Message from the President and CEO
In 2016, we started a conversation with our industry, our sponsors and our members about what we thought mattered most as a pension plan. Our answer hasn’t changed:the Plan’s funded status. It is the foundation on which secure, sustainable retirement futures rest, and when gauging the success of a defined benefit pension plan, it is the measure that matters.
Maintaining a well-funded plan is central to how we operate, and we are proud to report that in 2017, the Plan continues to be fully funded. This is no small accomplishment in an environment where investment returns are increasingly difficult to achieve without taking excess risk. We also continue to deal with the effects of the ongoing maturation of the Plan.
As important as this conversation is, we also believe in backing up our words with action, and throughout the year undertook many activities to advance the ideas we put forward.
A Superior Member Experience
OPTrust exists to serve its members. In 2017, we were honoured to be ranked by CEM Benchmarking as one of the top-ten defined benefit pension plans globally for the quality of service we provide to our members. Even more important, our members continued to give us high marks for satisfaction with our service, rating their overall satisfaction with an average score of 9 out of 10.
We are particularly proud of our results this year as our Member Services team dealt with significant, high volume projects such as the optional enrolment for the post-retirement insured benefits upgrade packages. We also continued our ongoing work to upgrade our pension administration system.
In 2017, OPTrust made a strategic investment in James Evans and Associates (JEA), a leading pension administration services firm and one of our core service providers. This investment strengthens the existing relationship between OPTrust and JEA, and will create the opportunity to bring further innovation and leading-edge pension administration services to our members.
Paying pensions today, preserving pensions for tomorrow
We are proud of the work we have done for more than 20 years on behalf of our members. However, we are not an organization that ever wants to rest on its laurels. Delivering on our mission for our members requires constant improvement and innovation.
Enhancing our Investment Capabilities
Our Member-Driven Investing (MDI) strategy has a simple idea at its heart: the primary goal of a pension plan must be to maintain its funded status. Above all, members want pension certainty, stability and sustainability. Our job is to balance those goals by achieving sufficient investment returns to support plan sustainability without taking on excess risk that could undermine the stability of contribution and benefit levels. We view risk as a scarce resource that must be carefully allocated. The effectiveness of this approach continues to be validated as we have once again successfully maintained a fully funded plan for our members.
In 2017, we internalized a significant portion of our public markets assets and activities as part of our overall MDI strategy. Our new internal capabilities in these asset classes complement our long-standing internal capabilities and sophistication in private equity, infrastructure and real estate.
By the end of the year our new trading desk had completed over 2850 trades.Internalization has enhanced our ability to dynamically manage risk in our portfolios.
Promoting New Ideas in Our Industry
At OPTrust, acting in the best interests of our members and being good pension citizens are one and the same. One of the best ways to create long-term sustainability is to foster new thinking and industry dialogue that can strengthen all aspects of the defined benefit model. In 2017, we undertook innovative research on climate change in partnership with Mercer, and in so doing, furthered our industry’s understanding of the need for investors to better measure, model and mitigate the risks that climate change presents.
We also continued our work to promote and defend defined benefit pensions globally, as we discussed retirement innovation with the Washington D.C.-based Brookings Institution and participated in a World Bank report on the Canadian pension model. Closer to home, we launched a new advocacy and education program, People for Pensions, which has engaged our members in an ongoing conversation about the advantages and importance of the defined benefit pension model.
Facing the Future With a New Strategic Plan
We are proud of the work we have done for more than 20 years on behalf of our members. However, we are not an organization that ever wants to rest on its laurels. Delivering on our mission for our members requires constant improvement and innovation, particularly with the increasing speed of change and disruption. The winning organizations of the future will be those that are flexible enough to adapt to change, and innovative enough to be changemakers.
With that in mind, we developed a new five-year strategic plan in 2017. Its primary aim is to foster growth and sustainability for the Plan and one of the most critical ways we will be able to achieve that goal is through increased innovation.
Hugh O’Reilly
President and CEO