Archives

Returns on Public Sector Pension Plan Funds in 2014

The year 2014 was marked by geopolitical tensions in Ukraine and by the sudden decrease in the price of oil at the end of the year. Incidentally, the American economy consolidated its growth for the passed years while the European economy has been rather stagnant. Taking that context into account, the stock markets have typically performed well. Indeed, American stocks have generated a return in Canadian dollars of 24%. Canadian stocks have also progressed well with a return of 13%. However, EAFO stocks (Europe, Australasia and the Far East) generated a more modest return of 4% in Canadian dollars. That return is lower than that of the emerging countries, who generated a return in Canadian dollars of 9%.

The decrease of interests rates in 2014 has surprized several experts. However, it has been beneficial for bonds, which generated a return of 8%.

Summary of the returns generated in 2014 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) is responsible for the investment of the assets of the 5 following funds based on the investment policy specific to each:

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 which 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. As for the investment policies of the RPCHCN Fund and the Special Plans Fund, consisting 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 our organization.

It is important that the funds be diversified so that they comply with the objectives 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 asset categories and their weight in the asset of each fund explains the difference in annual returns that can be observed between the 5 funds.

The evolution of the asset 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 $50.4 billion as at December 31, 2013 to $55.7 billion as at December 31, 2014.

The PPMP Fund

The asset of the PPMP Fund increased from $8.7 billion as at December 31, 2013 to $9.6 billion as at December 31, 2014.

The PPEMO Fund

The asset of the PPEMO Fund increased from $196.2 million as at December 31, 2013 to $215.9 million as at December 31, 2014.

The Special Plans Fund

The asset of the Special Plans Fund increased from $208.2 million as at December 31, 2013 to $226.5 million as at December 31, 2014.

The RPCHCN Fund

The asset of the RPCHCN Fund increased from $72.4 million as at December 31, 2013 to $77.8 million as at December 31, 2014.