Healthcare of Ontario Pension Plan (HOOPP) reported a 10.35 percent return on its investments in 2016, exceeding its portfolio benchmark by 4.23 percent. As a result, net assets overseen by the Canadian pension fund increased to $70.4 billion at the end of last year, up from $63.9 billion in 2015. Private equity investments returned 15 percent on a currency-hedged basis, compared to 17.7 percent the year before. At present, private equity accounts for 7.5 percent of HOOPP’s total assets.
HOOPP tops $70.4 bllion in net assets with a 10.35% rate of return
Mar 09, 2017
(Toronto, Ontario) The Healthcare of Ontario Pension Plan (HOOPP) announced today that its Funded Status at the end of 2016 was 122%.
The Fund’s net assets reached a record $70.4 billion, up from $63.9 billion in 2015, following a rate of return on investments of 10.35% in 2016. As a result of the Plan’s stable funding position, contribution rates made by HOOPP members and their employers have remained at the same level since 2004 and the Board of Trustees has committed to maintaining these rates until 2018.
Investment income for the year was $6.6 billion compared to $3.1 billion in 2015, and the Fund’s 10.35% investment return exceeded its portfolio benchmark by 4.23% or $2.7 billion. The Fund’s 10-year annualized return stands at 9.08% and its 20-year annualized return is 9.12%.
“We are very pleased with our performance this year, particularly given a challenging first quarter and overall, a volatile market. But rather than comparing our annual results against those of peer plans or stock market benchmarks, we consider the true measure of our success to be our funded status as this demonstrates our ability to meet our current and future pension obligations,” said HOOPP President and CEO Jim Keohane.
“The important value of a defined benefit pension plan is certainty for our members, knowing they won’t outlive their retirement income. This is why our strategy puts funding first, an approach which balances the need to generate returns with the need to effectively manage risk,” added Keohane.
HOOPP’s liability driven investing (LDI) approach has served members well by providing stability through challenging markets. It is a holistic, long-term investment approach which considers the Plan’s assets in relation to pension obligations, in order to balance risk with returns.
For more information about HOOPP’s financial results please view the 2016 Annual Report, available on hoopp.com.
2016 Return Highlights
HOOPP’s liability driven investing approach utilizes two investment portfolios: a liability hedge portfolio that seeks to mitigate certain risks associated with our pension obligations, and a return seeking portfolio designed to earn incremental returns to help to keep contribution rates stable and affordable.
In 2016, the liability hedge portfolio provided approximately 38% of our investment income. Nominal bonds and real return bonds generated returns of 3.9% and 6.8% respectively. The real estate portfolio was a significant contributor during the year, with a 12.2% currency hedged return.
Within the return seeking portfolio, which provided 62% of the Fund’s income, public equities were the largest contributor to investment income, returning 12.9%, while private equity investments returned 15.0% on a currency hedged basis. Other return seeking strategies, particularly absolute return strategies, made significant contributions to the income of the Fund.
HOOPP’s asset allocation was also a big contributor to the Fund providing a 1% total return.
About the Healthcare of Ontario Pension Plan
Created in 1960, HOOPP is a multi-employer contributory defined benefit plan for Ontario’s hospital and community-based healthcare sector with over 510 participating employers. HOOPP’s membership includes nurses, medical technicians, food services staff and housekeeping staff, and many other people who work hard to provide valued Ontario healthcare services. In total, HOOPP has more than 321,000 active, deferred, and retired members.
As a defined benefit plan, HOOPP provides eligible members with a retirement income based on a formula that takes into account a member’s earnings history and length of service in the Plan. HOOPP is governed by a Board of Trustees with representation from the Ontario Hospital Association (OHA) and four unions: the Ontario Nurses’ Association (ONA), the Canadian Union of Public Employees (CUPE), the Ontario Public Service Employees’ Union (OPSEU), and the Service Employees International Union (SEIU). The unique governance model provides representation from both management and workers in support of the long-term interests of the Plan.
For further information or to arrange interviews, please contact:
Joe Vecsi, Senior Manager Public Affairs
416 369-9212 ext 4315
For more information on HOOPP, please visit www.hoopp.com
Photo courtesy of Healthcare of Ontario Pension Plan