The Ontario Teachers’ Pension Plan earned a 14.7% return last year, performing 4.1% above the markets, but its funding shortfall continued to widen, the fund reported today.

In 2004, the pension fund’s net investment income fell to $10.8 billion, down from $11.4 billion for 2003. Meanwhile, the fund’s net assets increased to $84.3 billion from $75.7 billion in 2003.

Despite strong investment returns, the plan said its funding shortfall continued to grow.

“Low interest rates may be good for your mortgage or car loan, but they are hard on pension plans,” said Claude Lamoureux, the fund’s president and CEO.

“Low rates mean this pension plan must have more money in the fund today to be prepared to pay pensions 70 years from now.”

As of Jan. 1, an actuarial valuation by Mercer Human Resources Consulting showed that the plan’s future pension benefits were 84% funded, down from 94% a year earlier. In 2003, the pension plan was 102% funded.

Since the fund was created 15 years ago, the plan’s long-term rate of return has averaged 11.3% per year, says Teachers. During this period, the fund grew to $84.3 billion from less than $20 billion and paid out $28.9 billion in pension benefits. The investment team generated $74.3 billion in income since 1990, including $15.7 billion in value over benchmarks.