All figures in Canadian dollars unless otherwise noted.
Third-Quarter Performance1:
Net assets increase by $14.6 billion
10-year annualized net return of 9.3%
TORONTO, Feb. 15, 2024 /CNW/ – Canada Pension Plan Investment Board (CPP Investments) ended its third quarter of fiscal 2024 on December 31, 2023 with net assets of $590.8 billion compared to $576.1 billion at the end of the previous quarter.
The $14.6 billion increase in net assets for the quarter consisted of $19.3 billion in net income less $4.7 billion in net Canada Pension Plan (CPP) outflows. CPP Investments routinely receives more CPP contributions than required to pay benefits during the first part of the calendar year, partially offset by benefit payments exceeding contributions in the final months of the year.
The Fund, which includes the combination of the base CPP and additional CPP accounts, achieved a 10-year annualized net return of 9.3%. For the quarter, the Fund’s net return was 3.4%. In the 10-year period up to and including the third quarter of fiscal 2024, CPP Investments has contributed $319.4 billion in cumulative net income to the Fund.
For the nine-month fiscal year-to-date period, the Fund increased by $20.7 billion consisting of $15.3 billion in net income and $5.4 billion in net CPP contributions. The Fund’s net return was 2.6% for that same period.
“Strong performance of global equity and fixed income markets during the final months of calendar 2023 contributed to the Fund’s continued growth,” said John Graham, President & CEO. “We remain focused on applying our investment capabilities to prudently manage the Fund to deliver long-term value for CPP contributors and beneficiaries.”
Gains in public equity, fixed income, credit, private equity, energy and infrastructure assets contributed positively to results, partially offset by the impact of foreign exchange losses due to a stronger Canadian dollar relative to the U.S. dollar.
Performance of the Base and Additional CPP Accounts
The base CPP account ended its third quarter of fiscal 2024 on December 31, 2023, with net assets of $557.7 billion, compared to $546.3 billion at the end of the previous quarter. The $11.4 billion increase in assets consisted of $17.8 billion in net income, less $6.4 billion in net base CPP outflows. The base CPP account achieved a 3.3% net return for the quarter, and a five-year annualized net return of 7.7%.
The additional CPP account ended its third quarter of fiscal 2024 on December 31, 2023, with net assets of $33.1 billion, compared to $29.8 billion at the end of the previous quarter. The $3.3 billion increase in assets consisted of $1.6 billion in net income and $1.7 billion in net additional CPP contributions. The additional CPP account achieved a 5.0% net return for the quarter, and a five-year annualized net return of 5.3%.
The additional CPP was designed with a different legislative funding profile and contribution rate compared to the base CPP. Given the differences in their design, the additional CPP has had a different market risk target and investment profile since its inception in 2019. As a result of these differences, we expect the performance of the additional CPP to generally differ from that of the base CPP.
Furthermore, due to the differences in their net contribution profiles, the assets in the additional CPP account are also expected to grow at a much faster rate than those in the base CPP account.
CPP Investments Net Nominal Returns1,2
(For the quarter ended December 31, 2023)
Base CPP
Five-Year
7.7 %
10-Year
9.4 %
Additional CPP
Five-Year
5.3 %
1 After CPP Investments expenses.
2 Rates of return are calculated on a time-weighted basis.
Long-Term Sustainability
Every three years, the Office of the Chief Actuary of Canada (OCA), an independent federal body that provides checks and balances on the future costs of the CPP, evaluates the financial sustainability of the CPP over a long period. In the most recent triennial review published in December 2022, the Chief Actuary reaffirmed that, as at December 31, 2021, both the base and additional CPP continue to be sustainable over the long term at the legislated contribution rates.
The Chief Actuary’s projections are based on the assumption that, over the 75 years following …
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