May 19, 2005
The total CPP portfolio, which includes investment earnings and contributions not needed to pay current pensions, grew to $81.3 billion in the year ending March 31, 2005, an increase of $10.8 billion from $70.5 billion the previous year.
The CPP reserve fund assets showed a $6.3 billion investment gain in fiscal 2005 compared with a $10.3 billion gain in 2004. The rate of return was 8.5 per cent versus 17.6 per cent the previous year.
Global equity markets continued to perform well in fiscal 2005, but not at the high levels of the previous year. Consequently, equities and real return assets produced income of $4.7 billion for an 11.6 per cent rate of return compared with $7.2 billion and a 31.7 per cent rate of return in fiscal 2004.
Our fixed income assets, consisting of bonds and cash, generated income of $1.6 billion compared with $3.1 billion the year before. The rate of return on fixed income assets was 4.6 per cent, compared with 8.7 per cent in fiscal 2004. Over the past five years the CPP reserve fund has earned a real (inflation-adjusted) rate of return of 4.48 per cent which exceeds the 4.1 per cent real rate of return required to sustain the CPP over the long term. ”The results of the last five years show that we are on track to meet our long term goal of helping to sustain the pensions of 16 million Canadians for the long term,” said David Denison, President and CEO, CPP Investment Board. “We are now part way through our diversification program for the reserve fund and the results of the past year reflect its current composition. Going forward, we will be taking steps to more broadly diversify the portfolio beyond the current asset mix by increasing our holdings in real estate, infrastructure and other real return assets.” At March 31, 56.2 per cent or $45.7 billion of the $81.3 billion CPP reserve fund consisted of publicly traded stocks, 39 per cent or $31.7 billion of fixed income securities, 3.6 per cent or $2.9 billion of private equity, and 1.2 per cent or $1 billion of real estate and infrastructure. The three-year transfer of bonds from the federal Department of Finance will be complete on April 1, 2007. The one-year transfer of the cash operating reserve will finish in August 2005. Based on actuarial projections, CPP contributions are expected to exceed benefits until 2022, providing a 17-year period before a portion of the investment income is needed to help pay CPP benefits.
CPP Investment Board
The CPP Investment Board invests in capital markets the funds not needed by the Canada Pension Plan to pay current pensions. Cash flows are currently invested in equities, real estate and infrastructure to balance the cash and bonds owned by the Canada Pension Plan. By increasing the long-term value of funds, the CPP Investment Board will help the Canada Pension Plan to keep its pension promise to 16 million Canadians. With a mandate from the federal and provincial governments, the CPP Investment Board is accountable to Parliament and to the federal and provincial finance ministers who serve as the stewards of the CPP. Based in Toronto, CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. Its fiscal year is from April 1 to March 31. For more information about the CPP Investment Board, visit www.cppib.ca.
A teleconference has been scheduled for May 19, at 11 a.m. EDT to discuss these results. Journalists who wish to participate please contact Jennifer Ross at 416-868-4682 or jross@cppib.ca. The teleconference will also be webcast live at www.cppib.ca.
For further information contact:
John Cappelletti, Manager, Communications
416-868-0308
Or
Ian Dale, Vice President, Communications and Stakeholder Relations
416-868-4086