Description of Plan

The following description of the Hospitals of Ontario Pension Plan Trust Fund (HOOPP or the Plan) is a summary only. An exact and complete description of the Plan provisions can be found in the Hospitals of Ontario Pension Plan Text, the official Plan document.

a) General

The Plan is a contributory defined benefit multi-employer pension plan, established under an Agreement and Declaration of Trust (as amended) for the benefit of eligible employees of participating employers.

HOOPP is registered with the Financial Services Commission of Ontario (FSCO), and with the Canada Revenue Agency (CRA). The Plan’s Registration Number is 0346007.

In conjunction with its Registered Pension Plan (RPP), HOOPP operates a Retirement Compensation Arrangement (RCA). The RCA is administered as part of the overall Plan, but its assets are held in a segregated account.

b) Funding

Plan benefits are funded by contributions and investment earnings. The Plan’s funding policy aims to secure the pension promise and achieve long-term stability in contribution rates for both employers and members. Actuarial funding valuations are conducted to determine pension liabilities and the funded position and contribution rates of the Plan.

Under the terms of the Plan, contributions are set to cover the total annual cost of benefits. This includes the current service cost of benefits (with recognition of the administrative expenses of HOOPP), plus special payments required to amortize unfunded liabilities and solvency deficiencies, less any surplus amortization amounts.

c) Contributions

Contributions are determined in accordance with provisions of the Plan Text, and on the recommendation of the Plan’s actuary. Since 2004, members have contributed at 6.9 percent of annualized earnings up to the respective year’s maximum pensionable earnings (YMPE), and 9.2 percent of annualized earnings above the respective year’s YMPE. The YMPE is a figure set annually by the federal government and used to calculate Canada Pension Plan (CPP) contributions and benefits. Employers contributed 126.0 percent of member contributions during the period. Contribution rates will remain unchanged for 2008 and 2009.

d) Pensions

The formula used to calculate a HOOPP retirement pension takes into account a member’s contributory service, average annualized earnings, and the average YMPE. Members can receive an unreduced pension at the earlier of age 60 or as soon as they have completed 30 years of Plan membership, provided they are at least 55 years old. Members are eligible to retire at age 55, usually with a reduced pension.

Members who retire early will receive a bridge benefit until age 65 or death, whichever occurs first. The bridge benefit is designed to supplement a member’s basic HOOPP pension until age 65 when CPP benefits normally begin. An early retirement transition benefit, which provides an additional supplement, payable until age 65, is also available to retiring members who by the end of 2005 had met certain eligibility requirements.

Members who choose to retire after the normal retirement age of 65 receive an upward adjustment in recognition of the fact that they have chosen to retire later.

e) Disability Pensions

A disability pension is available at any age to a disabled member who has at least two years of Plan membership and meets other eligibility requirements. A disability pension is based on the member’s contributory service accrued to the date of disability retirement.

f) Death Benefits

Death benefits may be available to a surviving spouse or designated beneficiary upon the death of a member. Depending upon eligibility requirements, the benefit may be paid in the form of a surviving pension or lump sum payment.

g) Portability from the Plan

Members with more than two years in the Plan shall be entitled to receive a deferred pension. They may also opt to transfer the commuted value of the benefit out of HOOPP to another pension plan or registered retirement vehicle, subject to locking-in provisions and certain age restrictions.

Members with less than two years in the Plan shall be entitled to a refund of their own contributions with interest.

Members wanting to transfer their contributions or benefits from another registered pension plan to HOOPP can do so providing the transfer meets all eligibility requirements.

h) Inflation Protection

Retirement pensions earned for service through the end of 2005 are annually adjusted by an amount equal to 75 percent of the previous year’s increase in the consumer price index (CPI), to a maximum CPI increase of 10 percent. Thereafter, annually the Board has the authority to provide ad hoc indexing for all service earned, up to 100 percent of the previous year’s increase in CPI, depending on the Plan’s financial status as well as other factors. For retirements and deferred retirements occurring in 2006 and 2007, the Board has granted ad hoc indexation equal to 75 percent of each of the 2006 and 2007 CPI increase, to a maximum CPI increase of 10 percent. Therefore, all current retirees and deferred annuitants will receive indexation at 75% of the 2006 and 2007 CPI increases in respect of all service.

i) Retirement Compensation Arrangement

The Retirement Compensation Arrangement (RCA) was established to provide supplementary pension benefits to members whose earnings result in a pension that exceeds the maximum pension permitted under the Income Tax Act for Registered Pension Plans. These supplementary benefits, as described in note 10, are funded partially from contributions and investment earnings in the RCA fund.

j) Income Taxes

The Plan is both an RPP as defined in the Income Tax Act and an RCA. The RPP component is generally exempt from income taxes for contributions and investment income earned. Funds received and income earned in the RCA are taxable. Depending on the contributions received, benefit payments made, and investment income earned through the RCA, a portion of taxes may be refundable and are disclosed in note 3 as recoverable refundable withholding tax on contributions.