2018 Report to Members: All the Right Elements
May 29, 2019
2018 was a solid year for our plan, despite challenges in the global economy. We remain fully funded for a sixth consecutive year, and earned $5.2 billion in net investment income, $3.5 billion above our benchmark. And, once again, you, our members, gave very high satisfaction scores for the services we provided. These accomplishments were by design, not accident.
But our future success won’t be built on past results. To continue to fulfill our mission, we need to look ahead and abroad. We have all the right elements in place for success: a global and forward-looking strategy, outstanding talent, and a clear mission to provide outstanding service and retirement security for our members – today and tomorrow.
An investment portfolio built for stability
We delivered stability for you, our members, in a year of major market swings. Times like these show that efforts to rebalance the portfolio for stability are paying off. Our total-fund net return was 2.5%.
A true measure of our fund’s performance is financial returns over time. This is where we’ve excelled. Our five- and ten-year net returns, as at December 31, 2018, were 8.0% and 10.1%, respectively. The plan’s volatility was subdued compared to what would have been experienced by a more traditional asset allocation. Diversification allows us to spread risk across key factors, like time periods, asset classes, geography and economic outcomes. Active management helped us outperform our benchmark result by 1.8% or $3.5 billion.
We remain focused on building a resilient portfolio that is designed to pay pensions over the long term. We believe that diversification, a global mindset, relationships with aligned strategic partners, and creating enduring value as an asset owner remain key for the fund’s long-term sustainability.
Responsible investing means having a systematic process to identify, assess and manage the environmental, social and governance (ESG) factors in our investments. Companies that manage these well are more likely to be profitable and sustainable over the long term.
Read the 2018 Responsible Investing Report
Creating the right experience for you
Our service philosophy continued to focus on three guiding principles: simple, personal and insightful. We strive to make everything related to your pension as easy as possible. How? We simplify complex information with personalized service and leverage insights to anticipate and meet your needs across multiple channels.
We remain focused on improving our ability to deliver outstanding service, every day, in an increasingly complex operating environment. We know we need to do more than just keep up with the changes. We need to leverage our strengths and develop new ways of thinking.
The cost of administering the pension plan has been rising over the past six years. The cost per member was $208 in 2018, compared to $177 in 2017. This is in part due to ongoing investments in talent and technology, which are fundamental in creating value, reducing risk and providing an excellent experience for you.
As more and more of you opt for the convenience and security of an Ontario Teachers’ online account, we’ll continue to focus on expanding our digital offerings and communications to serve you in ways that are useful, timely and meaningful.