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Returns on pension funds in 2009

In 2009, after a very difficult first quarter, financial markets have known a significant recovery thanks to the improvement in fundamentals and the maintenance of supportive measures from public authorities. Several countries have concerted together to implement very incentive monetary and fiscal policies as well as measures aimed at increasing credit activity. Consequently, macroeconomic and systemic risks have decreased, the global economic activity has displayed evidence of economic recovery, investors' appetite has re-emerged and prices for a wide range of assets have bounced back.

For Canadian institutional investors, 2009 financial markets were characterized by:

• Excellent performance of corporate bond markets;
• Significant recovery of stock markets in Canada, in other developed countries and in emerging countries;
• Upturn of the Canadian dollar and certain raw materials prices;
• Moderate returns on international real estate investments;
• Final restructuring agreement for third-party ABCP concluded by the Pan-Canadian Investors Committee and protection buyer banks, which was approved in January 2009.

Summary of the returns generated in 2009 by public sector pension plan funds managed by the Caisse de dépôt et placement du Québec

The Caisse de dépôt et placement du Québec (CDP) administers the four 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.

Those funds are managed within the framework of an investment policy that sets return targets and risk limits. The RREGOP, the PPMP and the PPEMO investment policies are established jointly by the specific pension committee related to each fund and the CDP. Regarding the investment policy of the special plans fund, which is mainly made up of the assets of the Pension plan for federal employees transferred to employment with the gouvernement du Québec (PPFEQ), it is established by CARRA, jointly with the CDP.

In order to meet the targets set in the investment policy, assets are distributed among 12 distinct categories: Bonds, Canadian and Foreign Equity, Private Equity, Infrastructures and Real Estate.

The choice of assets categories and the proportion of assets in each category explain the annual return difference that can be observed between the four funds.

The evolution of assets, the return for 2009 as well as the average returns of the last 4, 5, 10 and 20 years are shown below for each fund.

The RREGOP Fund

Additional information: RREGOP Newsletter 

On the basis of the market value, the RREGOP fund assets rose from 33.8 billion dollars as at December 31, 2008 to 37.2 billion dollars as at December 31, 2009. Since RREGOP was established in 1973, the average return has been 9.3%.

The PPMP Fund

Additional information: The PPMP at a Glance 

On the basis of the market value, the PPMP fund assets rose from 6.0 billion dollars as at December 31, 2008 to 6.4 billion dollars as at December 31, 2009. The PPMP was established in 1997 but management personnel's contributions have been paid into the fund since 1975. The average return of the fund until now has been 8.8%.

The PPEMO Fund

On the basis of the market value, the PPEMO fund rose from 128.2 million dollars as at December 31, 2008 to 139.4 million dollars as at December 31, 2009.

The Special Plans Fund

On the basis of the market value, the Special Plans Fund rose from 202.1 million dollars as at December 31, 2008 to 216.0 million dollars as at December 31, 2009.

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