Canada Pension Plan Takes a Plunge

Assets in the Canada Pension Plan fell, over the three months of 2008, by $8.5 billion; this is the fund's second consecutive loss.

The unsettled equity markets have sent the Canada Pension Plan (CPP) tumbling with its assets falling by $8.5-billion in the last three months of 2008. This is the CPP's second consecutive quarterly loss means the fund's assets are now $18.8-billion less than where they stood on June 30, 2008. The fund now has $108.9-billion in assets, compared with $127.7-billion at the end of June last year. “Sharp declines in global equity markets , especially in October and November, negatively impacted our results for the quarter,” David Denison, president and CEO of the Canada Pension Plan Investment Board (CPPIB), said in a statement. October to December, 2008 is the CPP fund's third quarter and the S&P/TSX composite index dropped by 23.5 per cent. during that same period, the S&P 500 fell by 22.5 per cent, and many exchanges around the world tumbled by similar amounts. In the quarter, the CPPIB's investment return was negative 6.7 per cent which lead to a loss of $7.9-billion. The rest of the loss was the result of the return of a portion of contributions received earlier in the calendar year, that went to benefit payments. Denison said the plan's investment strategy is sound, and it will be able to weather an extended market downturn. Since 1999, the fund has made $30.1-billion in investment income and has generated a 5.1 per cent annualized investment rate of return since April 1, 1999. The Plan will not be forced to sell its assets at a loss due to structural issues including a steady stream of contributions and the long-term basis on which the plan is valued. The CPPIB will be able to evaluate acquisition opportunities that arise in the market downturn.