CPP survived global crash better than most plans

Canada's publicly-run pension system did far better than private pension plans.

Ottawa (16 July 2010) — The reserve fund of the Canada Pension Plan (CPP) was one of the top international performers during the 2005-09 boom-and-bust period, according to a report by the Paris-based Organization for Economic Co-operation and Development (OECD).

By comparison, Canada's private pensions, as is the case in most western developed countries, still have not recovered from huge losses during the global recession, the OECD reports in an analysis of public and private programs in 13 countries.

The CPP had one of the highest exposures to equity investments in the OECD. It proved also to be a top performer in after-inflation gains with an average annual return of 3.8%, second only to Poland at 4%.

Only 30% of the CPP's funds were invested in fixed income instruments like bonds over the period, one of the lowest among the countries studied. Most of the investments were in higher-risk equities, hedge funds, and real estate.

Yet other national public pension plans with even higher equity exposure were among the poorest performers.

For example, Ireland — with only about 5% of its pension reserves in fixed income — recorded a low 0.6% average annual loss over the period and New Zealand, with roughly 15% in fixed income, did even worse, averaging a 0.1% loss over the period.

The OECD study also looked at the performance of private pension plans in 41 developed democratic countries. It found that they had recovered only $1.5 trillion U.S. of the $3.5 trillion U.S. lost in the 2008 global crash.

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The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE