McMaster's Pension Plan
 A Performance Review

 Actuarial Valuation of the Pension Plan
 as at July 1, 1999
 Excerpts from Report to the Pension Trust Committee
 Prepared by William M. Mercer Ltd.

When conducting a valuation on a going-concern basis, the relationship is determined between the respective values of assets and accumulated benefits, assuming the Plan will be maintained indefinitely.
 

FINANCIAL POSITION: The results of the valuation as at July 1, 1999, in comparison with those of the previous valuation as at July 1, 1998, are summarized as follows:

Financial Position - Going-Concern Basis ($000's)

July 1, 1999 July 1, 1998
Actuarial value of assets $ 915,416 $ 836,931
  (adjusted for in-transit items)
Actuarial liability
  Present value of accrued benefits for:
        Active Members $ 338,016 $ 321,504
        Pensioners & Survivors    256,302    244,203
        Deferred Pensioners        1,803        1,701
        Additional Voluntary Contributions           105            90
         Inactive - status undecided      13,411      10,832
Total liability $ 609,637 $ 578,330
FUNDING EXCESS (unfunded liability) $ 305,779 $ 258,601

 
 

CURRENT SERVICE COST:  The estimated value of the benefits that will accrue on behalf of the active members during 1999/2000, in comparison with the corresponding value determined in the previous valuation as at July 1, 1998, is summarized below:

 Employer's Current Service Cost ($000's)

July 1, 1999  July 1, 1998
 Total Current Service Cost  $ 21,881 $ 20,988
 Estimated members' required
   contributions* 		 $   5,721  $  5,570
Estimated employer's current service
  cost		 $ 16,160 $ 15,418
Employer's current service cost
  expressed as a percentage of 
  members' contributions		      282%       277%
  *Members will contribute 50% of this amount during the 1998/1999 and 1999/2000  Plan years.  The remainder will be funded through surplus assets in the Plan.
 
 
MEMBERSHIP DATA:  Plan membership data is summarized below.

 Plan Membership

   July 1, 1999    July 1, 1998
Active Members        2,791       2,736
Pensioners and Beneficiaries        1,026           994
Deferred Pensioners             59            60
Inactive-Status Undecided           302          279
TOTAL MEMBERSHIP        4,178        4,069

                                  

 Combined Managers:  Asset Commitment Comparables
Market Value Asset Mix
  Jun98   Sep 98   Dec98   Mar99   Jun99 Min Bench Max
    %      %      %      %     %   %    %   %
EQUITIES
Canadian (JF/Linc)   16.7   17.9   18.1   18.8   19.2
Canadian (Index)   12.1   10.13   10.8   11.1   11.5
  Total Canadian   28.8   28.0   28.9   29.9   30.7  25    35   60
U.S. (JF/Linc)   11.4   10.6   11.5     9.8   10.1    10
U.S. (Derivative)1     5.5     5.4     6.0     6.3     6.5
Non-North American   10.1     9.8   10.7   10.7   10.6    10
  Total Foreign   27.0   25.8   28.23   26.8   27.2  10    20   252
TOTAL EQUITIES   55.8   53.83   57.13   56.7   57.9  35    55   75
FIXED INCOME
Bonds (JF/Linc)   25.1   25.2   23.03   24.1   23.6
Bonds (Index)   14.1   15.8   14.8   14.9   14.4
   Total Bonds   39.2   41.0   37.83   39.0   38.0  25    42   50
Cash     5.0     5.2     5.1     4.3     4.1    0      3   15
TOTAL FIXED INCOME   44.2   46.23   42.93   43.3   42.1  25    45   65
TOTAL FUND  100.0  100.0  100.0  100.0  100.0
3change in weighting of +/- 2% since previous quarter — 1Deemed to be Canadian content — 2Maximum of 20% by book value

COMMENTS:  The market value of the Fund increased from $892.7 million on March 31 to $916.5 million on June 30, 1999 after accounting for net cash withdrawals of $8.4 million.

The above table provides the breakdown of the Fund by asset class.  There was an increase in overall equity exposure of the Fund from 56.7% at March 31 to 57.9% on June 30, 1999, due to the higher returns earned by equities compared to fixed income securities.

 Prepared by James P. Marshall, Inc.