Funding management – Despite difficult financial markets, HOOPP ended the year 99 per cent funded. In 2007, HOOPP was able to

• hold contribution rates stable
• provide a cost-of-living adjustment for pensioners
• reduce the risk in the HOOPP investment portfolio

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Investment management – HOOPP is moving to a liability-driven investment approach. With this approach, the exposures and cash flows of pension liabilities are integrated with investment policies. This approach – along with advanced technology – will help to ensure our investment strategy carries an appropriate level of risk; one that helps the Fund maintain sufficient assets to ensure payment of benefits owed to our members. The first step in this direction was to adjust the target asset mix in 2007 to 46 per cent equity and equity oriented exposure and 54 per cent fixed income exposure from 60 per cent and 40 per cent respectively.

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Investment performance – Despite a challenging investment climate, HOOPP continued to generate value-added returns – outperforming its benchmark for the 10th straight year. While the Plan achieved a total Fund return of 6.23 per cent, beating its benchmark of 4.78 per cent by 145 basis points, it fell short of the nominal long term target of 6.75 per cent by 52 basis points.

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Contributions vs. pension benefits – Total Plan contributions climbed to $1,519 million in 2007, up 10.39 per cent or $143 million over 2006. At the same time, the total of pension-related payments for the year climbed to $1,079 million – a year-over-year increase of 5.89 per cent or $60 million.   

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Risk management – During 2007, HOOPP continued to work towards integration of its funding policy and investment strategy – a multi-year initiative designed to optimize market and minimize operational risks.

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