Canada’s largest pension plans are reporting mixed financial results from a year marked by the coronavirus pandemic.
The Caisse de dépôt et placement du Québec reported a 7.7 per cent return on its depositors’ funds in 2020, representing $24.8 billion in investment results. As at Dec. 31, 2020, the Caisse’s net assets totalled $365.5 billion, up $117.5 billion over five years, with investment results of $110.7 billion and net deposits of $6.8 billion. Over ten years, investment results were $198 billion and net deposits were $15.7 billion.
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Citing the “atypical year,” the Caisse said its total return is 1.5 per cent lower than its benchmark, primarily due to the underperformance by real estate, which posted a -15.6 per cent return, compared to a benchmark of -1.7 per cent. However, its infrastructure and fixed income investments exceeded benchmarks with one-year returns of 5.1 per cent and nine per cent, respectively. And while equities posted a one-year performance in line with its benchmark index at 8.3 per cent, the Caisse’s private equity investments returned 20.7 per cent for the year.
During the first six months of 2020, the Caisse adopted various measures to address the crisis, protect depositors’ capital and act on investment opportunities, while in the second half of 2020 it focused on implementing new approaches, notably in technology and for its international activities.
In the release, Charles Emond, president and chief executive officer of the Caisse, acknowledged the strong performance of some portfolios and the need to reposition some others for the coming years. “In real estate, certain sectors continue to struggle with significant challenges that the pandemic has only intensified. During the year, we continued to transition this portfolio, including through various acquisitions in promising sectors.”
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Meanwhile, the Ontario Municipal Employees Retirement System said the pandemic and subsequent lockdowns resulted in a net return of negative 2.7 per cent for the year.
The pension’s bonds portfolio saw a 1.1 per cent annual return while equity and private equity posted returns of 1.5 per cent and negative 8.4 per cent, respectively. Similar to the Caisse, the OMERS’ infrastructure portfolio saw an 8.4 per cent return, while real estate posted negative 11.4 per cent for the year.
In a press release, Blake Hutcheson, president and CEO of the OMERS, said the pension is a long-term investor that won’t be defined by a single year. “Over the 10-year period leading up to 2020, [the] OMERS investment portfolio performed well by any measure, averaging an annual return of 8.2 per cent and in 2019 alone, OMERS delivered 11.9 per cent. We’re active investors and asset managers with high-quality assets diversified globally and we believe in the strong investment future that our portfolio represents for more than 500,000 members and our more than 1,000 employers in Ontario.”
The OMERS is currently making “key decisions” within its investment portfolio that enhance diversification to grow exposure in new economy stocks, high-demand sectors in real estate and profitable investments with lower carbon intensity, according to the release.
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And the Colleges of Applied Arts and Technology’s pension plan is currently 119 per cent funded on a going-concern basis with a funding reserve of $3.3 billion, based on its latest actuarial valuation as at Jan. 1, 2021.
Additional reserves were allocated to further strengthen benefit security, according to a press release, which noted the plan’s governors deemed it the most prudent option to maintain resilience and cushion the plan against future economic or demographic shocks.
The plan’s discount rate has been lowered to 4.95 per cent from 5.15 per cent, consistent with the plan’s focus on benefit security and sustainability and reflects the asset mix and expected long-term market returns on the investment portfolio, the release said. The plan’s investment results will be released in April.