Pity the folks at Ontario Teachers’ Pension Plan. They shot the lights out with investment performance last year and the fund is still in the red.

The C$107 billion (US$111.4 billion) plan earned a record C$13.3 billion in investment income, for a 14.3 per cent rate of return, but its net deficit still inched up from C$17.1 billion to C$17.2 billion. The fund had a total cost of future pensions of C$161 billion as at December 31 last.

The performance produced “the largest value-add dollar amount in history”, the fund said in a statement last week, following a slight rejigging of its asset allocation towards growth assets earlier in the year.

Jim Leech (pictured), the plan’s president and chief executive, said: “Our investment team remained true to our investment fundamentals, taking appropriate risks to earn solid returns, while seeking the best diversification to meet our plan’s long-term needs…

“The root cause of the C$17.2 billion preliminary funding shortfall is a combination of factors: member longevity, retirement periods that exceed working years, low real interest rates – which reflect lower economic growth going forward – and the maturity of the plan, which now receives C$1.8 billion less in contributions than it pays out annually.”

Greg Bright is executive chairman of Conexus Financial. He has 30 years experience as a financial journalist and publisher and has previously started two companies – Trade News Corporation in the 1980s (later acquired by the Reed Group) and InvestorInfo (a listed company acquired by Morningstar). Prior to becoming a publisher, in 1983, he was assistant editor of the Australian Financial Review and before that an economics writer for the Sydney Morning Herald.
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