Ontario Teachers' Pension Plan gets 13 percent return rate in 2012

Tue Apr 2, 2013 9:59am EDT
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* Net assets rise to record C$129.5 billion

* Pension plan 97 percent funded as shortfall shrinks to C$5.1 billion

TORONTO, April 2 (Reuters) - The Ontario Teachers' Pension Plan, one of Canada's top investors, said on Tuesday it had a 13.0 percent rate of return on its investments in 2012, bringing net assets to a record high of C$129.5 billion ($127.4 billion).

The fourth straight year of double-digit returns on the investment portfolio narrowed Teachers' funding shortfall to C$5.1 billion from C$9.6 billion in 2011.

The funding gap measures the difference between Teachers' projected asset growth and the anticipated cost of providing pensions to the 303,000 active and retired educators in the plan.

Teachers and peers like the Canada Pension Plan Investment Board and Caisse de dépôt et placement du Québec have been among the world's most active dealmakers in recent years, with major bets on real estate, natural resources and infrastructure.

Still, demographic trends mean Teachers' must provide benefits to an increasing number of retirees while the number of active educators paying into the plan declines. The average teacher in the plan draws a pension for 31 years after working just 26 years.

The pension plan notched up strong returns in equity and real estate. But lower returns in fixed income and commodities pulled overall returns lower, Teachers' said in a statement accompanying its annual report.

"The investment team successfully navigated significant risks and turmoil in the global economy again in 2012 to earn an excellent rate of return," Teachers' Chief Executive Officer Jim Leech said in a statement. "Our 10-year annualized rate of return is 9.6 percent."   Continued...