OE News Special Edition July 2013

aDMinistRatoR’s REpoRt
A conservative strategy provides
stability in volatile times
I am pleased to present the 38th Annual Financial Statements of the Operating Engineers’
Benefits and Pension Plans (OEBPP). The Auditor has prepared these statements for the
review of Plan members, and they reflect the stewardship of the Plan’s assets by your
Trustees.
With the continuing and unprecedented turmoil in the world’s financial markets, your
Board of Trustees believes the move in 2002 to an Asset-Liability Matching Policy has provided
your pension plan stability during these difficult times. As described in previous editions of
this Special Edition your Trustees approved this investment strategy to ensure the long-term
stability of your pension plan.
As you will read, the Plan’s investment strategy is unchanged from the previous year. This
strategy is intended to give you, the Plan members, a higher level of certainty with respect to
the benefits you are relying on for your retirement. This conservative strategy is consistent
with what a large majority of participants told us they prefer.
2012 proved to be another year of volatile investment returns and low interest rates. Our
investment strategy, which is detailed below, is constantly monitored and tested to ensure
compliance with the risk parameters established by the Board and their advisors.
Investment policy providing greater certainty
Due diligence
The Trustees approved the investment strategy after intensive assessment, on the basis of
extensive professional advice, and with the involvement of provincial regulators.
The process began with computer modeling through which the performances of different
types of assets were assessed – relative to the liabilities of the plan, and in light of
possible changes in interest rates and stock market performance. The strategy has
thE stRatEgy is DEsignED
been accepetd by the provincial Superintendent of Pensions, who has responsibil- to givE MEMBERs a highER
ity for overseeing pension plan management.
LEvEL oF CERtainty with
The strategy was scrutinized by five different actuaries: the OEPP’s own actuary, REspECt to BEnEFits
a special consultant engaged to develop the strategy, and three independent actuaries
(two engaged by the OEPP, and one by the Superintendent of Pensions).
Asset-Liability Matching: The basic principle
Our strategy involves both a significant adjustment in the mix and nature of assets we hold, as
well as a plan specific long term discounted cash flow assessment of the value of some of those
assets (particularly real estate). The anticipated level of future returns will be much more certain,
and the plan will be better protected from the potentially negative impact of changes in
interest rates and stock market performance.
The basic principle behind an Asset-Liability Matching Policy is simple, and is summed up
in the name. The policy requires us to hold assets that we expect will deliver an income stream
coming as close as possible to matching the estimated liabilities of the Plan (the promises to
pay benefits to members), over a given time period – regardless of what may happen to interest
rates and the stock markets.
6 News Special Edition Summer 2013
Shawn Hatch
Administrator