The University Pension Plan posted 9.1 per cent losses in 2022, according to its annual report.
During the year, the jointly sponsored defined benefit pension plan’s assets declined from $11.8 billion to $10.8 billion. The plan finished the year with a solvency ratio of 103.3 per cent, down from 111 per cent at the end of 2021.
“This past year brought unprecedented challenges for individuals and investors alike, with far-reaching impacts,” wrote Barbara Zvan, the UPP’s president and chief executive officer, in a letter included in the annual report. “While conditions like these can certainly be stressful, I want to assure our members there is no impact to the security of their pensions.”
The most significant losses stemmed from the UPP’s public equities portfolio, which were down 14.1 per cent. The fixed income portfolio also saw sharp declines, dipping 12.2 per cent. The portfolio’s performance was led by its absolute return component, which grew 16 per cent.
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While its private equity holdings declined by three per cent, most alternative asset classes generated strong returns. The real estate portfolio grew by 12.5 per cent, infrastructure by 6.8 per cent and private debt by 3.6 per cent.
According to Zvan’s letter, the UPP remains in a strong financial position despite the investment losses. “While we take short-term investment performance seriously, UPP’s investment strategy is purposely designed for long-term results.”
The report also highlighted a number of the UPP’s environmental, social and governance achievements during the year. The portfolio’s carbon emissions declined 21 per cent during the year. Its carbon footprint, which includes the amount of greenhouse gas emissions caused directly and indirectly by the pension plan, declined by four per cent during the year.
The UPP also noted it cast proxy ballots on 5,855 motions during the year. It voted in support of 202 proposals designed to improve accountability on ESG-related issues. Of these, 68 were related to governmental issues, 47 to social issues and 41 to environmental ones. It also voted against the election of 129 corporate directors at 111 companies with boards that didn’t include at least one member from a traditionally underrepresented group.
Read: UPP climate action plan establishes 2040 net-zero portfolio target