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Pension Funds

Ontario Public Service Employees Union plan returns 9.5% in 2017

Ontario Public Service Employees Union Pension Plan, Toronto, returned 9.5% on its investments in 2017, helping raise assets to C$20.3 billion ($16.2 billion), said Hugh O'Reilly, president and CEO or OPTrust, which manages the pension fund's assets.

The return surpassed OPTrust's custom benchmark return of 6.9%, Mr. O'Reilly said.

The pension plan's funding level was 111% as of Dec. 31, compared to 110% at the end of 2016, Mr. O'Reilly said.

Assets were up 6.6% from Dec. 31, 2016, according to a funded status report released Monday by OPTrust. Investments contributed C$885 million to the pension fund in 2017, while combined employer and employee contributions added C$529 million.

The pension fund's discount rate as of Dec. 31 was 3.3%, compared to 3.4% at the end of 2016.

Public equities had the highest return for 2017, at 22.9%; followed by private equity at 21.6%; real estate, 14.7%; infrastructure, 11%; absolute return, 5%; and fixed income, 4.6%.

Mr. O'Reilly said returns in public equities, except for Canadian stocks, drove OPTrust's performance in 2017.

As of Dec. 31, the pension fund's asset allocation was 31.1% fixed income, 22.6% absolute return, 14.7% public equity, 13.9% private equity, 10.5% infrastructure, 9.4% real estate, and -2.2% in cash and overlay strategies.

The pension fund's asset allocation at the end of 2016 was 24.9% fixed income, 18.2% public equity, 15.4% absolute return, 15.1% real estate, 10.8% infrastructure, 8.4% private equity and the remainder in cash.

Mr. O'Reilly said last year's increases in absolute return and fixed income, which came which came from reductions in public and private equity and real estate, were made "for risk allocation and a view of the market on where the value was. But mostly it was for risk allocation."