Funding pensions highlights

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2015 funding valuation

OPTrust engages independent actuaries to perform regular valuations of the Plan to determine if there are enough assets to meet the projected cost of members’ and retirees’ lifetime pensions. These valuations provide a snapshot of the Plan’s financial position and ability to meet its pension obligations, while providing a review of gains and losses experienced since the last valuation.

The Plan’s 2015 funding valuation shows that it remained fully funded as of December 31, 2015. The funding valuation also confirmed deferred (or “smoothed”) investment gains of $1.1 billion, which will be recognized over the next four years, which should further improve the Plan’s funded status in years to come. 

Consistent with our approach over the past few years, OPTrust’s 2015 funding valuation strengthened the Plan's actuarial assumptions to further improve its long-term sustainability. The Board of Trustees approved a number of economic assumptions including:
  • Reducing the Plan's discount rate to 3.55%, net of inflation, down from 3.85% in 2014. This change, which reflects the expectation of lower long-term investment returns, will reduce the risk of future losses due to investment returns falling short of the expected cost of members’ and retirees’ future pensions.
  • Updating the Plan's salary increase assumption to reflect the agreement between the Government of Ontario and the Ontario Public Service Employees Union for general wage increases in 2016 and 2017.

The net effect of these assumption changes, which strengthen the Plan’s long-term sustainability, was an increase to fund liabilities of $850 million.

Funding Highlights
At December 31 ($ millions)   2015 VALUATION   2014 VALUATION
Net assets available for benefits $ 18,399 $ 17,481
Actuarial smoothing adjustment   (1,102)   (1,185)
Present value of future contributions   5,062   5,114
TOTAL ASSETS   22,359   21,410
Present value of future benefits and expenses   (22,231)   (21,296)
Rate stabilization reserves   (120)   (114)
TOTAL LIABILITES   (22,351)   (21,410)

Get the big picture

For more information on OPTrust’s strategy and results, see our full 2015 annual report.

Annual report covers