FIVE YEAR STRATEGIC PLAN NORTHERN EMPLOYEE BENEFITS SERVICES

September 2005

The Board of Directors and Pension Committee held a strategic planning session December 8 & 9, 2004. The purpose was to identify changes in the Corporation’s operating environment and set strategic directions for the next 5 years.

Specific objectives of the planning session were to:

• review the 1999 Strategic Plan against the current operating environment and develop consensus on the Corporation’s mission, vision, values and principles;
• identify key strategic directions and operational objectives;
• establish indicators to evaluate progress on strategic directions; and
• produce a report that forms the basis for a new 5 Year Strategic Plan.

Roy Stuart, Hewitt Associates, facilitated the planning session and produced a report, which the Board reviewed in April 2005. The Board directed preparation of a draft Strategic Plan using the report from the planning session.

The Board reviewed and approved this Strategic Plan in September 2005.

Our Program operates within a Canadian and uniquely northern environment.

The important trends and issues in Canada are:

For Health Benefits Plans:

• people are living longer and the workforce is aging, leading to increased costs;
• governments and private plan sponsors are responding in a variety of ways to contain costs, causing shifts and pressures in our health care system;
• a key issue has become the waiting times for medical treatments;
• skills shortages are driving human resource strategies to recruit and retain staff and benefits plans are central to these strategies;
• advances in technology are increasing plan costs but also providing plan sponsors opportunities to improve efficiency and contain costs;
• plan governance is a work in progress; and,
• legal risk is rising.

For Pension Plans:

• plans still haven’t recovered from poor investment returns in 20002002 and face challenges financing their pension promise;
• the deterioration of pension finances has highlighted risks and is causing sponsors to redesign or change plans and increase contribution requirements;
• pension governance is under a lot of pressure to embed fiduciary duties, manage risk, plan strategically, manage performance and build governors’ capacity;
• there is a trend to defined contribution plans, which reduce employer risks but place members’ benefits more at risk;
• technological advances are empowering members and providing opportunities for cost effectiveness for plan administrators;
• litigation is more common and fiduciaries are having high standards of care imposed by the courts; and,
• regulators are reviewing their legislation and regulations for pensions.

The NEBS Program is not immune to any of these pressures.

We also face a number of unique northern circumstances, including:

• we provide a public sector, multi-employer Program across vast distances that challenge operational and administrative efficiencies;
• the size and capacity of our employer members varies greatly;
• we serve a multi-cultural, multi-lingual membership;
• we want to know our members, operate with a “family” feeling and be very responsive to our members’ needs and circumstances;
• we want to provide comparable or better plans than those provided by the territorial governments for their employees; and,
• we want to meet the needs of our members and provide plans that are unique to the North.

The Board has identified the key challenges we have to address if the Corporation is to be successful. These challenges include:

• recognizing the optional nature of our Program and maintaining our current membership with effective communications, responsive service and innovation;
• maintaining, to the extent possible, our Plan’s comparability with those plans of the territorial governments for their employees;
• designing new options and provisions, or changing our Plans to remain attractive and comparable;
• recognizing a general resistance from our members to cost increases and maintaining relatively stable and attractive contribution rates for our Plans;
• increasing our membership, particularly with western community governments, and in our Pension Plan; and,
• confirming the regulatory framework for our Pension Plan and addressing the Plan’s funding requirements.

The Board adopted a simple definition of “mission” for this Strategic Plan:

-Mission is the business for which we are charged-

This definition proved somewhat at odds with the mission statement in the former strategic plan and changes were made. The Board adopted the following statement of our business.

NEBS MISSION STATEMENT

Our mission is to provide pension and health benefits programs that best address the financial and other interests of northern employees and that are competitive and comparable to those for territorial government employees.

Our business benchmark is the programs provided to territorial government employees.

Other key business characteristics are that:

• we are northern;
• we are non-profit;
• we serve public sector employer groups; and,
• we are owned and managed by our employer members.

For this Strategic Plan the NEBS Board decided the term “vision” is to be defined as:

-Vision is the manner we want to carry out our mission-

The Board feels the vision statement in our former strategic plan does not meet this definition and has adopted the following vision statement.

NEBS VISION STATEMENT

Our vision is an expanding and robust program that provides great value for money to a Northern membership using a not-for-profit and local approach.

We will be successful if the manner we carry out our business includes:

• being accountable to member employers and their employees and other
• stakeholders; • operating at the highest standards of integrity and trust;
• communicating effectively;
• being well governed and transparent in decisions and operations;
• being responsive and respectful to our members;
• being innovative in our service and program design; and,
• being independent and democratic.

The values of an organization are those standards, qualities or principles important to them. Principles are standards of good behavior, qualities that determine an organization’s characteristic behavior.

The Board believes it is most likely to succeed if these values inform its behavior and decision-making:

• Partnerships – treating relationships with employer members, their employees, and our service providers as partnerships that have intrinsic value and as such should be preserved and developed mutually;
• Professionalism – maintaining professional standards of skill and conduct in carrying out program activities;
• Fiduciary Stewardship – acting always as the trustee of the Plan and the fiduciary of members’ interests in the program, and placing those interests above all others;
• Employment Standards – being a good employer in order to attract/ retain excellent staff and to foster an outstanding service culture; and
• Independence – acting neutrally and free of conflict of interest.

Based on the working sessions held in December 2004, the NEBS Board of Directors decided on the following strategic directions for the next five years.

1. Plan Design
• Identify, examine and implement, where appropriate, design changes to assist in cost containment.
• Identify and examine plan changes (phasing, ramping, optional enrollment) to assist marketing to new members.
1. Plan Marketing
• Actively market to core membership groups (community and aboriginal governments and local housing authorities) and develop a comprehensive approach to pursuing active marketing files.
• Undertake a renewed approach to all members not participating in the Pension Plan, using Plan changes and the bundling of Plans to improve marketing.
1. Plan Delivery
• Develop and deliver a Program Administration Manual for employer members.
• Develop and deliver training for employer members.
• Renew and launch a new web site.
1. Human Resources
• Complete regular reviews of staff compensation and benefits and maintain market competitiveness.
• Undertake succession planning for key positions.
• Involve staff and seek their input.
1. Corporate Governance
• Update our Pension Plan Investment Policy and review all other Policies on a regular basis and update as necessary.
• Establish annual operational directions and marketing approaches and evaluate progress.
• Regularly review the 2005 Strategic Plan and update it as necessary.
1. Pension Plan Financing and Regulation
• Working with governments, establish a regulatory environment for our Pension Plan that recognizes the Plan is a multi-employer, public sector Plan which needs to be regulated accordingly.
• Working within the regulatory environment, develop an action plan to address the Plan’s funding requirements.

To judge success in our Strategic Directions the Board of Directors set the following benchmarks and performance indicators.

1. Plan Design

• At each annual renewal of the Group Benefits Plan contract, or more often

as required, the Board is presented for their consideration and decision: ooptions for Plan design that will assist the containment of costs; and ooptions to enhance, modify or delete existing coverage, or add new

coverage that better meets the needs of current and prospective new members.

• Based on on-going research and the results of annual Pension Plan Valuation Reports, the Pension Committee is presented for their consideration and decision:

ooptions for Plan design that contain future benefits costs; and ooptions for Plan changes that make joining the Plan easier and/or more attractive.

1. Plan Marketing
• Membership continues steady growth, with 1800 employees enrolled in the Group Insurance and Health Benefits Plan and 1000 enrolled in the Pension Plan by 2010.
• Incorporated community government and local housing association membership from the NWT and Nunavut is 100% by 2010.
• Membership of First Nations community and regional governments in the NWT is increased to 50% by 2010.
1. Plan Delivery
• Program Administration Manual delivered to all employer members by 2006.
• Plan for administrative training developed and approved by Board and delivery initiated by 2007.
• New NEBS web site launched in 2006.
1. Human Resources
• Personnel Committee reports to Board annually on employee terms and conditions of employment.
• Compensation review completed in 2005 and again no later than 2010.
• Board approves Succession Plan in 2006 and Personnel Committee reviews annually thereafter.
1. Corporate Governance
• New Investment Policy approved early 2006 and reviewed annually thereafter.
• Board reviews all Policies annually.
• Board approves annual operational directions and annual marketing plan.
• Board reviews Strategic Plan annually and develops new Plan in 2010.
1. Pension Plan Financing and Regulation
• Regulatory certainty by 2006.
• Action Plan to address funding requirements in place by 2006-07.