Ontario Teachers' Pension Plan
|Headquarters||Toronto, Ontario, Canada|
|Key people||Jim Leech CEO
Eileen Mercier, Chairman
|Total assets||$129.5 billion CAD (Dec.2012) |
The Ontario Teachers' Pension Plan Board (OTPP), commonly referred to as Teachers' (French: Régime de retraite des enseignantes et des enseignants de l'Ontario 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.
OTPP was established on December 31, 1989. Prior to this, Ontario teachers' pensions had been sponsored solely by the Ontario government. Assets of the plan had been invested in government bonds only.
Today, the OTPP administers the pensions for some 179,000 teachers, principals, and school administrators, and pays pensions to some 124,000 retirees. In 2012, $4.9 billion in benefits was paid to members. Teachers' is headquartered in Toronto, with offices in London, Hong Kong and 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' Merchant Bank). The Chair of the Board is Eileen Mercier.
Teachers' is one of Canada's largest institutional investors having reported $129.5 billion in net assets on December 31, 2012. It has an excellent track record for investment performance with an average annual return of 10.1% since inception.
Teachers' owns and manages a diversified portfolio of Canadian and international assets. Through its fully owned real estate subsidiary Cadillac Fairview, 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, Teachers' owns or has had interests in companies such as Easton-Bell Sports, Helly Hansen, Munchkin, Plano, Shearer's Foods, Samsonite, GNC and Maple Leaf Sports & Entertainment.
Teachers' owns a substantial portfolio of infrastructure assets including: minority stakes in Birmingham International Airport, Bristol International Airport, Copenhagen Airport and Brussels Airport; the High Speed 1 rail line linking London with the Channel Tunnel; and international water and power utilities. 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.
In July 2007, Teachers' led a group to take over Canadian telecommunications giant BCE Inc. (Bell Canada) private. The C$35.1 billion deal (C$51.7 billion including assumed debt) would have been the biggest leveraged buyout ever in Canadian history and potentially the largest in global history, according to Thomson Financial. However, the deal was officially cancelled on December 11, 2008.
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.
Despite strong investment performance, the pension plan has experienced funding shortfalls in recent years, with the projected actuarial value of future liabilities exceeding assets. The plan reported a preliminary $5.1 billion funding shortfall as of Jan. 1, 2013, as noted in its most recent annual report.
Leadership in pension funding innovation
At the 2013 National Summit on Pension Reform, President and CEO Jim Leech called for action to assure retirement financing security for all Canadians, now and for generations to come. 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. “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.
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.
On December 2, 2008, New York lawyer Marc Stuart Dreier was arrested at 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 Teachers' offices had become suspicious and notified Toronto police who promptly arrested him. Dreier was attempting to close a sale of forged Teachers' promissory notes, worth $44.7 million USD, by meeting with the buyers right in the Teachers' offices. 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.
- Ontario Teachers' Pension Plan: Jim Leech
- Ontario Teachers' Pension Plan: Eileen Mercier
- Ontario Teachers' Pension Plan Essentials
- "À propos du RREO". Otpp.com/fr. Retrieved 7 January 2013.
- "OTPP History". otpp.com. Retrieved 7 January 2013.
- "OTPP corporate web site". otpp.com. Retrieved 14 May 2013.
- "Bidding for Bell Canada may not be over". USA Today. 2007-07-02. Retrieved 2009-03-30.
- Kelly, Jason and Jonathan Keehner (2008-12-11). "BCE’s Buyout Collapses, Demands C$1.2 Billion Fee". Bloomberg.com. Retrieved 2009-03-30.
- "2012 Annual Report Ontario Teachers' Pension Plan Corporate Site". April-2013. Retrieved April-2012.
- News article: http://www.otpp.com/news/article/-/article/569209
- Speech: http://www.otpp.com/documents/10179/71c1ee45-217f-4c77-b2ec-f9360281ce09
- "Ontario Teachers Know All About Synergy" (Press release). Rick Mercer Report, CBC Television. 12 January 2004. Retrieved 2006-11-26.
- Cowan, Alison Leigh and William K. Rashbaum (2008-12-05). "Lawyer’s Arrest in Canada Has His Firm in Chaos". The New York Times. Retrieved 2009-03-30.
- Copy of the indictment against Dreier