An update for Canadians on the CPP Fund
Credit to Author: Staff Writer| Date: Wed, 28 Jun 2023 13:23:33 +0000
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This has been a challenging time for many Canadians.
The lingering global pandemic, prolonged war in Ukraine and other global conflicts, persistent inflation and the steady rise of interest rates continue to concern us all.
Rest assured that the CPP Fund is strong and the future value of your benefits remains solid. As one of the 10 largest and most enduring pension plans in the world, it is built to weather all types of economic and geopolitical pressures, just like the ones we face today.
Keeping a clear purpose
While we can’t predict what exactly will happen this year, we believe these challenges will continue. Canadians can take pride in the fact that their Plan is backed by a fund that has a universally admired and respected business reputation and is managed by investment professionals dedicated to maximizing the returns of the Fund without undue risk.
CPP Investments’ purpose is to help improve the financial security of Canadian retirees. This unwavering purpose, helps CPP Investments manage risk and build resilience in difficult times. Periods of uncertainty are expected; CPP Investments plans for them and has designed the Fund to withstand exactly these kinds of pressures.
Due to the cyclical nature of markets, some quarterly or annual declines in returns are inevitable. That’s okay. Market cycles can last several years, but CPP Investments invests with a 75-year time horizon.
While the value of assets may fluctuate over that 75-year period, CPP Investments’ investing approach and risk management help to ensure the overall trend is positive. The most recent 10-year annual return is 10.0% and the Fund is now C$536 billion dollars.
Active management is a strength
One of our greatest strengths is CPP Investments’ active management approach, a style of investing that enables them to exceed market returns. Rather than buying a benchmark basket of securities and letting it rise and fall in line with the market, they search worldwide for the very best investments. CPP Investments invests in all major asset classes and have the ability to invest in the largest economies across the globe. They seek to own significant positions in companies that they believe have the potential to outperform over the long term.
Leaders in sustainable investing
Despite today’s market challenges, CPP Investments recognizes the importance of sustainability to long-term value creation.
That’s why earlier in 2022, CPP Investments committed to net-zero greenhouse gas emissions by 2050. This decision was made only after significant study of what this commitment would mean for the organization and its investment activities. It’s worth noting that more than 10 years ago, CPP Investments started to incorporate climate risk into how they manage the portfolio. Over the past two years, they’ve expanded that to now view all opportunities with climate impacts in mind.
CPP Investments’ new Chief Sustainability Officer, Richard Manley presented their Framework to help companies develop transparent, credible plans to reduce their greenhouse gas emissions. This will help CPP Investments create and protect the value of the Fund, as the whole economy transitions to net zero. You can read more here.
What this means for Canadians in 2023
CPP Investments remains cautiously optimistic. Yes, we’re in for a bumpy ride, but market volatility is inevitable. It’s how speculative bubbles are deflated, and expectations reset. CPP Investments is confident their portfolio will endure the ups and the downs and, when prices for attractive assets decline, position them to take advantage of the long-term opportunities that emerge.
Canadians benefit from one of the most advanced pension systems in the world. CPP Investments is proud of the foundation that Canada has created, and they fully intend to protect it, so that today’s contributors and beneficiaries can be confident in their retirement security in the future.
Want to learn more about CPP Investments and your financial future as a new Canadian? Check back here for new content every month, or read more articles, access resources and watch videos at www.cppinvestments.com/commitment-to-canadians.
This content is provided for information purposes only. CPP Investments is not a financial advisor, and the content on this site does not provide financial advice. Every person’s financial planning needs are different. For advice on how you should prepare financially for retirement, please consult a credentialed professional financial advisor.
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