After a year of turbulent markets, the Colleges of Applied Arts and Technology pension plan has released its 2018 annual report, noting assets held steady compared to 2017 at about $10.8 billion, with a slight return of 0.5 per cent net of fees in 2018.
This is down from 2017’s investment return of 15.8 per cent.
Despite the lower return, the plan improved its funded status, which sits at a healthy 120 per cent on a going-concern basis as of Jan. 1, 2019. “The plan remains strong despite uncertain times,” said Derek Dobson, the CAAT’s chief executive officer and plan manager, in a press release. “Our long-term assessments continue to project that the plan will remain resilient well into the future. The funding reserves provide important protection against difficult-to-predict economic or demographic shocks.”
These results bring the CAAT plan’s annualized five-year net rate of return to 8.7 per cent and its 10-year annualized net return to 9.9 per cent.
“Over the past two years, the asset mix of the investment fund has shifted slightly away from public equities to private equity and real assets in response to the findings of the 2016 asset-liability modelling study,” the report said. “These long-term investments are a good fit for the long-term nature of the plan’s liabilities and its risk tolerance, given its ability to manage through periods of short-term volatility. During 2018, progress was made moving private equity and real asset allocations closer to their targets of 15 per cent and 20 per cent, respectively.”
Of note, the CAAT plan moved away from viewing Canadian equity as a standalone allocation in its asset mix policy in 2018, with its remaining Canadian equity exposure becoming part of the global developed equity class.
“In 2019, the asset mix policy will again be examined by means of an asset-liability modelling study that will employ updated assumptions about future asset-class returns, market risks and plan member demographics,” the report said.
Beyond investments, 2018 was a significant year for the CAAT as it launched its second plan design, DBplus, and welcomed several employers into the plan, including the Youth Services Bureau of Ottawa, the Canadian Collegiate Athletic Association, Lambton Student Administrative Council, the Shareholder Association for Research and Education and Torstar Corp.