Ontario Teachers' Pension Plan

Ontario Teachers' Pension Plan Board

Type	Private
Industry	Pension fund
Founded	1989
Headquarters	Toronto, Ontario, Canada
Key people	Ron Mock CEO[1] Jean Turmel, Chairman[2]
Total assets	$154.5 billion CAD (Dec.2014) [3]
Number of employees	1000
Website	www.otpp.com

The Ontario Teachers' Pension Plan Board (OTPP; French: Régime de retraite des enseignantes et des enseignants de l'Ontario^[4] or RREO), is an independent organization responsible for administering defined-benefit pensions for school teachers of the Canadian province of Ontario. The OTPP also invests the plan's pension fund, and is one of the world’s largest institutional investors. The plan is a multi-employer pension plan, jointly sponsored by the Government of Ontario and the Ontario Teachers' Federation.

History

OTPP was established on Jan. 1, 1990.^[5] Until then, Ontario teachers' pensions had been sponsored solely by the Ontario government. Assets of the plan had been invested in government bonds only.

Organization

Today, the OTPP administers the pensions for some 182,000 teachers, principals, and school administrators, and pays pensions to some 129,000 retirees. In 2014, $5.3 billion in benefits was paid to members. Ontario Teachers' is headquartered in Toronto, with operations in London, Hong Kong and an office in New York.

Founding President and Chief Executive Officer, Claude Lamoureux, retired on December 1, 2007 and was succeeded by Jim Leech, who was Senior Vice President of Private Equity (aka Teachers' Private Capital).

Effective January 1, 2014, Ron Mock, succeeded Jim Leech as President and Chief Executive Officer.^[6] The Chair of the Board is Jean Turmel.^[7]

Investments

Ontario Teachers' is one of Canada's largest institutional investors having reported $154.5 billion in net assets on December 31, 2014. It has an excellent track record for investment performance with an average annual return of 10.2% since inception.

Ontario Teachers' owns and manages a diversified portfolio of Canadian and international assets. Through its fully owned real estate subsidiary Cadillac Fairview, Ontario Teachers' owns properties that include the Toronto-Dominion Centre, Toronto Eaton Centre, and the Rideau Centre in Ottawa. Through its private equity investment arm Teachers' Private Capital, Ontario Teachers' owns or has had interests in companies such as Easton-Bell Sports, Helly Hansen, Munchkin, Plano and Shearer's Foods.

Ontario Teachers' owns a substantial portfolio of infrastructure assets including: 100% of Bristol Airport and minority stakes in Birmingham Airport, Copenhagen Airport and Brussels Airport; the High Speed 1 rail line linking London with the Channel Tunnel; and international water and power utilities. Ontario Teachers' also owns Camelot Group PLC, which holds an exclusive licence to operate the U.K. National Lottery.

The OTPP posts a list of major investments annually on its website.

See a list of recent transactions

Responsible investing

Ontario Teachers’ approach to responsible investing seeks to achieve the best risk-return balance for its members by being diligent in choosing and managing assets. It includes several dimensions:

• evaluating investments against material financial and non-financial factors, including risks associated with environmental, social and governance (ESG) issues, as well as reputation risk;
• continuing to be effective stewards for as long as it owns an asset;
• working with other global leaders to advance the understanding of responsible investing, as a signatory to the United Nations-backed Principles for Responsible Investment and a member of various groups and associations;
• using its position as large investors to advance good corporate governance because it considers strong governance to underpin a company’s ability to effectively deal with risks and opportunities; and
• taking a thoughtful and well-researched view in voting shares in public companies, based primarily on the plan’s Corporate Governance Principles and Proxy Voting Guidelines.

Pension funding

The pension plan reported a preliminary $6.8 billion funding surplus as of Jan. 1, 2014. Despite improved funding levels, the pension plan still faces challenges resulting from increasing longevity, longer retirements and a volatile investing environment.

Leadership in pension funding innovation

At the 2013 National Summit on Pension Reform, then President and CEO Jim Leech called for action to assure retirement financing security for all Canadians, now and for generations to come.^[8] Leaders and experts from government, private companies and labour unions gathered in Fredericton, to encourage candid, high-level conversations about pensions. “Pensions, like any species that wishes to survive through time, must adapt to the environment,” Mr. Leech told the conference.^[9] “That means we must ensure that benefits and contributions are fair and correlated; that assets and liabilities can be balanced; that expectations are realistic and success is achievable.” In support of his position, Jim Leech invited summit participants to view the 23-minute documentary Pension Plan Evolution: A New Financial Reality. The documentary takes a global look at how pension plans are changing to meet economic and demographic challenges ranging from volatile markets to increasing longevity.

Media coverage

On the January 12, 2004 episode of Rick Mercer Report, comedian Rick Mercer had a short segment about the Ontario Teachers' Pension Plan, in which he humorously contrasted the plan's beneficiaries (i.e. teachers) with the investments the plan had made, including shopping malls and the tobacco industry.^[10]

On December 2, 2008, New York lawyer Marc Stuart Dreier was arrested at Ontario Teachers' Toronto offices and charged with impersonating, through his words and by the use of business cards, Michael Padfield, a senior lawyer with the pension plan. A secretary in the Ontario Teachers' offices had become suspicious and notified Toronto police who promptly arrested him. Dreier was attempting to close a sale of forged Ontario Teachers' promissory notes, worth $44.7 million USD, by meeting with the buyers right in the Ontario Teachers' offices.^[11] On December 4, 2008, Dreier was indicted by the United States Justice Department for successfully executing a similar corporate officer 'impersonation' routine, including bluffing his way into using the momentarily vacant CEO's office of one 'selling' firm for a meeting with the buyer, to sell forged financial instruments on at least two occasions in New York.^[12]

References

Largest private equity investment firms 3i Group AAC Capital Partners Advent International AlpInvest Partners American Capital Apax Partners Apollo Global Management Ares Management Bain Capital BC Partners Berkshire Partners The Blackstone Group Bridgepoint Capital Candover The Carlyle Group CCMP Capital Cerberus Capital Management Charterhouse Capital Partners Cinven Clayton, Dubilier & Rice CVC Capital Partners Doughty Hanson & Co EnCap Investments EQT Partners First Reserve Corporation Fortress Investment Group General Atlantic Goldman Sachs Capital Partners GTCR Hellman & Friedman H.I.G. Capital KKR Trilantic Capital Partners Leonard Green & Partners Madison Dearborn Partners Nordic Capital Oak Investment Partners Oaktree Capital Management Onex Teachers' Private Capital Pacific Equity Partners PAI Partners Permira Providence Equity Partners Sentinel Capital Partners Silver Lake Partners Summit Partners Sun Capital Partners TA Associates Terra Firma Capital Partners Thomas H. Lee Partners TPG Capital Warburg Pincus Welsh, Carson, Anderson & Stowe Private equity Private equity firms Venture capital firms Portfolio companies