September 8, 1998

To:Audit Committee

From:Chief Financial Officer & Treasurer

Subject:1997 Management Letter Response

Purpose:

To respond to issues raised in the City Auditor=s 1997 Management letter as it specifically relates to the Metropolitan Toronto Pension Plan and the Metropolitan Toronto Police Benefit Fund.

Financial Implications:

N/A

Recommendation:

Receive as information.

Discussion:

Comments on the 1997 Management Letter were sent to the City Auditor on June 23, 1998 and are contained in this report.

Auditor's Recommendation:

The security lending agreement between the Boards of Trustees of the MTPP and the MTPBF and CIBC Mellon Global Securities Services Company should be signed and executed as soon as possible.

Management Response:

We will expedite the execution of the agreement once the legal department is satisfied with the wording of the agreement. Currently our solicitor is in final discussions with CIBC Mellon in regards to one section of the agreement that concerns the pooling of cash collateral.

Auditor's Recommendation:

Contributions by participating employers to the MTPP should be reviewed to ensure that they are complete and that any adjustment for amounts receivable be made on a timely basis.

Management Response:

The verification procedure will be changed from an annual basis to a quarterly basis to ensure that discrepancies are identified earlier.

Auditor's Recommendation:

Management should develop a policy regarding the collection of overpayments to pensioners. This policy should be submitted to both Boards of Trustees for approval.

Management Response:

A draft policy will be submitted to the Board, within the next three months, for their discussion and approval.

Auditor's Recommendation:

Management should establish guidelines that specify who should monitor compliance with the asset mix policy and the requirements of the Income Tax Act. The guidelines should also require quarterly reporting of the results of monitoring the asset mix policy.

Management Response:

This matter will be brought to the attention of the Board of Trustees, at their next meeting, so that guidelines can be established in regards to the monitoring of asset mix and foreign content limits.

Contact Name:

Ivana Zanardo

Director

Pension, Payroll & Employee Benefits

7-4143

Chief Financial Officer & Treasurer