ASSET OWNERS

2017 data now available for public Canadian DB plan sponsors

Canada's largest 13 public pension plans have seen a significant total plan asset increase to C$1.02 trillion in 2017, up 10.46% from 2016. Five of 13 public plans achieved asset growth rate of 11% or more because of both tactical and strategic allocations in favor of public equities and alternatives including private equities, infrastructure and real estate, both of which posted double-digit returns in 2017. The plan assets of the Canada Pension Plan Investment Board, the largest public pension plan in Canada, increased by C$39.46 billion to C$356.1 billion in 2017; that 12.46% is the highest growth rate of the 13 plans.

Canadian's largest 13 public pension plans all outperformed their benchmarks in 2017, with an average excess return of 1.25%. Ontario Municipal Employees Retirement System exceeded its benchmark by 4.2 percentage points, and Canada Pension Plan Investment Board outperformed by 2.1 percentage points. Canadian public pension plans achieved an average investment return of 10.38% in 2017. Canada Pension Plan Investment Board returned 11.9% last year, the highest return achieved across all plans, followed by Canada Post's return of 11.8% and Ontario Municipal Employees Retirement System's 11.5%.

Equity was the largest asset class among the 13 plans, with an average allocation of 36.8% in 2017, followed by 34.12% in alternatives; 30.78% fixed-income; -1.4% cash and -0.3% other. The negative allocation is due to tactical hedging strategies used or capital set aside to finance funding for other investments. Eleven of the 13 plans allocated 37% or more capital to equity, eight plans invested 32% or more in fixed-income, and nine invested 29% or more in alternatives. The British Columbia Teachers' Pension Plan had the most aggressive investment strategy in 2017, with 47.5% allocated to public equity, of which 38.4% was invested in non-Canadian markets. Both Ontario Teachers' Pension Plan and Ontario Public Service Employees Union Pension Plan capped public equity exposure below 20%, while heavily investing in alternatives with 62% and 56.5% exposure, respectively.