OPTrust News: OPTrust Announces Financial Results for 2003Posted: April 15, 2004
Toronto (April 15, 2004) - The OPSEU Pension Trust (OPTrust) today announced its financial results for 2003. Over the year, OPTrust achieved an overall investment return of 17.3%, generating investment income of $1.4 billion.
As a result, the OPSEU Pension Plan's net assets increased to $9.6 billion at December 31, 2003, from $8.5 billion the previous year.
“With approximately 60% of the portfolio allocated to Canadian and Global equities, the Plan was well positioned to benefit from the strong recovery of the world's major stock markets,” said David Rapaport, Chair of OPTrust's Board of Trustees. “At the same time, our returns bettered the Plan's market benchmarks for each of our major asset classes.”
OPTrust's overall return outperformed the Plan's 13.6% weighted market benchmark by 3.7%. The difference, equal to approximately $310 million over the year, represents the added value realized through OPTrust's investment strategy.
The Plan's investment performance also exceeded OPTrust's 7.5% funding target return. This target represents the long-term rate of return needed to fund the projected cost of members' and retirees' pension benefits.
Since OPTrust's launch in 1995, the Plan has achieved an average annual rate of return of 9.7%, exceeding both the funding target return and the 8.6% benchmark for the same period.
At the end of 2003, the Plan had a financial statement surplus of $1.5 billion, compared to $1.9 billion in 2002. The decline in surplus was largely due to the recognition of a portion of the Plan's deferred investment losses from the previous two years.
Despite its strong results for 2003, OPTrust is managing the effects of negative investment returns from 2001 and 2002. While the long-term outlook remains strong, OPTrust anticipates that the Plan's next actuarial funding valuation will identify a funding loss. The results of this valuation, as of December 31, 2003, will be available in August 2004.
Normally a funding loss would trigger an immediate increase in the contributions paid by OPTrust members and employers. However, in their role as plan sponsors, OPSEU and the Government of Ontario have set aside a portion of past funding gains in separate contribution stabilization reserves, which can be used to offset required contribution increases.
At the end of 2003, the members' contribution stabilization fund stood at $172 million, while the employers' fund totaled $338 million. Based on current projections, these funds are expected to be sufficient to prevent contributions from rising above the plan's normal rate of 8% of salary until the next scheduled funding valuation in 2007.
OPTrust's financial results are presented in its
2003 Annual Report. The
Annual Report, including full financial statements, is available in print
and on OPTrust's Web site.
OPSEU Pension Trust