For immediate release
Toronto (April 4, 2003) ĖThe OPSEU Pension Trust (OPTrust) today
announced its financial results for 2002. In a challenging year for global
financial markets, the one-year rate of return for OPTrustís diversified
investment portfolio was negative 7.2%.
Despite experiencing its second consecutive annual
investment loss, the OPSEU Pension Plan continued to outperform its
composite benchmark in 2002, which dropped by 7.8%. The benchmark measures
the performance of standard indices for the markets in which OPTrust
invests, in proportion to their weighting in the Planís asset mix.
ďLike other large institutional investors, OPTrustís
return is closely tied to the performance of the markets in which we
invest,Ē said David Rapaport, Chair of OPTrustís Board of Trustees. ďWith
the global nature of the downturn in stock values last year, we experienced
a significant loss on the 60% of the Fund invested in Canadian and foreign
equities. These losses were partly offset by strong returns on the Planís
fixed income and inflation sensitive investments.Ē
Given the nature of its commitment to Plan members and
pensioners, OPTrustís ability to grow the fundís assets over the long-term
is much more important that single-year returns. Since the Planís inception
in 1995, OPTrust has achieved an average annual return of 8.8%. This return
exceeds both the 8.0% average for the benchmark over the same period, and
the 7.5% target return required to meet the Planís funding requirements.
ďWhile we are concerned that equity markets may
continue to perform poorly in 2003, we anticipate that the Plan will be able
to meet or exceed its funding requirements over the long-term,Ē said
Rapaport. ďIn the meantime, our members and pensioners have the security of
knowing that, as part of a defined benefit pension plan, the value of their
earned pensions is not affected by changing investment returns.Ē
At the end of 2002, the OPSEU Pension Planís net
assets stood at $8.5 billion, down from $9.4 billion in 2001. The decline in
net assets reflects both a $688 million investment loss and benefit payments
that exceeded contributions by $223 million. The Planís surplus for
financial statement purposes stood at $1.1 billion at December 31, 2002,
compared to $1.8 billion the previous year.
In 2002, the OPSEU Pension Planís actuarial funding
valuation for the years 1999-2001 identified net funding gains of $867
million. The gains, which were largely due to the delayed recognition of
investment earnings from the late 1990s, were shared between the Planís
members and pensioners and the Government of Ontario.
In its role as one of the Planís sponsors, OPSEU used
part of the membersí and pensionersí share of gains to fund a package of
temporary and permanent benefit improvements and to extend a modified
reduction in membersí contributions.
OPSEU also set aside $146 million in a contribution
stabilization fund. This fund can be used to offset any required increase in
member contributions above the normal rate, should the Plan experience a
funding loss in the future.
Part of the Government of Ontarioís share of gains was
used to eliminate the balance of the Planís initial unfunded liability owed
by the Government and to pay for certain negotiated pension plan
improvements. The OPSEU Pension Plan is now fully funded, 27 years ahead of
schedule. The Government also established a $297 million fund to stabilize
its future contributions.
OPTrustís financial results are presented in its
2002 Annual Report,
released this week. The Annual Report, including full financial statements
and a list of significant investments, is available in print and on
OPTrustís Web site.
OPSEU Pension Trust