CANADA - The Canada Pension Plan (CPP) grew by $600m for the quarter ending June 30, 2006, despite an investment rate return of -2.6% or $2.5bn.
The fund managed a positive return thanks to $3.1bn from CPP contributions not needed to pay current pensions, and CPP Investment Board CEO David Denison said: Our investment returns reflect the decline in Canadian and global equity markets that occurred during the quarter. Given that the composition of our portfolio is designed to generate long-term returns required to help sustain the CPP over multiple generations, this kind of short-term volatility in markets and returns is expected.”
The CPP said contributions were expected to exceed annual benefits paid until 2022, providing a 16-year period before a portion of the investment income is needed to help pay CPP benefits. At June 30, 2006, the CPP fund consisted of 58.5% ($57.7bn) publicly traded stocks, 25.7% ($25.3bn) government bonds, 9.6% ($9.6bn) real return assets, 5% ($4.9bn) private equity and 1.2% ($1.1bn) in cash and cash equivalents. Over the next ten years, the Chief Actuary of Canada estimates that the CPP fund will grow to approximately $250 billion, making it one of the largest single purpose pools of investment capital in the world. By Damian Clarkson
This week's edition of Professional Pensions is out now.
Industry Voice: Sponsored by Eaton Vance
BNY Mellon has launched a range of reporting tools to help institutional investor clients track and evaluate portfolio investments based on environmental, social and governance (ESG) issues.
PP speaks to BESTrustees director Heather McGuire about her views on the CMA's review into the investment consultant and fiduciary management markets.