Insights from Our Leadership Team

Chris Kautzky
Insights from Chris Kautzky
Chief Investment Officer

Working with the Board, OPB’s leadership team and its investment manager, the Investment Management Corporation of Ontario (IMCO), Chris leads the oversight of OPB’s investment strategies and their implementation and performance.

OPB’s Investment Performance in 2021

Investment markets are an imperfect mirror of larger world events. They always reflect what is happening, but perhaps not always in the way you might expect. The hope for 2021 was that it was going to be a year of reset and recovery, and there would be less volatility than in 2020. However, markets were still significantly affected by volatility driven by ongoing pandemic conditions and the emergence of new COVID variants, global supply chain disruptions and the rise of inflation.

Against this background, OPB still delivered strong results. The Plan’s one-year net return in 2021 (net of fees and expenses) was 9.4%. These solid results were largely driven by Canadian equities, global equities and private equities. While our results for 2021 were generally favourable, the nature of pension investing and evaluating a portfolio like OPB’s require taking a long-term view. Performance over a single year is important, but the real story is in how the assets perform over a longer timeline of five years, 10 years or more. By definition, pension plans invest for the long run, and that focus is reflected in our portfolio and our strategy.

We remain focused on delivering strong results while also being careful with expenses. As stewards of the pension funds, we are diligent in our planning and ensure prudent oversight of our approved budget.”

Armand De Kemp
Armand de Kemp, Vice-President, Finance

How We Managed Our Investment Strategy in 2021

One of our most significant achievements for the year was completing a new asset/liability (A/L) study, which included receiving Board approval for implementing the plan over the next four years. We also finalized a new Strategic Asset Allocation (SAA) plan that went into effect on December 31, 2021. The A/L study and SAA were developed with input from IMCO, and together they will set out how and what we invest in over the next four years. They will determine what asset classes we invest in and to what degree, and the portfolio weightings of each class. We also introduced two new elements to our investment approach: public market alternatives and leverage. Both of these strategies add diversity while helping to improve the risk and return characteristics of our investment portfolio.

IMCO Delivers Value for PSPP Members

Guided by our SAA, IMCO manages investments for OPB. OPB has several ways to oversee and evaluate cost, performance and value in relation to IMCO, and we take that role very seriously. IMCO was established, in part, to become a global investment organization, able to compete effectively for opportunity and talent against leading private sector firms. Working on behalf of Ontario’s public sector, IMCO continues to actively grow and evolve toward that goal, with several clients and over $70 billion in client assets under management. IMCO’s increasing scale and expanding capacity enable it to eliminate duplications, introduce operational efficiencies, and develop relationships and expertise that will deliver long-term value for all its stakeholders.

Making Progress on Investment and ESG

In 2021, we created and adopted an environmental, social and governance (ESG) investing policy for OPB. While it aligns with many of the choices we were already making, this was a milestone achievement because it concretely articulated our objectives and expectations. Further, the policy provides structure around our own governance and indicates our direction to IMCO. It also reaffirms the Board’s support for an engagement-centred approach to ESG issues. At the same time, our policy makes it clear that if engagement does not deliver the desired results, then divestment is an option.

OPB also hired its own ESG advisor in 2021 and made ESG issues a standing item in every Investment Committee meeting. We also rejoined the United Nations-supported Principles for Responsible Investment (PRI), but now as an asset owner, while previously we had been an asset manager. Membership commits us to supporting and implementing the Principles and to submitting annual reports to PRI on our ESG activities.

In addition to creating our own ESG policies approaches, we supported IMCO in developing their Responsible Investing (RI) approach. IMCO is committed to becoming a leader in RI.

Climate change is another issue at the forefront for both OPB and IMCO. As part of its larger Responsible Investing Policy, IMCO has developed a climate change strategy and Climate Action Plan. In November, IMCO also joined the Paris Aligned Investment Initiative on climate action and committed to achieve net-zero alignment by 2050 or sooner.

How OPB and IMCO are Managing Climate Risk

OPB and IMCO understand the importance and urgency of climate change and are founding signatories of the Canadian Investor Statement on Climate Change. As owners, investors and organizations with our own carbon footprints, we are committed to making significant and meaningful progress in the climate change challenge. Our ESG Policy clearly outlines how OPB addresses ESG issues, including climate risk. The policy also clarifies expectations around IMCO’s progress toward net-zero GHG emissions and comprehensive reporting that aligns with the requirements of the Task Force on Climate-related Financial Disclosures (TCFD).

To help reach its goal of net-zero GHG emissions by 2050 or sooner, IMCO has a robust climate change strategy and Climate Action Plan, and, on behalf of its clients, including OPB, is currently establishing its emissions baseline, which it expects to publish this year.

Peter Shena is recognized as a strong advocate on behalf of retirement security for all Canadians. In recent years, he has been a leader in working to expand the range of services provided to PSPP members.

Delivering Progress on Pension Modernization

In 2021, we reached a key milestone in our pension modernization program with the launch of modernized online portals for members and employers. The portals are built on new, cloud-based platforms; this technology enables us to rapidly implement and deliver new features and capabilities to meet the growing and evolving needs of our members and employers.

Designed with input from members, the modernized member portal offers an improved user experience, an updated pension estimate tool, improved accessibility and enhanced security features, and is mobile- and tablet-friendly.

The employer portal improves efficiency for participating employers and OPB’s internal users. It also provides employers with several key enhancements they had been asking for, including the ability to reset their own passwords and reassign messages within their organizations.

We engaged with employers and members to be sure that the modernized portals would deliver a better experience for our clients. These enhancements are just the beginning of our digital transformation journey; we will continue to add online services and new features for clients.”

Mila Babic
Mila Babic, Vice-President, Client Services

Improved security is a key feature for both portals. We updated the application security, incorporating stronger, more modern tools and coding approaches, as well as multi-factor authentication on portals. Along with enhanced security, we also upgraded our disaster-recovery capabilities.

Another key achievement for the year, and one with long-term benefits, was moving our pension systems off onsite hardware to the cloud. This makes our systems and data more secure, more scalable and easier to upgrade. Along with this change, we have moved to an agile development methodology. Under this approach, we develop in short, intense sprints, release a solution and then, based on feedback and experience, move to quickly upgrade and improve. Effectively, we are driving the evolution of our systems, which allows us to act and react more efficiently. Developing in focused sprints allows us to implement enhancements to meet our clients’ needs more quickly.

In 2022, we will start moving forward on the design and strategy for developing an updated pension entitlement calculator. Moving to one calculation engine will ensure that both members and staff will get consistent results regardless of which version of the calculator they use; it will also reduce manual effort and eliminate process inefficiencies. The updated calculator will also have the scale and capacity to handle complex rules and multiple plans, such as for legacy TVO and Ontario Northland members and Agricorp members, who we have taken over administration for.

Our focus is on implementing technology that makes things more efficient, secure, and that improves the experience for our clients. Our IT team asks: What service or solutions does OPB want to offer, and how can technology help us get there?”

Valerie Adamo
Valerie Adamo, Chief Technology Officer
Peter Shena
Insights from Peter Shena
Chief Pension Officer

Working to Meet Members’ Needs

Over the last few years, OPB has worked to make sure that our approach to delivering service and meeting members’ needs aligns with our digital-experience strategy. We also reached out to members so they could select their preferred channel for communication.

In addition to providing members with choice, we recognize that we have an obligation to provide members with information they need to help them plan for – and enjoy – a well-earned retirement. Through our in-house team of pension experts and Certified Financial Planners®, we can answer members’ pension and retirement questions and provide them with guidance that helps them make informed decisions. Recently, we have expanded our education efforts to include financial literacy and provide comprehensive financial advisory workshops for members at every stage of their careers.

Advocating for Retirement Security for All Canadians

OPB believes that every Canadian should be able to look forward to a secure retirement. We recognize the benefits that a strong retirement system creates for all Canadians. Over the course of 2021, we partnered with pension plan peers across the country in developing and releasing a financial literacy video. Debuting on YouTube in November, Financial Literacy Month, the short animated video, titled What’s Important, promotes the importance of financial security in retirement. The video addresses some misleading messages we’re seeing from some private investment advisors encouraging members to withdraw the commuted value of their defined benefit pensions. These investment organizations do not provide essential context or information about risk, and in many cases fail to disclose how they are paid by the funds they sell. Our video helps members better understand the value of OPB’s advisors, all Certified Financial Planners®, who have a fiduciary duty to provide unbiased decision support to members.

As an additional service, we have also been working with pension plans throughout Canada to make it easier to identify and locate missing beneficiaries.

Meeting OPB’s Employee Needs

During the second year of the COVID-19 pandemic, our employees remained focused on delivering exceptional service to our clients and on supporting one another. Engagement is a defining strength of OPB’s culture, and in 2021, we continued to build on that strength through regular check-ins and updates with employees, while also prioritizing their health and well-being. Throughout the year, we communicated often with staff across various channels, providing information and resources on mental and physical health and resiliency. We encouraged staff to take time away to relax and recharge, and provided speakers and education resources to help manage the pressures of family responsibilities and remote work. We also successfully recruited and onboarded a number of employees and made it a priority to help them feel connected and engaged with their team and the broader organization.

Our CEM Service Score was 87/100, compared to 90/100 the prior year. CEM Benchmarking Inc. ranked us first among our Canadian peers and fifth among its universe of leading global pension plan administrators who participate in the CEM survey.

We conducted our latest comprehensive employee engagement survey in 2021. Our last comprehensive employee engagement survey was held in 2017, though we’ve done several pulse surveys since that time. We are very appreciative of the participation rate on the survey – greater than 97% – and value the feedback from staff across the organization. Their input and engagement continues to help us support and sustain a positive, engaging and respectful workplace for all.”

Jasmine Kanga
Jasmine Kanga, Vice-President, Human Resources & Corporate Services