|Annual Highlights 2001||Focusing on Pension Security|
The Meaning of Security
|The OPSEU Pension Trust exists for one reason: to
provide a secure retirement income to you and more than 71,000 other members and
pensioners of the OPSEU Pension Plan. As Trustees, we are responsible to you and to
the Plans sponsors, the Ontario Public Service Employees Union (OPSEU) and the
Government of Ontario for ensuring that this pension promise is met, now and into
the future. A Guaranteed Pension
In 2001, losses on the worlds major stock markets highlighted the value of an OPTrust pension. Through your contributions and those made by your employer you earn the right to a lifetime pension. Your pension is calculated using a set formula, based on your years of service and average salary.
Unlike most RRSPs and other individual investments, the value of your OPTrust pension is guaranteed. Once you retire, your pension will be adjusted annually for inflation. That adds up to stability now and security for your future.
To pay for your pension, OPTrust invests to achieve long-term growth, while keeping risk within acceptable limits. Like that of all major institutional investors, however, the Plans annual return is closely tied to the performance of the markets. With the global retreat of stock prices in 2001, OPTrust posted an investment loss of 3.5% for the year.
More important than the single-year return, is OPTrusts ability to grow the pension fund over a much longer period. Since 1995, we have achieved an 11.3% average annual return on investments. As a result, the Plan has reduced its unfunded liability, enhanced benefits, reduced member contributions and built up the reserve that was used to offset the investment loss experienced in 2001.
Investment returns vary based on a wide range of factors. That is why OPTrust maintains a diversified investment portfolio. This allows us to moderate exposure to market risks, while positioning the Plan for growth over the long-term. In 2001, we improved the Plans diversification by increasing the proportion of the fund invested in international stocks.
We also enhance the stability of the Plan by recognizing or "smoothing" each years investment returns over a four-year period. As a result, earnings held in reserve from 1998-2000 more than offset the portion of the 2001 losses recognized at year-end. This contributed to a $202 million increase in the financial statement surplus to $1.8 billion. The unrecognized portion of the 2001 investment loss will reduce the surplus over the next three years.
Every three years, OPTrust reviews the Plans funding status. Any "gains" (or losses) are shared equally between the members and pensioners and the Government of Ontario. The results of the next funding valuation will be ready in mid-2002.
In addition to a secure pension, members and pensioners have told us that you count on OPTrust for useful information and prompt, reliable service. In 2001, we took a number of steps to better meet these needs:
Looking ahead, OPTrust is committed to ensuring the long-term security of the pension promise, and to responding to your changing needs.
Stan Sanderson (left) and Paul Sharkey are the Chair and Vice-Chair of the OPTrust Board of Trustees.
|© 2002 OPSEU Pension Trust / Fiducie du régime de
retraite du SEFPO