Toronto (April 8, 2002) After six years of
strong investment results, the OPSEU Pension Trust (OPTrust) has reported an overall rate
of return of negative 3.5 per cent for 2001. Over the seven years since the OPSEU Pension
Plan was launched, OPTrust has achieved an average annual return of 11.3 per cent.
At the end of 2001, the Plans net assets stood at $9.4
billion, down from $10 billion in 2000. This decrease in net assets reflects a $359
million investment loss as well as pension and other benefit payments made over the year.
"OPTrusts return, like that of all large institutional
investors, is closely tied to the performance of the markets," said Stan Sanderson,
Chair of OPTrusts Board of Trustees. "With the retreat of Canadian and
international equity markets, 2001 was a difficult year for investors."
Despite its negative return, OPTrust outperformed its weighted
benchmark, which showed an overall drop of 4.4 per cent for the year. The benchmark
measures the overall performance of the markets in which OPTrust invests. Since 1995,
OPTrust has bettered its benchmark in five of the past seven years.
"Because capital markets are subject to business cycles, we
anticipate the possibility that a plan like ours may occasionally experience a year of
negative returns," said Sanderson. "What is more significant, given our
long-term commitment to OPTrusts members and pensioners, is our ability to grow the
fund over time, while keeping risk within acceptable limits."
To meet its funding obligations, OPTrust has set a long-term return
target of 7.5 per cent. The Plans seven-year average return has exceeded this target
by 3.8 per cent. OPTrust also outperformed the 10.5 per cent average return of its
weighted benchmark for the same period.
In 2001, OPTrust increased its investment in international equities
to 38 per cent of the Plans assets, from 29 per cent in 2000. This shift allows the
Plan to capitalize on opportunities for improved diversification available in developed
At the end of 2001, Canadian equities accounted 23 per cent of the
portfolio, fixed income investments represented 33 per cent, and real return bonds, real
estate and cash made up the remaining 6 per cent.
The OPSEU Pension Plan is a defined benefit plan covering more than
48,000 active members and 16,000 current pensioners. The Plan is jointly sponsored by the
Province of Ontario and the Ontario Public Service Employees Union (OPSEU). Plan members
include employees of the Province and other public sector organizations who are
represented by the Ontario Public Service Employees Union (OPSEU) or the Ontario Liquor
Boards Employees Union (OLBEU).
At year-end, the Plans financial statements showed a surplus
of $1.8 billion, up from $1.6 billion in 2000. While it is an indication of the
Plans continuing strength, the financial surplus is not available to improve
benefits or reduce contributions.
Instead, OPTrust carries out a funding valuation every three years,
comparing the Plans assets to the future cost of members benefits. Any
resulting funding gain is shared between the Government of Ontario and the OPTrusts
members and pensioners, and may be used to improve benefits, reduce contributions, or
create a stabilization fund. As a sponsor, OPSEU is responsible for allocating the
members and pensioners share of any funding gains.
The results of the Plans next funding valuation, for the years
1999, 2000 and 2001, will be finalized in mid-2002.
OPTrusts financial results are presented in its 2001 Annual
Report, released this week. The Annual Report, including full financial statements and a
list of significant investments, is available in print and on OPTrusts Web site at www.optrust.com.
OPSEU Pension Trust