CPP Reserve Fund Grows to $91.7 Billion

The CPP reserve fund, which includes investment earnings and CPP contributions not needed to pay current pensions, grew by $4.7 billion to $91.7 billion during the quarter ending September 30, 2005.

The CPP reserve fund earned $4.0 billion from investments in publicly traded stocks, private equity, real estate, infrastructure and government bonds for a rate of return of 4.5 per cent for the quarter (not annualized). The fund grew by a further $0.7 billion from CPP contributions not needed to pay current pensions.

At September 30, 2005, the CPP reserve fund consisted of 55.5 per cent ($50.8 billion) of publicly traded stocks, 30.8 per cent ($28.3 billion) of government bonds, 4.3 per cent ($3.9 billion) in cash and money market securities, 5.6 per cent ($5.2 billion) of real return assets and 3.8 per cent ($3.5 billion) of private equity.

"We are pleased with the progress we are making in diversifying the reserve fund into a broader range of asset classes," said David Denison, President and CEO, CPP Investment Board. "One example of this broader investment approach is the recent completion of the purchase of the Olympia and York real estate portfolio by a consortium in which we are a major participant."

Based on actuarial projections, CPP contributions are expected to exceed benefits paid until 2022, providing a 17-year period before a portion of the investment income from the CPP reserve fund is needed to help pay CPP benefits.

Since 1999, when the CPP Investment Board began its investment program, the CPP reserve fund has more than doubled to $91.7 billion, with about 61 per cent, or $28.9 billion, of the increase coming from investment gains. The Chief Actuary of Canada estimates the fund will grow to approximately $147 billion by 2010.