About Us
Canada Pension Plan Investment Board (CPP Investments) was created in 1997 by an Act of Parliament with the objective to invest the Canada Pension Plan (CPP) fund assets to maximize returns without undue risk of loss, having regard to the factors that may affect the funding of the Canada Pension Plan.
This decision was made to help the CPP remain sustainable for the long term. We prudently invest the amounts transferred to us by the CPP, helping to provide a foundation on which Canadians can build financial security in retirement.
In December 2016, following federal and provincial agreement, Royal Assent was given to Bill C-26, An Act to Amend the Canada Pension Plan, the Canada Pension Plan Investment Board Act and the Income Tax Act. This Act increased the amount of retirement pensions and other benefits that will be paid for contributions made after 2018. It also increased both the rate of contributions required on earnings covered by the CPP, and the upper limit on covered earnings. These increases began in January 2019 and are being phased in over seven years.
Every three years, the Office of the Chief Actuary (OCA) conducts an independent review of the sustainability of the CPP over the next 75 years. The OCA’s most recent report, released in December 2019, reconfirmed that the CPP is sustainable for the next 75 years at the legislated contribution rates as of December 31, 2018.
At September 30, 2022, the Fund’s 10-year annualized net return was 10.1% and the Fund is projected to reach the trillion-dollar mark by fiscal 2033.
There are two parts to the Canada Pension Plan – the base CPP and the additional CPP. Federal and provincial governments decided in 2016 to expand the CPP to provide enhanced future benefits for workers who contribute. As part of this amendment, the CPP was expanded into two parts:
- The “base” CPP refers to the portion of benefits and contributions continuing at the rates used before January 2019; and
- The “additional” CPP refers to the additional benefits and the additional contributions that started in January 2019.
In coming decades, this means that CPP will replace approximately one-third of a beneficiary’s income compared to the current level of approximately one-quarter, up to a certain limit.
Both the base CPP and additional CPP will have the full advantage of CPP Investments’ global network, expertise, investment strategies and risk governance framework. CPP Investments’ strategy is to build a single, resilient Fund with a view to strong performance for both accounts.
CPP Investments has designed an investment structure that will address the different funding requirements of the base CPP and additional CPP. This structure ensures fairness between the base CPP and additional CPP accounts, and that both benefit from CPP Investments’ strengths and have a widely diversified portfolio with appropriate distinct risk characteristics for each account.
Yes. The Canada Pension Plan Investment Board Act (CPPIB Act) has safeguards against any political interference. CPP Investments operates at arm’s length from federal and provincial governments with the oversight of an independent, highly qualified professional Board of Directors. CPP Investments management reports not to governments, but to the CPP Investments Board of Directors. The CPP Investments Board approves investment policies, determines with management the organization’s strategic direction and makes critical operational decisions.
We are, however, accountable to Parliament and to federal and provincial ministers who serve as the CPP stewards. The CPPIB Act holds our Board of Directors and Management accountable for their performance under a rigorous public accountability regime. We also go beyond our legislated requirements and make every effort to ensure federal and provincial stewards, as well as Canadians, are kept informed of our activities.
CPP Investments assists the CPP in meeting its obligations to contributors and beneficiaries. To enable this, Canadian governments created a unique governance model where CPP Investments operates as a professional investment organization with a commercial, investment-only mandate. All assets managed by CPP Investments are strictly segregated from government funds.
Yes. Every three years, the Office of the Chief Actuary of Canada conducts an independent review of the sustainability of the CPP over the next 75 years.
In December 2019, the Office of the Chief Actuary reaffirmed through its latest triennial review that each part of the CPP remains sustainable at the legislated contribution rates throughout the 75-year period of her report (i.e., until 2095), based on actuarially accepted assumptions.
In addition to future return expectations, this review takes many factors into account, including:
- The growing base of contributors and employment earnings;
- The rising ratio of those receiving pension benefits relative to contributors; and
- Expected increases in life expectancy.
The next actuarial review will cover the status of both base and additional CPP as at December 31, 2021 and will be next performed in 2022.
CPP Investments is distinct from the Government of Canada and does not get involved in the administration of CPP contribution or benefit payments which is the role of Employment and Social Development Canada (ESDC). CPP Investments’ role is to invest the assets of the Fund that are not needed to pay current benefits.
To find out more about CPP contributions and benefits, please visit the Service Canada website or call 1-800-277-9914 (Canada and the United States toll-free) or 1-613-957-1954 (call collect) outside of Canada and the United States as Service Canada manages the administration of the CPP program.
Other useful government resources:
Employment and Social Development Canada (ESDC) / Service Canada
Canada Pension Plan Overview
Canada Pension Plan Contact Information
Canadian Retirement Income Calculator
Canada Pension Plan enhancement
Department of Finance Canada – Additional CPP
Backgrounder: Canada Pension Plan (CPP) Enhancement
Backgrounder: A Stronger Canada Pension Plan
Canada Revenue Agency
Canada Pension Plan (CPP)
The Canada Pension Plan enhancement
Our Investments
CPP Investments is focused on delivering returns over a very long horizon and as such, we construct a portfolio that has a diversified, long-term asset mix.
Our current asset mix (as of September 30, 2022) is as follows:
1Fixed income consists of cash and cash equivalents, money market securities and government bonds, net of debt financing liabilities. Public Equities include absolute return strategies and related investment liabilities.
As a global investment organization, we invest in public equities, private equities, bonds, public and private debt, real estate, infrastructure and other areas. We want Canadians to be informed about our investment strategy and what this means for how we manage the funds in the CPP. In addition to on-going announcements about new investments and quarterly financial reporting, we disclose our investments on our website, and our public equities on an annual basis at year-end (March 31).
You can read about our holdings in the following lists:
- Private equity relationships established as at June 30, 2022
To learn more about our private equity investments and teams, please visit Private Equity. - Canadian public equity holdings as at March 31, 2022
- Foreign public equity holdings as at March 31, 2022
To learn more about our public market investment activities please visit Active Equities and Capital Markets & Factors Investing. - Global Equity Index Exposure as at March 31, 2022
- Real estate holdings established as at September 30, 2022
To learn more about our real estate activities and the teams who manage our investments, please visit Real Assets.
Please note that, as our disclosure policy states, we “do not disclose information regarding investments under consideration or not completed, and we respect third-party confidentiality agreements.” We also do not publish information that is commercially sensitive.
We compete around the world to secure and manage public and private assets to maximize returns and deliver sustainable value. We have global teams who bring deep expertise and local knowledge. We ensure the Fund has both asset and geographic diversification to achieve strong returns, to make it more resilient to single-market volatility and to safeguard the best interests of current and future beneficiaries against other factors affecting the funding of the plan.
We generally do not respond to unsolicited investment proposals. To build a diversified portfolio, CPP Investments invests in public equities, private equities, real estate, infrastructure and fixed income instruments, and we explore investment opportunities that meet our criteria and scale. You can learn more about How We Invest and Our Investment Strategy here.
Our mandate is to help sustain the future pensions of 21 million CPP contributors and beneficiaries by maximizing returns without undue risk of loss, having regard to the factors that may affect the funding of the CPP. Most of the demographic and economic factors that affect the sustainability of CPP are domestic in nature. Therefore, global diversification of the Fund is critical to managing these risks.
With 14% of our portfolio invested in Canada as of September 30, 2022, we will always have a large part of the Fund invested here. But, a Fund of our size cannot be overly dependent on the strength of the Canadian economy and so we are systematically looking for opportunities to diversify internationally. Portfolio diversification by asset class and by geography is a fundamental part of CPP Investments’ long-term investment strategy.
The Office of the Chief Actuary reaffirmed through its latest triennial review that the CPP remains sustainable at the current contribution rate throughout the 75-year period of the report, based on actuarially accepted assumptions. It is assumed that base CPP and additional CPP accounts will earn an average annual real rate of return of 3.95% and 3.38% respectively over that period after taking into account inflation and all costs.
As of September 30, 2022, the Fund’s 10-year net nominal annualized return was 10.1% or 7.7% on a net real return basis.
It is important to note that the 3.95% and 3.38% rates of return are not CPP Investments targets. Our mandate is to maximize returns without undue risk of loss, having regard to the factors that may affect the funding of the CPP, and so our investment programs are designed to meet this mandate.
CPP Investments uses performance benchmarks at the total portfolio (Fund level) to objectively measure and evaluate investment performance. Our benchmarks are our Reference Portfolios for base CPP and additional CPP and are a representation of the passive public investment alternatives that the Fund might otherwise hold. The Reference Portfolios provide a clear benchmark for long-term total returns on the additional CPP and base CPP Investment Portfolios. The Reference Portfolios differ between the additional CPP and base CPP accounts to reflect the different risk levels prudently targeted for each of their long-term investment portfolios. For the base CPP, CPP Investments has adopted a Reference Portfolio of 85% global equity/15% nominal bonds issued by Canadian governments. For the additional CPP account, CPP Investments has adopted a Reference Portfolio of 50% global equity/50% nominal bonds issued by Canadian governments.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Quoted market prices are used to measure the fair value for investments traded in an active market, such as public equities and marketable bonds.
Where the market for an investment is not active, such as for private equity, private debt, real assets, and over-the-counter derivatives, fair value is determined by valuation techniques that make maximum use of inputs observed from markets, such as a multiple of earnings derived from a set of publicly traded comparable companies.
Additional techniques include the use of recent arm’s-length transactions, the current fair value of another investment that is substantially the same, discounted cash-flow analysis, pricing models and other accepted industry valuation methods.
For more information about our valuation practices, watch the video below:
Governance & Operations
The nomination process to CPP Investments’ Board of Directors is designed to ensure that only those with appropriate and desired expertise, most generally in investment, business, and finance, are appointed to the Board.
The nomination process to CPP Investments is a well-defined and multi-step nomination and appointment process. Directors are appointed by the Governor in Council following a recommendation by the federal Minister of Finance. Before making that recommendation, the federal Minister is required to consult with the Finance Ministers of the participating provinces.
The Minister of Finance of Canada is authorized to appoint—and in practice has appointed—a nominating committee to advise on appointments, which consists of representatives of each of the participating provinces and a representative designated by the federal Minister. As this process has evolved, CPP Investments has come to take initial steps: under the supervision of the Governance Committee of the Board of Directors, a search firm is engaged and CPP Investments proposes individuals to the governmental nominating committee. The nominating committee then recommends candidates for appointment and re-appointment to the federal Finance Minister.
The Board posts a Notice of Appointment Opportunity on CPP Investments’ website. This provides the general public with the opportunity to view the critical competences required of a Director and to submit one’s name for consideration. Candidates arising from this process augment those identified by external executive search firms to ensure we consider the widest possible range of highly qualified candidates.
For more information see Board of Directors.
We compete for talent with the largest investment managers and financial institutions in Canada and around the world. We believe market competitive compensation is one of the essential elements necessary to attract, motivate and retain the talent we need to effectively execute CPP Investments’ legislative mandate.
Our compensation program reflects our public accountability and our responsibility to manage the Fund in the best interests of CPP’s contributors and beneficiaries. We align incentives to the delivery of our mandate and long-term strategy, while also considering our appetite for taking on different types of risks in our pursuit of value-add returns.
Every employee’s total incentive is partially tied to total Fund performance. This emphasis on the total Fund helps draw a closer linkage between the interests of CPP contributors and beneficiaries and the compensation outcomes of our employees. As our investment strategy and execution evolve, we consider both quantity and quality when evaluating investment performance and other objectives.
We treat cost management as a tenet of our public accountability as we seek to build an internationally competitive investment platform to maximize long-term returns. While total costs for the fiscal year ended March 31, 2022, are down compared to the previous year, operating expenses increased by $106 million due to an increase in full-time globally positioned talent, higher incentive compensation, in line with better year-over-year long-term Fund performance, and continued investments in building our technology and data infrastructure.
Our operating expense ratio of 27.1 basis points (bps) declined from 29.3 bps the previous year and is also below our five-year average of 29.1 bps.
For a full discussion of how we manage costs, please refer to our most recent Annual Report.
Sustainable Investing
We believe organizations that effectively anticipate and manage dynamic and emerging material business risks and opportunities, including climate change, are more likely to make better-informed decisions, and endure and create value over the long term. This is why we consider and integrate these sustainability-elated risks and opportunities into our investment analysis across the investment life cycle and across asset classes, where such considerations are material. This includes engaging with our investment partners and portfolio companies to promote improved management of these factors to enhance long-term outcomes in the companies and assets in which we invest.
Sustainability-related factors, including climate change, are increasingly and more directly impacting the strategic, operational and financial profile of companies around the world. The investment and asset management teams at CPP Investments integrate material sustainability-related factors both before making investments and during the period we hold the asset, as well as when our portfolio companies prepare for listing.
CPP Investments is an active and engaged owner, and is constructive in our partnership with companies on their sustainability journey. We recognize and respect the different roles that shareholders/owners, boards/ directors and management teams/executives each play in ensuring long-term value creation.
Please visit the Sustainable Investing section of our website to learn more about our approach to sustainability.
Interested in our approach to net zero? Click to learn more about our net-zero commitment and how we are investing in the path to net zero.
