{"id":18179,"date":"2020-04-24T09:00:12","date_gmt":"2020-04-24T13:00:12","guid":{"rendered":"https:\/\/www.benefitscanada.com\/news\/caat-pension-plan-returns-16-in-2019-well-positioned-to-weather-coronavirus-storm-145388"},"modified":"2020-04-24T09:00:12","modified_gmt":"2020-04-24T13:00:12","slug":"caat-pension-plan-returns-16-in-2019-well-positioned-to-weather-coronavirus-storm","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2020\/04\/24\/caat-pension-plan-returns-16-in-2019-well-positioned-to-weather-coronavirus-storm\/","title":{"rendered":"CAAT pension plan returns 16% in 2019, well-positioned to weather coronavirus storm"},"content":{"rendered":"
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Yaelle Gang, the Canadian Investment Review<\/span> | April 24, 2020 <\/p>\n

The Colleges of Applied Arts and Technology pension plan saw a strong 2019, delivering a 16 per cent return, net of investment management fees, while growing its assets under management to $13.5 billion.<\/p>\n

\u201cOn an absolute basis, all asset classes contributed positively to returns in 2019, with global developed equity, long bonds and real assets being the largest contributors,\u201d said the annual report. \u201cInterest rate and inflation hedging asset classes returned 11 per cent in aggregate, while return-enhancing asset classes returned 20.5 per cent. The plan\u2019s currency hedging policy added 1.8 per cent to returns.\u201d  <\/p>\n

For 2019, the CAAT plan is 118 per cent funded on a going-concern basis.<\/p>\n

Read: CAAT pension plan holds steady with 2018 return of 0.5%<\/a><\/strong><\/p>\n

While 2020 markets have gotten off to a bumpy start, the CAAT plan has a long-term perspective. \u201cEven though we are monitoring what\u2019s going on in the marketplace, I don\u2019t have any real concerns from an investment perspective at this time,\u201d says Derek Dobson, chief executive officer of the CAAT plan.<\/p>\n

He highlights the plan\u2019s fairly large funding reserve and asset smoothing reserve, at $2.9 billion and $0.8 billion, respectively. \u201cAnd the volatility in the marketplace hasn\u2019t even used up our asset smoothing reserve yet. So we\u2019re still very much [in] a strong, well-funded position.\u201d<\/p>\n

Further, the plan has a globally well-diversified portfolio, adds Dobson, noting the portfolio is performing as expected. \u201cClearly, with a 16 per cent net rate of return in 2019, I\u2019m super pleased and proud that our asset mix and our team\u2019s performance is exceeding my expectations.\u201d<\/p>\n

The CAAT also regularly conducts asset-liability modelling studies to measure its health against different scenarios. These studies have confirmed the plan can weather severe downside situations.<\/p>\n

Read: CAAT wins pension performance award for membership growth strategy<\/a><\/strong><\/p>\n

For its Jan. 1, 2020 valuation, the plan\u2019s discount rate was lowered from 5.5 per cent to 5.15 per cent to reflect expected lower returns in the future.<\/p>\n

\u201cThe lower discount rate marginally lowers the plan\u2019s 2020 funded status, but increases the likelihood that its funded status will improve in the future because it is more likely that future investment returns will exceed the lower discount rate,\u201d the annual report said.<\/p>\n

Overall for 2019, Dobson says he\u2019s most proud of the work the CAAT plan has done to expand defined benefit coverage in Canada, noting in 2019, it added more than 10,000 members by welcoming single-employer plans into its DBplus plan. \u201cIf we were to look at our purpose, which is to make simple, secure, valuable workplace pensions accessible to all Canadian workplaces, I think we made a major step \u2014 or even two or three major steps in 2019 \u2014 to contribute to the retirement income security industry.\u201d<\/p>\n

Read: Four more employers join CAAT\u2019s DBplus pension plan<\/a><\/strong><\/p>\n

Read the full article at BenefitsCanada.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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