2015 Report to members

Pensions mean the world to us

photo of executive team

(l-r) Jean Turmel, B.Comm., MA, Chair; Ron Mock, B.A.Sc., MBA, President and Chief Executive Officer; Bjarne Graven Larsen, M.Econ., Executive Vice-President, Investments, and Chief Investment Officer (as of February 1, 2016); Tracy Abel, BA, MBA, Senior Vice-President, Member Services

More information on board members and executive team

A message from PLAN LEADERSHIP

We are pleased with the strong 2015 results achieved by our Investment and Member Services professionals, and with the plan’s positive funding situation. However, our enthusiasm is tempered by the global investment outlook and the plan’s demographic profile, both of which are flashing yellow caution signals.

Economic growth in most countries is quite weak, with low or declining interest rates and low inflation. Ontario Teachers’ needs to take investment risks in order to pay lifetime pensions – but as a mature pension plan with a declining ratio of active to retired members, we must also minimize the risk of a major investment loss.

The Ontario Teachers’ board oversees an increasingly complex and global asset mix. The plan sponsors, Ontario Teachers’ Federation and the Ontario government, therefore expanded the board size to 11 members from nine previously. We welcome Patti Croft, Lise Fournel and Kathleen O’Neill as our newest board members. Each has extensive international business experience, and their perspectives will be welcome.

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pLAN FUNDING

The plan had a preliminary funding surplus of $13.2 billion at January 1, 2016. This equals 107% of the assets required to pay future pensions to all members, based on current contribution rates and benefits.

 

Find out more about conditional inflation protection, an important lever for maintaining funding balance.

Go to OTPP.COM/PLANFUNDING for more information on plan funding.

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Changing Demographics

1990

icon of hourglass

25 years
Expected on pension

2015

icon of hourglass proportionately larger

31 years
Expected on pension

icon representing the ratio of 4 : 1 teachers to pensioners

4 : 1
teachers to pensioners

icon representing the ratio of 1.4 : 1 teachers to pensioners

1.4 : 1
teachers to pensioners

FUNDED STATUS

$198.7 billion
$211.9 billion
$13.2 billion

preliminary funding surplus, based on current benefit and contribution levels

Liabilities (cost of future pensions)

Plan assets and future contributions

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Member services

Outstanding service is central to our mission. We deliver personalized service through digital communications and direct service channels, and we administered $5.5 billion in pension and benefit payments in 2015. Members consistently rate our services very highly.

DIGITAL TOOLS

Visit our secure members-only website.

Download our mobile apps BabySteps, Classtime, and Worklog, in your app store.

Visit OTPP.COM/MEMBERS for news and videos about your pension.

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Active Members and Pensioners

1990

icon representing number of active members

156,000
Active Members

2015

icon representing number of active members

183,000
Active Members

icon representing number of pensioners

38,000
pensioners

icon representing number of pensioners

133,000
pensioners

thumbs up 96%

of members surveyed last year said they were satisfied or better with our service. 61% gave us a 10 out of 10.

130

pensioners were age 100 or over

71

Our average pensioner age

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Investments

Ontario Teachers’ is a globally active, responsible investor with diverse holdings in more than 50 countries. The plan earned a 13.0% rate of return in 2015 and has an annualized return of 10.3% since 1990. Investment returns are responsible for more than three-quarters of the plan’s income, with the remainder coming from member and government contributions.

Pension funding sources since 1990

11%
Government/
employer
contributions*
38%
investments – Active management
41%
Investments – Benchmark
10%
Member contributions

* Includes 1% original plan deficit funding.

Icon of an open hand

Total return

13.0%

benchmark

10.1%

$19.6

billion

Investment income generated

$171.4

billion

net assets

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Plan Funding – The plan had a preliminary funding surplus of $13.2 billion at January 1, 2016. This equals 107% of the assets required to pay future pensions to all members, based on current contribution rates and benefits. Investments – Ontario Teachers’ is a globally active, responsible investor with diverse holdings in more than 50 countries. The plan earned a 13.0% rate of return in 2015 and has an annualized return of 10.3% since 1990. Investment returns are responsible for more than three-quarters of the plan’s income, with the remainder coming from member and government contributions. Member Services – Outstanding service is central to our mission. We deliver personalized service through digital communications and direct service channels, and we administered $5.5 billion in pension and benefit payments in 2015. Members consistently rate our services very highly.