As a HOOPP member, you may have read about ‘funded status’ in our newsletters, on hoopp.com, or through other communications. But what does it actually mean? Here’s what you need to know: funded status is a ratio that compares how much
a pension plan has in assets to how much it owes in liabilities (i.e., pensions). When funded status is 100% or greater, the plan is said to be fully funded and has enough assets to pay its pension obligations,
today and in the future. That’s why it is one of the most important measures of a pension plan’s health.
To help explain, here are a few examples. First there is pension plan A; it has more assets than liabilities and a funded status of 110%, which is the same as saying they have $1.10 in assets for every dollar they owe in current and future pensions. The
plan is considered healthy and more than fully funded, and its members can be confident their pensions are secure. Then there is pension plan B, which has more liabilities than assets, and a funded status of 85%. That means they are currently in a
more challenging underfunded position.
At the end of 2022, HOOPP’s funded status was 117%, which means we have $1.17 in assets for every dollar we owe in pensions to our members. That puts us in a very strong position to meet our pension
obligation to members, now and in the future. In fact, HOOPP has been fully funded since 2009.
Here’s a look at our funded status over the past 10 years.
HOOPP funded status
A closer look at assets and liabilities
A pension plan's assets represent the money available to pay pensions to its members. HOOPP’s assets consist of the regular contributions made to the Plan by active members and their employers. The assets also include the investment income earned
by the Plan. Based on current contribution rates and benefit provisions, approximately 80% of what we pay to members in pensions needs to come from the long-term growth of our investments.
A pension plan's liabilities represent the value of its pension obligations (i.e., the payments that will be provided to members in the future), along with the costs of investing fund assets and administering the Plan benefits on behalf of our membership.
We monitor our operating costs consistently and, based on publicly available information, they compare favourably to similar Canadian pension plans.
Investing to keep our Plan strong
The relationship between assets and liabilities drives HOOPP's Liability Driven Investing (LDI) approach. It focuses on ensuring that the long-term growth of our investment
portfolio meets or exceeds the growth in our pension obligations to members. That approach has helped us maintain a strong and consistent funded status and keep the Plan strong for our members.
“Our collective job (at HOOPP) is to ensure assets relative to our liabilities, leave us in a fully funded position. And by doing that, we can be confident that we’ll continue to pay our members’
pensions now and for decades to come.”
- Michael Wissell, Chief Investment Officer, HOOPP
Delivering our pension promise
By maintaining a strong funded status, HOOPP continues to be well positioned to deliver on our pension promise – to provide members with a secure and reliable pension for life.
To learn more, visit the Plan performance page of our website.