District of Lake Country
Notes to Financial Statements
For the year ended December 31, 2015
11. Contingent liabilities and commitments
Regional District of Central Okanagan
Regional District debt is, under the provisions of the Local Government Act, a direct, joint and
several liability of the District and each electoral area and member municipality within the Regional
District, including the District of Lake Country. The loan agreements with the Regional District of
Central Okanagan and the Municipal Finance Authority provide that if at any time the scheduled
payments provided for in the agreements are not sufficient to meet the Authority’s obligation with
respect to such borrowing, the resulting deficiency becomes a liability of the member municipalities.
Legal actions
The District is currently engaged in certain legal actions, the outcome of which is not determinable
at this time. Accordingly, no provision has been made in the accounts for these actions. The amount
of loss, if any, arising from these actions will be recorded in the accounts in the period in which the
loss is realized.
Pension liability
The District and its employees contribute to the Municipal Pension Plan (“the plan”), a jointly
trusteed pension plan. The Board of Trustees, representing plan members and employers, is
responsible for overseeing the management of the plan, including investment of the assets and
administration of benefits. The plan is a multi-employer contributory pension plan. Basic pension
benefits are based on a formula. As at December 31, 2014, the plan has about 185,000 active
members and approximately 80,000 retired members. Active members include approximately
37,000 contributors from local government.
Every three years, an actuarial valuation is performed to assess the financial position of the plan and
adequacy of plan funding. The actuary determines an appropriate combined employer and member
contribution rate to fund the plan. The actuary’s calculated contribution rate is based on the entryage normal cost method, which produces the long term rate of member and employer contributions
sufficient to provide benefits for average future entrants to the plan. The rate is then adjusted to the
extent there is amortization of any funding deficit.
The most recent actuarial valuation for the Municipal Pension Plan as at December 31, 2012
indicated a $1.37 billion funding deficit for basic pension benefits on a going concern basis.
The next valuation will be as at December 31, 2015 with results available in 2016.
Employers participating in the plan record their pension expense as the amount of employer
contributions made during the fiscal year (defined contribution pension plan accounting). This is
because the plan records accrued liabilities and accrued assets for the plan in aggregate, resulting in
no consistent and reliable basis for allocating the obligation, assets and cost to individual employers
participating in the plan.
The District paid $408,395 (2014 - $360,364) for employer contributions, while employees
contributed $351,549 (2014 - $306,798) to the plan in fiscal 2015.
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2015 Annual Report
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