Teachers’ fund faces challenge, CEO says
Uncertainties churn ‘waters’
The Ontario Teachers’ Pension Plan rang up a surplus for the second year in a row in 2014.
However, demographics and geopolitical uncertainty continue to challenge Canada’s largest single profession pension plan.
“Navigating through these waters is not an easy task,” said Ron Mock, the chief executive of Teachers, who added the impact of oil prices and other commodities as a current challenge.
“It’s really important that we stay focused on paying pensions,” he said.
The pension plan earned $16.3 billion in investment income last year, for a return of 11.8 per cent. The results beat the fund manager’s benchmark of 10.1 per cent. The surplus is $6.8 billion and the plan was 104 per cent funded at the start of the year, based on current contribution and benefit levels.
The results were achieved “in spite of market turmoil,” Mock said.
During a presentation from the plan manager’s Toronto headquarters Tuesday, executives said low oil prices could present buying opportunities, and a potential shift from derivatives to real assets over the next three to five years.
On other fronts, Canada’s large pension plans continue to face competition from sovereign wealth funds and other large money managers, whose activity in the private markets has pushed up the price of infrastructure and real estate investments.
Neil Petroff, the chief investment officer of the manager of the $154.5-billion fund, announced this week that he will be retiring after 22 years at Teachers.
“His contribution to Teachers? It’s been immeasurable,” Mock said.
Petroff, whose mother is a retired teacher, said he expects the pension manager to open a new international office to continue to pursue global investments in the not-too-distant future, most likely in South America. Teachers already has offices in London and Hong Kong.
Longevity of plan members has at times been among the greatest challenges for Teachers, and led to adjustments in funding and benefits.
Canada’s oldest citizen, at 112 years old, is collecting a pension from the Ontario Teachers’ plan, according to Tracy Abel, the plan’s senior vice-president of member services. “She has been receiving a pension for almost 50 years,” Abel said.