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Jeff Wendling, CEO of the Healthcare of Ontario Pension Plan.

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The Healthcare of Ontario Pension Plan (HOOPP) has reported an 11.4-per-cent return on investments for 2020, putting it in a comfortable position to boost benefits for its members amid the pandemic.

The 60-year-old plan, which serves 398,324 Ontario health care workers, closed the year with $104-billion in assets and said its funding ratio – which compares its assets with the future benefits it owes members – was 119 per cent at yearend.

HOOPP said Wednesday that, effective April 1, active members will receive an increase in their lifetime pension for any service in 2018, 2019 and/or 2020. The plan estimated the benefit – calculated as a small bump in the formula for those three years of service – is worth up to $426 a year for a member. In its announcement to members, HOOPP cited its funding status and its 2020 results, saying the increase is “a sign of our support for our active members, who continue to lead our communities through the pandemic.”

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Chief executive Jeff Wendling, a 22-year veteran of the plan who assumed the top job last March, as the COVID-19 crisis erupted in Canada, said HOOPP came into 2020 with a bond-heavy portfolio. Then, as interest rates plunged during last year’s market volatility, the plan sold many of those bonds and plowed money into equities.

“We just felt it didn’t make sense to hold bonds – they weren’t going to help us generate the return that we needed and they weren’t going to provide the defence, either, we thought we needed in the future,” Mr. Wendling said in an interview Tuesday. “At the same time, we started to see opportunities in riskier assets – in equities and credit.”

HOOPP’s 11.4-per-cent return topped its 9.8-per-cent benchmark – what a similar portfolio should have been expected to return – and said its 10-year return was 11.16 per cent, whereas the benchmark for that period was 8.8 per cent.

HOOPP does not report percentage returns, or benchmark measures, by asset class. It said it had $10.66-billion in net investment income in 2020, with $7.14-billion coming from bonds. Equities – both public and private – generated $3.23-billion in net income.

It reported $32-million in net income from real estate, with $334-million in losses and declines in the value of properties almost wiping out $366-million in real estate dividends and income. Real estate has been a problem spot for many pensions, with Caisse de dépôt et placement du Québec, the Ontario Teachers’ Pension Plan and the Ontario Municipal Employees’ Retirement System all citing their exposure to shopping centres as a drag on results over the past year or two.

Mr. Wendling said HOOPP’s real-estate portfolio is well diversified but had overweighted logistics and warehousing properties, owning more of them than pure retail. “That was a big advantage for us, obviously, this year with e-commerce.”

HOOPP reported a $490-million loss between its use of options and what it classifies as “other return seeking strategies.” For some time, it has made extensive use of financial derivatives and hedges to manage risk and generate returns.

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Mr. Wendling said none of HOOPP’s asset classes “materially” underperformed their benchmarks in 2020. “We had strong value-added [returns] across the board.”

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