As mentioned in our April 2020 FPP Update newsletter, the following are Questions and Answers for UBC Faculty Pension Plan members. We would like to thank the members who participated and submitted questions.
- I’ve read that the stock market dropped significantly in the first quarter of 2020. I worry about my investments. How can I protect my savings during a crisis like COVID-19?
The spread of COVID-19 continues to negatively affect the global economy and impact the financial markets. At the height of concerns about the pandemic in March, even the most conservative investment manager had no place to hide as equity markets and lower grade corporate bond markets sold off steeply and swiftly.
However, for those with a long-term perspective, there may be opportunities to acquire investments at a better price. As famous investor Warren Buffet has said, “wide-spread fear is your friend as an investor because it serves up bargain purchases.” April has already provided a significant bounce-back in the markets, rewarding managers that started putting cash to work in their funds in late March and early in the second quarter.
That said, there is no way to predict what the future holds, especially when the environment is so unique. The best way to protect your investments is to honestly assess your risk tolerance (emotionally and financially), have an appropriate investment strategy, and stick to it. Review your circumstances regularly and confirm the suitability of your strategy. Through your online member account at mysunlife.ca/ubcfpp, you have access to the Asset allocation tool. The Asset allocation tool can help you determine your investment time horizon and comfort with investment risk, and in turn, help you select investment options that are right for you. We recommend that you review your options carefully and encourage you to seek independent investment advice from an appropriately qualified individual.
Studies have shown that market timing is a great detriment to the typical investor, creating a gap between what investors earn (lower) and what the markets provide (higher). Furthermore, frequent trading increases costs – recall that there is a 2% short term inter-fund trading fee (the Short Term Investment Fund and GICs are exempt). Refer to the Sun Life Short Term Trading Policy Q & A document by signing into mysunlife.ca/ubcfpp , then under Investments, select Manage plan > my plan > Make a change > Change investments.
- How do I make an investment allocation change?
Members can make investment allocation changes as well as manage their investments through mysunlife.ca/ubcfpp or by phoning the Sun Life Client Care Centre. Please visit our Managing your investments page for further instructions.
- How are the Plan’s management and underlying external investment managers responding to the crisis?
Management and the Board of Trustees for the Faculty Pension Plan (FPP) continue to focus on the ongoing due diligence of the investment funds available to you, both in terms of their long-term strategies and recent performance. Constant dialogue with the FPP’s fund managers has given us confidence that their actions during this volatile period are consistent with their mandates, and that they are taking measures to ensure business continuity.
We do not plan on making near-term adjustments to the fund options or the construction of the FPP Balanced and FPP Fossil Fuel Free Equity and Bond funds, as we believe that it is prudent to stay disciplined and follow our long-term investment policy.
The market environment is still very fluid, reacting to the latest economic and health news, the lock-down measures taken by governments globally to “flatten the curve,” the gradual and regional re-opening of economies, and the historic stimulus provided by central banks and fiscal authorities.
All of our managers are approaching the situation with caution and are focusing on portfolio risk management. They are also actively taking advantage of market dislocations in efforts to position portfolios for an eventual recovery; indeed, the equity markets bounced back strongly in April.
- Is there any way to track the amount of dividends earned by the funds in my portfolio? As far as I know, I can only see my individual and institutional contributions made into the fund, but not the dividends passively accrued in each holding.
Currently, we do not have the ability to provide dividend accrual tracking for holdings in a member portfolio.
- Can I choose to temporarily suspend my contributions to the FPP?
No, there are no provisions to suspend contributions. Contributions from both plan members and the University must continue to be paid.
- Can I expect any delay in a payment or transfer of funds if my employment with UBC is terminated?
We can assure members that we have taken all the necessary steps to ensure the continuity of services that you have come to expect from the FPP. Although our staff are working remotely, there will be no delays in payments and transfer of funds.
- I turn age 71 this year. Where can I find out more information about my retirement income options?
Visit our Retiring page for detailed information about the retirement income options available within the UBC Faculty Pension Plan as well as external options. If you are planning to retire soon, we recommend scheduling a meeting with our member services specialist who will review in detail your retirement options with you and your spouse. Please contact Lorraine Heseltine at lorraine.heseltine@ubc.ca to schedule a meeting.
If you have a question that has not been addressed in this question and answer, or a specific question regarding your FPP account, please contact our Member Services team.