Note 13. Accrued Pension Benefits Correction

HOOPP recently discovered that certain of its membership data elements used in the preparation of its actuarial valuations for each of the 2004, 2005 and 2006 valuation years have been misinterpreted. The effect of this has been an underestimation of HOOPP liabilities by amounts of $323 million for the 2004 valuation year, $330 million for the 2005 valuation year, and $354 million for the 2006 valuation year. This has had a corresponding impact on HOOPP’s financial statements for each of these financial years (since HOOPP’s financial statements are prepared based on its actuarial valuations). As a result, HOOPP’s reported financial/funded position for each of the 2004, 2005 and 2006 financial years has been overstated by an amount of approximately 1 to 2%.

HOOPP filed with the Financial Services Commission of Ontario (FSCO) valuation reports for the 2005 and 2006 financial years based on the misinterpreted data. However, HOOPP has not made any changes to its contribution rates and only modest Plan benefit changes based on the 2004, 2005 or 2006 valuations, and HOOPP’s contribution level throughout these years was sufficient to meet all regulatory funding requirements even with corrected valuation results.

Following is a table illustrating the effect of the corrections for each of the 2004, 2005 and 2006 valuations as well as HOOPP’s funded position in 2007:

			2007		2006						2005						2004
($ millions)					Restated			Original			Restated			Original			Restated		Original
Actuarial value of net assets available for benefits			$	28,352		$	25,205		$	25,205		$	22,853		$	22,853	$	21,308		$	21,308
Accrued pension benefits				28,683			25,808			25,454			23,749			23,419		21,858			21,535
Deficit				(331)			(603)			(249)			(896)			(566)		(550)			(227)
Financial/Funded position				99%			98%			99%			96%			98%		97%			99%