Ontario Teachers’ Pension Boosts Stake in UK Airport


The Ontario Teachers’ Pension Plan has increased its stake in Birmingham airport after the airport reported its busiest November on record.

The pension fund’s stake in the airport now totals 48 percent.

From the Financial Times:

The Birmingham deal comes a week after the regional airport said passenger numbers in November were the highest ever at 646,000, up 10 per cent on the previous year. It was the sixth record-breaking month in 2014 and the airport said it expected Christmas traveller numbers to be 7.4 per cent higher than last year.

“Birmingham airport is a high-quality asset that we know well. It has good growth prospects and we look forward to working with our partners to strengthen its position as a key regional airport in the UK,” said Andrew Claerhout, senior vice-president at Teachers’.

Birmingham is the UK’s seventh busiest airport with more than 9m passengers passing through its doors in 2013, according to the UK’s Civil Aviation Authority. Heathrow airport is the largest with 72m passengers, double the number of passengers of its nearest competitor, Gatwick.

Teachers’ first invested in Birmingham airport in 2001 and later acquired a joint 48.25 per cent stake with Victorian Funds Management Corporation in 2007 for £420m after the Dublin Airport Authority and Macquarie Airports Group sold their holdings.

The Canadian pension fund now has a sole 48.25 per cent stake, in addition to other airport investments in Copenhagen, Brussels and Bristol. Seven local district councils will continue to own a significant shareholding in the airport.

“We will continue to work with Teachers’ and the district shareholders with the shared goal of developing Birmingham airport’s connectivity to benefit both the region and the UK as a whole,” said Paul Kehoe, chief executive of Birmingham airport.

The Ontario Teachers’ Pension Plan manages over $140 billion in assets.

Photo by  Caitlin ‘Caity’ Tobias via Flickr CC License

Ontario Teachers’ Pension Becomes One of BlackBerry’s Top 10 Shareholders

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The Ontario Teachers’ Pension Plan saw something it liked in BlackBerry in the third quarter, as the pension fund bought into the company to the tune of 7.8 million shares. Now, the fund is among the company’s ten largest shareholders.

More from Business News Network:

The retirement fund is now one of the Waterloo-based smartphone maker’s top 10 holders with 8.23 million shares as of Sept. 30, according to a regulatory filing today. The 1.6 percent stake is valued at about $84.5 million, based on yesterday’s closing stock price.

One year in as chief executive officer, Chen has helped BlackBerry recover from a failed buyout and put its stock on pace to beat the Nasdaq Composite Index this year for the first time since 2009. Chen has outsourced manufacturing, sold real estate and focused on core business customers as he aims to start making a profit again next fiscal year.

BlackBerry had risen 38 percent this year through yesterday.

“Given the multitude of changes that occur quarter to quarter, we don’t discuss individual stock holdings and increases/decreases in positions,” Deborah Allan, a spokeswoman for Ontario Teachers, said in an e-mail.

The pension fund manager also disclosed it bought almost 127,000 shares in Alibaba Group Holding Ltd., China’s largest e- commerce company, during the quarter. The stake in Alibaba is valued at $14.2 million based on yesterday’s close.

The Ontario Teachers’ fund manages $124 billion in assets.

Strong Global Equities Performance Drives Ontario Pension Return

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The Ontario Public Service Pension Plan (PSPP) returned 12.5 percent overall in 2013. But a new report from the Ontario Pension Board, which handles investments for the fund, gives more details on the performance of individual asset classes.

Strong global equities performance (37 percent return) drove the fund’s returns in 2013. Reported by Pensions & Investments:

In the pension fund’s annual report released Thursday by the Ontario Pension Board, which administers the defined benefit plan, global equities returned 37% last year, while Canadian equities returned 18%, compared with 35.9% for the MSCI World (Canadian dollar) and 13% for the S&P/TSX Composite indexes.

Real estate returned 12.9% vs. its custom benchmark’s 9.7% return; infrastructure, 12% vs. 0.9% for its custom benchmark; emerging markets equities, 5% vs. the MSCI Emerging Markets (Canadian dollar) index’s 4.3%; and Canadian fixed income, 1.8% vs. -1.2% for the DEX Universe Bond index.

Private equity, which returned 17.8%, was the only asset class to underperform its benchmark, which was 30.2%.

The pension fund’s asset allocation as of Dec. 31 was 28.2% fixed income, 23.7% developed markets equities, 15.5% emerging markets equities, 14% real estate, 8% cash and short-term investments, 7.6% Canadian equities, 2.5% infrastructure and 0.5% private equity.

The plan improved its funded status from 94 percent to 96 percent, according to the report.

The fund handles $18.9 billion of assets.

Why Did Ontario Lawmakers Wait So Long to Release A Report Critical of Its Pension Systems?


There’s been much concern in Ontario about the sustainability of its public pension systems, particularly in the electricity sector. Ontario Auditor General Bonnie Lysyk warned in 2013 that electricity sector pensions were unsustainable and quite possibly too generous.

Union leaders, taxpayers and other concerned parties agreed that the systems deserved a closer looking-at.

So, last December, Ontario lawmakers appointed Jim Leech—former head of the Ontario Teachers’ Pension Plan—to examine the pension systems inside and out to produce a report and make recommendations to improve their sustainability and affordability.

On March 18, 2014, the report was delivered to Ontario lawmakers. But not to the public.

For over four months it didn’t see the light of day. But last Friday, August 1, the report was finally released to the public. And it was highly critical of the sustainability and cost of the electricity sector’s public pension plans.

[The entire report can be read at the bottom of this page.]

From the Toronto Star:

As reported by the Star’s Rob Ferguson, the 45-pagestudy by former Ontario Teachers’ Pension Plan head Jim Leech finds that Ontario taxpayers contribute $5 for every $1 employees are putting into their pension plans at Hydro One.

Ontario Power Generation isn’t much better, with employees contributing just 24 per cent of contributions compared to 76 per cent by the publicly owned utility.

Meanwhile, compared to other public-sector plans, the ones at Ontario’s four electricity agencies are “generous, expensive and inflexible,” Leech wrote.

What’s more, the study found all four pension plans “are far from sustainable.” Wrote Leech: “Should plans go further into deficit, the sponsors and, ultimately, ratepayers will be required to pay even larger contributions.”

The report has already accomplished part of its purpose: get the government thinking about ways to make these systems more sustainable and less costly.

But new questions are being raised about the transparency issues surrounding the report’s release. Although lawmakers saw the report in March, the public had to wait. Why was it allowed to gather dust for nearly five months?

Other stakeholders are wondering the same thing. Some reactions, as reported by The Star:

“This is awfully suspect,” said Progressive Conservative MPP Vic Fedeli, his party’s finance critic, questioning Wynne’s oft-stated goal of running an “open and transparent” government.

“There was ample opportunity to release this document with good public scrutiny. What are they hiding? What didn’t they want us to know?”


“Why now, why not before the election so people would have known what’s happening?” said Plamen Petkov, whose lobby group opposes the ORPP as too expensive.

“We’re very worried to see government agencies where employees are paying only 20 cents on the dollar for their pensions when taxpayers pay the other 80 cents. No wonder the government itself expects electricity prices to go up 42 per cent over the next five years,” he told the Star.

“It’s really disappointing. We recommend the government clean its own house first before they ask employers to contribute $3.5 billion a year to the Ontario Retirement Pension Plan.”

Government officials said they originally planned to release the report on May 1, when Ontario’s new budget was passed. But the budget wasn’t passed, and that led to new elections being held.

The report was held as elections played out. The results of those elections weren’t confirmed until June 24th. Still, the report remained in the hands of the government for another 5 weeks afterward.

Here is the report, which can also be found on Ministry of Finance website.

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Photo: “Ontario-flag-contour” by Qyd. Licensed under Public domain via Wikimedia Commons