Investments & Funding
Planting Deep Roots with HOOPP
Defined benefit pension plans like HOOPP invest for long term – not for year-over-year results – where pension contributions made today to fund benefits may not be paid out for 40 or more years.
Retiring HOOPP members receive a pension based on a formula that takes into account their best five consecutive years of earnings and years of service in the Plan.
Under HOOPP:
- Assets equal the current value of the contributions collected and investment returns
- Liabilities equal the current value of the Plan’s total pension obligations
When net assets equal or exceed liabilities, a plan is fully funded. When liabilities exceed net assets, a plan is underfunded, which means there may not be sufficient money to immediately meet all of a plan’s future benefits payable.
HOOPP uses a liability driven investment strategy to align funding and cash flow requirements.
Through a minimum risk portfolio, the characteristics of HOOPP’s liabilities are matched with assets that have similar characteristics, providing HOOPP with more control over risk and volatility than what would be offered in a conventional portfolio.
