OPTrust’s funding policy

OPTrust’s current funding policy was approved by the Board of Trustees in April 2010. It sets out a detailed framework for ensuring that the assets of the Plan are sufficient to meet the pension promise and formalizes the Plan’s three funding goals:

Security of benefits - the primary goal of the Plan is to provide the promised pension benefits to our members and retirees.

Stability of contributions - another goal is to minimize the likelihood of having to significantly increase contribution rates. This goal is usually achieved by using rate stabilization reserves - set aside during years when investment gains exceed the target for funding future benefits - to pay off any funding deficits identified by the Plan's independent actuaries. Unfortunately the losses of 2008 could not completely be dealt with using the stabilization reserves. As a result, employee and employer contribution rate increases were necessary.

Fairness of funding among generations and other groups - this is best achieved within a framework that provides for level contributions by the member and employer over the member’s career. It also requires prudent and equitable distribution of any gains among classes and generations of members. Adequate current funding is needed to avoid placing an undue burden on future generations while, at the same time, measures of conservatism should not be so large as to transfer large surpluses to future generations.