Pension funds performance

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Returns on pension funds in 2011

The financial markets experienced great volatility in 2011. Such significant events as the earthquake in Japan, the protest movements in North Africa, the sovereign debt problems in Europe, and the discussions on raising the US debt ceiling created uncertainty and lowered prospects for economic growth. Because of these circumstances, investors favoured safe assets, such as high-quality government bonds, to the detriment of stock markets.

For investors, 2011 was characterized by:

• the good performance of the Canadian bond markets;
• the poor performance of the Canadian, European and Asian stock markets;
• the good performance of investments in real estate and infrastructure;
• the hovering of the Canadian dollar near parity with the U.S. dollar.

Summary of the returns generated in 2011 by the pension plan funds managed by the Caisse de dépôt et placement du Québec (CDP)

The Caisse de dépôt et placement du Québec administers the following five funds:

1. The Government and Public Employees Retirement Plan (RREGOP) Fund;
2. The Pension Plan of Management Personnel (PPMP) Fund;
3. The Pension Plan of Elected Municipal Officers (PPEMO) Fund;
4. The Special Plans Fund;
5. The Retirement Plan for Active Members of the Centre hospitalier Côte-des-Neiges (RPCHCN) Fund.

Each of these funds is managed under an investment policy that sets return targets and risk limits. The RREGOP, PPMP and PPEMO investment policies are established jointly by the specific pension committee for each fund and the CDP. As regards the investment policies of the RRCHCN Fund and the Special Plans Fund, which consists mainly of the assets of the Pension Plan for Federal Employees transferred to employment with the gouvernement du Québec (PPFEQ), it is established by CARRA, jointly with the CDP.

It is important that the funds be widely diversified so they meet the targets set in each investment policy. That is why the funds’ assets are distributed among at least 12 distinct classes, particularly bonds, Canadian and international shares, private equity, infrastructure and real estate.

The choice of asset classes and their weight in the assets of each fund explain the difference in annual returns that can be observed between the five funds.

The changes in assets and the average annual returns for different periods are shown below for each of the five funds.

 

1. The RREGOP Fund

Additional information: Returns of RREGOP

The assets of the RREGOP Fund rose from $41.3 billion as at December 31, 2010 to $42.0 billion as at December 31, 2011.

	Rate of return
	2011 (1 year)	2008 to 2011 (4 years)	2007 to 2011 (5 years)	2002 to 2011 (10 years)	1992 to 2011 (20 years)
RREGOP Fund	3.5%	-0.7%	0.4%	4.5%	6.9%

 

 

2. The PPMP Fund

The assets of the PPMP Fund climbed from $6.8 billion as at December 31, 2010 to $7.1 billion as at December 31, 2011.

	Rate of return
	2011 (1 year)	2008 to 2011 (4 years)	2007 to 2011 (5 years)	2002 to 2011 (10 years)	1992 to 2011 (20 years)
PPMP Fund	4.9%	-0.3%	0.9%	4.8%	7.0%

 

 

3. The PPEMO Fund

The assets of the PPEMO Fund increased from $156.2 million as at December 31, 2010 to $159.4 million as at December 31, 2011.

	Rate of return
	2011 (1 year)	2008 to 2011 (4 years)	2007 to 2011 (5 years)	2002 to 2011 (10 years)	1992 to 2011 (20 years)
PPEMO Fund	3.2%	-0.8%	0.4%	4.7%	7.2%

 

 

4. The Special Plans Fund

The assets of the Special Plans Fund grew from $172.9 million as at December 31, 2010 to $177.9 million as at December 31, 2011.

	Rate of return
	2011 (1 year)	2008 to 2011 (4 years)	2007 to 2011 (5 years)	2002 to 2011 (10 years)	1992 to 2011 (20 years)
Special plans fund	3.9%	-0.6%	0.6%	4.7%	6.7%

 

 

5. The RPCHCN Fund

The assets of the RPCHCN Fund declined from $66.1 million as at December 31, 2010 to $64.8 million as at December 31, 2011.

	Rate of return
	2011 (1 year)	2008 to 2011 (4 years)	2007 to 2011 (5 years)	2002 to 2011 (10 years)	1992 to 2011 (20 years)
RPCHCN fund	4.4%	-0.5%	0.7%	4.8%	6.7%