Canada Post today announced the 2009 financial results for the Canada Post pension plan (the Plan). The Plan’s rate of return was 16.2 per cent in 2009 which compared favourably against a benchmark rate of return of 15.8 per cent.
The Canada Post pension plan (the Plan) ended 2009 with total net assets of $13.576 billion, an increase of $1.867 billion from 2008. The Plan’s rate of return was 16.2 per cent in 2009 beating the median return of comparable large pension funds.
The Plan is one of the largest single employer defined benefit pension plans in Canada, with over 80,000 active members, pensioners, deferred members and beneficiaries. It offers inflation-protected benefits, making it one of the best retirement packages in Canada.
“While 2009 was a difficult year for businesses overall, we did see financial markets begin to rebound from the global economic downturn. The Plan was well positioned on the investment side to take advantage of these recovering financial markets,” said Douglas Greaves, Canada Post’s Vice President, Pension Fund and Chief Investment Officer. “The strong investment returns helped the Plan maintain an estimated long-term going-concern surplus of $567 million. However, the returns were not enough to avoid a solvency shortfall.”
While the Plan’s rate of return was 16.2 per cent, historically low real interest rates caused an increase in pension obligations which are the total projected benefits to the end of 2009 for pensioners and current employees participating in the Plan. As a result, the Plan ended the year with an estimated solvency shortfall of $2.007 billion, representing a solvency funding ratio of 88 per cent.
Based on the estimated financial status of the Plan on December 31, 2009, an actuarial valuation on a going-concern and solvency basis will be filed, with the federal pension regulator, in June 2010. Canada Post will begin making special solvency payments in 2010 designed to bring the solvency ratio up to 100 per cent.
“As the Plan sponsor, the financial risk of the Defined Benefit component of the Plan rests solely with Canada Post. The best security for Plan members continues to be a financially strong Plan sponsor,” said Moya Greene, President and CEO of Canada Post. “Management, along with the Board of Directors, is working hard to protect our pensions. The company must continue to invest in modernization so that we can remain relevant to our customers, uphold our service obligation and remain financially sustainable.”
About Canada Post
Canada Post delivers more than 11 billion pieces of mail each year to 14.7 million destinations. With more than 60,000 employees and 6,600 post offices, Canada Post maintains the largest retail network in the country and serves 32 million Canadians and more than 1 million businesses and institutions from coast to coast to coast. In 2008, net income for Canada Post and its affiliates, which include Purolator Courier, SCI Logistics and Innovapost (jointly owned by Canada Post and CGI), was CDN $90 million on revenues of CDN $7.7 billion. Canada Post provides innovative physical and electronic delivery solutions, creating value for our customers, employees and Canadians. Canada Post has been chosen as one of Canada’s Top 100 employers by Mediacorp three years in a row and in 2009 was named “Most Iconic Brand in Canada” by Brand Finance Canada. Website: http://www.canadapost.ca.
