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< page 10 of 44 > |
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Measuring the State of the Plan |
Financical position of the plan |
Preliminary funding position at January 1, 2008 | Upcoming valuation filing |
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Measuring the state of the plan
Achieving balance between plan assets and the cost of future benefits is an ongoing job for the Ontario government and the OTF, the plan’s sponsors. Teachers’ management assesses the funding position of the plan each January, and offers them technical advice and analytical support.
Teachers’ uses two methods to value the plan annually:
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Financial statement valuation: Prepared by an independent actuary, this valuation takes into account only the benefits already earned by current retirees, inactive and active members, and contributions already received by the plan.
The discount rate used in the financial statement valuation was 4.65%, based on long-term Canada bonds plus 0.5%.
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Actuarial valuation for funding purposes: The funding valuation, also prepared by an independent actuary, determines the long-term financial health of the plan at current contribution rates. In preparing the funding valuation, the actuary projects the plan’s benefit costs and compares them to plan assets, then adds in future contributions from teachers and the government. Key economic assumptions used in the valuation are set out in the Funding Management Policy adopted by the plan sponsors. The projection includes the cost of pensions for current members, but does not include the cost of benefits for teachers who are expected to be hired in the future.
The discount rate used in the preliminary funding valuation as at January 1, 2008, was 5.15% (nominal) based on long-term Canada bonds plus 1%. The assumption takes into account the expected rates of return for this fund’s asset mix, as well as the required risk balance in order to achieve intergenerational equity.
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Conducted |
Annually |
Annually. Filed with the pension regulator at least every three years as required by law
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Independent actuary hired by
Teachers’ board |
Independent actuary hired by Teachers’ board |
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Benefits earned to date |
Benefits earned to date plus projected future benefits and contributions for current members |
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