Ontario Teachers' Pension Plan Overview and Recent Developments

The Ontario Teachers' Pension Plan is a significant player in the Canadian pension landscape. It's one of the largest pension plans in Canada, with over 86,000 active members and more than 50,000 retirees.

The plan is a defined benefit plan, which means that members receive a guaranteed benefit based on their salary and years of service. This type of plan is becoming increasingly rare, but it's still a great benefit for Ontario teachers.

The plan's assets are managed by the Ontario Teachers' Pension Plan Board, which has a reputation for being a prudent and long-term investor. The board's investment strategy is focused on generating strong returns over the long term, rather than trying to time the market.

The plan's funding level is also worth noting, with a surplus of over $23 billion as of the latest available data. This surplus is a testament to the plan's strong investment performance and its ability to manage costs effectively.

The Ontario Teachers' Pension Plan has a long history of managing the pensions for teachers, principals, and school administrators. It administers pensions for some 330,000 individuals.

The plan is headquartered in Toronto, with regional offices in London, New York, Hong Kong, Singapore, and Mumbai. It pays pensions to some 148,000 retirees.

In 2020, a significant amount of $6.74 billion in benefits was paid to members. This highlights the plan's commitment to supporting its retirees.

The Ontario Teachers' Pension Plan Board (OTPPB) was established in 1990 to manage the defined benefit plan shared by teachers at public schools in Ontario. This marked a significant shift from the previous system where the provincial government managed the pensions.

As of the beginning of 2022, the pension plan held approximately CAD $227.7 billion in investments. This is a testament to the plan's growth and success over the years.

The plan now manages a variety of assets, including international equities, commodities, natural resources, and real estate. This diversified approach helps to manage funding risk and ensure the plan's obligations are met.

Jo Taylor succeeded Ron Mock as President and Chief Executive Officer of the plan, effective January 1, 2020. This change in leadership brought new perspectives and ideas to the plan.

Steve McGirr serves as the Chair of Ontario Teachers', providing guidance and oversight to the plan. His leadership is essential in ensuring the plan's continued success.

Ontario Teachers' Pension Plan has made significant commitments to Environmental, Social, and Governance (ESG) investing. They aim to advance key G7 objectives through various initiatives.

In 2018, the plan partnered with other global institutional investors to enhance expertise in infrastructure financing and development of emerging and frontier economies. This collaboration also focused on opening opportunities for women in finance and investment worldwide.

Ontario Teachers' Pension Plan has also pledged to speed up the implementation of uniform and comparable climate-related disclosures under the FSB-TCFD framework. They are part of a group of finance, health, and government leaders who signed the Tobacco-Free Finance Pledge in 2018.

Ontario Teachers' Pension Plan is committed to net zero greenhouse gas emissions by 2050. Their strategy focuses on financing climate solutions that replace fossil fuels and reduce emissions.

Here are some key ESG initiatives undertaken by Ontario Teachers' Pension Plan:

Ontario Teachers' is one of Canada's largest institutional investors, with a net asset value of $249.8 billion as of June 30, 2023.

The pension fund has a strong track record of investment performance, boasting an average annual return of 9.4 percent since its inception in 1990.

Ontario Teachers' owns a diverse portfolio of Canadian and international assets, including real estate properties like the Toronto-Dominion Centre and the Pacific Centre in Vancouver.

Through its private equity investment arm, Private Capital, the fund owns interests in companies such as Munchkin and GFL Environmental.

One notable investment is the UK National Lottery, which Ontario Teachers' owned until January 31st 2024. The fund also acquired a share of the Irish National Lottery in 2014.

Ontario Teachers' has a significant portfolio of infrastructure assets, including stakes in airports like Birmingham Airport and Copenhagen Airport.

The fund has also invested in renewable energy through its partnership with PSP Investments in Cubico Sustainable Investments.

In recent years, Ontario Teachers' has made notable investments, including a minority stake in the YES Network, a regional sports network in the United States.

Here's a breakdown of some of Ontario Teachers' notable investments:

The Ontario Teachers' Pension Plan Board has decided to downsize its investments in insurance-linked securities.

This move is notable, as OTPP has been one of the longest standing pension fund investors in ILS.

ILS funds are a type of investment that pools money to provide insurance coverage for natural disasters and other risks.

In a recent move, OTPP has already pulled back from two ILS funds, indicating a significant reduction in their exposure to this investment class.

As a result, investors and industry observers will be watching to see how OTPP's decision affects the overall market for ILS.

Mei-ni Yang joined Ontario Teachers' Pension Plan (OTPP) in Hong Kong, bringing over five years of experience from LP advisory Mercer. She led the $2.6bn final close on OTPP's latest flagship vehicle.

OTPP has also made internal hires, promoting Gillian Brown to Chief Investment Officer, Public & Private assets, a role she's been preparing for by managing the ILS allocation activities of the plan for years.

A board is a group of people who work together to make decisions and oversee an organization.

Boards can be found in various types of organizations, including non-profit, for-profit, and government entities.

In a typical board, members are appointed or elected to serve for a specific period, usually ranging from one to three years.

The size of a board can vary, but it's common for boards to have between 7 and 21 members.

The role of a board is to provide strategic direction and oversight, rather than getting involved in day-to-day operations.

Boards often have committees to help with specific tasks, such as finance, governance, or personnel.

Effective boards prioritize communication, transparency, and accountability to ensure the organization runs smoothly.

Bernard Grzinic has been promoted to Managing Director for Credit, Insurance Linked Securities and Equities within the Capital Markets group at Ontario Teachers’ Pension Plan. He will lead the investment teams for these areas.

Grzinic's new role is a key position at OTPP, allowing him to oversee significant investments. His experience and expertise will be invaluable in making strategic decisions for the company.

Philippe Trahan, a former Managing Director of ILS at OTPP, left the organization due to a reorganization. His departure marks a change in leadership within the company.

Grzinic's appointment is a significant move for OTPP, demonstrating their commitment to investing in insurance-linked securities. He has a deep understanding of the market and will likely make a lasting impact in his new role.

The Ontario Teachers' Pension Plan (OTPP) is undergoing a major leadership overhaul in Asia-Pacific.

Ben Chan, the head of Asia-Pacific, is departing the Canadian pension giant.

Raju Ruparelia, who led direct investments for APAC, is also leaving OTPP.

GP and LPs, including the California Public Employees' Retirement System and Alaska Permanent Fund, have faced staff turnover at a time of congested fundraising and market uncertainty.

OTPP has brought in a new leader to fill the gap, with Mei-ni Yang joining as the new head of APAC fund investments.

Mei-ni Yang comes from a background in LP advisory at Mercer, where she spent over five years.

She joins OTPP in Hong Kong, where she will be focusing on fund investments.

OTPP has just closed its latest flagship vehicle with a final close of $2.6 billion.

Philippe Trahan, the Managing Director of ILS, has left OTPP as part of a re-organisation.

The Ontario Teachers' Pension Plan has a dedicated manager for their insurance-linked securities and catastrophe bond investments.

They have over $117 billion in assets, making them the largest single-profession pension plan in Canada.

Their forward-thinking approach to alternative investments has earned them a reputation as a savvy investor in the reinsurance sector.

The Ontario Teachers' Pension Plan (OTPP) is a significant investor in the reinsurance sector, having a dedicated manager for that portion of their investment portfolio.

The OTPP has over $117 billion in assets, making it the largest single-profession pension plan in Canada.

This investment strategy is considered forward-thinking, as they utilize alternative investment vehicles such as insurance-linked securities and catastrophe bonds.

The London Bridge Risk deal has made it easier for Ontario Teachers' Pension Plan (OTPP) to access the Lloyd's insurance and reinsurance market.

This is because the London Bridge Risk PCC insurance-linked securities (ILS) structure enables quota share access to Lloyd's for third-party investors.

The London Bridge Risk deal simplifies investment structures for OTPP, the first backer of the deal.

This is a significant advantage for OTPP, allowing them to invest in Lloyd's with greater ease.

The London Bridge Risk PCC structure helps to streamline the investment process for OTPP and other third-party investors.

Fund commitments are a crucial aspect of specific deals and commitments. They involve a company or investor pledging a certain amount of money to a project or business.

In the context of the deals and commitments we've discussed, fund commitments have been made by various parties. For example, a venture capital firm committed $5 million to a startup in exchange for a 20% equity stake.

The Ontario Teachers' Pension Plan Board (OTPPB) is a pioneer in the development of the Canadian Model of pension management. This innovative approach has been adopted by other pension funds, such as the Ontario Municipal Employees Retirement System (OMERS).

The Canadian Model is characterized by four key pillars: independence, strong internal governance, direct investment, and a focus on retaining talent. By managing investments directly, OTPPB is able to keep costs low and maintain a long-term approach.

One of the key benefits of the Canadian Model is its ability to avoid political concerns that often affect public pension institutions. OTPPB's board members tend to come from finance backgrounds, rather than politics or public service. This helps to ensure that decisions are made based on financial expertise rather than political considerations.

OTPPB's executive pay is also structured to reward long-term returns, and is competitive with Bay Street, the investment community in Toronto. This is in contrast to pension managers in the United States, who tend to receive compensation far below the norms of Wall Street.

Here are some key statistics that illustrate the success of the Canadian Model:

By adopting the Canadian Model, OTPPB has achieved a global reputation as a leader in effective and responsible pension management.