The Healthcare of Ontario Pension Plan (HOOPP) is looking quite healthy — the plan earned a return of 17.71 per cent for 2014, with net assets at a record $60.8 billion, up from $51.6 billion in 2013.
Investment income for the year was $9.1 billion, up from $4.0 billion in 2012.
"Our 295,000 members count on HOOPP to deliver on the pension promise, and it's the foundation of our business plan," said HOOPP president and CEO Jim Keohane.
"Being fully funded means we are able to consistently deliver to our members and our liability-driven investing approach has been critical to ensuring the long-term health and sustainability of the plan."
The 2014 results have also elevated the plan’s 10-year return to 10.27 per cent and its 20-year return to 9.98 per cent.
Funding has remained stable at 115 per cent, up from 114 per cent in 2013.
Last year’s positive results are largely due to the liability-driven investing (LDI) approach the plan adopted a number of years ago, said Keohane.
HOOPP's LDI approach uses two investment portfolios: a liability hedge portfolio that seeks to mitigate risks associated with pension obligations, and a return seeking portfolio designed to earn incremental returns to help to keep contribution rates stable and affordable.
"2014 was a year that highlighted the merits of the LDI approach. Sharp declines in interest rates, that were highly beneficial to our fixed income portfolio, offset the negative impact of the rate declines on our pension obligations," said Keohane.
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