Inflation protection can help protect the buying power of your pension in retirement.

FUNDING VALUATION 2 Financial Check Up Independent experts do a financial check up of the pension plan every year. The check up is called a funding valuation. How much inflation protection you get depends on three key factors: The base inflation adjustment, which reflects the annual increase in the cost of living. The plan’s funding status. This determines how much of the base inflation adjustment the pension plan can afford to pay. When you worked and earned pension credit. Let’s look at each of these factors in more detail.

FUNDING VALUATION 3 Assets & Liabilities The valuation compares projected pension assets to liabilities. Assets are what we own. Liabilities are what we owe in pensions to our members.

Factors Affecting Assets & Liabilities FUNDING VALUATION 4 Factors Affecting Assets & Liabilities Many factors affect pension assets and liabilities. Key ones include returns on plan investments, interest rates and member life expectancy. The valuation takes these and many other variables into account.

Key Positions & Outcomes FUNDING VALUATION 5 Key Positions & Outcomes The valuation can show three key funding positions or outcomes: A balanced state A surplus A shortfall

THREE KEY FUNDING POSITIONS OR OUTCOMES 6 A Balanced State The pension plan is balanced when projections show we have enough money to meet pension obligations looking out 70 years and beyond.

THREE KEY FUNDING POSITIONS OR OUTCOMES 7 A Surplus Even better is a surplus. This occurs when projections show we have more than enough money to meet all pension obligations.

THREE KEY FUNDING POSITIONS OR OUTCOMES 8 A Shortfall But when future pension costs are greater than pension assets, we have a projected funding shortfall.

RESTORING BALANCE 9 Lower Pension Costs Providing smaller cost-of-living increases can help lower pension costs and restore balance.

RESTORING BALANCE 11 Larger Increases When there’s a funding surplus, larger cost-of-living increases can be paid with confidence.

Conditional Inflation Protection RESTORING BALANCE 11 Conditional Inflation Protection Making inflation protection conditional on the plan’s funding status is one way to keep the pension plan balanced. And that translates into retirement security for you.

I’m happy to answer any questions you may have. You can also consult the resources listed on this slide. MORE INFORMATION • Visit the pension plan’s website at www.otpp.com/funding • Talk to your affiliate pension representative