CPPIB added almost $10B in assets in last quarter

CPP performance is well ahead of what chief actuary of Canada says will be needed to pay benefits for decades.

CPP performance is well ahead of what chief actuary says will be needed to pay benefits for decades

The board that manages funds on behalf of the Canada Pension Plan saw its assets increase by almost $10 billion in the first three months of its fiscal year. (Ramya Jegatheesan/CBC)

Canada's national pension plan owned assets worth $326.5 billion at the end of June, a nearly $10-billion increase in three months despite a weakening Canadian dollar that dragged down results.

The Canada Pension Plan Investment Board (CPPIB) invests funds on behalf of 20 million Canadian workers and retirees included in the Canada Pension Plan. The board's job is to take contributions not needed to pay current benefits and invest them for the future.

Last year,  the chief actuary of Canada reaffirmed that the fund should be able to pay out all of its obligations for the next 75 years at its current contribution rate of 9.9 per cent.

Of the almost $10 billion increase in the fund's assets, about 5.7-billion worth came from investment returns. Another $4.1 billion came in via new contributions. 

Between April and June, the fund earned a 1.8 per cent rate of return after costs. But the performance looks a lot better over a longer time frame.

In the previous five years, the fund has pulled off a return of 10.5 per cent, after costs. Over a 10-year horizon, the gains drop to 5.2 per cent, but still well above the 3.9 per cent annualized long-term gains the chief actuary calculates will be needed for the fund to pay out its obligations in perpetuity.

Every major class of investment that the fund has money put to work in contributed to the gain, including public stocks, private companies, bonds and other investments like real estate and infrastructure.

"Global equity markets produced a significant uplift and gains from fixed income improved," CPPIB president Mark Machin said. "Meanwhile, the strengthening Canadian dollar against most major currencies applied downward pressure, a trend that accelerated in the first half of the current quarter."