CPP fund grows to $98.6 billion: Contribution inflows more than off-set negative investment returns for quarter

Waning Canadian and global equity markets slows growth in Q1

The CPP fund, which includes investment earnings and CPP contributions not needed to pay current pensions, grew by $0.6 billion to $98.6 billion during the quarter ending June 30, 2006.

For the three-month period, the CPP fund experienced an investment rate of return of minus 2.5 per cent, or a decline of $2.5 billion, while the fund added $3.1 billion from CPP contributions not needed to pay current pensions. The net result is a $0.6 billion overall increase in the CPP fund.

"Our investment returns reflect the decline in Canadian and global equity markets that occurred during the quarter," said David Denison, President and CEO, CPP Investment Board. "Given that the composition of our portfolio is designed to generate long-term returns required to help sustain the CPP over multiple generations, this kind of short-term volatility in markets and returns is expected."

At June 30, 2006, the CPP fund consisted of 58.5 per cent ($57.7 billion) of publicly traded stocks, 25.7 per cent ($25.3 billion) of government bonds, 9.6 per cent ($9.6 billion) of real return assets, 5 per cent ($4.9 billion) of private equity and 1.2 per cent ($1.1 billion) in cash and cash equivalents.

CPP contributions are expected to exceed annual benefits paid until 2022, providing a 16-year period before a portion of the investment income is needed to help pay CPP benefits. Over the next ten years, the Chief Actuary of Canada estimates that the CPP fund will grow to approximately $250 billion, making it one of the largest single purpose pools of investment capital in the world.

CPP Investment Board

The CPP Investment Board invests the funds not needed by the Canada Pension Plan to pay current benefits. With a mandate from the federal and provincial governments, the CPP Investment Board is accountable to Parliament, to the federal and provincial finance ministers who serve as the stewards of the CPP and reports to 16 million contributors and beneficiaries. Based in Toronto, the 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.