Insured benefits coverage in retirement is one of the key advantages to your membership in the Plan. As an OPTrust member, you qualify for insured benefits if:

• you are receiving a pension based on at least 10 years of credit in the OPSEU Pension Plan or the Public Service Pension Plan (PSPP), or
• you are receiving a pension based on at least 10 years of continuous employment and have some credit in the OPSEU Pension Plan for at least some part of each of those 10 years.

Like full-time employees, eligibility for insured benefits is based on the same criteria for members who are in a part-time, contract or casual position. Your insured benefits coverage includes: dental, supplementary health and hospital, and basic life insurance. Insured benefits are provided by the Government of Ontario and administered by Great-West Life, not OPTrust.

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Funding update: full 3% contribution increase needed

 Like other major pension funds, the Plan experienced a substantial investment loss in 2008 due to the global financial crisis. As described in the 2009 Annual Highlights Report, that loss has had a significant impact on the Plan’s funding.

In 2009, an initial actuarial valuation identified a total funding shortfall of $2.7 billion as of the end of 2008. This shortfall included both the Plan’s funding deficit of $1.8 billion and deferred (or “smoothed”) investment losses of $927 million, to be recognized over the following four years.

Deficit management
In response, the OPTrust’s Board of Trustees, together with our two sponsors – OPSEU and the Government of Ontario – acted quickly to implement a proactive strategy for managing the deficit. Central to this strategy was the decision to implement a gradual 3% increase in member and employer contribution rates, rather than reduce members’ future pension benefits. The contribution increase is being phased in over three years starting in 2010, to reduce the immediate impact on members’ take-home pay and employers’ payroll costs.

In the meantime, OPTrust’s investment portfolio performed strongly in 2009, generating a return of 13.6%. This was double the Plan’s 6.75% annual funding target return, which the Fund is expected to achieve over the long term to pay for member’s and retirees’ pensions.

Given this strong performance in 2009, OPTrust was asked by the Plan’s sponsors to review whether the third 1% increase in contribution rates, scheduled for 2012, would still be required.

Funding requirements
In 2009, investment income helped increase the Plan’s net assets to $12 billion at year-end, up by $1 billion from the end of 2008. Given the Plan’s funding requirements, however, this one year of growth was not enough on its own to make up for our $2.4 billion investment loss in 2008.

In fact, our analysis has determined that the Plan would need to achieve a return of at least 15% in 2010 to be able to avoid the third 1% increase in contribution rates.

Due to the continued volatility in global investment markets, however, OPTrust’s investment return for the first six months of 2010 was below the Plan’s 6.75% funding target return on an annualized basis. As a result, unless there is a very significant rebound in capital markets for the latter half of 2010, eliminating the third contribution increase is not an option.

While the approved 3% contribution increase and the Plan’s 2009 investment return have significantly reduced the Plan’s funding deficit and smoothed losses, the Plan’s current gains are not enough to avoid the full 3% contribution increase – particularly in light of the continuing high levels of investment market volatility.

In the meantime, OPTrust’s Board of Trustees, our senior management and our external actuarial consultants will continue to monitor the Plan’s funding status. Look for more funding updates – and how we are working to ensure the security of your OPTrust pension– in future issues of OPTions.

For more information on the OPTrust’s deficit management strategy and the Plan’s funded status, see the 2009 Annual Highlights Report.

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OPSEU appoints new Trustee

OPSEU appointed Dennis Wilson to the OPTrust Board of Trustees for a three-year term in April 2010.

During his Ontario Public Service career spanning nearly 30 years, Wilson has worked for the Ministries of Natural Resources, Northern Development and Mines, and Labour. He is currently an Industrial Health and Safety Inspector with the Ministry of Labour.

Wilson’s union activities have included Steward, Local President, Executive Board Member, Ministry Employee Relations Committee (MERC) Team Member, and positions on several bargaining teams.

“When I started working in the OPS, unclassified employees did not have the option to join the pension plan. OPSEU lobbied for and secured the right for unclassified staff to become plan members,” says Wilson. “I’ve always recognized the value of a strong pension, and this issue has become increasingly important to me as I approach my own retirement.”

 

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Facts about...Your pension beneficiaries

As an OPTrust member you can count on a pension payable for your lifetime. You can also count on your pension to provide benefits for your eligible survivors after you die.

That is why it is a good idea to confirm that the beneficiary information you have provided to OPTrust is up-to-date. You can start by checking your 2009 Annual Pension Statement, which was sent to you online or by mail in the spring.

If you have not named any beneficiaries, or the information on your statement is incorrect, you can immediately update your records through OPTrust’s secure Online Services. You can also update your beneficiary information using OPTrust’s Pension Beneficiaries form, although this will take longer than completing the process online.

Who qualifies for survivor benefits?
More information on naming your beneficiaries, eligibility requirements and how survivor benefits are paid is in our fact sheet Your pension beneficiaries.

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Posted on August 19, 2010