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Jim-Keohane-1We still maintain one of the lowest contribution rates of any of the major plans, and we have left our contribution rates unchanged since 2004.” – Jim Keohane


 

With a 5.12 per cent return on investments for the year ending Dec. 31, 2015, the Healthcare of Ontario Pension Plan (HOOPP) announced a funded position of 122 per cent, good news for retirees and local economies that benefit from retiree spending.
“Even during a year of significant economic uncertainty, HOOPP remains fully funded which means that we have sufficient resources to meet all of our current and future pension and benefit payments,” stated Jim Keohane, HOOPP President and CEO, in a media release distributed during a press conference at the plan’s Toronto offices.
”Being fully funded means we are able to consistently deliver to our members and our liability driven investing approach has been critical to ensuring the long-term health and sustainability of the Plan.”
The success of the plan is relayed in press releases and investment results while the impact on people is played out in homes and communities across Ontario.
A study completed by the Boston Consultant Group for Canada’s top 10 plans, which includes HOOPP, revealed the social and economic value of having a steady and reliable stream of lifetime income from a defined benefit plan. It found that, on average, 11 per cent of spending in Ontario communities comes from DB spending.
In communities with a larger retiree population, like Elliot Lake, the number is even higher – with that community seeing 38 per cent of spending from DB income. Even larger communities, like Kingston and Belleville, get a DB bump to the value of about 20 per cent.
The study also revealed different spending patterns between retirees with DB income, and those without.
“People who did receive defined benefits tended to spend their income as opposed to saving it because a paycheck was coming next month,” said Keohane.
“People who aren’t in those plans tend to become savers in retirement because they worry about their money … very different spending patterns, which has an impact on the local economy.”
The 2015 numbers moved the plan from a funded position of 115 per cent in 2014 to 122 per cent by the end of last year. Net assets grew to a record $63.9 billion from $60.8 billion in 2014.
To view the 2015 Annual Report, click here.
HOOPP’s strong position “enables us to keep the plan affordable for members and employers. We still maintain one of the lowest contribution rates of any of the major plans, and we have left our contribution rates unchanged since 2004,” said Keohane, who added, “we are committed to leaving them where they are through 2017 – because of the strong surplus we have right now, we think we will be able to maintain that into the foreseeable future.”
The funded position is also good news for retiree COLA benefits, which had been tied to 75 per cent of the Consumer Price Index (CPI), but have now been increased to 100 per cent of CPI, and it’s “our intention (to) continue to pay 100 per cent of CPI going forward,” said Keohane.
HOOPP, he continued, is a relatively young, but maturing plan with more than 300,000 members, 87,000 of whom are retired, resulting in a “good ratio of active members to retirees.”
A number of those retirees are more than 100 years old, with the most senior being 106.
Keohane said he recently saw a picture of the retiree, and she “looks pretty good,” adding, “I guess that’s a testament to receiving a DB pension.”

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