By Karen Mazurkewich, Financial Post April 7, 2010
Ontario Teachers' Pension Plan still faces a Sisyphean task managing its pension obligations for the 289,000 active and retired teachers in the province. Although the plan's investors scored a 13 per cent annual rate of return in 2009, the fund is recording a $17.1-billion deficit -- more than five times larger than the previous year.
OTPP recouped a "fair amount" of the money lost in 2008, when the plan announced a negative 18 per cent in investment returns, said Jim Leech, president and chief executive of the plan. "But we continue to face serious funding challenges."
With only 1.5 teachers for every retiree, the fund's future payouts are now greater than projected assets. But the lack of working teachers is not the main culprit creating this gap: the drop of real interest rates from 2.1 per cent to 1.5 per cent widened the deficit hole by $15 billion. LINK
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Isn't it funny how they make it sound like an accomplishment that the fund was up 13% in 2009 while the DOW index was up about 22% in 2009. So they are not even close to following the standard index. I'd like to know how the fund performed over a ten year period. If they have kept pace with the DOW or S&P 500 index then they are probably negative 20-25% or more. The real scary part is, their deficit in 2009 is FIVE times larger than 2008 the worst market decline since the Great Depression. GCC
