OPTrust fully funded for 14th consecutive year
DISCOUNT RATE IS 3.00% REAL
TORONTO, March 14, 2023 – OPTrust today released its 2022 Funded Status Report, A Clear Vision, which details the Plan's financial results and fully funded status. In one of the most challenging years for markets in decades, OPTrust achieved a net investment return of -2.2 per cent and remained fully funded for the 14th consecutive year. Over the past 10 years, the Plan's average net investment return is 7.8 per cent.
"Our long-term investment horizon means we are well positioned to navigate short-term volatility and instability as we continue to capitalize on long-term trends and opportunities, and most importantly, deliver a secure retirement to our members," said Peter Lindley, President and CEO of OPTrust. "Our ability to weather a turbulent global economy and maintain our fully funded status reflects our exceptional team and their extraordinary commitment to our more than 100,000 members."
As a component of OPTrust's Member-Driven Investing strategy, bonds play an important role in keeping the funded status stable through market cycles. While bonds delivered negative returns in 2022, the increase in interest rates has a positive impact on longer-term Plan sustainability. In 2022, illiquid asset classes performed well and helped to offset total portfolio losses from public market assets, reflecting the value of diversification in the portfolio. The infrastructure, real estate and private equity portfolios delivered net returns of 21.1 per cent, 15.0 per cent and 4.8 per cent, respectively.
"Our members look to OPTrust for a predictable income in retirement and the peace of mind that comes with a defined benefit pension," said Lindley. "OPTrust's Member-Driven Investing strategy and diversified portfolio helped to preserve the funded status for a 14th consecutive year, despite the difficult market environment in 2022. The good news for our members is that the Plan has never been more sustainable than it is now."
In 2022, OPTrust also welcomed ten additional nonprofit organizations to reach a membership of 3,200 in OPTrust Select, implemented the first year of a three-year inclusion, diversity and equity strategy, resulting in a 9 per cent increase in gender equity at OPTrust, and continued to provide an exceptional service experience to members who rated their service satisfaction as 8.7 out of 10. OPTrust was also recognized among the top 10 pension plans in the world for service by CEM Benchmarking Inc.
In recognition of members' growing interest in environmental, social and governance (ESG) matters and the role of responsible investing at OPTrust, the annual Responsible Investing Report is now integrated into the Funded Status Report. Responsible investing highlights of the past year include engaging over 500 companies on key ESG issues, the release of OPTrust's enhanced climate change strategy and announcing the ambition to achieve a net-zero portfolio by 2050.
"OPTrust has a long-standing commitment to integrating ESG factors in our investments and investing sustainably for the long-term health of the Plan is foundational to our vision," said Lindley. "As the world accelerates the transition to a low-carbon economy, our enhanced climate change strategy is designed to support the fund's resiliency and adaptability on the path to net zero."
In 2022, OPTrust increased the discount rate to 3.0%, net of inflation, from 2.85% in 2021. Additional information about OPTrust's 2022 strategy and results is available in A Clear Vision at optrust.com.
With net assets of almost $25 billion, OPTrust invests and manages one of Canada’s largest pension funds and administers the OPSEU Pension Plan (including OPTrust Select), a defined benefit plan with over 106,000 members. OPTrust was established to give plan members and the Government of Ontario an equal voice in the administration of the Plan and the investment of its assets through joint trusteeship. OPTrust is governed by a 10-member Board of Trustees, five of whom are appointed by OPSEU and five by the Government of Ontario.
Director, Public Affairs