Mark Machin
Oct. 14, 2020
COVID-19 has changed Canadians’ lives in many ways, including how we interact with one another.
In March of this year, CPP Investments stood alongside hundreds of other Canadian business and community leaders to shift focus to a critical objective: slowing the pace of COVID-19’s transmission. We remain committed to this focus — public health and safety must come first.
In light of this commitment, our 2020 public meetings — where we connect with Canadians across the country to discuss the financial state of the Canada Pension Plan (CPP) Fund and our investment activities — will be virtual.
Every two years, CPP Investments hosts these public engagements across Canada. We do this as part of our legislated requirements, but also because we believe it is important to hear directly from CPP contributors and beneficiaries and answer their questions about how we are investing CPP Funds.
To protect the health of CPP contributors and beneficiaries during the pandemic, this year’s online meetings will create a new space for Canadians to have these important conversations and allow people to participate from the comfort of their workspaces or living rooms.
CPP Investments’ purpose is clear: to help provide a foundation upon which 20 million Canadians can build their financial security in retirement. As the world grapples with the significant economic shock resulting from the COVID-19 pandemic, we know it is more important than ever to have confidence that the CPP will be there for you in retirement.
While we did not predict a global pandemic and its related economic impact, we were already preparing for the possibility of a significant financial downturn following the end of the most recent decade-long economic expansion. Some investors took short-term action as a reaction to the significant market swings in the early days of the pandemic. At CPP Investments, we stayed the course and remained patient, staying true to our long-term investment strategy.
Our strategy is working. Despite the significant financial and economic impact of the pandemic, during the first quarter of our fiscal year (April 1 — June 30, 2020) the CPP Fund’s net assets increased by $24.8 billion to $434.4 billion.
We can say with confidence that our long-term returns are more than enough to keep the CPP sound.
Every three years, the Chief Actuary of Canada conducts an independent review of the sustainability of the CPP over the next 75 years. In the most recent triennial review published in December 2019, the Chief Actuary reaffirmed that, as at Dec. 31, 2018, the CPP continues to be sustainable over the 75-year projection period at the legislated contribution rates.
While the Chief Actuary’s report was produced prior to the COVID-19 pandemic, it takes into account changes in demographics, the economy and investment environments, including significant financial market events.
So, what’s next?
While the Fund was well-positioned to weather the economic impact of COVID-19, we must continue to maintain our focus in ensuring the long-term security of the CPP Fund. For example, we developed an innovative collaboration through the Creative Destruction Lab’s Recovery Vision Council. Recently formed, the Council brings together leading tech entrepreneurs, inventors, scientists and other leaders and thinkers to work on accelerating transformative inventions to address COVID-19, with a focus on public health and economic recovery.
In addition, our strategy is helping create greater resiliency for the Fund. We diversify to ensure we are not overly exposed to any single currency, asset class or region.
It is important that our contributors and beneficiaries understand our strategy and its key implications, such as occasional and inevitable short-term drops in value, the costs associated with successfully running a globally competitive investment organization, and how we carefully address complex considerations such as the long-term implications of climate change for the Fund.
Finally, we want to remind Canadians that our investment decisions are made in the context of fulfilling our statutory mandate to invest the assets of the Fund with a view to achieving a maximum rate of return without undue risk of loss.
Our public meetings are your opportunity to speak to us about how we are performing against our mandate, and we are looking forward to answering your questions.
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In this new normal of living and working with the challenges of COVID-19, we remain committed to providing you with transparent, up-to-date information on how we are managing the CPP Fund.
Sign up to attend the meetings at www.cppinvestments.com/public-meetings.
