Great year for Ontario Teachers still not good enough

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.”