CPP adds $17B to assets now worth more than $409B despite pandemic

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CPPIB Canada Pension CBC News | James Alexander Michie

Canada Pension Plan Investment Board president Mark Machin said the national pension plan is secure despite the global economic disruption caused by the coronavirus pandemic. (Adrian Wyld/Canadian Press)

The Canada Pension Plan earned a return of 3.1 per cent after expenses during the financial year ended March 31, the board that manages the fund’s money reported Tuesday.

Net assets for Canada’s national pension plan totalled $409.6 billion as of the end of March, up from $392 billion at the end of the previous financial year.

The $17.6-billion year-over-year increase included $12.1 billion in net income from its investments. The other $5.5 billion came from contributions of more than 20 million Canadian workers covered by the plan.

In the past five years, investment returns have added $123 billion to the fund’s assets, the Canada Pension Plan Investment Board said Tuesday.

While the plan made money for the year as a whole, the fourth quarter was a challenging one because of COVID-19. The fund said fixed-income assets did well as investors fled for safety, but values of stock-based investments fell.

“Despite severe downward pressure in our final quarter, the fund’s 12.6 per cent return on a 2019 calendar-year basis combined with the relative resilience of our diversified portfolio helped cushion the impact,” chief executive officer Mark Machin said.

“Amid the significant number of concerns many Canadians have today, the sustainability of the fund is one thing they shouldn’t worry about. The fund’s long-term returns continue to help ensure the security of Canadians’ retirement benefits.”

That annual return of $12 billion implies the fund lost about $16 billion during the pandemic, since at the end of December CPPIB reported nearly $28 billion worth of investment gains in the first nine months of the fiscal year.

A three per cent annual return may not sound impressive, but Michel Leduc, a senior investment executive with the fund, said in an interview that the fund’s financial performance in the middle of a serious economic crisis is a testament to its strategy.

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Source: Pete Evans | CBC News

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