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Returns on pension funds in 2013

The year 2013 was marked by a come back in force of the developed countries' stock markets. Despite the announcement about the injection of liquidity slowdown due to purchase of bonds by the United States Federal Reserve (FED) and the closedown of the US governmental activities, American stocks have showed an exceptional return close to 41%. EAFO stocks (Europe, Australasia and the Far East) have also progressed significantly with returns of 31%. Canadian stocks have showed a more modest return of 16%. That return is higher than that of the emerging countries, who experienced a return of 4% for the same period.

This last year has been difficult for bonds, most of which have experienced returns near zero. That upset is due to the capital loss caused by the increased interest rates in 2013.

Summary of the returns generated in 2013 by the public sector pension plans administered by the Caisse de dépôt et placement du Québec

The Caisse de dépôt et placement du Québec (CDPQ) administers the 5 following funds:

1. The Government and Public Employees Retirement Plan (RREGOP) Fund;
2. The Pension Plan of Management Personnel (PPMP) Fund;
3. The Pension Plan of Elected Municipal Officers (PPEMO) Fund;
4. The Special Plans Fund;
5. The Retirement Plan for Active Members of the Centre hospitalier Côte-des-Neiges (RPCHCN) Fund.

Each fund is managed under an investment policy that sets return goals and risk limits. The RREGOP, the PPMP and the PPEMO's investment policies are established jointly by the pension committee specific to each fund and the CDPQ. In regards to the investment policies of the RPCHCN Fund and the Special Plans Fund, which consist mainly of the assets of the Pension Plan for Federal Employees integrated to a function within the Gouvernement du Québec (PPFEQ), it is established by CARRA.

It is important that the funds be diversified in order to comply with the goals set in each investment policies. That is why the funds' assets are distributed among at least 10 distinct categories, particularly bonds, Canadian and international stocks, private equity, infrastructure and real estate.

The choice of assets categories and their weight in the assets of each fund explain the difference in annual returns that can be observed between the 5 funds.

The evolution of the assets and the average annual return for various periods are shown below for each of the 5 funds.

The RREGOP Fund

Additional information: Returns of RREGOP 

The asset of the RREGOP Fund increased from $45.1 billion as at December 31, 2012 to $50.4 billion as at December 31, 2013.

The PPMP Fund

The asset of the PPMP Fund increased from $7.8 billion as at December 31, 2012 to $8.7 billion as at December 31, 2013.

The PPEMO Fund

The asset of the PPEMO Fund increased from $173.2 million as at December 31, 2012 to $196.2 million as at December 31, 2013.

The Special Plans Fund

The asset of the Special Plans Fund increased from $190.1 million as at December 31, 2012 to $208.2 million as at December 31, 2013.

The RPCHCN Fund

The asset of the RPCHCN Fund increased from $68.0 million as at December 31, 2012 to $72.4 million as at December 31, 2013.