February 14, 2000
The Canada Pension Plan Investment Board received $663 million in new cash from the Canada Pension Plan in the third quarter of fiscal 2000. These funds were invested as soon as they were received. As a result we had $1.7 billion in invested assets at December 31, 1999 compared with $818 million at September 30, 1999. The share of the Canada Pension Plan assets managed by the Canada Pension Plan Investment Board is presently small, but will grow steadily in the coming years. Today the Canada Pension Plan has total assets of approximately $37.6 billion. In addition to the $1.7 billion under management at the CPP Investment Board, $30.3 billion (at cost) is invested in provincial and federal government bonds with the remainder held in a short-term operating reserve. Both the bond portfolio and the operating reserve are administered by the Federal Government. In determining our asset mix, we have taken into consideration the amounts that are already invested in government bonds and as a result, 100% of new investments by the CPP Investment Board are allocated to equities. Approximately 80 percent of the Canada Pension Plan assets under our management are invested in the shares of major Canadian companies and the remainder in foreign equities. The Canadian investments substantially replicate the Toronto Stock Exchange 300 Composite Index. The foreign investments substantially replicate the Standard and Poor’s 500 Index of leading U.S. companies and the EAFE (Europe, Australia and Far East) Index of about 1,000 overseas companies.
These indexes are a cost-efficient way to invest in domestic and foreign markets and to diversify investment risk among different global economies. During the month of December 1999 the federal and provincial finance ministers unanimously agreed to permit the CPP Investment Board to invest actively up to 50% of the assets committed to Canadian equities. This was an important development. In the future, we will be able to diversify the asset classes and investment approaches we employ. As a result we will have a broader range of alternatives for enhancing return and managing risk. The Canada Pension Plan Investment Board was created by an Act of Parliament in December 1997. It receives funds not needed by the Canada Pension Plan to pay current pensions and invests them in capital markets. By increasing the long-term value of these funds, the CPP Investment Board will help the Canada Pension Plan to keep its pension promise to Canadians. The CPP Investment Board is a corporation governed and managed separately from the Canada Pension Plan. The Canada Pension Plan itself is the joint responsibility of the federal and provincial governments which set contribution rates and benefit levels. The plan is administered by the federal government, which collects contributions and pays pensions.
For further information contact: Canada Pension Plan Investment Board 181 University Avenue Suite 1800 Toronto, Ontario M5H 3M7 Telephone : 416-868-4075 Facsimile : 416-868-4083 Website : www.cppib.ca