At HOOPP, our primary objective is to secure the pension promise.

We have a strong tradition of providing a first-rate defined benefit pension plan to Ontario’s healthcare community. HOOPP is one of the largest defined benefit pension plans in the country.

As a defined benefit pension plan, we provide our members with a secure retirement income based on a formula that takes into account a member's earnings history and length of service in the Plan. Once members start receiving a pension, they receive it for life. That’s our promise – the “pension promise.” This formula is designed to provide HOOPP members, over their careers, with a very significant replacement of their pre-retirement earnings once they retire.

As of December 31, 2007, the Plan was 99 per cent funded. In other words, our total assets were just shy of those needed to meet all of our pension obligations. Other pension plans are facing more significant funding shortfalls.

During 2007, we took a number of steps to help us achieve a fully funded position and, equally important, to maintain that position over the long term.

• Through the use of active management strategies, we overcame difficult investment markets to achieve an overall Fund return of 6.23 per cent – beating our investment benchmark for the tenth straight year. The Fund return fell short of the nominal long term return target of 6.75 per cent by 52 basis points.
  
  
• We are moving toward a liability-driven investment approach. This approach is designed to help us maintain an appropriate balance between risk and return – and to protect and grow the Fund’s assets in line with the Plan’s future liabilities.
  
  
• We adjusted our asset mix policy, setting new targets. The new targets:
  • support our move toward liability-driven investing
  • reduce the Fund’s exposure to equity markets, while increasing exposure to other less risky investments
  • better align assets with future cash flow requirements, and
  • more effectively protect against inflation

• We continued with the development and implementation of improved investment technology. This includes an integrated data and performance management system that supports investment decision-making, and will enhance risk management capabilities.
  
  
• We lowered our long-term investment return assumption for the second year in a row. Adopting a lower, more conservative investment return assumption aligned with the investment risk level set by the HOOPP Board of Trustees.

This section of the report – Management’s Discussion & Analysis (MD&A) – provides a more detailed look at these key events and the impact they had on the Plan.