members and their survivors. Specifically, to provide payment of pensions to Officers, Non-Commissioned Officers and Constables engaged prior to March 1, 1949, except those who elected to come under the RCMPSA.

Recommendations

Given the Program is sun setting and it is being managed in an efficient and effective manner, no recommendations are required.

1.0 Introduction

This report presents the results of the Evaluation of the Pensions under the Royal Canadian Mounted Police Pension Continuation Act (PCA) transfer payment program. The evaluation was conducted internally by National Program Evaluation Services between September 2013 and January 2014. The evaluation was conducted in compliance with Section 42.1 of the Financial Administration Act that requires that all ongoing transfer payment programs are evaluated every five years. The evaluation followed the Treasury Board (TB) Policy on Evaluation and the TB Secretariat's Directive on the Evaluation Function.

1.1 Background

Program profile and funding

The transfer payment program of the Pensions under the Royal Canadian Mounted Police Pension Continuation Act is a statutory payment program introduced in 1959. The objective of the PCA is to provide a lifetime benefit for RCMP members and their survivors. Specifically, providing payment of pensions to Officers, Non-Commissioned Officers and Constables engaged prior to March 1, 1949, except for those who elected to come under the RCMP Superannuation Act (RCMPSA). The PCA is a predecessor to the RCMPSA. The PCA contributes to the core RCMP strategic outcome "to secure incomes for RCMP members and their survivors affected by disability or death".

The overall management of the PCA is the responsibility of the RCMP National Compensation Services (NCS), however the day to day administration is contracted to a third party administrator, Morneau Shepell (MS).

All plan recipients are either existing pensioners or survivors. Given that all members now fall under the RCMPSA, there are no new pensioners entering the plan. As depicted in table 1 (below), the number of recipients and amounts paid will continue to steadily decline. As a result, the PCA will sunset in the future.

Table 1: Pension Continuation Act - Details of Payments
Fiscal Year Recipients Total Paid
2005-2006 557 $22,489,472
2006-2007 517 $20,436,708
2007-2008 474 $19,623,840
2008-2009 440 $18,884,791
2009-2010 411 $17,857,400
2010-2011 371 $16,480,442
2011-2012 332 $15,173,970

Source: Details of PCA Payments document
Provided by Pension Accounting Unit, Corporate Management and Comptrollership on 2013-07-23

According to the RCMP's Report on Plans and Priorities (RPP) Footnote 1, the PCA represents approximately 8.5% of the $164 million of planned spending for the RCMP's 2013-14 transfer payment programs.

1.2 Purpose and scope of the evaluation

The evaluation was national in scope and covered the period beginning April 1, 2005 and ending March 31, 2013.

The objectives of the evaluation were to assess:

  1. Relevance of the transfer payment program, specifically:
    • A continued need for the transfer payment program;
    • Alignment of the transfer payment program with RCMP strategic objectives and Government of Canada priorities; and the
    • Alignment and clarity of roles and responsibilities as they pertain to the transfer payment program;
  2. Performance of the transfer payment program in terms of:
    • Effectiveness - the extent to which the transfer payment program is achieving its expected objective to provide payments of pensions. The evaluation will also examine whether there are oversight and reporting mechanisms to support its management.
    • Efficiency and economy- the extent to which the RCMP has achieved efficiencies in the management and administration of the transfer payment program for the department.

1.3 Methodology and approach

The evaluation followed the TB Policy on Evaluation and the TB Secretariat's Directive on the Evaluation Function. Multiple lines of evidence were used to assess the relevance and performance of the transfer payment program, and develop findings and recommendations.

Document review

Internal and external documentation as well as secondary research were reviewed to gather contextual information about the transfer payment program and to inform the evaluation questions. Document review included Department Performance Report (DPR), RPP, benchmarking documents, policies, evaluations, audits and other applicable information.

Analysis of administrative and performance data

Available financial, administrative, and performance measurement data from the RCMP and MS was analyzed to inform the evaluation about the efficiency, effectiveness, and economy of the transfer payment program.

Key informant interviews

Four interviews were conducted to validate and supplement information gathered through the other lines of evidence indicated above. The interviews were conducted with representatives of both program areas involved with the transfer payment program, including:

  • Human Resources - National Compensation Services (n=3)
  • Corporate Management and Comptrollership - Corporate Budgeting (n=1)

1.4 Considerations and limitations

No interviews were conducted with representatives from MS. Additionally, all information from MS was received through the RCMP Program area. Some of the information (i.e. services to clients, client satisfaction) extracted from benchmarking reports is reported in aggregate and therefore it was not possible to report specific to the PCA.

2.0 Findings

2.1 Relevance

Finding 1: There is an ongoing need for the transfer payment program.

All lines of evidence support a continued need for the PCA. It is a legislative obligation for the RCMP to make payments under this transfer payment program. This need is clearly articulated in documentation (such as the Act itself) as well as supported by all interviewees (4/4) who acknowledged the RCMP's legislative obligation to continue payments. Although there is currently an ongoing need for the PCA, due to the advanced age of the PCA recipients, it is expected that the PCA will sunset in the future. Graph 1 (below) demonstrates the trend of declining recipients between the period of 2005 and 2012.

Graph 1: Number of PCA Recipients by year

Description of graph in tabular format follows.

Graph 1: Number of PCA Recipients by year
Number of PCA Recipients by year
Year 2005 - 06 2006 - 07 2007 - 08 2008 - 09 2009 - 10 2010 - 11 2011 - 12
Recipients 557 517 474 440 411 371 332

Source: Details of PCA Payments document
Provided by Pension Accounting Unit, Corporate Management and Comptrollership on 2013-07-23

Finding 2: The objective of the transfer payment program is consistent with the RCMP and Government of Canada strategic outcomes and legislative authorities.

The objective of the PCA is directly aligned with the RCMP's Program Activity Alignment (PAA) Strategic Outcome of "Incomes are secure for RCMP members and their survivors affected by disability or death". Additionally, the objective of the PCA is linked to the Government of Canada Priority of "Income Security & Employment for Canadians". Footnote 2

The transfer payment program is aligned with legislative and regulatory authorities of the RCMP. This is the legislative authority for the "provision of payment of pensions to certain persons appointed as members of the RCMP before March 1st 1949" Footnote 3. Additionally, further legislative authority and direction with respect to the payment of pensions is provided in the Pension Continuation Regulations.

Finding 3: Roles and responsibilities of the RCMP and MS with respect to the transfer payment program are clearly articulated and understood.

Evidence indicates that the governance of the PCA and the roles and responsibilities of the RCMP and MS with regard to its administration and management are clear and well understood. A review of program and other documentation confirms that roles and responsibilities are consistently outlined and explained. Interviewees also confirmed that the roles and responsibilities are very clear for the RCMP and MS in regard to the management and administration of the PCA. Examples of such documentation included the Pension Plan Administration Services contract (and accompanying Annexes and Appendices) between the RCMP and MS, the Pension Continuation Act and Pension Continuation Regulations, as well as a series of comprehensive "Business Processes" and "Business Rules" which were created by the Pension Administration Outsourcing Project Team in 2010. In particular, these documents provide explicit explanations for all aspects of the PCA including roles and responsibilities, processes and criteria.

The following indicates the internal governance and roles and responsibilities of the specific areas within the RCMP involved in the transfer payment program:

  • Pension Services of NCS is responsible for the overall management of the PCA including oversight of MS contractual obligations.
  • Corporate Management & Comptrollership is responsible for entering the transfer payment program into the financial system as well as seeking funding from the TB of Canada.

2.2 Performance - effectiveness

Finding 4: Strong processes and criteria exist which contribute to the delivery and payments of pensions to recipients according to the Act.

There are strong processes and criteria in place for the PCA. As previously discussed, document review revealed and all interviewees (4/4) spoke of a series of "Business Processes and "Business Rules" which provide explicit details about the processes, and criteria in relation to the PCA. Additionally, the administration of the PCA is guided by the Pension Continuation Act and Pension Continuation Regulations.

The evaluator could not find any evidence of deficiencies in the processes or criteria that would impact the RCMP's ability to deliver payments to recipients within reasonable service standards. This is supported by the benchmarking reports which indicate that the service score for paying on time was 100 out of 100 Footnote 4.

Finding 5: The transfer payment program is achieving its goal of providing payment of pensions as required under the Act.

The PCA is achieving its goal to provide payments of pensions as required under the Act. The payments are being made and as indicated above, are being paid in a timely manner.

Finding 6: Oversight and reporting mechanisms are in place to ensure that RCMP recipients are receiving adequate services.

There is evidence to indicate that there are oversight and reporting mechanisms in place with respect to PCA. Interviewees (4/4) identified the RPP and DPR Supplementary Information (Tables) and Public Accounts of Canada as examples of reporting and oversight which inform Government and the public on its yearly expenditures with respect to the transfer payment program.

Annex A of the contract between the RCMP and MS articulates MS's obligation to provide ongoing reporting of activities Footnote 5. As part of this obligation, MS provides performance data that is used in annual benchmarking reports which are commissioned by the RCMP. These reports provide comprehensive accounting of their activities in relation to all RCMP pension programs they administer on behalf of the RCMP including the PCA. A review of these documents suggests that MS overall is providing adequate services to RCMP clients. However, it is important to note that the benchmarking documents report on all pension programs in aggregate and therefore it is difficult to extract and comment on specific services related to the PCA. Most Interviewees (3/4) acknowledge that MS has ongoing systems in place for oversight and reporting such as regular reports to RCMP, participation in benchmarking studies and call centers available to clients.

Aside from MS reports, interviewees cited the example of the Pension Accounting Unit as providing oversight of RCMP pension plans including the PCA. Interviewees had the opinion that the RCMP Pension Finance Oversight Committee (PFOC) provided an additional level of oversight. PFOC was established to advise the Chief Human Resources Officer (CHRO) and the Deputy Commissioner of Corporate Management and Comptrollership, on the administration of the pension plans. Document review supports this notion as the identified role of this Committee is to provide a challenge function in relation to pension plans as well as to provide advice and recommendations to NCS concerning the review, management and control of total administration costs charged to the RCMP pension plans Footnote 6.

Interviewees also commented that the Pension Advisory Committee (PAC) is one further example of oversight. This notion is supported by document review as the PAC is mandated through section 25.1 of the RCMPSA to advise and assist the Minister of Public Safety Canada on matters arising in connection with the operation of the RCMPSA. PAC is chaired by the CHRO and is supported by the NCS team Footnote 7.

It should be noted that both of these Committees address all pension plans including the PCA. It is logical to assume that if there were glaring deficiencies with the transfer payment program it would be identified and addressed by one or both of these Committees.

2.3 Performance - efficiency and economy

Finding 7: Management and administration of the transfer payment program is timely, efficient and costs are reasonable.

Most interviewees (3/4) could not suggest alternative ways of managing or administering the PCA that would result in reduced cost to the RCMP. Indications from interviewees and program data suggest that the current administration costs for the PCA are reasonable. Program documentation demonstrates a decrease in administrative costs from $80,947 in 2008-2009 to $39,052 in 2012-2013. Over the last five years this has constituted less than 0.5% of the transfer payment program's total expenditures.

One interviewee (1/4) explained that the administration and management of the PCA (along with all other RCMP pension benefits programs) is shifting from MS to Public Works and Government Services Canada which may result in reducing costs in the future.

The RCMP's Performance Measurement Framework identifies a target of $75 for the PCA efficiency indicator "Cost per claim stays within more or less of 5% of Target" Footnote 8. As evidenced by Graph 2, the RCMP has been achieving this target for PCA since 2009-2010.

Graph 2: Average Morneau Shepell Administrative Cost per Payroll Transaction

Description of graph in tabular format follows.

Graph 2: Average Morneau Shepell Administrative Cost per Payroll Transaction
Year $ amount
2008 - 2009 83.5
2009 - 2010 75
2010 - 2011 71.6
2011 - 2012 68
2012 - 2013 64.5

Source: Administrative costs for SIP and PCA document
Provided by Pension Accounting Unit, Corporate Management and Comptrollership on 2013-07-23

3.0 Conclusion

Relevance

The evaluation found that the mandate of the transfer payment program is relevant and is aligned with the RCMP and government priorities. Additionally, there is a continued need for the transfer payment program. The roles and responsibilities of the RCMP and MS are clear and well understood.

Performance

The evaluation found that the delivery and payment of pensions to RCMP recipients is conducted according to the Act and that there are oversight and reporting mechanisms in place to ensure adequate services.

The transfer payment program is achieving its goal of providing payment of pensions as required under the PCA.

Given the transfer payment program is sun setting and it's being managed in an efficient and effective manner, no recommendations are required.

4.0 Management response

4.1 Management response

This evaluation report RCMP Pension Continuation Act transfer payment program has been reviewed and accepted by senior officials of the responsible program areas.

Appendix A: Evaluation framework for the pensions under the RCMP PCA

1.0 Relevance
Question Indicators Methods / Data Sources
1.1 Is there a continuous need for the Transfer payment programs? 1.1.1 Trends in number of recipients since 2008 (SIP and PCA)
  • Document Review (Program documentation, VAC and Morneau Shepell reports Footnote *)
  • Administrative Data Analysis (Program documentation, VAC and Morneau Shepell reports Footnote *)
1.1.2 Opinions on the extent to which RCMP clients' needs are being addressed through the transfer payment programs (SIP and PCA)
  • Key Informant Interviews (program representatives; VAC and Morneau Shepell representatives Footnote **)
1.2 Is the objective of the Transfer payment programs consistent with departmental and government-wide priorities? 1.2.1 Alignment of transfer payment programs objectives with RCMP's strategic outcomes/priorities and Government of Canada priorities (SIP and PCA)
  • Document Review (Departmental RPPs, DPRs, PAA)
1.3 Are the roles and responsibilities of the RCMP and Government of Canada clear? 1.3.1 Alignment of Transfer payment programs' with RCMP and Government of Canada legislative obligations (SIP and PCA)
  • Document Review (RCMP Pension Continuation Act, RCMP Superannuation Act; Pension Act; DPR, RPP)
1.3.2 Evidence/Opinions on the clarity of the roles and responsibilities of the RCMP, VAC, Morneau Shepell and the federal government in the delivery of the Transfer payment programs (SIP and PCA)
  • Key Informant Interviews (senior management; program representatives, VAC and Morneau Shepell representatives Footnote **)
  • Document Review (Program documentation, VAC and Morneau Shepell reports Footnote *)
2.0 Performance - Achievement of Transfer payment programs' Goal
Question Indicators Methods / Data Sources
2.1 Is the application process (SIP only), delivery and payments of pensions and benefits to RCMP clients conducted according to policy and within established services standards? 2.1.1 # and % of applications processed within service standards since 2008 (SIP)
  • Document Review (program documentation)
  • Administrative Data Analysis (VAC statistical reports)
2.1.2 Total # of appeals by applicants and % of appeals by applicants processed within service standards since 2008 (SIP)
  • Administrative Data Analysis (VAC statistical reports)
  • Key Informant Interviews (VAC representatives Footnote **)
2.1.3 Average time from application to payment since 2008 (SIP)
  • Document Review (program documentation, VAC and Morneau Shepell documentation Footnote *)
  • Administrative Data Analysis (Program documentation)
2.1.4 Evidence of policies and established service standards (PCA and SIP)
  • Document Review (program documentation, reviews)
  • Key Informant Interviews (VAC representatives)

2.2 To what extent is the Transfer payment programs is achieving its goals?

SIP - to maintain comparable income levels of survivors of RCMP members whose death occurring as a consequence of their duties

PCA - to provide payment of pensions (statutory)

2.2.1 # and % of payments to RCMP clients within established service standards since 2008 (SIP and PCA)
  • Document Review (program documentation, Morneau Shepell documentation Footnote *)
  • Administrative Data Analysis (Program documentation)
2.2.2 Evidence/Opinions on the extent to which the Transfer payment programs are achieving its goals and identification of possible issues (ex. eligibility, receipt of correct amount, determination of criteria) (SIP and PCA)
  • Key Informant Interviews (program representatives, Corporate Finances, VAC and Morneau Shepell representatives Footnote **)
  • Document Review (program documentation, Morneau Shepell documentation Footnote *)
  • Administrative Data Analysis (program documentation)
2.3 What are the oversight and reporting mechanisms in place to ensure that RCMP clients are receiving adequate services? 2.3.1 Evidence of oversight mechanisms/procedures (SIP and PCA)
  • Key Informant Interviews (senior management; program and VAC and Morneau Shepell representatives Footnote **)
  • Document Review (program documentation)
  • Administrative Data Analysis (program documentation)
3.0 Performance -Demonstration of Efficiency and Economy
Question Indicators Methods / Data Sources
3.1 What has the RCMP achieved in savings (economy) in the administration and management of the payments? 3.1.1 $ amount and % paid by RCMP for administration of transfer payment programs(SIP and PCA)
  • Document Review
  • Administrative Data Analysis (Financial Data)
  • Key informant interviews (Corporate Finances)
3.1.2 Opinions on whether there are ways/alternatives to decrease administration costs of the transfer payment programs (SIP and PCA)
  • Key Informant Interviews (Corporate Finances, senior management; VAC and Morneau Shepell representatives Footnote **)

Appendix B: Bibliography

Government of Canada, Department of Justice, RCMP Pension Continuation Act, Ottawa, NCR: 1970.

Government of Canada, Department of Justice, Royal Canadian Mounted Police Superannuation Act, Ottawa, NRC: 1985.

Government of Canada, Office of the Auditor General of Canada, Report of the Auditor General of Canada to the House of Commons - Chapter 9, Pension and Insurance Administration Royal Canadian Mounted Police, Ottawa, NCR: 2006.

Government of Canada, Public Works and Government Services Canada, RCMP Pension Administration Services - Contract no. M9020-020358/001/ZH - Annex A - Statement of Work, Ottawa, NCR: 2002.

Government of Canada, Royal Canadian Mounted Police, Defined Benefit Administration Benchmarking Analysis Fiscal Year 2010 - Royal Canadian Mounted Police, Ottawa, NCR: 2011.

Government of Canada, Royal Canadian Mounted Police, Defined Benefit Administration Benchmarking Analysis Fiscal Year 2011 - Royal Canadian Mounted Police, Ottawa, NCR: 2012.

Government of Canada, Royal Canadian Mounted Police, Defined Benefit Administration Benchmarking Analysis Fiscal Year 2012 - Royal Canadian Mounted Police, Ottawa, NCR: 2013.

Government of Canada, Royal Canadian Mounted Police, RCMP Performance Measurement Framework, Ottawa, NRC: 2013.

Government of Canada, Royal Canadian Mounted Police, RCMP Program Alignment Architecture, Ottawa, NRC: 2013.

Government of Canada, Royal Canadian Mounted Police, RCMP Report on Plans and Priorities 2013-2014, Ottawa, NCR: 2013

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