Absolute returns: Refers to the total gain or loss from a portfolio or an asset over a defined period of time. It can be expressed in dollar or percentage terms. An absolute return is often simply referred to as a portfolio’s return.

Asset mix: The categorization of assets within the pension plan portfolio (e.g., cash, Canadian equities, real estate, etc.). Each category is measured as a percentage of the total pension plan portfolio’s fair value.

Assumptions: Estimates of what certain variables – such as interest rates, investment returns and mortality rates – will be in the future. Assumptions are used to estimate the future cost of pensions and the future value of pension assets.

Benchmark: A point of reference that is used to compare portfolio performance and risk. The S&P/TSX Composite Index and the FTSE/TMX Universe Bond Index are two benchmarks commonly used to compare Canadian equity portfolio and fixed income portfolio performance and risk, respectively. OPB’s Strategic Asset Allocation (SAA) is a benchmark against which the overall Plan is assessed from a risk and return perspective.

Bond offerings/financings: Bond offerings or bond financings give OPB an opportunity to enhance investment returns and provide a partial hedge against future rises in interest rates. They provide OPB with access to low-cost financing that is reinvested in high-quality real estate that generates a cash flow greater than the amount needed to cover the interest payments on the bond. In short, they enable OPB to enhance returns in a cost-effective manner.

Capital preservation: Prevents capital losses during down market conditions. A capital preservation investment approach generally implies a lower-level risk profile for the investment portfolio; this may result in relative underperformance during periods of rising markets.

Co-ownership: An ownership structure whereby the investors (co-owners) directly own undivided interests in and control a private markets asset. The rights and obligations of the co-owners and management of the asset are governed by a co-owners agreement.

Emerging markets: Countries (such as Brazil, China and India) experiencing higher economic and industrialized growth than developed countries (such as the U.S., Canada and the U.K.). Emerging markets often present higher investment risks due to geopolitical instabilities, currency fluctuations, and financial regulations still in infancy; on the other hand, emerging markets offer investors expected higher returns because of greater growth prospects.

Funded status: A measure of the amount of assets the pension plan currently holds to pay out its future pension benefits (present value of projected future pension benefits). The funded status is regarded as the “health check” of a pension plan, and is determined by undertaking a funding valuation of the pension plan.

Investment risk: The uncertainty of asset returns associated with investing activities (i.e., asset returns are lower than what is expected).

Private equity: Equity capital of non-public companies. Private equity is less liquid and is considered more of a long-term investment.

Private markets: The market for assets that are not sold or listed on a public exchange, such as a stock exchange. Assets bought and sold in the private market include things like real estate, private equity, infrastructure and mortgages.

Proxy voting: Stockholders have the right to vote on certain issues related to the organization’s management, including composition of the Board and compensation of senior management, etc. Many shareholders do not attend annual or special meetings held by publicly traded companies to decide on these key operational issues. Instead, shareholders can allow someone else to cast a proxy vote on their behalf. Institutional investors often base their proxy voting decisions against a set of pre-determined criteria, such as environmental, social and governance factors.

Public markets: The market for assets that are bought and sold on public exchanges, such as stock exchanges.

Relative returns: The return that an asset achieves over a period of time compared to a benchmark. The relative return is the difference between the absolute return achieved by the asset and the return achieved by the benchmark. For example, an asset that achieves an absolute return of 12% will have a relative return of 2% when compared to a benchmark return of 10%.

Risk assets: Any asset that carries a degree of risk higher than Government of Canada bonds. Risk assets are those that generally have a high degree of price volatility, such as equities, commodities, and all fixed-income assets aside from high-quality government bonds.

Risk-adjusted returns: A measurement used to analyze an investment’s return based on how much risk is involved in producing that return. Risk-adjusted returns can be used to compare the return of a portfolio against a benchmark with a known return and risk profile.

Strategic Asset Allocation (SAA): A long-term strategy that involves setting target allocations of asset mix with the purpose of achieving highest returns on investment to meet current and projected future pension benefits given the Plan’s risk tolerance and investment horizon.

Surplus at Risk: Measures the risk of a decrease in the Funded Ratio (i.e., Plan assets divided by Plan liabilities) over a defined period of time. OPB generally measures this at a 5% probability level (i.e., expected to occur once in a 20-year period). For example, a 10% Surplus at Risk suggests that the Funded Ratio could decrease by -10% once in the next 20 years.

Tactical Asset Allocation (TAA): An asset mix strategy that uses fundamental and quantitative factors in a systemic approach to increase or decrease OPB’s risk exposure at various points in the market cycles to take advantage of investment opportunities.

Driving Innovation

Play Video
Video Transcript

At OPB, we understand that innovation is a subtle but powerful essence that drives our ability to make a meaningful difference for our clients and stakeholders. We continually push ourselves to move forward, identifying new opportunities to grow and to protect the pension promise.

About OPB

Previous slide
Since our inception in 1990, OPB's long-term rate of return is 8.5%, demonstrating our ability to deliver investment returns needed to pay the pension promise.
With over 42,000 active members, the PSPP is made up of select employees from ministries, agencies, boards and commissions of the Government of Ontario.
OPB’s assets under management have grown to $23 billion. We are the 10th largest public pension fund in Canada.
Over the last five years, OPB has paid inflation-indexed pensions to over 39,736 retired members.
With an investment return of 6.14% in 2015, OPB's funded status remains at 98% – positioning the Plan well for long-term sustainability.
Since our inception in 1990, OPB's long-term rate of return is 8.5%, demonstrating our ability to deliver investment returns needed to pay the pension promise.
With over 42,000 active members, the PSPP is made up of select employees from ministries, agencies, boards and commissions of the Government of Ontario.
OPB’s assets under management have grown to $23 billion. We are the 10th largest public pension fund in Canada.
Over the last five years, OPB has paid inflation-indexed pensions to over 39,736 retired members.
With an investment return of 6.14% in 2015, OPB's funded status remains at 98% – positioning the Plan well for long-term sustainability.
Next Slide

More About OPB

Who We Are

Ontario Pension Board (OPB) is the administrator of the Public Service Pension Plan (PSPP or the Plan) – a major defined benefit pension plan sponsored by the Government of Ontario. Our membership base is comprised of certain employees of the provincial government and its agencies, boards and commissions. Our commitment is to protect the long-term sustainability of the Plan, invest assets astutely and with discipline, keep contribution levels stable and affordable, and deliver exceptional service to our stakeholders.

With $23 billion in assets, 42,105 members, 36,220 retired members and 6,037 former members, the PSPP is one of Canada’s largest pension plans. It is also one of the country’s oldest pension plans, successfully delivering the pension promise since the early 1920s.

Who We Serve

OPB serves:

  • PSPP members, retired members and employers (“clients”); and
  • other key stakeholders (the Plan Sponsor, bargaining agents and the citizens of Ontario).

About Your Plan

The PSPP is a defined benefit pension plan designed to enhance the financial security of its members. Retired members receive a pension benefit based on a pre-set (defined) formula. That formula takes into account each member’s earnings history and years of service with the Plan. To fund the pension promise, both members and employers make contributions to the Plan.

Our Promise

To use innovative solutions and strategies to:

  • protect the long-term sustainability of the Plan;
  • invest the Plan’s assets to maximize returns within acceptable risk parameters;
  • keep contribution levels reasonably stable and affordable; and
  • deliver superior, cost-effective service to clients and stakeholders so that they can realize the full value of their participation in the Plan.

Investments and Funding

Our Investments team successfully navigated challenging markets to deliver a 6.14% return. This helped us to maintain our strong funded status of 98% as of December 31, 2015, despite the volatility of public markets globally.


funded status


co-ownership of Toronto’s iconic TD Centre

$23 billion

net assets under management

Investment and Funding Highlights

We are committed to investment excellence and pursuing quality opportunities that generate stable long-term returns while preserving capital. Succeeding in today’s investment environment requires agile responses to fast-changing markets – and that is precisely what we did in 2015.

Lowered costs and
improved control and
transparency with
enhanced in-house
asset management
Expanded best-in-
class partnerships
with high-profile
Raised $500 million with two
bond financings
Transitioned to active
foreign currency

Forecasted risk with
custom in-house
Surpassed each of
our Strategic Asset
Allocation phase-in

Client Service

At OPB, we are committed to superior client service. Full stop. In fact, the global benchmarking organization CEM recently put us in the top two of 13 Canadian pension plan administrators – and in the top five out of 77 worldwide.


our best Member Satisfaction Score yet


e-services users who take advantage of our online Pension Estimator


our 2015 Member Communication Score

Client Service Highlights

Everything we do is about protecting the pension promise. With our members’ financial security in mind, we’ve invested in innovative, value-added tools designed to help them make informed, sound decisions about their pension. In 2015, our peers recognized us for providing a superior member experience at a cost-effective price.

Helped nearly 2,500 members navigate
critical pension
Provided five in-house
to help
members prepare for
Reached 200% more members
than in 2014 through
outreach and education
Hired a digital
content strategist

to help improve
members’ online
Announced Advisory Services – personalized
1-on-1 support from our team of Certified
Financial Planners –
to help clients understand how
their pension fits into their broader financial and life
Established key
performance metrics

to monitor trends and
client needs
Introduced a secure,
dedicated online
for employers
Dedicated resources to
enhance information
and protect
member privacy
E-services Logins
Table View
Client Interactions
13,258 members
using the online retirement planning tool
Delivered 158 member presentations
Processed 2,624 beneficiary changes for members
Nearly 1,200 address
submitted online
Completed 2,868 buyback quote requests
33,137 members and retired members registered to use e-services

Leadership Messages

Chair’s Message

M. Vincenza Sera, Chair

In last year’s Chair’s message, I reflected on all that OPB accomplished in its first 25 years as Plan administrator of the PSPP. 2015 was another significant year for OPB as we moved forward with a number of innovative initiatives that reinforced our reputation as one of the world’s top pension plan administrators.

Leading Innovation

The two initiatives that will have the greatest impact on OPB’s future are Asset Pooling and Advisory Services.

Asset Pooling

Since the spring of 2012, when the Government of Ontario announced its interest in pooling the assets of broader public sector pension plans, we have worked very closely with the Government of Ontario and the Workplace Safety and Insurance Board (WSIB), the latter being our partner in this strategy, to lay the groundwork for success. At this time, we expect that asset pooling – through the Investment Management Corporation of Ontario (IMCO) – will be implemented in 2017. We have remained steadfast in our primary goal with IMCO: to enhance investment returns. By combining the assets of OPB and WSIB, IMCO will have a larger investment pool to ensure it can attract and retain the best investment talent and participate in a broader range of investment opportunities. The Board and I have been very focused on meeting our fiduciary obligation to ensure the move to asset pooling is the right strategy for OPB. We believe that, properly implemented, this strategy will benefit the financial status of the Plan and is in the best interests of Plan beneficiaries and stakeholders. We will continue to be actively involved as IMCO evolves.

Advisory Services

Ensuring secure pensions for our members also means making sure that our members have the information they need to make sound decisions about their pensions. In 2015, we took member service to the next level, formally announcing our Advisory Services program to members. In the first year, our Advisors helped almost 2,500 members navigate key pension decisions within the context of their broader financial circumstances.

Protecting the Pension Promise

As a pension plan, we operate over a long-time horizon – protecting the long-term sustainability of the Plan is our top priority. We do this by ensuring our clients and stakeholders understand the value of the Plan they have and by prudently investing the assets of the PSPP. Our long-term rate of return since OPB’s inception in 1990 is 8.5%, which has helped us achieve a 98% funded status. We have continued to successfully protect the pension promise for our current and future members. Through responsible and prudent management, we have maintained a strong funded status, kept contribution rates for members and employers affordable, and protected benefits. Our contribution rates remain among the lowest of the public sector plans.

To ensure the continued long-term sustainability of the Plan, OPB regularly conducts a series of studies that review the appropriateness of the assumptions we use to value the Plan, including the discount rate and a long-term funding study to ensure that contribution rates and benefits are appropriate. This study is the basis for recommendations to the Plan Sponsor around changes to contribution rates and Plan design. Given the continued market volatility, global economic conditions we are seeing in 2016 and the emergence of negative interest rates in some countries, we think the timing is right for OPB to review the discount rate and other assumptions used to value the PSPP.

Other Highlights

Enterprise Risk Management (ERM): During the year, we further strengthened our risk management processes by revamping our ERM program to give the Board of Directors and management team timely and more accurate data as well as more actionable mitigation strategies.

Supporting Environmental, Social and Governance (ESG): OPB is committed to ESG in a way that supports its overriding fiduciary responsibility to act in the best interests of the Plan. There is strong evidence that improved ESG engagement can have a positive impact on investment portfolio performance. I am pleased to say that in 2015, we signed the United Nations-supported Principles of Responsible Investing and developed our own proxy voting strategy, which incorporates ESG factors into our voting of publicly traded securities.

Leading with Good Governance

Three Board members – David Brown, Peggy Gilmour and Shamira Madhany – completed their terms in 2015 after providing thoughtful advice and exemplary service over many years. I would also like to welcome our newest members to the Board, Kevin Costante and Lisa Hillstrom, who were both appointed in 2015, as well as Michelle Savoy, who was appointed in January 2016. These individuals bring a wealth of knowledge and experience to the Board, which will help us navigate the challenges ahead.

On a personal note, my appointment as Board Chair will end in June of this year. A new Chair will be appointed in a timely fashion and in accordance with OPB’s strong governance structure around Board appointments. It has been my honour to serve the stakeholders for over 12 years and it has been my great pleasure to work with OPB’s dedicated management team, led by Mark Fuller, and all of the talented employees who have helped us accomplish so much. I’d also like to thank my fellow Board members for their careful and considered direction.

OPB’s commitment to excellence and innovation, coupled with its proven ability to respond swiftly and effectively to changes, positions us well to ensure the health of the Plan for this generation and generations to come.

M. Vincenza Sera

President’s Message

Mark J. Fuller, President & CEO

I am very proud of all that OPB has accomplished in its 25 years as the Plan’s administrator. Our careful and responsible management of the Plan, coupled with our innovative strategies to protect our members’ retirement security, have positioned OPB as a leader in the global pension landscape.

During a period in which defined benefit plans have found themselves increasingly under the microscope, OPB’s responsibility, restraint and transparency have established us as a trusted, responsible and respected government agency. Our performance has enabled contribution rates to remain affordable and has protected benefits. We have successfully navigated the ups and downs of the markets to maintain a very strong 98% funded status, and we have done so with one of the lowest expense ratios in the industry.

I’m pleased to report that despite a challenging year in the global financial markets, we ended 2015 with a return of 6.14%, which had a value-add of 0.77% (77 basis points) over our benchmark of 5.37%. At the end of 2015, the PSPP was 98% funded – a very solid position for us to be in.

Long-Term Funding

We are committed to protecting the long-term sustainability and affordability of the Plan. As part of our prudent management of the Plan, we regularly conduct long-term funding studies to determine whether the current contribution rates are set to adequately fund the Plan going forward. While our 2014 study didn’t show a need for any immediate adjustments, we know that people are living longer, which drives pension costs higher, and the investment outlook ahead is more challenging.

Another factor that can impact our contribution rates is the discount rate the Plan uses in its valuations. The discount rate reflects what the Plan’s assets can reasonably be expected to earn over the long term, less expenses and provisions for unanticipated events.

Setting the discount rate is a rigorous process designed to ensure that the assumption is reasonable and at an appropriate level for the Plan. Changes to the discount rate impact the Plan’s projected liabilities and, by extension, the Plan’s funded position.

We regularly review the discount rate to confirm that it is set at an appropriate level, meaning that it is at a level that OPB believes we can achieve in terms of long-term average annual investment return.

We’ve now been in a low-interest-rate environment for quite some time, and there are no signs that this trend is going to reverse in the near future. In fact, we’re starting to see the emergence of negative interest rates in several countries. Given this environment, we believe that our expectations for future returns, as reflected in our discount rate, may need to be moderated. Accordingly, during 2016, we will be conducting a review of our current economic and demographic assumptions. This will include a review of our expected rate of return on assets (the discount rate), the inflation assumption, the rate of salary increase assumption and the life-span assumption. This review could lead to recommendations to change the assumptions we currently use, including lowering the discount rate used to value the PSPP from its current level of 5.95%. Overall, such changes would likely result in a modest decline in the funded status of the Plan. However, we believe that ensuring the assumptions we use are realistic, and that we make required changes in a timely fashion, will be key to properly managing the financial health of the Plan.

In 2016, we will be conducting a long-term funding study to assess the adequacy of our contribution rates. Should the study show a need to adjust contribution rates, we would make a recommendation to the Plan Sponsor to adjust them.

Managing Expenses

We are committed to providing world-class client service while also being cost-efficient. Our total expense-to-average-assets ratio is one of the lowest among our peers. Our track record of operational excellence and effective cost management has positioned OPB as a highly respected government agency.

While we will continue to be prudent in managing our expenses diligently, there are a number of crucial initiatives we have put off in recent years that we must begin to address in 2016. As part of our cost-constraint measures, OPB has restrained spending on information technology (IT) infrastructure and core applications since 2008. While we have been maintaining our systems, we now need to focus on a generational shift in technology to meet the evolving needs of our clients and stakeholders, as well as to ensure our technology remains current and secure.

We are preparing to replace our aging pension administration system in the coming years. The new system will further improve data security and processing efficiency for member services. The next-generation system will also help to support our progressive digital strategy, including planned client and stakeholder outreach initiatives as well as customer self-service via e-services.

In 2016, we will position ourselves to start the multi-year IT modernization project in 2017.

Preparing for Asset Pooling

In 2015, the Government of Ontario passed the Investment Management Corporation of Ontario Act, creating IMCO and further laying the policy foundation for the new investment entity that will invest OPB’s and the Workplace Safety and Insurance Board’s (WSIB) assets. We expect that asset pooling will be implemented in 2017.

As this year’s landmark TD Centre co-ownership acquisition demonstrated, we see significant investment value in partnering with large, world-class organizations that have a similar investment philosophy as us. Asset pooling will give us greater capability to invest in large acquisitions as well as providing us with the enhanced ability to back up investment decisions with even stronger research and risk management capabilities.

Asset pooling will give OPB more opportunity to invest directly in high-quality opportunities, helping us realize higher net investment returns at a lower cost, which we believe will support the long-term sustainability of the Plan. We believe asset pooling will boost investment returns, and even a small increase could have a significant impact. For example, if OPB were able to increase its annual investment returns by 25 basis points (1/4 of 1%) above the Plan’s 5.95% discount rate, this would add approximately $2.0 billion to the funded status of the Plan at the end of 15 years. While IMCO will be responsible for managing our assets, OPB will continue to maintain control over the strategic asset mix of the Plan, staying consistent with its fiduciary duty to its members.

Elevating Our Client Service

With the launch of our Advisory Services program, 2015 marked a significant leap forward in client service excellence. Our qualified Advisors can help members navigate pension decisions within the context of their broader financial circumstances. I truly believe this program fills an important need and will help members avoid potentially costly mistakes that could negatively impact their retirement security. I am thrilled with how well the program has been received by our members.

I am very pleased to say that OPB was recognized as one of the top two out of 13 ranked pension administrators in Canada and one of the top five out of 77 ranked globally by CEM, a leading pension administration benchmarking firm.

Looking Forward

Our successes would not have been possible without a shared commitment to going beyond simply meeting our fiduciary duty to pay accrued benefits. We also ask how we can best protect the pension promise for our members and how we can innovate for our members’ retirement security.

I want to thank the Board, the leadership team and all employees for their dedication, commitment and hard work. As we chart our path for the next 25 years, I am confident that our responsible approach to pension administration and investment management, paired with our commitment to driving innovation, will allow us to continue to protect the long-term sustainability of the Plan.

Mark J. Fuller
President & CEO

Q&A with the chief pension officer

Peter Shena, Chief Pension Officer

People often think about investments when they think about a pension plan, but excellent pension administration is equally critical to the Plan’s success. This year, OPB’s Chief Pension Officer, Peter Shena, talks about how we’re managing the pension side and about some of the exciting ways we’re taking our client service to the next level.

People may not be familiar with what a Chief Pension Officer does. Can you talk a bit about your role?

As the Chief Pension Officer, I have three key responsibilities: first, to manage the liabilities of the Plan; second, to ensure our clients receive high-quality and efficient service; and third, to provide members with access to the advice and assistance they need to make sound decisions about their pension. These responsibilities are all equally important and are critical to ensuring the long-term success of the PSPP.

Managing the liabilities of the Plan well is vital to its long-term sustainability – and to keeping contributions affordable and maintaining benefits. It requires staying on top of changes or trends that can impact what it costs to pay the pension promise, such as changes in how long people are living or the average salary in the Plan. We do this by running a long-term funding study and an experience study to test whether the contributions and benefit structure are sustainable, and whether the assumptions we’ve used to value the Plan’s liabilities match the Plan’s actual experience. We perform these studies at least every five years and we expect to conduct our next review in 2016.

When it comes to client service, everything we do is ultimately about providing our members with a secure pension and a superior experience. Last year, we formally announced our Advisory Services program to ensure we can help members navigate complex pension decisions in the context of their overall financial picture – we want to ensure they are equipped to make sound pension decisions.

Can you talk to us about Advisory Services and why OPB launched this important initiative?

Pension issues are complex and the wrong or sub-optimal decision can have a significant impact on an individual’s financial future. Our members are regularly faced with overwhelming financial choices, without the pension and general financial knowledge to make those decisions. To make the best decision for their future, members need to consider pension decisions in the context of their broader financial circumstances and goals. We introduced Advisory Services to provide our members with the support they need to make an informed decision about their pension in the context of their personal financial picture and life circumstances. It is our role to ensure they have a better understanding of the options they have and the impacts their decisions can have on their financial security in retirement. We believe it is important to help our members avoid costly mistakes that could negatively impact their retirement security.

To help our members in this way, we need to be more than pension experts. We now have Client Service Advisors who are designated Certified Financial Planners® (CFP), or have the Canadian Institute of Financial Planning’s Registered Retirement Consultant® (RRC) accreditation and are in the process of completing their CFP designation.

How has Advisory Services been received?

We are thrilled with the engagement and feedback we have received. In our first year, our Advisors helped close to 2,500 members navigate critical pension decisions and all five of our in-house Advisory Workshops were fully registered. To us, this response validates what a strong need there is to understand and navigate pension decisions. I believe our client satisfaction scores also reflect that, with our member satisfaction scores hitting a record high this year.

Our Advisory Services offering has also piqued interest within the industry. We’re being asked to speak about what we’re doing and why we’re doing it. We truly believe Advisory Services is filling a significant need for our members and are thrilled that they are responding so well and taking advantage of this important value-added service.

When should members start thinking about retirement and how the PSPP may help them achieve their financial goals?

The reality is that most people don’t start planning for retirement until it’s on the horizon and members often don’t understand that their decisions today impact their retirement reality tomorrow. That’s why it’s really important to start thinking about retirement planning early on. Our suite of online tools, including our Pension Estimator and online Retirement Planner, are a good place for members to start to understand how their pension fits into their overall plan and to see if they’re saving enough for their retirement plans.

Once members have used these tools and reviewed the information available online, they can book a 1-on-1 with our Client Service Advisors, who can help them understand how decisions about their pension can impact their financial future. I would strongly recommend that members speak to an Advisor if they’re navigating a pension issue that requires larger financial analysis, such as determining if they’ll have enough income in retirement, deciding whether purchasing or transferring pension credit makes sense for them or choosing a retirement date. Advisors take the time to understand a member’s personal financial situation and goals so that they can equip the member with information to make the best decision about their pension. Advisors won’t make decisions for members – they will provide valuable counsel and clear explanations of the impact of their choices and support members in making good decisions about their pension.

Why do you feel it’s important for OPB to continue to invest in the member experience?

Everything we do is ultimately about providing our members with a secure pension and a superior client experience. At OPB, we pride ourselves on providing world-class client service to our members, a fact that recently was recognized by CEM, an international pension administration benchmarking company. In 2014, OPB was ranked as one of the top five out of 77 globally ranked pension administrators. Whether it’s investing in new online services to give members access to information and interactive programs, advisory staff on standby who can help them navigate complex pension decisions, or digital communication channels that fit with their lives, we’re constantly looking at how we can provide better and more meaningful ways for our clients to experience the pension promise.

OPB is active within the pension and retirement income industry. Why is that important?

At OPB, we believe that everyone should have access to a pension. To that end, we believe that a sound retirement income system is critical to ensuring that Canadians have access to a pension and can retire with dignity. We feel it’s important that we participate in discussions and debates to ensure that important messages about employer-sponsored pension plans are delivered. For example, we want to ensure the public as well as government and business decision-makers understand that well-designed, well-run defined benefit and defined benefit-like or shared-risk plans remain the best option for delivering efficient, affordable and sustainable retirement income. Not only do these plans provide members with a secure retirement income, but they also play an important role in stimulating our economy by providing pensioners with disposable income that is pumped back into the economy – and they provide an important ready source of reliable long-term capital for the markets.

We continue to advocate strongly for the defined benefit (DB) pension plan model and DB-type arrangements that are sustainable and could be made accessible to a broader range of working Canadians. Shared-risk plans, in particular, retain the best features of the DB model, but spread the risk of unfunded liabilities between members and plan sponsors, as all public sector pension plans already do.

We believe it’s important to ensure that working Canadians have adequate income in retirement, which is why we continue to promote viable retirement systems and the importance of long-term financial planning in a wide array of public, private and government forums.

Straight Talk with EVP & CIO Jill Pepall

Jill Pepall, EVP & CIO

In 2015, OPB’s Investments team continued to generate stable investment returns in an increasingly challenging environment. The team successfully managed through turbulent economic conditions by advancing its in-house asset management and building relationships with like-minded investment partners.

In the following interview, Jill Pepall, OPB’s Executive Vice-President & Chief Investment Officer (EVP & CIO), offers her outlook for the coming year. More specifically, she talks about the benefits of asset pooling and how OPB’s investment strategies position the Plan to take advantage of the expected continuation of market volatility in 2016.

In 2015, you beat your benchmark rate of return. To what do you attribute this success?

OPB’s success in 2015 can be attributed primarily to our timely Tactical Asset Allocation (TAA) decisions, the strong performance of our Real Estate portfolio, and the flexibility to leverage in-house expertise to take advantage of changing market conditions across all asset classes.

Why would an investor want to look at both absolute and relative returns when describing the success of an investment? Looking back on 2015, why is this especially relevant?

Monitoring both absolute and relative returns is important because it provides two different perspectives: assessing market conditions and evaluating the individual manager’s ability. Absolute return (i.e., the actual return) is driven, in large part, by the financial markets. For example, during stock market rallies, absolute return will tend to be higher than when equity markets are declining, and vice versa. Relative return (i.e., OPB’s actual return (6.14% in 2015) compared to the Strategic Asset Allocation (SAA) benchmark return of 5.37% for the same period) tells us if Management is taking advantage of the market conditions, and speaks to the value-add that is generated regardless of whether financial markets are up or down. This difference is important in a year like 2015, when markets were challenging and volatility was high. In 2015, major global equity markets were weak and interest rates remained low. Although this impacted the absolute rate of return, on a relative basis, OPB was able to take advantage of the market volatility, and we added value by exceeding the benchmark return by 77 basis points.

In 2017, OPB intends to implement the recently announced Government of Ontario asset pooling initiative with the Workplace Safety and Insurance Board (WSIB). How can larger asset pools benefit the PSPP and its members?

The objective of the asset pooling initiative is to create and operationalize a new world-class investment manager, the Investment Management Corporation of Ontario (IMCO), that will provide fiduciary, cost-effective investment expertise to the PSPP and WSIB initially, as well as to other broader public sector (BPS) pension plans and entities in Ontario that wish to participate. The larger scale that will be achieved by pooling BPS assets will permit access to larger investment opportunities in a wider array of asset classes. Other expected benefits from asset pooling include:

  • higher risk-adjusted investment returns;
  • lower investment management fees and expense ratios through an optimal combination of internal investment management and a larger asset base with external managers; and
  • enhanced research and risk management supported by leading-edge information technology and expertise.

What’s important to note for the PSPP and its members is that ownership of the assets and pension obligations of the Plan are not being transferred to IMCO. Both will remain with OPB, as will OPB’s investment philosophies and policies as well as its asset allocation strategies. This will preserve the important interrelationship between the Plan’s assets and liabilities. What will change are the management of the Plan’s assets and the expectation of higher returns and lower relative investment costs in the future. For more information about asset pooling, click here.

Why is working with trusted partners such an integral part of OPB’s investment strategy?

In order to achieve strong results, building relationships with like-minded partners is critical. This approach helps OPB gain access to high-quality investment opportunities; enables us to leverage our partners’ expertise in particular industry segments or geographic areas, leading to more informed and ultimately better investment decisions; and encourages the building of long-term, mutually beneficial relationships through which we are able to gain access to research on industry developments, market intelligence and investment trends.

OPB looks for like-minded partners who share a common approach and philosophy toward investing and understand the responsibility of being a fiduciary. This helps ensure we share a similar strategy for value creation and improves the alignment of interests with our partners.

Ultimately, OPB’s culture is one that values trust, collaboration and accountability, and we look for partners that share similar values.

Why is private markets an important part of OPB’s diversified investment strategy? Why are you focused on growing it?

Given OPB’s long-term investment horizon, investing in more private market assets is a natural way to enhance investment returns while adding diversification away from the more volatile public markets. Real assets (infrastructure and real estate) help protect the Plan from volatility because a larger proportion of their returns are in the form of ongoing stable cash flows. Private equity offers attractive risk-adjusted returns and allows improved diversification by asset type, industry and geography. Although fees can be higher for some private market investments, these are offset by higher net returns. In addition, privately negotiated transactions may offer better rights, protections and governance than are available in the public market.

The 2011 SAA first introduced Infrastructure and Private Equity to OPB’s portfolio and increased the allocation to Real Estate. Since then, our 2014 triennial SAA review increased allocations for Infrastructure to 10% and Private Equity to 5%, and confirmed Real Estate’s allocation as 23% (net of financing).

How does OPB incorporate Environmental, Social and Governance (ESG) considerations into its investments?

OPB believes that supporting ESG initiatives will improve corporate transparency and disclosure practices; enable long-term investors, such as OPB, to better evaluate investment return–risk trade-offs; and ultimately support OPB’s efforts to achieve the Plan's objectives. There is strong evidence that improved ESG engagement can have a positive impact on investment portfolio performance. Companies that follow the principles of good governance have less risk and generate higher long-term value for their shareholders. Supporting initiatives that promote corporate transparency allow for improved information flow, which increases the ability to better assess a company’s risks and make a more informed investment decision.

OPB adopts a pragmatic approach to integrating ESG considerations into its investment policies and procedures. Some examples of actions taken in 2015 include:

  • Collective engagement: OPB became a signatory to the United Nations–supported Principles of Responsible Investing, an important forum for collective engagement with companies and other enterprises where OPB believes improvement in disclosure practices and other ESG activities is necessary; and
  • Proxy voting: We developed our own proxy voting strategy, which incorporates ESG considerations, among other relevant factors, into our voting of publicly traded securities. OPB views proxy voting as an important tool to encourage companies and other enterprises to provide adequate disclosure to shareholders relating to ESG factors, policies and initiatives.

It is also important that factors such as ESG are incorporated in a manner that supports OPB’s overriding fiduciary responsibility to act in the best interests of Plan beneficiaries and for the long-term sustainability of the Plan.

What other important goals or achievements did the Investments team deliver in 2015?

OPB’s core investment goals for 2015 were:

  • optimizing the implementation of our SAA;
  • continuing to build on in-house expertise and management of assets; and
  • enhancing our investment risk assessment and analysis as well as advancing our contribution to asset management.

Optimizing the implementation of our SAA
The Investments team is executing on its multi-year plan of moving to an investment portfolio with a greater exposure to private markets. In 2015, all three private market asset classes exceeded their phase-in target weights. More impressively, during the building and deployment phase of the newer infrastructure and private equity asset classes, OPB has been able to invest directly in mature funds and in assets, avoiding paying fees to managers before they have actually made investments – a situation that can result in lower returns in the early years of a fund’s existence.

Continuing to build on in-house expertise and management of assets
OPB enjoyed success in 2015, selectively bringing the management of some of our public markets assets in-house from external managers (Internalization Program). The Internalization Program provides value-added portfolio management, while lowering costs and providing greater control and transparency. As part of the program, OPB performs a rigorous cost/benefit analysis and ensures back-office capabilities are in place prior to launching an internal mandate. Specifically, OPB launched a liquidity-based money market mandate designed to facilitate smaller funding requirements and a market-neutral portable alpha mandate designed to enhance fixed income returns with similar or lower risk.

Enhancing our investment risk assessment and analysis as well as advancing our contribution to asset management
As OPB moved forward with the Internalization Program, it became increasingly important to advance and strengthen our investment risk assessment and reporting capabilities. Significant strides were made in 2015 with our in-house risk monitoring and measurement processes. Key successes included incorporating private markets investments into the risk analysis and enabling OPB to effectively review the impact of potential investment decisions on the Plan’s risk positions. Another successful enhancement to the in-house risk tool is its ability to assess and manage Surplus at Risk, allowing OPB to measure the impact of portfolio decisions on risk as it relates to the Plan’s liabilities.

In light of ongoing volatility, what is your view/OPB’s perspective on emerging markets? What factors will you be looking at to gauge the success of these investments in future years?

Investing in emerging markets is a long-term strategic decision to benefit from the relative wealth and growth shift from developed to developing economies. Maintaining a significant exposure to these emerging market economies provides a return-enhancing complement to other assets and strategies currently employed by the Plan. Our Emerging Markets portfolio is structured to benefit from various uncorrelated strategies. These range from working with investment managers who have a focus on capital preservation; to structuring complementary investment strategies; to allocating to satellite strategies such as small cap, China A-Shares and local emerging market debt. Since emerging markets tend to be inefficient and volatile, active management can provide the opportunity to exceed the Plan’s benchmark return with lower risk. At the present time, valuations of emerging market assets are relatively cheaper than developed markets and currently provide a good opportunity for the Plan.

What is your investment outlook for 2016?

There are a number of factors currently in place that are contributing to a reduction in global liquidity. After a historically lengthy period of financial easing, the U.S. central banking authority made its first attempt at raising or normalizing its policy interest rates in late 2015, and China continues to spend reserves to manage an orderly decline in its currency exchange rate. A historic collapse in energy prices has led to disarray in global debt capital markets, which were used to finance high-cost energy solutions. As global liquidity has reduced, so has the appetite for risk assets. The effective withdrawal of liquidity has brought about elevated market volatility that will likely remain in place for the foreseeable future. These circumstances, when coupled with relatively expensive valuation levels for equities, make the 2016 investment horizon very challenging – not dissimilar to the latter half of 2015.

Asset Pooling

In an increasingly sophisticated investment world, one of the best ways to tackle uncertain markets is through economies of scale. A larger base of assets means better opportunities – which is why we are looking to pool our assets through the new Investment Management Corporation of Ontario (IMCO).

$50 billion

The approximate combined asset pool expected to be invested by the Investment Management Corporation of Ontario.

$2.0 billion

The amount that could be added to the Plan’s assets (enhancement to funded status) assuming an average increase of 0.25% ‎per year in annual investment returns‎ for 15 years.

More on Asset Pooling

In our 25 years administering the Plan, we’ve realized, first-hand, the significant investment value of partnering with large, world-class organizations that have long-term views similar to ours.

That’s why we continue to take a lead role in creating an asset pooling arrangement with the Workplace Safety and Insurance Board (WSIB) – an initiative we expect to be operational in 2017. OPB expects that by spring 2017, IMCO will be operating as an independent investment manager for its first clients, OPB and WSIB, with investment and investment finance staff from both organizations, as appropriate, moving over to IMCO.

The combined pool of approximately $50 billion would:

  • enable OPB to have access to top investment talent;
  • enhance our investment decisions with strong research and risk management capabilities;
  • greatly increase our ability to invest directly in high-quality opportunities; and
  • help us realize higher risk-adjusted investment returns.

We believe asset pooling will boost investment returns, and even a small increase could have a significant impact. For example, if OPB were able to increase its annual investment returns by 25 basis points (1/4 of 1%) above the Plan’s 5.95% discount rate, this would add approximately $2.0 billion to the funded status of the Plan at the end of 15 years.

About the Investment Management Corporation of Ontario (IMCO)

As an independent statutory corporation, IMCO will provide investment management and advisory services to various Ontario broader public sector entities and funds to improve the overall risk-adjusted returns of its participants through the pooling of assets owned by them. OPB and WSIB are expected to be the first two members.

IMCO will invest OPB’s assets in accordance with an Investment Management Agreement that will reflect OPB’s investment philosophies and beliefs, investment policies and asset allocation targets (i.e., asset mix). OPB will not assume any liabilities of other IMCO members and there will not be any merger of the pension plans. Furthermore, IMCO will be a not-for-profit entity and operate on a cost-recovery basis.

One of our requirements to move forward with asset pooling was that OPB have governance influence over IMCO, which we have achieved by structuring it as a membership entity. As members, OPB and WSIB will have the right to appoint the majority of the initial board members (two members per organization, or four positions on the seven-member board).

What Asset Pooling Means to OPB

The pooled assets would be managed by a new investment manager, IMCO. OPB, however, will continue to own the assets of, and maintain its fiduciary responsibility to, the Plan. We will also maintain control of the strategic asset mix decisions and be responsible for its pension obligations and liabilities. OPB will also continue to maintain appropriate levels of internal investment competency, including a Chief Investment Officer (CIO), to manage and oversee the relationship with IMCO and report directly to OPB’s Board.


You can’t build a great house without a solid foundation. We wouldn’t be able to invest successfully, offer world-class client service, adapt to changing conditions or continuously drive innovation without our strong governance structure.

How OPB Is Run

A strong governance structure forms the foundation of OPB’s continued success. OPB’s governance structure meets – and in many cases exceeds – industry standards and best practices. Our steadfast commitment to industry-leading governance practices ensures full accountability, effective decision making, prudent investment management, fiscal responsibility, legal compliance and smart risk-taking. In short, it ensures that we are – at all times – protecting and promoting the best interests of the Plan and its beneficiaries.

Underpinning our governance framework is a series of documents that define our organizational structure, responsibilities and governance practices. Collectively referred to as the Governance Documents, these documents include a Statement of Governance Principles, a General By-law, Statements of Mandate and Authority, and a Code of Conduct.

Our Governance Documents clearly define roles and responsibilities, draw a clear link between responsibility and accountability, set expectations for ethical behaviour and entrench conflict-of-interest guidelines. They also establish a well-defined system of checks and balances on all power and authority.

Role of the Board

OPB’s Board of Directors holds the ultimate responsibility for the Plan’s stewardship. That said, the Board has delegated responsibility for the day-to-day operations of the Plan – including administration and asset management – to OPB’s management team. It has also chosen to delegate specific responsibilities to five committees of the Board: the Governance and Risk Committee, Investment Committee, Audit Committee, Pension Committee and Human Resources Committee.

The Board retains overall responsibility for supervision of OPB’s business affairs. For example, it:

  • approves OPB’s strategic plan, business plan and budget;
  • ensures that management has identified and is managing risks;
  • conducts performance and compensation reviews for the President & CEO;
  • approves the Strategic Asset Allocation, which drives investment management asset mix decisions;
  • supervises and approves all audit matters;
  • ensures that management is maintaining a culture of integrity;
  • conducts an annual review of OPB’s Statement of Investment Policies & Procedures;
  • approves any recommendations made to the Plan Sponsor regarding Plan amendments; and
  • monitors compliance with OPB’s governance documents.

In fulfilling their duties, members of the Board are directly accountable to:

  • the Plan’s beneficiaries (i.e., active and retired members);
  • the Financial Services Commission of Ontario (the organization that oversees registered pension plans in Ontario); and
  • the Government of Ontario (the Plan Sponsor).

Continuous Improvement

Good governance is an ongoing process. To ensure we stay at the forefront of industry best practices for governance, we must remain committed to continuous improvement. That’s why in 2015 we:

  • adopted a new model for delegating authority within OPB to streamline the approvals process and contain costs while also strengthening our system of internal checks and balances;
  • revamped our Enterprise Risk Management (ERM) program to give the Board of Directors and management team more accurate data and more actionable mitigation strategies;
  • developed, and are currently implementing, a series of risk appetite statements and a risk scale, to specify and more objectively measure acceptable levels of risk for specific business priorities.

Our ERM program remains a key component of our good governance framework. This program provides an integrated, organization-wide approach to managing risk and setting our organizational strategy. Specifically, it prescribes a formal framework for identifying, reporting and monitoring any risk that could adversely affect the Plan. It also helps identify mitigation strategies.

OPB has also embraced the governance-risk-compliance (GRC) model. In short, this model looks to ensure the integration of governance, compliance and risk management functions across the organization and improve organizational effectiveness.

OPB is consistently recognized as an example of good governance within Ontario’s public service. The Board is committed to maintaining a best-in-class governance model, and ensuring OPB can continue to drive innovation and build a strong future for all PSPP stakeholders.

Board of Directors

Members of OPB’s Board of Directors are appointed based on their expertise, commitment, integrity and vision. Working together, they ensure the Plan’s governance structure and practices reflect the highest standards.

M. Vincenza Sera, ICD.D (Chair)

Vincenza is a former investment banker with 25 years of expertise in capital markets, corporate finance, investment management and corporate governance. She has held senior positions with major Canadian firms, including National Bank Financial, Gordon Capital and CIBC. Vincenza is a member of the Institute of Corporate Directors.

Appointed to the Board on September 17, 2004.
Appointed as Chair on July 1, 2007.
Current appointment ends June 30, 2016.

Patti Croft, ICD.D (Vice-Chair)

Patti has over 30 years of experience as an economist, with extensive institutional investment management experience, focusing on asset allocation strategies. She has held a number of high-profile positions, including Vice-President and Chief Economist for Phillips, Hager & North Investment Management, Chief Economist for RBC Global Asset Management, and Vice-President and Chief Economist for Sceptre Investment Counsel. Patti is a member of the Institute of Corporate Directors.

Appointed to the Board on May 1, 2013.
Appointed as Vice-Chair on December 3, 2014.
Current appointment ends April 30, 2016.

Kevin Costante

Kevin is an Adjunct Professor and Stauffer-Dunning Visitor at the School of Policy Studies with Queen’s University. He is a former Deputy Minister of Government Services, Associate Secretary of the Cabinet and Secretary of the Management Board. His community involvement includes serving as a member of the Youthdale Treatment Centre and as a member of the PRESTO sub-committee with Metrolinx.

Appointed to the Board on December 2, 2015.
Current appointment ends December 1, 2018.

Sean Hanley

Sean is Counsel with the Constitutional Law Branch, Ministry of the Attorney General. As past President of the Association of Law Officers of the Crown, he established a successful track record of advocacy on behalf of public sector lawyers in collective bargaining, pension sustainability, defending professional employees’ rights and independence in the workplace, and promoting continuing professional development for public sector lawyers. He was also the founder of the National Pension Strategy Committee of the Canadian Association of Crown Counsel, which co-ordinates education and advocacy with respect to public sector pension developments affecting Crown counsel in all Canadian jurisdictions.

Appointed to the Board on December 3, 2014.
Current appointment ends December 2, 2017.

Lisa Hillstrom

As Executive Officer, Pension and Benefits, for the OPP Association, Lisa provides bereavement counselling, retirement counselling and assistance to members with insured benefit appeals, LTIP and WSIB issues. During her career, she has held several positions in the pension and benefits field with the Ontario Public Service (OPS). Immediately prior to joining the OPP Association, she held the position of Benefit Advisor, Ontario Shared Services.

Appointed to the Board on March 26, 2015.
Current appointment ends August 14, 2016.

Hugh G. Mackenzie, ICD.D

Hugh is Principal in his own economic consulting business and a Research Associate of the Canadian Centre for Policy Alternatives. He has worked for over 40 years in the trade union and non-profit sectors, as well as in all three levels of government. He is past Chair of the Atkinson Charitable Foundation and was a member of the Ontario Teachers’ Pension Plan Board from 2007 to 2014. Hugh is a member of the Institute of Corporate Directors.

Appointed to the Board on December 4, 2002.
Current appointment ends September 30, 2017.

Geri Markvoort

Geri is a retired senior human resources executive, with more than 40 years’ experience in large complex organizations. She has aligned the delivery of human resources with the needs of business in various industries (e.g., Shell Canada, Quality Safety Systems, Jannock, CIBC, KPMG and KPMG Global). Significant organizational change, global service models, total rewards delivery, effective client relationships and the evolution of the HR function have challenged and engaged her throughout her career. A passionate champion for change and strong HR leadership, Geri’s board experience has included governance roles as Chair of the Board of Governors, George Brown College; Chair of the Board, Dress for Success Toronto; and board member of Lawn Summer Nights and the Cystic Fibrosis, Toronto Chapter.

Appointed to the Board on January 5, 2015.
Current appointment ends January 4, 2018.

Michelle Savoy, ICD.D

Michelle is a corporate director with over 25 years’ experience in the financial services industry, including investment management and capital markets. She currently serves as a Director for the Laurentian Bank of Canada (LB-T), Pizza Pizza Royalty Corp. (PZA-T) and Nav Canada, and held numerous senior executive positions with The Capital Group of Companies, a global investment management organization, including President of Capital Guardian Canada, until her retirement in 2011. Michelle is a member of the Institute of Corporate Directors.

Appointed to the Board on January 15, 2016.
Current appointment ends January 14, 2019.

Former Members of the Board

M. David Brown

Appointment from October 2006 to October 2015.

M.E. (Peggy) Gilmour

Appointment from August 2009 to August 2015.

Shamira Madhany

Appointment from December 2010 to February 2015.

Directory of Key Personnel


Mark J. Fuller

President & CEO

Jill Pepall

Executive Vice-President & Chief Investment Officer

Peter Shena

Executive Vice-President & Chief Pension Officer

Valerie Adamo

Chief Technology Officer

R. Paul Edmonds

Chief Legal & Governance Officer

Gayle Fisher

Chief Administrative Officer

Michel J. Paradis

Chief Financial Officer

Glenn Hubert

Managing Director, Private Debt

Tanya Lai

Managing Director, Public Markets

Sean Macaulay

Managing Director, Private Markets

Brian Whibbs

Managing Director, Real Estate

Mila Babic

Vice-President, Client Services

Kevin Clinton

Vice-President, Investment Counsel

John McNair

Vice-President, Investment Risk Management & Analytics

Management’s discussion & analysis
and Financial statements (PDF)
Total Returns
Total Returns
Year Percentage per Annum
2005 9.6%
2006 11.6%
2007 2.1%
2008 -9.4%
2009 11.9%
2010 9.4%
2011 0.4%
2012 11.9%
2013 12.5%
2014 8.4%
2015 6.1%
Since Inception 8.5%
Asset Mix
Asset Mix
Asset Percentage of total
Cash and Equivalents -0.3%
Fixed Income 27.0%
Long Bonds 1.8%
Real Return Bonds 0.3%
Canadian Equities 9.8%
Foreign Developed Equities 20.5%
Emerging Equities 15.0%
Private Equity 2.4%
Real Estate 18.5%
Infrastructure 5.0%
Growth of Plan Assets
Growth of Plan Assets
Year Growth of $1,000 since inception
1990 $1,046
1991 $1,278
1992 $1,427
1993 $1,711
1994 $1,668
1995 $2,034
1996 $2,348
1997 $2,715
1998 $3,051
1999 $3,067
2000 $3,374
2001 $3,486
2002 $3,516
2003 $3,827
2004 $4,164
2005 $4,564
2006 $5,093
2007 $5,199
2008 $4,713
2009 $5,272
2010 $5,766
2011 $5,791
2012 $6,478
2013 $7,285
2014 $7,897
2015 $8,381
Pension Funding Sources Since 1995 (post-split)
Pension Funding Sources Since 1995 (post-split)
Source Percentage
Investment Growth 72.2%
Employer and Sponsor Funding 15.7%
Member Contributions 12.1%
Net Assets Since Inception
Net Assets Since Inception
Year $ millions
1990 $7,845
1991 $9,026
1992 $10,250
1993 $11,733
Post-split 1994 $7,802
1995 $8,495
1996 $9,143
1997 $10,037
1998 $10,974
1999 $11,196
2000 $11,951
2001 $11,945
2002 $11,490
2003 $12,284
2004 $13,068
2005 $14,192
2006 $15,745
2007 $16,379
2008 $14,607
2009 $16,043
2010 $17,376
2011 $17,270
2012 $18,991
2013 $20,915
2014 $22,231
2015 $23,075
Funded Status
Funded Status
Year Status
2011 88%
2012 93%
2013 96%
2014 98%
2015 98%
E-services Logins
E-services Logins
Year E-services Logins
2011 20,400
2012 27,781
2013 35,659
2014 38,340
2015 42,944
Client Profile
Client Profile
Active Members 42,105
Retired Members 36,220
Former Members 6,037
Number of Active Members
Number of Active Members
Year Number of Active Members
2002 30,400
2003 31,450
2004 32,400
2005 33,500
2006 34,600
2007 35,700
2008 38,000
2009 41,298
2010 42,379
2011 42,711
2012 41,863
2013 41,925
2014 42,102
2015 42,105
Growth in Total Members Since 2002
Growth in Total Members Since 2002
Year Total Members
2002 73,400
2015 84,362