Funding Management - Introduction

Retiring HOOPP members receive a pension based on a formula that takes into account their earnings history and years of service in the Plan. To ensure these payments can be provided, a balance is struck - over the long term - between assets and liabilities.

• assets equal the current value of the contributions collected and invested to pay pensions.
• liabilities equal the current value of the Plan's total pension obligations.

When assets equal or exceed liabilities, a plan is fully funded. When liabilities exceed assets, a plan is underfunded (in other words, there may not be enough money to immediately meet all of a plan's future benefits payable).

Maintaining a balance between assets and liabilities requires expertise, supporting technology, and educated assumptions about future economic, market and demographic trends.

Even with best efforts, the balance between assets and liabilities can change, due to a number of factors including:

• lower-than-expected investment returns
• interest rate fluctuations, and
• changing demographics (such as mortality and termination rates)

Going into 2009, HOOPP was 97 per cent funded, with a three per cent shortfall. Thanks in part to solid, double digit gains in 2009, the Plan finished the year 102 per cent funded.

The Board is committed to ensuring HOOPP remains affordable for members and participating employers. This means maintaining contributions at reasonable levels and keeping rates stable from one year to the next.