2012 Financial Statements - Workers' Compensation Board

Meredith Principles
The framework outlined in then-Chief Justice of Ontario Sir William Meredith’s report on workers’ compensation in
1913, now commonly known as the Meredith Principles:
• Workers receive compensation benefits regardless of fault for work-related injuries.
• Employers share collective liability for the costs of work-related injuries and, in return, employees
waive the right to sue.
• Injured workers are entitled to prompt payment of benefits, and guaranteed future payments.
• The workers’ compensation agency has exclusive jurisdiction over all legal matters arising out of the
enabling legislation.
• The agency is financially independent of the government and enjoys full autonomy over all
administrative and adjudicative matters.
Real discount rate
The rate used to discount the actuarial projections of all future claim benefit payments back to present value.
The rate is based on the real rate of return that the investment portfolio is expected to generate over the long
term, at a 70 per cent probability level. This provides the mechanism for generating a margin for adverse deviation
in the claim benefit liability. The real discount rate is also called the net discount rate.
Real rate of return
The annual percentage return realized on an investment, adjusted for changes in prices due to inflation
or deflation.
Return
The interest and dividend income and the capital gains or losses associated with an investment. The return is
usually quoted as a percentage of the investment’s market value (market return) or its book value (book return).
Performance of an investment or a pool of investments is the actual rate of return over a given evaluation period.
Risk
In general, the possibility or chance that a future event or outcome will be different than expected, and will lead to
a loss. See also financial risk.
2012 FINANCIAL STATEMENTS and notes 79