Assumptions Review
	Review of Assumptions I Panel Report I Expert Panel Members
	Review of assumptions The Ontario Teachers’ Federation (OTF), the Ontario government and the Ontario Teachers’ Pension Plan jointly commissioned an independent review of the assumptions used to value the cost of future pension benefits (the plan’s “liabilities”) and plan assets. The review was part of an agreement reached between the OTF, the government and the pension plan's board for the January 2005 funding valuation, which was filed with the provincial regulator in June 2006. Plan liabilities are valued based on a number of economic and demographic assumptions, including projected life expectancies, salary increases, interest rates and other factors. Assumptions are used to determine if the anticipated future value of the plan’s assets will cover the expected cost of future pensions for all current plan members. Assumptions have a significant impact on funding valuations, and can mean the difference between a shortfall and a surplus. To ensure members pay the right amount into the plan for the benefits provided, the assumptions must be realistic and provide a plausible snapshot of the plan’s future health. Assumptions are approved by the pension plan’s board for each funding valuation, based on the advice of an independent actuary. To supplement this process, a panel of five internationally recognized pension and actuarial experts was tasked with a one-time review of the appropriateness of the assumptions and the process for establishing them. The panel’s report was presented to the OTF, the government and pension plan staff in late 2007. Panel report The expert panel completed a thorough analysis of the plan’s funding assumptions. While they did not state what the assumptions should be, they offered guidance on how assumptions should be set to meet the plan’s objectives of benefit security, contribution rate stability and intergenerational equity. The panel confirmed the plan’s maturity and the need to strengthen mortality assumptions to account for increased longevity of members. Their report to the board and plan sponsors provides an objective, evidence-based opinion on the assumptions, which can be used in preparation for the final 2008 valuation. The report will help ensure the assumptions are as appropriate as possible in order to present a valid picture of the plan’s future health. A supplementary report on Risk-Sharing Arrangements (Among Members) in Eight Canadian Pension Plans is scheduled to be completed later this spring. The report is being prepared by expert panel member Bob Baldwin. Expert panel members
	Bob Baldwin is an Ottawa-based consultant who specializes in pensions, aging society and labour market issues. He is a Senior Associate with Informetrica Ltd., and an Adjunct Research Professor in the School of Public Policy and Administration at Carleton University. Mr. Baldwin was Director of Social and Economic Policy at the Canadian Labour Congress (CLC) from 1995 to 2005. He served as the CLC’s pension specialist from 1977 to 2005. Mr. Baldwin is a director of PSP Investments; a member of the Committee on Professional Conduct, Canadian Institute of Actuaries; and a pension advisor to the Trade Union Advisory Committee of the Economics Co-operation and Development. He holds an MA in Political Science from the University of Western Ontario.
	Laurence Booth has served as professor of finance at the Rotman School of Management, University of Toronto, since 1987. From 1999 to 2006, he was Rotman’s CIT Chair in Structured Finance. Mr. Booth has authored dozens of articles and research papers, and contributed to several books. He serves on the editorial boards of the Journal of Multinational Financial Management and the Canadian Journal of Administrative Sciences. Among many honours and awards, he was named Leader in Management Education in 2003 by the Financial Post. He holds a B.Sc. in Economics from the London School of Economics and a DBA, MBA and MA from Indiana University.
	W. Paul McCrossan is an actuary and retired partner with Eckler Partners Ltd., a Canadian actuarial and consulting firm. He served as Member of Parliament for York Scarborough from 1978 to 1980 and again from 1984 to 1988. A frequent speaker on the international circuit, he has served on numerous committees of actuarial associations in Canada and abroad since 1971. Among other professional honours, he is a Fellow of the Society of Actuaries and the Canadian Institute of Actuaries, a member of the American Academy of Actuaries and an Honorary Overseas member of the Institute of Actuaries in the U.K. He holds a B.Sc. in Mathematics and Physics.
	Robert R. Reitano is Professor of the Practice in Finance, Brandeis University, International Business School. He specializes in asset/liability risk management, derivatives pricing and applications, and quantitative finance. Mr. Reitano is a former Executive Vice-President and Chief Strategist of John Hancock/Manulife. A frequent industry speaker and teacher, his papers have appeared in prominent journals and his research has been awarded three times by the Society of Actuaries. Mr. Reitano is a Fellow of the Society of Actuaries, a member of the American Academy of Actuaries and a member of the International Actuarial Association. He holds a PhD in Mathematics from MIT.
	Andrew Smith is a Partner with Deloitte in London, England. An actuary, Mr. Smith specializes in economics, pricing models for pension liabilities and derivatives, investment models for use in asset/liability management, and has been involved in financial reporting reforms for defined benefit pension plans in the U.K. Mr. Smith has published many papers on insurance, pensions and financial matters and is an active participant in a number of professional groups. He is a spirited critic of actuarial “mumbo jumbo”, and is widely respected as an entertaining and informative conference speaker. Readers of The Actuary magazine in 2003 voted Mr. Smith the second greatest British actuary ever. He graduated from Cambridge University with a degree in Mathematics.

	Posted April 2008	TOP