Canadian defined benefit pension plans are among the best in the world, Healthcare of Ontario Pension Plan (HOOPP) President and CEO Jim Keohane said at a press conference to release the fund’s annual report, and results would support that conclusion.
The plan’s funded status at the end of 2016 was 122 per cent, with net assets reaching a record high of $70.4 billion driven by a 10.35 per cent return on investments. The funded position allows employee and employer contribution rates to remain at the same level they’ve been since 2004.
Investment income was more than double that of 2015, $6.6 billion compared to $3.1 billion, while the 10.35 per cent ROI exceeded the portfolio benchmark by 4.23 per cent, or $2.7 billion. HOOPP’s 10-year annualized return stands at 9.08 per cent, and its 20-year annualized return is 9.12 per cent.
As impressive as those numbers are, what stands out as a measure of success is the plan’s funded status, says Keohane.
“We are very pleased with our performance this year, particularly given a challenging first quarter and overall, a volatile market. But rather than comparing our annual results against those of peer plans or stock market benchmarks, we consider the true measure of our success to be our funded status as this demonstrates our ability to meet our current and future pension obligations.
“The important value of a defined benefit pension plan is certainty for our members, knowing they won’t outlive their retirement income. This is why our strategy puts funding first, an approach which balances the need to generate returns with the need to effectively manage risk.”
While HOOPP focuses on the value of DB for its members, it also advocates for adequate retirement income for all Canadians, leading to engagement with policymakers to explain and promote the value of providing adequate retirement income, which in turn spurs economic growth in communities across the country.
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 DB pension. It found that, on average, 11 per cent of spending in Ontario communities comes from DB spending, and that DB income reduces reliance on tax-supported programs, like the Guaranteed Income Supplement (GIC).
At the press conference (Thursday) at HOOPP’s new Toronto home, 1 York Street, Keohane spoke to advocacy measures, which include talking to policymakers about the public risk of moving from a defined benefit model to a defined contribution scheme.
“We are trying to increase the dialogue to get public policymakers to really understand both sides of the equation … moving from a DB to a DC is not about cost. It’s really about transferring risk – from employer to employee and ultimately the social welfare system.”
HOOPP, he says, has investment costs of .2 per cent a year, while people in individual plans can pay as much as two per cent a year.
“That’s what we need to make policymakers aware of … that they have just got a bunch of risks dropped in their laps. We are just trying to get more of the facts out there and get more balance in the argument.”
In addition to moving to a new location, a HOOPP-owned energy-efficient and LEED-certified platinum building, the fund also launched a redesigned website, a new logo, and a new online services and pension system.
“At HOOPP, we know that our members rely on their pensions as a stable and secure source of income in retirement. Our top priority is to provide these pensions. We are committed to delivering on the pension promise today and in the years to come, and through challenging market conditions such as what we experienced in 2016,” Keohane says in his AR message.

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