OPTrust's Net Assets Top $10 Billion in 2004Posted: April 13, 2005
Toronto (April 13, 2005) - Strong investment returns for the second
year in a row helped increase the OPSEU Pension Plan's net assets to $10.5
billion at the end of 2004, according to OPTrust's annual report, released
During 2004, the OPSEU Pension Trust (OPTrust) achieved an overall return on investments of 11.7%. This result exceeded both the Plan's weighted benchmark return of 11.5% for the year and its long-term target return of 7.5%.
As a result, the Plan's net assets available for benefits increased by $1.1 billion, ending OPTrust's 10th year of operation above the $10-billion mark. In 2003, OPTrust registered an annual return of 17.3%.
“Our strong financial results last year capped a very successful first decade for OPTrust, our members and pensioners, and the Plan's sponsors,” said Deborah Stark, Chair of OPTrust's Board of Trustees. “We've achieved significant growth and laid a solid foundation for the Plan's current and future retirees.”
Since OPTrust's launch in 1995, its annual investment performance has bettered the Plan's 7.5% target return seven years out of 10. The target is the average rate of return the Plan needs to achieve over the long term to pay the projected cost of members' and retirees' pension benefits.
OPTrust has out-performed its weighted benchmark in eight of the past 10 years. Over the decade, the Plan registered an average annual return of 9.9%, compared to the benchmark's average of 8.9%.
In 2004, OPTrust's above-benchmark performance was driven by the Plan's foreign equity portfolio, which returned 13.1% versus 11.4% for the benchmark index. Canadian equity and fixed income investments also generated strong returns of 13.4% and 9.2% respectively, but were slightly below their benchmarks. Real estate, which makes up a small proportion of the total portfolio, returned 12.9%, more that doubling the 6.2% benchmark return.
Over the year, OPTrust continued implementing a number of changes to its investment portfolio. These included increasing the Plan's real-estate holdings, revising the management structure of its Canadian equity portfolio, and adjusting its fixed income strategy to better match its pension liabilities.
In July 2004, the Plan's most recent funding valuation identified an unfunded liability of $255 million, reflecting investment losses from 2001 and 2002. However, stabilization funds set aside from previous gains have allowed OPTrust's sponsors to keep member and employer contributions at the Plan's normal rate.
Assuming an average annual investment return of 7.5% over the three years up to December 31, 2006, the members' stabilization fund should be able to offset the need for a contribution increase until at least 2009.
OPTrust administers the OPSEU Pension Plan, a defined benefit plan covering almost 74,000 members and retirees. The Plan is jointly sponsored by the Ontario Public Service Employees Union (OPSEU) and the Government of Ontario.
OPTrust's full financial results are available in its 2004 Annual Report. The annual report, including detailed financial statements, is available in print and on OPTrust's web site.
OPSEU Pension Trust