ARM Ch. 12 Pension Plan Report, April 2021


Pension Report

April, 2021

 

OTPP has made two new investments in March. Our pension plan, Main Post, partnered with Flynn Restaurant Group, the largest Franchise operator in the U.S. to acquire franchises for 937 Pizza Huts and 194 Wendy’s. Flynn Restaurant Group has the largest number of franchises in Applebee’s and Arby’s and the second largest number of Panera Bread. In addition, it has the third largest number of Taco Bell restaurants in the U.S. Enjoy your fast food when traveling in the U.S.A.

 

OTPP and Caisse de Depot et placement du Quebec have agreed to purchase a Cincinnati based conservative life insurance company called Ohio Mutual Holdings and its subsidiary Ohio National Financial Services. Ohio National, established in 1909, is a leading provider of financial products and services to its policy holders.

 

OTPP now has only 2% of its equity portfolio invested in the energy sector. This is a reduction in this area as it was previously 3%. Hopefully more investments relating to renewable, clean energy and in ones that will prevent climate change will occur in the future. However, the value of energy stocks in 2021 has increased considerably.

 

Two areas of concern in the fight against climate change are crypto currency production, and crypto network computer usage. Considerable electrical consumption is required. Outside of most parts of North America the electricity required to produce bitcoin is produced by coal-fired plants. Oil and gas companies are not the only culprits in this fight against climate change.

 

Our pension plan had a return of 8.6% for 2020. A considerable 46% holding of bonds and fixed holdings gave a return of 20% on this portion of their assets. The bonds were sold, as interest rates increased. Our pension plan now has assets of $221.2 billion and an $8.5 billion surplus. Every retiree and participant in the plan could collect a pension and there would still be money left over (surplus). We have no problems with our pension with a surplus of $8.5 billion. We are very fortunate to have such a well-run plan.

 

Most defined pension plans in Ontario have increased their pension solvency from 89.4% on Dec. 31, 2020 to 96% now. In Ontario if the solvency goes below 85% extra contributions are required by the employer.

 

Paul Headdon

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