The OPSEU Pension Trust:
Diligence, Service, Security

Annual General Meeting
Quarter Century Club
Tuesday, June 19, 2007

Remarks
Robert Breens,
Vice-President, Policy and Communications
OPSEU Pension Trust

I'm glad to be back again to talk to you about pensions and the OPSEU Pension Trust.

I know from past years that your pensions are a topic that members of the Quarter Century Club take an active interest in.

I'm happy to have this chance to report to you on our achievements this past year, as well as some of the work we do on your behalf.

The theme of our 2006 Annual Report is For you. About you, which is significant because it reflects our mission to serve our membership and focus on what matters to you most.

Overview of 2006 Investment Results and Funding Outlook

To start with, I'd like to give you a brief overview of OPTrust's investment results for 2006.

If you want more detailed information on the Plan's investment performance, it can be found in our 2006 Annual Report.

OPTrust's fundamental goal has always been to pay for members' and retirees' pension benefits now and into the future, while reducing the risk that member and employer contributions will have to rise above the Plan's normal rate.

To meet this goal, we need to earn an average annual investment return of 7.0% over the long term.

In 2006 the Plan's overall investment return was 13.4% (last year it was 15.6%), beating our market-based benchmark return of 11.7%. This performance translated into investment income of $1.5 billion in 2006. We increased our total assets available for benefits to more than $13.1 billion. The return since the plan's inception in 1995 is 10.6%, exceeding the benchmark of 9.6%

However, as any investor can tell you, the stock market has experienced significant short-term swings and regardless of how strong your investment results are in any given period, they are not likely to be sustained over the long term.

Like most major pension plans, OPTrust uses a technique called smoothing to spread each year's unplanned investment gains or losses over a 5 year period.

This process lessens the effect of sometimes significant fluctuations in investment returns on the Plan's funded position.

The most recent funding valuation (completed at the end of 2005) revealed a funding shortfall of $517 million, due in large part to investment losses incurred in 2001 and 2002 that continue to be recognized.

This deficit is being paid down with payments from stabilization funds (currently at $446 million) which both the employer and employee sponsors prudently set aside from gains arising out of the good years.

In 2006, OPTrust earned significantly more than it requires to fund the Plan's pension obligations. As a result, if the Plan achieves its long term target rate of return on investments over the next year leading up to the December 31st, 2007 funding valuation, the $517 million actuarial deficit should be eliminated.

Here is a summary of the Plan's major investment accomplishments in 2006:

• achieved an investment return of 13.4%, exceeding both the long-term funding target and market benchmarks
• continued to diversify our investment portfolio to reduce volatility and risk
• used funds set aside from the gains of earlier years to maintain member and employer contribution rates at normal levels.

What It Means for Members and Pensioners

I'm sure you're wondering what the investment results mean for you as a member or pensioner of the OPSEU Pension Plan. Usually the question most people ask is: "Is my pension secure?"

Simply put, the answer is YES. Because your OPTrust pension is what is known as a defined benefit pension, unlike most RRSPs and other individual investments, the value of your pension does not change when investment market conditions fluctuate. Instead, your pension is calculated using OPTrust's pension formula - and is based on your average annual salary and years of credit in the Plan.

As long as you contribute, the value of your pension continues to grow.

And, as the pensioners in the room well know, once you retire, your pension will increase annually to keep pace with inflation. Pensions increased by 2.3% in January.

At the same time active members can expect stable contribution rates.

Where other pension funds are having to do away with indexing and are raising contributions rates, we have been able to maintain both of those key elements.

What that translates into for you and the over 77,000 other members and pensioners, is that your OPTrust pension remains a tremendously valuable investment and unique source of financial security for your retirement years.

We are keeping the pension promise we made to you.

Enhancing Service

Of course, as well as providing you with a secure pension, we know you also expect OPTrust to deliver prompt, efficient and courteous service.

Reducing the time it takes to process a case is one of the areas of focus with our new service standard targets. In 2006 the number of cases overdue for more than 30 days was 3.7%, well below the target level of 10% of total cases.

In 2006 we conducted focus group research with members and pensioners to help us to determine your needs and wants, and ensure that we delivered.

Our approach is to provide proactive service, with such things as e-mails to inform you of news and updated information, letters with pension estimates that are mailed to all members who reach age 55 and automatic cost requests for those new members with non-contributory service to purchase.

In addition to meeting your service needs, we continue to look for effective ways to keep you informed about your pension - and the options that may be available to you.

We are also enhancing our online services and actively targeting the membership in an effort to get more people online. It is in anticipating your needs and expectations that we feel we best serve you. We conducted a usability study with the membership and made changes to the online system based on this feedback.

The benefits of accessing online services are plentiful, aside from the obvious convenience, it allows members and pensioners to keep their information current and enables you to view statements and updates as they become available, as opposed to waiting for information to be mailed.

With more of you accessing information online, we feel this method of communication is the most accurate and effective way to communicate to you.

Summary

This has been a very quick - and I hope useful - overview of the work OPTrust does on your behalf and the services we provide.

For those of you who would like a more detailed look at our performance over the past year, I encourage you to pick up a copy of our 2006 Annual Report, available at the back of the room. Once again, thank you very much for inviting me to your Annual General Meeting.

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