Ontario Teachers' Pension Plan

Ontario Teachers' Pension Plan

March 15, 2005 10:58 ET

Ontario Teachers' Reports $10.8 Billion Investment Income for 2004


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: ONTARIO TEACHERS' PENSION PLAN

MARCH 15, 2005 - 10:58 ET

Ontario Teachers' Reports $10.8 Billion Investment
Income for 2004

TORONTO, ONTARIO--(CCNMatthews - March 15, 2005) - The Ontario Teachers'
Pension Plan today announced the 2004 performance results for the
pension fund and released its annual report online at www.otpp.com. Net
assets increased to $84.3 billion from $75.7 billion in 2003. Income
from investments was $10.8 billion, similar to the $11.4 billion for
2003, for total income over two years of $22.2 billion.

The pension plan's one-year rate of return was 14.7 percent, 4.1 percent
above the performance of the markets as reflected in its composite
benchmark of 10.6 percent. The difference between the actual return and
the benchmark represents $3.0 billion in extra value created by the
investment team in 2004. The benchmark tracks standard indices for
Canadian and foreign markets in proportion to their weighting in the
fund.

"We were particularly pleased to provide value for teachers and
taxpayers by beating the market benchmarks by more than 4 percent for
the second year in a row. Our investment team has worked together for a
number of years and has achieved a great deal of synergy in the search
for value," said Claude Lamoureux, Teachers' President and Chief
Executive Officer.

"Over the past few years, we have successfully diversified and Bob
Bertram and his team have been able to find investments with good
returns, while reducing the overall risk in the fund. This has
contributed to our continued success."

Real estate, managed by The Cadillac Fairview Corporation Limited, had a
17.3 percent rate of return compared to a benchmark of 6.1 percent. This
created more than $1 billion in value for the fund in 2004. Canadian
public and private equities returned 21.1 percent compared to the
S&P/TSX benchmark of 14.5 percent, adding almost $900 million in value.
For more results, please see the Investment Highlights and MD&A sections
of the 2004 Annual Report.

Since the fund was created 15 years ago in 1990, the plan's long-term
rate of return has averaged 11.3 percent per year. During this period,
the fund grew to $84.3 billion from less than $20 billion and paid out
$28.9 billion in pension benefits. The investment team generated $74.3
billion in income since 1990, including $15.7 billion in value over
benchmarks. This strong performance is enough to pay teachers' pensions
for several years.

More than 5,200 teachers and 700 beneficiaries started pension during
2004, bringing the number of pensioners to 97,000 and annual pension
payments to $3.4 billion. Contributions from teachers and the Ontario
government were $1.5 billion in 2004.

The Pension Plan's Funding Status

Despite strong investment returns, the plan's funding shortfall
continued to grow. The actuarial valuation at January 1, 2005, showed
that the plan's future pension benefits were 84 percent funded, down
from 94 percent a year earlier. The valuation was conducted by Mercer
Human Resource Consulting Limited, an independent actuary hired by the
board to determine whether the plan's current benefit and contribution
levels can fully cover the cost of future pension benefits for all
current plan members.

"Low interest rates may be good for your mortgage or car loan, but they
are hard on pension plans," said Lamoureux. "Low rates mean this pension
plan must have more money in the fund today to be prepared to pay
pensions 70 years from now. We've included a special Funding Report with
our annual report this year to help explain the situation."

Responsibility for ensuring the pension plan is fully funded lies with
the Ontario government and the Ontario Teachers' Federation, the plan's
co-sponsors, which set benefit and contribution levels.

The Ontario Teachers' Pension Plan is an independent corporation
responsible for investing the fund's assets and administering the
pensions of Ontario's 158,000 elementary and secondary school teachers
and 97,000 retired teachers.

Note: The 2004 Annual Report and Funding Report 2005 are available at
www.otpp.com under Publications.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Ontario Teachers' Pension Plan
    Lee Fullerton
    Director, Communications
    (416) 730-5347
    Lee_Fullerton@otpp.com