February 11, 2005
FISCAL 2005 THIRD-QUARTER RESULTS: CPP RESERVE FUND GROWS TO $77.2 BILLION
The CPP Investment Board announced today that for the three months ending December 31, 2004, assets available to the Canada Pension Plan earned $3.9 billion, producing a rate of return of 5.2 per cent.
At December 31, 2004, the $77.2 billion CPP reserve fund consisted of $43.8 billion in publicly traded equities, private equities, real estate and infrastructure, and $33.4 billion in nominal fixed-income securities. Equities and real return assets, representing approximately 56.7 per cent of the CPP reserve fund, consisted of 52.4 per cent publicly traded stocks, 3.2 per cent private equities, 1 per cent real estate and 0.1 per cent infrastructure. For the quarter, these assets earned $3 billion for a return of 7.4 per cent. Nominal fixed income, representing approximately 43.3 per cent of the total CPP portfolio, consisted of 37.1 per cent in federal and provincial government bonds and 6.2 per cent in cash and money market securities. For the quarter, these assets earned $890 million for a return of 2.6 per cent. During the nine months ending December 31, 2004, assets available to the CPP reserve fund earned $4.6 billion, producing a fiscal year-to-date rate of return of 6.2 per cent. ”Canadians, today and tomorrow, can count on the Canada Pension Plan. The Chief Actuary of Canada said in his recent report the CPP, as currently constituted, is sound for the next 75 years,” said David Denison, President and CEO of the CPP Investment Board. “Canada stands out among G8 countries for having a stable national pension plan, which is the result of CPP reforms made in 1997.” The CPP reserve fund grew to $77.2 billion from $75.2 billion the previous quarter. The increase from the previous quarter was the result of $3.9 billion from investment earnings, less $1.9 billion in benefit payments in excess of contributions, for a net growth to the CPP reserve fund of $2 billion. The bonds and cash operating reserve held in Ottawa are gradually being transferred to the CPP Investment Board. The transfer of bonds began on May 1, 2004, and will take three years to complete. The transfer of the cash operating reserve began in September 2004, and will be completed in August 2005.
Based on recent actuarial projections, CPP contributions are expected to exceed benefits until 2022, providing a 17-year period before a portion of the investment income is needed to help pay CPP benefits. CPP Investment Board The CPP Investment Board invests in capital markets the funds not needed by the Canada Pension Plan to pay current pensions. Cash flows are currently invested in equities, real estate and infrastructure to balance the cash and bonds owned by the Canada Pension Plan. By increasing the long-term value of funds, the CPP Investment Board will help the Canada Pension Plan to keep its pension promise to 16-million Canadians. With a mandate from the federal and provincial governments, the CPP Investment Board is accountable to Parliament and to the federal finance and provincial finance ministers who serve as the stewards of the CPP. Based in Toronto, CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. Its fiscal year is from April 1 to March 31. For more information about the CPP Investment Board, visit www.cppib.ca. A teleconference has been scheduled for February 11, at 11 a.m. EST to discuss these results. Journalists who wish to participate please contact Jennifer Ross at 416-868-4682 or firstname.lastname@example.org. The teleconference will also be webcast live at www.cppib.ca.
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