Message from the Chief Executive of the TTC Pension Fund Society12 June, 2019
The TTC Pension Fund Society has been delivering our pension promise for over 75 years and we are committed to continue to deliver on that promise well into the future. When we manage our plans assets, we need to employ a long-term approach, keeping in mind that the contributions that we receive from a TTC Operator today, while they are in their 20s or 30s, will be used to deliver pension payments to that person as a pensioner while they are in their 80s and 90s.
Employing a long-term approach to pension plan management enables us to keep our sights on the horizon to deliver our pension promise long into the future. Of course, we fully expect, and anticipate that certain periods will be characterized by challenging short-term performance due to slow economic growth, market volatility and heightened geopolitical risks. From a return perspective, 2018 was a challenging year. Our net investment return after fees was negative 0.7%, underperforming our plan benchmark by roughly 1.0% for the year.
Despite some of these varied challenges in 2018, the PFS has been able to generate positive returns over the long term. Over the past 10 years, the Fund earned 8.4% after fees, which has comfortably exceeded the return of our Plan benchmark and the actuarial discount rate. Over that time period our asset values have more than doubled.
The strong position was based on long-term investment portfolio returns and strong cost control features with a risk management focus. The positive results of our investment portfolio have allowed the Board to approve a base-year update and 2.16% pensioner increase. Active Members and 2019 retirees will now have their pensionable earnings and credited service up to December 31, 2018 included in the base period for calculation of their pension benefit. These benefit improvements, while approved by the Board, are based on confirmation from the PFS’s external actuary that the Plan has sufficient assets available to cover the cost of those benefits.
Since 2011, the Plan has been able to afford steady increases to the base period, which have brought the base years fully up-to-date. This is a noteworthy accomplishment, however as a reminder, there is no contractual obligation to provide benefit improvements. As you know, on an annual basis, the Board assesses affordability of benefit improvements, including pension indexing, and grants them at their discretion. Future enhancements are not guaranteed.
PFS continues to evolve its staff team to meet the increasing needs and complexity of our operations. In late 2017, we created the position of Director, Investments, which has proven to be an important addition as our assets grow. In 2019, we intend to further expand our skill set by adding internal resources to support both the Investment and Pension Administration functions. The growth of our membership and retirements and the increasing size and complexity of our investment portfolio makes this a necessity. We are also continuing with succession planning initiatives as certain key individuals move closer to retirement. We are confident that the PFS will continue to enjoy strong and uninterrupted leadership.
In 2019, PFS staff moved into new offices at 2 Bloor East, Suite 1901. Our phone, fax and e-mail information remain the same. We are very pleased with the result and we are now well-positioned to meet the current and projected space needs of the organization.
I would like to acknowledge the efforts of our entire staff, who have collectively delivered excellent results in the key areas under our control, member services and investment strategy.
Chief Executive Officer
TTC Pension Fund Society
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