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
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