Healthcare of Ontario Pension Plan (HOOPP) reported an investment rate of return of 10.88 percent last year, which exceeded its portfolio benchmark by 2.99 percent. The pension fund’s 10-year annualized return is 9.55 percent, while its 20-year annualized return is 9.01 percent. Investment income, which reached $7.6 billion at the end of 2017, helped push HOOPP’s net assets to $77.8 billion. Strong performance was shown by most asset classes, HOOPP reported, including private equity, which returned 19.6 percent on a currency-hedged basis.
Photo: Jim Keohane, president and CEO of HOOPP.
HOOPP 2017 Annual Results: Creating Long-Term Value for our Members
HOOPP tops $77.8 billion in net assets with a 10.88% rate of return
TORONTO (March 8, 2018) – The Healthcare of Ontario Pension Plan (HOOPP) announced today that its Funded Status at the end of 2017 was 122%, unchanged from the prior year.
The Fund’s net assets reached $77.8 billion, up from $70.4 billion in 2016, following a rate of return on investments of 10.88% in 2017. After several years of stellar investment performance resulting in funding surpluses, the Board of Trustees approved enhancements to members’ benefits during the year and committed to maintain contribution rates made by HOOPP members and their employers at the same level until at least 2019. These rates have remained unchanged since 2004.
Investment income for the year was $7.6 billion compared to $6.6 billion in 2016, and the Fund’s 10.88% investment return exceeded its portfolio benchmark by 2.99% or $2.0 billion. The Fund’s 10-year annualized return is 9.55% and its 20-year annualized return is 9.01%.
“Our investment return for 2017 was 10.88%. While we had strong returns pretty much across all asset classes, our public and private equities, fixed income and real estate all provided significant contributions to our investment income,” says HOOPP President and CEO Jim Keohane.
“HOOPP exists to pay pensions for members. We invest with that objective in mind to ensure that we can meet our pension obligation regardless of the economic backdrop. We also continue to reinvest in our personnel and our systems in order to maintain the sustainability of the Fund and support growth going forward,” added Keohane.
HOOPP’s pioneering investment model of liability driven investing has proven to be a foundation of the organization’s ability to provide adequate and predictable retirement security to its members and being able to deliver on the pension promise. This risk management approach to investing ensures that HOOPP can effectively adapt to changes in the market to ensure stability and avoid negative impact on the Fund. The success of HOOPP’s funding and investment strategy can be attributed to the organization’s focus on long-term vision and approaches.
HOOPP’s financial results available here.
2017 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 2017, the liability hedge portfolio provided approximately 48% of our investment income. Nominal bonds returned 10.5% while real return bond returns were essentially flat. The real estate portfolio was a significant contributor during the year, with an 11.9% currency hedged return.
Within the return seeking portfolio, which provided 52% of the Fund’s income, public equities were the largest contributor to investment income, returning 14.8%, while private equity investments returned 19.6% on a currency hedged basis.
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 548 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 339,000 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.
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Photo courtesy of HOOPP