ARM Ch. 12 Pension Plan Report, March 2022


Pension Report

 

 

March, 2022

 

OTPP has completed a transaction to acquire 870,000 acres of Pine Forest in the Southern U.S. Our Plan
paid $625 million US for the Timberlands. The OTPP has invested indirectly in these assets since 2006.
The transaction was administered by Tamarak Timberlands LLC owned by our Plan. The Timberlands are
certified by the sustainable Forestry initiative. This investment will provide good stable yields and long
term capital appreciation. This will be a very positive outcome and solution regarding the effects of
climate change.

 

Our plan has given recipients a 2.4 % increase in their pensions effective January 31, 2022. This was the
annual COLA increase. Next year’s increase should be considerably higher (due to inflation). The annual
increase for the C.P.P. was 2.79%.

 

The investment returns in 2021 for several pension plans have recently been made public. OMERS has
15.7 % return and Caisse de depot et placement du Quebec has seen a 13.5 % return for 2021. OTPP had
an investment return of 11.1 % in the same year. The return for our plan in 2020 was 8.6 percent and 9.3
percent over the last ten years. The plan now has $ 241.6 Billion in assets and a $ 17.2 Billion surplus. It
is fully funded.

 

A full Old Age Security Pension is payable if you have lived in Canada for at least 40 years after turning
18. The OAS benefits are adjusted four times a year (January, April, July, and October) based on the
Consumer Price Index. The maximum monthly payment commencing January 2022 is $ 642.25.
Effective July 2022 the OAS will increase by 10% for all recipients 75 years of age or older. This
permanent increase will apply regardless of whether you receive a full or partial OAS pension. Always be
aware of OAS claw back. This occurs when your net income exceeds $ 79,845 in 2021 and $ 81,761 in
2022. If your net income exceeds this amount you must pay back 15% of the excess amount up to the
maximum payment of the OAS.

 

Investors in Canadian dividend paying stocks should remember that the 38 % gross increase on the
Canadian eligible dividends will increase your net income and therefore increase the claw back.

 

In regards to OTPP investments in Russia, Claire Holland, Spokesperson for OTPP, advises that the fund
“is not a direct investor in Russia and we have no plans to be while Russia occupies Ukraine..we have
minimal indirect exposure, substantially less than 0.1 % of the fund via the holdings through externally
managed investments.” Ms. Holland said that OTPP has no discretion over externally managed positions, but “ we proactively engaged managers to divest current holdings and restrict future investments in Russia.”
Source, Globe and Mail March 10, 2022 Article Pension Funds are selling off Russian investments.

 

The OTPP has approximately 50 Million invested in Russia which equals 2/100 of 1 % of its total assets.

 

 

Paul Headdon

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