CPP shrinks $17.2B in fiscal '09

The Canada Pension Plan fund lost 18.6 per cent of its value in fiscal 2009, the CPP Investment Board said Thursday.

The fund had $105.5 billion in assets at March 31, the end of its fiscal year, down $17.2 billion from the end of fiscal 2008.

The drop includes investment losses of $23.6 billion, partly offset by CPP contributions of $6.6 billion, the board said in a news release. It manages the pension plan on behalf of 17 million contributors and beneficiaries.

Market turmoil caused the loss, with real estate investments dropping nearly 44 per cent, and Canadian and emerging market equities both down 32 per cent.

"We remain well-positioned to generate the returns necessary to deliver on our mandate of helping to pay pensions for decades and generations to come," said David Denison, board president and CEO.

The board said CPP contributions of $28 billion are expected to exceed annual benefits paid through to the end of 2019.

If the board can make an average 4.2 per cent real rate of return over the long term, contribution rates will not have to be raised, the chief actuary of Canada has said.

The four-year rate of return through March 31 was 1.42 per cent.

However, the board takes a very long-term view, Denison said, and expects there will be four-year periods when the rate is below the 4.2 per cent needed to hold contribution rates steady.

Since the board began investing a decade ago, the 10-year annualized rate of return is 4.3 per cent.

Every year is important, but the board's strategy "is designed to perform over significantly longer time frames," he said.