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CAAT pension fund surpasses benchmark with 8% return in 2016

Colleges of Applied Arts and Technology Pension Plan, Toronto, returned a net 8% on its investments in 2016, helping increase its assets to C$9.4 billion ($7 billion) as of Dec. 31, driven by double-digit percentage returns in Canadian equity and private equity, according to CAAT's annual report.

CAAT's return surpassed its custom benchmark's 6.7% return; assets were up 9.3% from Dec. 31, 2015. Net income from investments in 2016 totaled C$700 million.

The defined benefit plan returned an annualized 10.5% for the five years ended Dec. 31. In 2015, it returned 8.1%.

Canadian equity led returns for 2016 at 20.4%, followed by private equity at 16.9%. Canadian equity was below its custom benchmark's 21.1% return, but private equity surpassed its 7.1% custom benchmark return.

Among CAAT's other asset classes, commodities returned 9.9% vs. its custom benchmark return of 7.5%; real assets, 7.1% vs. 6.2%; Canadian bonds, 3.8% vs. 1.7%; global developed equity, 3.8 vs. 3.3%; nominal long bonds, 2.9% vs. 2.5%; real-return bonds, 2.9% vs. 2.9%; and emerging markets equity, 1.8% vs. 7.3%.

CAAT's asset allocation as of Dec. 31 was 34% global developed equity, 14% nominal long bonds, 13% real assets, 10% emerging markets equity, 8% Canadian equity, 6% real-return bonds, and 5% each private equity, Canadian bonds and commodities.

Total contributions to the CAAT plan in 2016 were C$443 million, split evenly from employers and employees. A total of C$431 million was paid out in pension benefits for the year.

The pension plan's funded status as of Dec. 31 was 113.3% on a going concern or ongoing basis, up from 110.4% a year earlier. On a solvency basis, which is based on if the plan were immediately terminated, the plan was 74% funded.

The CAAT plan is sponsored by the Ontario College Administrative Staff Association, the College Employer Council and the Ontario Public Service Employees Union.

The annual report will be posted on CAAT's website on May 15.