Canadian Armed Forces Pension Plans Annual Report for the Fiscal Year ended 31 March 2024

Message from the Deputy Commander of Military Personnel Command (MILPERSCOM)

I am pleased to present the Annual Report on the Canadian Armed Forces Pension Plans for the fiscal year ended 31 March 2024. This report provides plan members, parliamentarians, and the Canadian public with insight into how the plans were managed in the last fiscal year.

Canadian Armed Force (CAF) members and the Government of Canada contribute to a pension plan that provides a strong foundation on which to build a secure financial future when CAF members retire. The CAF pension is a key part of the overall CAF compensation package and, along with personal savings, investments, and benefits from the Canada Pension Plan (CPP)/Québec Pension Plan (QPP) and Old Age Security, provide the basis for financially stable retirement years.

As Chair of the Canadian Forces Pension Advisory Committee (CFPAC), my responsibilities include the administration, policy development, and improvement of the CAF pension plans. The CAF will continue to recruit Canada’s best, and work hard to enable their lasting service in the CAF. We will continue to care for those who are ill or injured, whether physically or mentally. We will care for our military families, who have such a central role to play in keeping us strong. Service to Canada is highly valued, and the government’s investment in CAF pension plans reflects the importance it places on that service.

Major General Erick Simoneau

Deputy Commander Military Personnel Command / Assistant Chief Military Personnel

About this report

This report provides information on the Canadian Forces Pension Plan (CFPP) and Reserve Force Pension Plan (RFPP) for the fiscal year ended 31 March 2024. It is prepared and tabled in Parliament in accordance with section 57 of the Canadian Forces Superannuation Act (CFSA). The report includes the plans’ annual financial statements prepared in accordance with the stated accounting policies set out in Note 2 to the statements.

About the plans and its members

First established in 1901 under the Militia Pension Act, the CAF pension plans are administered in accordance with the provisions of CFSA and its supporting regulations.

The CAF pension plans cover all members of the Regular Force component of the CAF and Reserve Force members who have sufficient qualifying service. Regular Force members are members of the CFPP, while Reserve Force members who have sufficient qualifying service and pensionable earnings are members of either the CFPP or the RFPP, depending on their employment status and earnings.

Both CFPP and RFPP are contributory defined benefit pension plans. A contributory defined benefit plan is one to which both the employer and the employee make payments, and in which the benefits payable on death, disability, termination of service, and retirement are specified in the plan document—in this case, the CFSA and its Regulations. The benefits are directly related to the employee's earnings and years of pensionable service.

The plans provide survivor benefits for a member’s eligible spouse, common-law partner, and eligible children.

Plan contributions

For Fiscal Year 2023-2024, CFPP members contributed 9.35% of their pensionable earnings for the first nine months and 9.35% for the last three months, up to the Canada Pension Plan Yearly Maximum Pensionable Earnings (YMPE). Contributions on earnings in excess of the YMPE were made at the rate of 12.37% for the first nine months and 12.25% for the last three months. The YMPE was $66,600 in calendar year 2023 and increased to $68,500 for calendar year 2024.

For FY 2023-2024, part-time members of the Reserve Force who participated in the RFPP contributed 5.2% of salary for the year (unchanged from the prior year) in respect of basic pension benefits and their indexation.

Each year the Government, as the employer, contributes an amount that ensures sufficient future funds will be available for the benefits earned by employees in respect of that year, as determined by the President of the Treasury Board.

Plan benefits

Regular Force members and qualified full-time members of the Reserve Force who retire with 25 years or the equivalent of 9,131 days or more of CAF service are eligible for an immediate annuity.

An immediate annuity is based on the pension plan member’s average salary during the best five consecutive years of pensionable earnings, multiplied by the number of years of pensionable service to a maximum of 35 years times 2%, which includes a bridge benefit to age 65.

In general, Reserve Force members who participate in the RFPP and who retire with at least 9,131 days of CAF service are eligible for an immediate annuity based on the total pensionable years of service, age, and other factors (section 43 of the Reserve Force Pension Plan Regulations).

RFPP pension is based on cumulative pensionable earnings only. The basic benefit formula is 2% multiplied by indexed pensionable earnings, which includes a bridge benefit to age 65. Those Reserve Force members with sufficient qualifying service are automatically converted to membership under the CFPP.

Annuities and member and survivor annual allowances are subject to cost-of-living increases pursuant to the CFSA.

Financial overview

The CFPP and RFPP financial statements provide a comprehensive presentation of the plans’ financial positions. These statements were prepared in accordance with accounting policies of the Canadian accounting standards for pension plans in Part IV of the Chartered Professional Accountants (CPA) Canada Handbook. The Office of the Auditor General of Canada (OAG) audits the financial statements.

The Superannuation Account has been established in the accounts of Canada under the CFSA. It represents a tracking of all contributions, benefit payments, interest revenue, charges, and transfers that pertain to service prior to April 1, 2000. The Account portrays a notional portfolio of bonds, and as such, does not hold any investment assets. The amount of interest credited on the Account is as though net cash flows were invested quarterly in 20-year Government bonds issued at prescribed rates and held to maturity. For service accrued after 31 March 2000, contributions and benefit payments in respect of pensionable service accrued after are recorded in the CFPP in the accounts of Canada, in accordance with the Canadian accounting standards for pension plans. Contributions net of current benefits and administration expenses are regularly transferred to the Public Sector Pension Investment Board (PSPIB) for investment in capital markets to build assets to pay future benefits.

The RFPP is governed by the CFSA and its RFPP Regulations. The RFPP provides pension benefits for all eligible members of the Reserve Force. As with the CFPP, contributions net of current benefits and administration expenses are transferred to PSPIB to be invested in capital markets.

Fiscal year highlights

Table 1: Plan members, by type

	CFPP	RFPP
Active contributors	69,298	19,235
Retired members	94,185	2,826
Deferred annuitants	7,748	16,349
Survivors receiving benefits	22,242	229

Table 2: Financial highlights

	CFPP	RFPP
Net assets available for benefits ($millions)	50,897	929
Total Annuity Payments ($millions)	3,809	15
Average Annuity Payment per Member ($)	38,040	5,516
Death Benefits paid ($thousands)	34,421	207
Assets under investment with PSPIB ($millions)	57,798	1,233

Investment performance

CFPP and RFPP funds are invested in private and public markets in accordance with the Public Sector Pension Investment Board Act (PSPIBA). PSPIB manages invested pension funds in the best interests of plan contributors and beneficiaries and maximizes returns without undue risk of loss, taking into account the funding, policies, and requirements of the pension plans and the ability of those pension plans to meet their financial obligations. Pension funds are diversified across a variety of investment vehicles.

Asset Mix

Image description

A circular graph indicating that the pension fund’s assets are composed of:

• 21.0 percent Public Market Equities,
• 23.9 percent Government Fixed Income,
• 15.3 percent Private Equity,
• 10.3 percent Real Estate,
• 13.0 percent Infrastructure,
• 9.9 percent Credit Investments,
• 5.7 percent Natural Resources,
• 0.9 percent Complementary Portfolio.

5 year average benchmark rate of return

The investment gain reflects a consolidated 5-year net annual rate of return of 7.9% in FY 2023-2024. The 5-year average rate of return for the plan, as compared to the 5-year average benchmark rate, shows the plan consistently outperforming the comparable benchmark.

Further details and analysis of the investment performance and the overall state of investment markets are available in the 2024 Annual Report of PSPIB.

Image description

This bar graph compares the five year average rate of return of the pension fund against the five year average benchmark rate of return. Overall, the pension fund's performance slightly exceeded the benchmark for each year:

• For year 2020 the average rate of return was 5.8 percent compared to a 5.1 percent average benchmark rate of return
• For year 2021 the average rate of return was 9.3 percent compared to a 8.3 percent average benchmark rate of return
• For year 2022 the average rate of return was 9 percent compared to a 7.9 percent average benchmark rate of return
• For year 2023 the average rate of return was 7.9 percent compared to a 5.5 percent average benchmark rate of return.
• For year 2024 the average rate of return was 7.9 percent compared to a 5.3 percent average benchmark rate of return.

Administrative expenses

Under CFSA legislation, authorized government organizations and the PSPIB charge eligible administrative expenses to the plans. These are expenses that departments incur for plan administration and for the operating expenses of the PSPIB.

While many aspects of the two pension plans are administered jointly, the CFPP and the RFPP each issue independent financial statements. Where expenses incurred can be specifically attributed to the CFPP or RFPP, they are charged accordingly. Expenses which cannot be specifically attributed to one of the pension plans, such as office supplies, are shared between each of the pension plans based on an appropriate allocation method.

Table 3: For the year ended 31 March 2024, plan administrative expenses totaled 8 million. The following table shows the breakdown (in $ thousands):

	CFPP	RFPP	Total
Public Services and Procurement Canada (PSPC)
Salaries and employee benefits	$27,982	$4,263	$32,245
Operation and maintenance	11,627	1,771	13,398
Subtotal—PSPC	$39,609	$6,034	$45,643
Department of National Defence (DND)
Salaries and employee benefits	$3,024	$460	$3,484
Operation and maintenance	1,089	166	1,255
Subtotal—DND	$4,113	$626	$4,739
Office of the Chief Actuary—Actuarial fees	936	143	1,079
Total - Government Departments	$44,658	$6,803	$51,461
Public Service Pension Investment Board (PSPIB)
Salaries and employee benefits	$85,000	$1,850	$86,850
Operation and maintenance	22,000	572	22,572
Professional and consulting fees	22,000	471	22,471
Other	5,000		5,000
Total - PSPIB	$134,000	$2,893	$136,893
Total administrative expenses	$178,658	$9,696	$188,354

Governance and oversight

Minister of National Defence (MND): The Minister of National Defence is responsible for the oversight of the pension plans. Within the Department of National Defence (DND), the Directorate of Pension Policy and Social Programs (DPSP) oversees the financial analysis, program and policy advice and interpretation, including amendments to the CFSA and its Regulations, on behalf of the MND. DPSP also prepares the Annual Report of the Canadian Armed Forces pension plans.

Treasury Board of Canada Secretariat (TBS): TBS is responsible for the overall pension policy for the four major federal public sector pension plans. The CFSA requires the President of the Treasury Board to consult with the MND on funding matters. TBS provides general guidance to the DND on the accounting for the pension plans through the Office of the Comptroller General.

Canadian Forces Pension Advisory Committee (CFPAC): Chaired by the Deputy Commander Military Personnel Command, CFPAC is an advisory committee to the Minister of National Defence, comprised of up to ten members—one pensioner, three members representing active Regular Force contributors, one member representing Reserve Force personnel, and five other members—all appointed by the Minister of National Defence. CFPAC reviews and provides advice and recommendations to the Minister on pension issues and considers any pension-related matters that the Minister may refer to it.

Public Services and Procurement Canada (PSPC): Under the direction of its Minister, PSPC has assumed the day-to-day administration of the pension plans, alongside the Public Service Pension Plan and Royal Canadian Mounted Police Pension Plan. This includes benefit calculation, and member communications and support. As Receiver General for Canada, the Minister of PSPC is responsible for the central treasury and payments functions.

Public Sector Pension Investment Board (PSPIB): PSPIB is a Crown corporation that reports to Parliament through the President of the Treasury Board. In accordance with the Public Sector Pension Investment Board Act and its Regulations, net pension contributions are transferred to PSPIB and invested in equities, fixed income securities, real estate, private equity, and infrastructure. The relevant financial results of PSPIB are included in the pension plans’ financial statements.

Office of the Superintendent of Financial Institutions (OSFI): OSFI performs an actuarial valuation of the pension plans every three years. This triennial valuation, which is tabled in Parliament by the President of the Treasury Board, is used to compare the pension plans’ assets and liabilities and estimate the contribution rates required to ensure the pension plans’ ongoing financial sustainability. For accounting purposes, the triennial actuarial valuation is updated annually using management’s best estimate assumptions, and actual data on annuitants and contributors.

Office of the Auditor General (OAG): The OAG is responsible for the annual audit of the pension plans’ year-end financial statements to provide assurance that the financial statements are presented fairly, in accordance with Canadian accounting standards for pension plans and that the CAF pension plans comply with the key legislative authorities.

Financial Statements of the Canadian Forces Pension Plan for the fiscal year ended 31 March 2024

Statement of Responsibility

Responsibility for the integrity and fairness of the financial statements of the Canadian Forces Pension Plan (the pension plan) rests with the management of the Department of National Defence. In support of this responsibility, management has developed and maintained books, records, internal controls and management practices designed to provide reasonable assurance as to the reliability of the financial information and to ensure that transactions are in accordance with the Canadian Forces Superannuation Act and regulations, as well as the Financial Administration Act and regulations.

The financial statements of the pension plan for the year ended 31 March 2024, have been prepared in accordance with the stated accounting policies set out in Note 2 to the financial statements, which are based on Canadian accounting standards for pension plans, and on a basis consistent with that of the preceding year. The information included in the financial statements is based on management’s best estimates and judgement, with due consideration given to materiality.

Additional information is obtained as required, from the Public Sector Pension Investment Board (PSPIB) to meet accounting and reporting requirements. PSPIB maintains its own systems of financial management and internal controls to account for the funds managed on behalf of the pension plan in accordance with the Public Sector Pension Investment Board Act, regulations and by-laws.

These financial statements have been audited by the Auditor General of Canada, the independent auditor for the Government of Canada.

Approved by:

Original signed by

Ottawa, Canada

Independent Auditor’s Report

To the Minister of National Defence

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of the Canadian Forces Pension Plan (the pension plan), which comprise the statement of financial position as at 31 March 2024, and the statement of changes in net assets available for benefits and statement of changes in pension obligations for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the pension plan as at 31 March 2024, and the changes in its net assets available for benefits and changes in its pension obligations for the year then ended in accordance with Canadian accounting standards for pension plans.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the pension plan in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

Management is responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the stated accounting policies set out in Note 2 of the financial statements, which are based on Canadian accounting standards for pension plans, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the pension plan’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the pension plan or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the pension plan’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the pension plan’s internal control
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the pension plan’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the pension plan to cease to continue as a going concern
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the pension plan to express an opinion on the financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on Compliance with Specified Authorities

Opinion

In conjunction with the audit of the financial statements, we have audited transactions of the Canadian Forces Pension Plan coming to our notice for compliance with specified authorities. The specified authorities against which compliance was audited are the Canadian Forces Superannuation Act and regulations, the Public Sector Pension Investment Board Act and regulations, and the by-laws of the Public Sector Pension Investment Board.

In our opinion, the transactions of the Canadian Forces Pension Plan that came to our notice during the audit of the financial statements have complied, in all material respects, with the specified authorities referred to above.

Responsibilities of Management for Compliance with Specified Authorities

Management is responsible for the Canadian Forces Pension Plan’s compliance with the specified authorities named above, and for such internal control as management determines is necessary to enable the Canadian Forces Pension Plan to comply with the specified authorities.

Auditor’s Responsibilities for the Audit of Compliance with Specified Authorities

Our audit responsibilities include planning and performing procedures to provide an audit opinion and reporting on whether the transactions coming to our notice during the audit of the financial statements are in compliance with the specified authorities referred to above.

Original signed by

Ottawa, Canada

26 February 2025

CFPP Financial Statements

Table 4: Statement of Financial Position (Canadian $ millions)

	As at 31 March 2024	As at 31 March 2023
Assets
Canadian Forces Pension Fund (Note 4)	$79	$25
Investments (Note 5)	57,798	54,514
Contributions receivable
From plan members (Note 8)	92	86
From employer (Note 8)	150	137
Transfers receivable from Reserve Force (Note 4 and Note 8)	59	61
Other assets	36	36
Total assets	$58,214	$54,859
Liabilities
Investment-related liabilities (Note 5)	2,064	3,023
Accounts payable and other liabilities	95	101
Borrowings (Note 5 and Note 9)	5,158	4,624
Total liabilities	$7,317	$7,748
Net assets available for benefits	$50,897	$47,111
Pension obligations
Funded (Note 12)	$41,431	$39,256
Unfunded (Note 12 and Note 20)	$43,956	$46,838
Total pension obligations	$85,387	$86,094
Deficit to be financed by the Government of Canada (Note 13)	$(34,490)	$(38,983)
Table 4 Note Commitments (Note 23) The accompanying notes are an integral part of these financial statements.

Table 5: Statement of Changes in Net Assets Available for Benefits - Year ended 31 March (Canadian $ millions)

	2024	2023
Net assets available for benefits, beginning of year	$47,111	$44,987
Increase in net assets available for benefits
Investment income, excluding changes in fair values of investment assets and investment liabilities (Note 14)	1,525	1,265
Changes in fair values of investment assets and investment liabilities, realized and unrealized gains (Note 14)	2,381	1,075
Contributions
From plan members (Note 15)	669	547
From employer (Note 15)	1,073	893
Transfers from other pension plans (Note 4)	45	73
Total increase in net assets available for benefits	$5,693	$3,853
Decrease in net assets available for benefits
Benefits paid with respect to service after 31 March 2000 (Note 17)	1,204	1,072
Change in transfers receivable from Reserve Force	2	12
Refunds and transfers (Note 17)	159	241
Investment-related expenses (Note 18)	370	236
Administrative expenses (Note 19)	172	168
Total decrease in net assets available for benefits	$1,907	$1,729
Net increase in net assets available for benefits	$3,786	$2,124
Net assets available for benefits, end of year	$50,897	$47,111
Table 5 Note The accompanying notes are an integral part of these financial statements.

Table 6: Statement of Changes in Pension Obligations - Year ended 31 March (Canadian $ millions)

	2024 Funded	2024 Unfunded	2024 Total	2023 Funded	2023 Unfunded	2023 Total
Pension obligations, beginning of year	$39,256	$46,838	$86,094	$37,552	$50,316	$87,868
Increase in pension obligations
Interest on pension obligations	2,436	1,384	3,820	2,072	1,172	3,244
Benefits earned	1,436	0	1,436	1,477	0	1,477
Experience losses (Note 12)	260	287	547	642	1,118	1,760
Cost of new elections	16	0	16	17	0	17
Transfers from other pension plans	45	0	45	73	0	73
Total increase in pension obligations	$4,193	$1,671	$5,864	$4,281	$2,290	$6,571
Decrease in pension obligations
Benefits paid (Note 17)	$1,204	$2,605	$3,809	$1,072	$2,525	$3,597
Changes in actuarial assumptions: gains (Note 12)	617	1,932	2,549	1,240	3,214	4,454
Refunds and transfers (Note 17)	159	10	169	241	13	254
Administrative expenses included in the service cost (Note 19 and Note 20)	38	6	44	24	16	40
Total decrease in pension obligations	$2,018	$4,553	$6,571	$2,577	$5,768	$8,345
Net increase (decrease) in pension obligations	$2,175	$(2,882)	$(707)	$1,704	$(3,478)	$(1,774)
Pension obligations, end of year	$41,431	$43,956	$85,387	$39,256	$46,838	$86,094
Table 6 Note The accompanying notes are an integral part of these financial statements.

1. Description of the Canadian Forces Pension Plan

The Canadian Forces Pension Plan (the pension plan), governed by Part I of the Canadian Forces Superannuation Act (CFSA), provides pension benefits for all members of the Regular Force component and eligible members of the Reserve Force component of the Canadian Forces. Established in 1901 under the Militia Pension Act, the present-day version of the pension plan is administered in accordance with the CFSA.

The main provisions of the pension plan are summarized below.

(A) General

The pension plan is a contributory defined benefit plan covering all members of the Regular Force component and eligible members of the Reserve component of the Canadian Forces. Membership in the pension plan is compulsory for all members of the Regular Force regardless of length of service. Members of the Reserve Force component of the Canadian Forces contribute to the pension plan when they meet eligibility criteria.

The Government of Canada (the government) is the sole sponsor of the pension plan. The Minister of National Defence is the Minister responsible for the CFSA. The Department of National Defence is responsible for the management of the pension plan and maintains the books of account, while Public Services and Procurement Canada (PSPC) provides the day-to-day administration. The Office of the Chief Actuary (OCA), an independent unit within the Office of the Superintendent of Financial Institutions (OSFI), performs periodic actuarial valuations of the pension plan.

Until 1 April 2000, separate invested funds were not set aside to provide for payment of pension benefits. Instead, transactions relating to the pension plan were recorded in a Canadian Forces Superannuation Account (superannuation account) created by legislation in the accounts of Canada. Pursuant to the CFSA, as amended by the Public Sector Pension Investment Board Act, transactions relating to service since 1 April 2000 are now recorded in the Canadian Forces Pension Fund (pension fund). While the pension plan matures, an amount equal to contributions in excess of benefit payments and administrative costs is transferred regularly to the Public Sector Pension Investment Board (PSPIB) for investment. PSPIB is a Crown corporation whose statutory objectives are to manage the funds transferred to it for investment and to maximize investment returns without undue risk of loss, having regard to the funding, policies and requirements of the three main public sector pension plans (public service, Royal Canadian Mounted Police (RCMP) and Canadian Armed Forces). When the pension plan is mature to a state where benefit payments are greater than incoming contributions, which is the normal state for any mature pension plan, PSPIB will transfer amounts to the Consolidated Revenue Fund (CRF) for benefit payments and administrative costs, or as required under the circumstance of a non-permitted surplus (refer to CFSA subsection 55.4 (5) for the definition of non-permitted surplus).

(B) Funding policy

The pension plan is funded from plan member and employer contributions, and from investment earnings. For the fiscal year, members of the pension plan contributed 9.35% (9.36% in 2023) for the first nine months and 9.35% (9.35% in 2023) for the last three months of pensionable earnings, up to the maximum covered by the Canada Pension Plan (CPP) or Québec Pension Plan (QPP), and 12.37% (12.48% in 2023) for the first nine months and 12.25% (12.37% in 2023) for the last three months of pensionable earnings above that maximum.

The government’s contribution is made monthly to provide for the cost (net of plan member contributions) of the benefits that have accrued in respect of that month at a rate determined by the President of the Treasury Board. The contribution rates are determined based on actuarial valuations for funding purposes, which are performed triennially.

The CFSA provides that all pension obligations arising from the pension plan be met by the government. The CFSA requires that any actuarial deficit in the pension fund be dealt with by transferring equal instalments to the pension fund over a period of up to 15 years, starting in the year in which the actuarial report is tabled in Parliament. The CFSA also allows any surplus to be lowered by reducing employer and plan member contributions. In addition, if there is an amount considered to be a non-permitted surplus related to the pension fund, no further government pension contributions are permitted, while plan member contributions under the pension fund may be reduced and amounts managed by PSPIB may be transferred to the government’s CRF.

(C) Benefits

The pension plan provides pension benefits based on the number of years of pensionable service up to a maximum of 35 years. Benefits are determined by a formula set out in the legislation; they are not based on the financial status of the pension plan. The basic benefit formula is 2 % per year of pensionable service multiplied by the average salary of the five consecutive years of highest paid service. To reflect the Income Tax Act restrictions on registered pension plan benefits, separate retirement compensation arrangements (RCAs) have been implemented to provide benefits that exceed the limits established in the Income Tax Act. Since the RCAs are covered by separate legislation, their account balances in the accounts of Canada are not consolidated in these financial statements; however, condensed information is presented in Note 21.

Pension benefits are coordinated with the CPP and QPP and are reduced when the plan member reaches age 65 or earlier if the member receives a disability benefit from the CPP or QPP. The pension reduction factor is 0.7% for members born before 1943, declining gradually for members born from 1943 to 1946 until it reaches 0.625% for members born after 1946. Benefits are fully indexed to the annual increase in the Consumer Price Index.

Other benefits include survivor pensions, deferred annuities, annual allowances, transfer values, cash termination allowances or minimum benefits in the event of death, unreduced early retirement pensions, and disability pensions.

2. Significant accounting policies

The significant accounting policies that have been applied in the preparation of these financial statements are summarized below.

(A) Basis of presentation

These financial statements present information on the pension plan on a going-concern basis. They are prepared to assist plan members and others in reviewing the activities of the pension plan for the year, not to portray the funding requirements of the pension plan.

These financial statements are prepared in Canadian dollars, the pension plan’s functional currency, in accordance with the accounting policies stated below, which are based on Canadian accounting standards for pension plans in Part IV of the Chartered Professional Accountants (CPA) Canada Handbook (Section 4600). Section 4600 provides specific accounting guidance on investments and pension obligations. For accounting policies that do not relate to either investments or pension obligations, the pension plan complies with International Financial Reporting Standards (IFRS) in Part I of the CPA Canada Handbook. To the extent that IFRS in Part I are inconsistent with Section 4600, Section 4600 takes precedence. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian accounting standards for pension plans.

PSPIB is a Crown corporation whose statutory objectives are to manage the funds transferred to it for investment and to maximize investment returns without undue risk of loss. PSPIB qualifies as an investment entity as defined under IFRS 10 Consolidated Financial Statements and forms part of the pension plan reporting entity. Pursuant to Section 4600, PSPIB’s subsidiaries that are formed to hold investments or those that provide PSPIB with services that relate to its investment activities are consolidated, since these entities are not considered investment assets. PSPIB’s investment in subsidiaries, associates, and joint ventures that are considered investment assets are measured at fair value in accordance with Section 4600. Financial liabilities are also measured at fair value in accordance with Section 4600.

The financial statements for the year ended 31 March 2024 were authorized for issue by the signatories on 26 February 2025.

(B) Interests in other entities

Management, through the activities of PSPIB, assesses control, joint control and significant influence with respect to the investees disclosed in Note 6 as follows:

(I) Control and significant influence

A subsidiary is an entity which is controlled by PSPIB. PSPIB determines that it controls an investee when it has power over the investee, is exposed, or has rights, to variable returns from its investment in the investee and has the ability to affect those returns through its power over the investee.

An associate is an entity over which PSPIB has significant influence, as in certain cases, PSPIB does not have control over an investee but has the power to participate in the financial and operating policy decisions of the investee. In such cases, PSPIB determines that it has significant influence over the investee.

In the context of control or significant influence, power over an investee is obtained through voting rights conveyed by PSPIB’s ownership interest, other contractual arrangements, or a combination thereof.

(II) Joint control

PSPIB determines that it is party to a joint venture arrangement when it has joint control over an investee and has rights to the net assets of the investee. Such investees are reported as jointly controlled. Joint control is established through a contractual arrangement which requires the unanimous consent of the parties sharing control for the activities that significantly affect the returns of the arrangement.

Generally, decision-making regarding such activities is governed through voting rights conveyed by the ownership interest of each party. In certain cases, it is governed solely through contractual arrangements or in conjunction with the ownership interest of each party.

(C) Financial instruments

(I) Classification

Financial assets representing investments are managed, together with related financial liabilities, according to the entity’s business model to maximize the rate of return. The performance of such financial instruments is evaluated on a fair value basis and they are classified at fair value through profit or loss (FVTPL). They are described in detail in Note 5(A).

Borrowings, as described under Note 9, are financial liabilities that are designated to be measured at FVTPL since they are part of the portfolios of investments that are managed together and whose performance is evaluated on a fair value basis.

(II) Recognition

Financial assets and financial liabilities are recorded at the date upon which PSPIB becomes a party to the associated contractual provisions. In the case of traded financial assets, they are recorded as of the trade date.

(III) Initial and subsequent measurement

All financial assets and financial liabilities are recorded in the statement of financial position at fair value and continue to be measured as such on a recurring basis. After initial measurement, subsequent changes in the fair value of financial assets and financial liabilities classified at FVTPL are recorded in the statement of changes in net assets available for benefits.

(IV) Derecognition

A financial asset (or, where applicable, a part thereof) is derecognized when the following conditions are met:

• The rights to receive cash flows from the asset have expired, or
• PSPIB has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows to a third party, and
• PSPIB has transferred substantially all the risks and rewards of the asset, or
• In cases where PSPIB has neither transferred nor retained substantially all the risks and rewards of the asset, it has transferred control of the asset

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expired.

(D) Determination of fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

At initial recognition, PSPIB evaluates the facts and circumstances related to a transaction to confirm that the transaction price represents the fair value of an asset or a liability. At each subsequent reporting date, market prices are used to determine fair value where an active market exists (such as a recognized securities exchange), as they reflect actual and regularly occurring market transactions on an arm’s length basis. If quoted market prices are not available, then fair value is estimated using valuation techniques based on inputs existing at the end of the reporting period that are derived from observable market data.

Valuation techniques are generally applied to investments in private markets, alternative investments, over-the-counter (OTC) derivatives and certain fixed income securities. The values derived from applying these techniques are impacted by the choice of valuation model and the underlying assumptions made concerning factors such as the amounts and timing of future cash flows, discount rates, volatility and credit risk. In certain cases, such assumptions are not supported by market observable data.

The determination of fair value of all financial assets and financial liabilities is described in Note 5.

(E) Foreign currency translation

Foreign currency transactions during the period, including purchases and sales of securities, income and expenses, are translated at the rate of exchange prevailing on the date of the transaction.

Monetary assets and liabilities that are denominated in foreign currencies are translated at the functional currency rate of exchange prevailing at the end of the reporting period.

Foreign currency transaction gains and losses on all monetary assets and liabilities are included in investment income.

(F) Securities lending and securities borrowing and related collateral

PSPIB participates in securities lending and borrowing programs whereby it lends and borrows securities in order to enhance portfolio returns. Lending and borrowing transactions including related collateral under such programs do not transfer the risks or rewards of ownership of the securities to the counterparty. Consequently, PSPIB does not derecognize securities lent or pledged as collateral or recognize securities borrowed or received as collateral. Cash amounts received are recognized as described in Note 5(A) (IX).

The securities lending and borrowing programs require collateral in cash, high-quality debt instruments or securities. Collateral transactions are conducted under terms that are usual and customary in standard securities lending and borrowing programs. PSPIB and its counterparties are authorized to sell, repledge or otherwise use collateral held. The same securities or equivalent securities must be returned to the counterparty at the end of the contract, unless an event of default occurs.

(G) Securities sold under repurchase agreements and purchased under reverse repurchase agreements and related collateral

PSPIB is party to repurchase and reverse repurchase agreements. Such agreements involve the sale of securities by one counterparty with a simultaneous agreement to repurchase such securities at a specified price and at a specified future date.

Securities sold or purchased under the repurchase and reverse repurchase agreements respectively, including related collateral, are not derecognized or recognized as all risks and rewards of ownership related to such securities are not transferred. As such, in the case where PSPIB is the counterparty selling securities under such agreements, all income (loss) related to such securities continues to be reported in investment income, and obligations to repurchase the securities sold are accounted for as investment-related liabilities.

The difference between the fair value of the securities sold and the repurchase price is recorded as interest expense within investment-related expenses. In the case where PSPIB is the counterparty purchasing securities under such agreements, no income (loss) related to such securities is recognized, and obligations to resell the securities are accounted for as investment-related receivables. The difference between the fair value of the securities purchased and resale price is recorded in investment income.

Transactions under repurchase and reverse repurchase agreements involve pledging collateral consisting of cash or securities deemed acceptable by the counterparties. Collateral transactions are conducted under terms that are usual and customary in standard repurchase arrangements. Such terms require the relevant counterparty to pledge additional collateral based on the changes in the fair value of the existing collateral pledged, as well as the related securities sold or purchased. The counterparties are authorized to sell, repledge or otherwise use collateral held. The securities pledged as collateral must be returned to the relevant counterparty at the end of the contract, unless an event of default occurs.

(H) Offsetting of financial instruments

Financial assets and financial liabilities are offset with the net amount reported in the statement of financial position only if PSPIB has a current legally enforceable right to offset the recognized amounts and the intent to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(I) Pension obligations

The present value of accrued pension benefits is calculated by the OCA on behalf of the pension plan sponsor, the government, using the projected benefit method prorated on service, based on management’s best estimate of streamed expected rates of return on invested funds for funded pension benefits, and the government’s cost of borrowing derived from the yields on the actual zero-coupon yield curve for Government of Canada bonds, which reflect the timing of the expected future cash flows for unfunded pension benefits.

(J) Investment income

Investment income is made up of interest, dividends, gains (losses) on the disposal of financial assets and financial liabilities, as well as gains (losses) which reflect the change in unrealized appreciation (depreciation) of financial assets held and financial liabilities outstanding at the end of the reporting period. Interest is recognized, on a consistent basis, using the prescribed rates until maturity. Dividends are recognized when the right to receive them has been obtained, generally on the ex-dividend date.

(K) Contributions

Contributions for current service are recorded in the year in which the related payroll costs are incurred. Contributions for past service that are receivable over a period in excess of one year are recorded at the estimated net present value of the contributions to be received.

(L) Benefits earned, benefits paid, and refunds and transfers

Benefits earned are accrued as employees render pensionable services.

The funded and unfunded benefits paid are recognized as a reduction of pension obligations when the payments are made. The funded benefits paid are recognized as a reduction of net assets available for benefits when the payments are made.

Benefit payments, refunds to former members and transfer payments to other plans are recorded in the period in which they are paid.

(M) Investment-related expenses

Investment-related expenses are made up of interest expense, transaction costs, external investment management fees and other (net).

Transaction costs are incremental costs directly attributable to the acquisition, due diligence, issue, or disposal of a financial asset or financial liability, and they are expensed as incurred.

External investment management fees are directly attributable to the external management of assets on behalf of PSPIB. These fees are paid directly by PSPIB and comprise base fees accrued as a percentage of the fair value of the assets managed externally and performance fees accrued as a function of various performance indicators. This excludes amounts not paid directly by PSPIB for certain pooled fund investments classified under alternative investments and for investments in private markets as outlined in Note 18.

(N) Significant accounting judgments, estimates and assumptions

In preparing the financial statements, management makes certain judgments, estimates and assumptions that can affect the amounts reported therein. Significant judgments include those related to the determination of the investment entity status of PSPIB as described in Note 2(A).

Management also makes estimates and assumptions in the measurement, risk assessment and related disclosures surrounding investments in private markets, certain fixed income securities and the pension obligations.

The main assumptions made by management regarding measurement of financial instruments are outlined in Note 5(C) (III), and those regarding the assessment of risk are outlined in Note 7.

The pension obligations are actuarially determined, and the actual experience may differ significantly from the assumptions used in the calculation of the pension obligations. The significant actuarial assumptions used in measuring the pension obligations are found in Note 12.

The economic environment continues to be subject to global uncertainty and heightened geopolitical tensions, which could impact the actuarial assumptions used to measure the present value of the pension obligations and the market value of PSPIB’s portfolio. The pension obligations and the investments held by PSPIB, as at 31 March 2024, as well as the return on investments for the year, reflect the impacts resulting from these events to the extent known and estimable at the reporting date.

Although assumptions reflect management’s best estimates, actual results may differ from such estimates due to the uncertainties involved in using them.

3. Current and future changes in accounting standards

Management has determined that there is no anticipated material impact on the financial statements arising from new standards, amendments and interpretations that have been issued by the IASB but that are not yet effective.

4. Canadian Forces Pension Fund

The government has a statutory obligation to pay benefits relating to the pension plan. This pension obligation is to plan members and their beneficiaries.

In 1999, the pension legislation was amended to allow the government to invest funds in order to provide for the pension obligation. This legislation created the PSPIB to manage and invest amounts that are transferred regularly to it from the CRF related to service since 1 April 2000. The transactions are recorded in the Canadian Forces Pension Fund. The Canadian Forces Pension Fund is a flow through account. At year-end, the balance in the Canadian Forces Pension Fund represents net contributions transferable to the PSPIB, and would also reflect any amounts transferred from the PSPIB. PSPIB investment assets and investment related liabilities are reflected directly in the pension plan’s financial statements.

In order for the government to track the transactions related to contributions, benefit payments, interest and transfers for service prior to 1 April 2000, the government established the Canadian Forces Superannuation Account in the accounts of Canada. The Canadian Forces Superannuation Account has no capacity to pay pensions and is not considered an asset of the pension plan. All cash receipts and disbursements go to or come from the CRF. The details of the transactions of the Canadian Forces Superannuation Account are provided in Note 20.

Related Party—Reserve Force Pension Plan

The Canadian Forces Pension Plan is related, through common legislation (the CFSA), to the Reserve Force Pension Plan. Transactions with the Reserve Force Pension Plan related to member service and contributions are considered to be in the normal course of operations, in accordance with the Section 83 of the Reserve Force Pension Plan Regulations (RFPPR) and are recorded at the exchange amount as required by that section. For the year ended 31 March 2024, $45 million (2023—$73 million) was transferred between the fund accounts. The value of the pensionable service due between the pension plans has been estimated at 31 March 2024 to be $59 million (2023—$61 million).

5. Financial assets and financial liabilities

(A) Classes of financial assets and financial liabilities

Financial assets and financial liabilities are aggregated in the following table, in classes that reflect their respective exposure as well as in investment sectors.

Table 7: Fair values as at 31 March ($ millions):

	2024	2023
Investments Public markets
Canadian equity	$535	$862
Foreign equity	8,022	6,787
Private markets
Real estate	7,106	7,914
Private equity	7,565	6,907
Infrastructure	7,794	6,915
Natural resources	4,154	3,590
Fixed income
Cash and cash equivalentstable 7 note 1	677	1,346
Money market securitiestable 7 note 1	1,617	1,604
Government and corporate bonds	5,150	4,466
Inflation-linked bonds	3,431	2,200
Private debt securities	5,694	5,840
Alternative investments	4,940	4,789
Total Investments	$56,685	$53,220
Investment-related assets
Amounts receivable from pending trades	$244	$488
Interest receivable	121	97
Dividends receivable	52	40
Securities purchased under reverse repurchase agreements	437	246
Derivative-related assets	259	423
Total investment-related assets	$1,113	$1,294
Investments representing financial assets at FVTPLtable 7 note 2	$57,798	$54,514
Investment-related liabilities
Amounts payable from pending trades	$(103)	$(209)
Interest payable	(32)	(22)
Securities sold short	(613)	(480)
Collateral payable	(128)	(184)
Securities sold under repurchase agreements	(1,001)	(1,814)
Derivative-related liabilities	(187)	(314)
Investment-related liabilities representing financial liabilities at FVTPL	$(2,064)	$(3,023)
Borrowings
Capital market debt financing	$(5,158)	$(4,624)
Borrowings representing financial liabilities designated at FVTPL	$(5,158)	$(4,624)
Net investments	$50,576	$46,867
Table 7 Notes Table 7 Note 1 During the year ended 31 March 2024, cash and cash equivalents were reclassified out of money market securities and presented separately in order to better reflect their unique nature and characteristics. Accordingly, comparative figures were reclassified to present cash and cash equivalents separately and to decrease money market securities by the same amount. Return to table 7 note 1 referrer Table 7 Note 2 As at 31 March 2024, $1,939 million out of $57,798 million were investments pledged as described in Note 5(D) (31 March 2023—$2,636 million out of $54,514 million) Return to table 7 note 2 referrer

(I) Public markets

Public markets consist of Canadian and foreign investments in the following securities: common shares, American depository receipts, global depository receipts, participation notes, preferred shares, income trust units, exchange traded funds units, pooled funds units, and securities convertible into common shares of publicly listed issuers.

Valuation techniques

Direct investments in Canadian and foreign equities are measured at fair value using quoted prices in active markets and are based on the most representative price within the bid-ask spread.

In the case of investments in pooled funds, fair value is measured using unit values obtained from each of the funds’ administrators, which are derived from the fair value of the underlying investments in each pooled fund. PSPIB reviews the fair value received, and where necessary, the impact of restrictions on the sale or redemption of such investments is taken into consideration.

(II) Private markets

Private markets consist of investments in real estate, private equity, infrastructure and natural resources.

Real estate investments are comprised of direct equity positions in various private entities, fund investments, as well as properties in the real estate sector. Real estate investments focus on partnerships, companies and properties operating mainly in the retirement and residential, office, retail, and industrial sectors, as well as private funds invested in real estate assets. Real estate investments are presented net of all third-party financing.

Private equity investments are comprised of fund investments with similar objectives, co-investments in private entities, as well as direct equity positions.

Infrastructure investments are comprised of direct equity positions, fund investments and co-investments in various private entities. Infrastructure investments focus on entities engaged in the management, ownership or operation of assets in energy, transportation and other regulated businesses. Infrastructure investments are presented net of all third-party financing.

Natural resources investments are comprised of direct equity positions, fund investments and co-investments in various private entities. Natural resources investments focus on entities engaged in the management, ownership or operation of assets in timberlands, agriculture and upstream oil and gas. Natural resources investments are presented net of all third-party financing.

Valuation techniques

The process for fair value measurement of private markets investments is described in Note 5(C) (II) and the valuation techniques, together with the significant inputs used, are described in Note 5(C) (III).

(III) Fixed income

Cash and cash equivalents

Cash includes demand deposits with financial institutions.

Cash equivalents include treasury bills, certificates of deposit, bankers’ acceptances and other fixed-income securities with maturities of 90 days or less that are held to meet short-term financial commitments. Such instruments are readily convertible into known amounts of cash and have an insignificant risk of change in value.

Money market securities, bonds and private debt securities

Fixed income consists of money market securities, government and corporate bonds, inflation-linked bonds and private debt securities. Money market securities include instruments having a maximum term to maturity of one year, such as treasury bills, certificates of deposit and bankers’ acceptances.

Government and corporate bonds include Canadian and foreign, federal, provincial, territorial and municipal bonds, floating rate notes, asset-backed term notes and mortgage-backed securities. Inflation-linked bonds are fixed income securities that earn inflation-adjusted returns.

Private debt securities are fixed income securities of private companies held directly or through private funds. Such debt securities take the form of senior debt, mezzanine and distressed debt and primary and secondary investments in leveraged loans. Private debt securities also include third-party loans such as junior and senior debts, construction loans, bridge loans, income-participating loans, as well as other structured finance products in the real estate sector.

Valuation techniques

Treasury bills are valued based on prices obtained from third-party pricing sources. Such prices are determined using the most representative price within a spread of dealer quotations. Certificates of deposit and bankers’ acceptances are recorded at cost plus accrued interest, which approximates their fair value given their short-term nature.

Fair values of government and most corporate bonds, inflation-linked bonds and mortgage-backed securities are based on prices obtained from third-party pricing sources. Such prices are determined using either an appropriate interest rate curve with a spread associated with the credit quality of the issuer or other generally accepted pricing methodologies.

The fair values of certain corporate bonds, private debt securities and asset-backed term notes are determined using valuation techniques. Such techniques, together with the significant inputs used, are described in Note 5(C) (III).

The fair value measurement of fund investments included as part of private debt securities is described in Note 5(C) (II).

(IV) Alternative investments

Alternative investments consist mainly of units of funds that hold a mix of equity, fixed income and derivative instruments, as well as hedge funds.

Valuation techniques

The fair value of these investments is determined based on the fair values reported by the funds’ administrators or general partners and reflects the fair value of the underlying equity, fixed income or derivative instruments, as applicable. PSPIB reviews the fair value received and, where necessary, the impact of restrictions on the sale or redemption of such investments is taken into consideration.

(V) Amounts receivable and payable from pending trades

Amounts receivable from pending trades consist of proceeds on sales of investments, excluding derivative financial instruments, which have been traded but remain unsettled at the end of the reporting period.

Amounts payable from pending trades consist of the cost of purchases of investments, excluding derivative financial instruments, which have been traded but remain unsettled at the end of the reporting period.

Valuation techniques

The fair value of amounts receivable and payable from pending trades reflects the value at which their underlying original sale or purchase transactions were undertaken.

(VI) Interest and dividends receivable

Interest and dividends are recorded at the amounts expected to be received at the end of the reporting period, which due to their short-term maturity, approximates fair value.

(VII) Interest payable

With respect to the borrowings described in Note 5(A) (XI), interest is accrued at the amount expected to be paid at the end of the reporting period, which approximates fair value.

(VIII) Securities sold short

Securities sold short reflect PSPIB’s obligation to purchase securities pursuant to short selling transactions. In such transactions, PSPIB sells securities it does not own with an obligation to purchase similar securities on the market to cover its position.

Valuation techniques

Using quoted market prices that are based on the most representative price within the bid-ask spread, the fair value of securities sold short is measured using the same method as the similar long positions presented within public markets and fixed income.

(IX) Collateral payable

As part of securities lending and certain OTC derivative transactions, when cash is received, it is recognized as collateral payable. The payable balance reflects the obligation of the transferee to return the amount to the transferor at the end of the transaction in the absence of an event of default by the transferor.

(X) Securities sold under repurchase agreements and purchased under reverse repurchase agreements

As described in Note 2(G), PSPIB is party to repurchase and reverse repurchase agreements.

Valuation techniques

Obligations to repurchase or resell the securities sold or purchased under such agreements are recorded at cost plus accrued interest, which due to their short-term maturity, approximates fair value.

(XI) Borrowings under the capital market debt program

PSPIB’s capital market debt program is described in Note 9(B).

Valuation techniques

Short-term promissory notes are recorded at cost plus accrued interest, which due to their short-term maturity, approximates fair value. The fair value of PSPIB’s medium-term notes is based on prices that are obtained from third-party pricing sources. Such prices are determined using an interest rate curve with a spread consistent with PSPIB’s credit quality.

(B) Derivative-related assets and liabilities

Derivative financial instruments are financial contracts that are settled at a future date. The value of such instruments is derived from changes in the value of the underlying assets, interest or exchange rates. Derivative financial instruments do not, typically, require an initial net investment. In certain cases, they require an initial net investment that is less than what would be required to hold the underlying position directly. Derivative financial instruments can be listed or traded OTC. OTC instruments consist of those that are bilaterally negotiated and settled, and those that are cleared (OTC-cleared) by a central clearing party (CCP).

PSPIB uses derivative financial instruments to enhance returns or to replicate investments synthetically. Derivatives are also used to reduce the risk associated with existing investments.

PSPIB uses the following types of derivative financial instruments:

(I) Swaps

Swaps are transactions whereby two counterparties exchange cash flow streams with each other based on predetermined conditions that include a notional amount and a term. Swaps are used to increase returns or to adjust exposures of certain assets without directly purchasing or selling the underlying assets.

(II) Futures

Futures are standardized contracts to take or make delivery of an asset (buy or sell) at a predefined price and predefined future date. Futures are used to adjust exposures to specified assets without directly purchasing or selling the underlying assets.

(III) Forwards

Forwards are contracts involving the sale by one party and the purchase by another party of a predefined amount of an underlying instrument, at a predefined price and at a predefined date in the future. Forwards are used to adjust exposures to specified assets without directly purchasing or selling the underlying assets.

(IV) Options

Options are contracts where the seller gives the purchaser the right, but not the obligation, to buy or sell a given amount of an underlying security, index, commodity, currency, interest rate, credit or other financial instrument, at an agreed-upon price stipulated in advance, either at a determined date or at any time before the predefined maturity date.

(V) Warrants and rights

Warrants are options to purchase an underlying asset which is in the form of a transferable security and which can be listed on an exchange or traded OTC.

Rights are securities giving shareholders entitlement to purchase new shares issued by a corporation at a predetermined price (normally less than the current market price) in proportion to the number of shares already owned. Rights are issued only for a short period of time, after which they expire.

Valuation techniques

(i) Determination of fair value of derivative financial instruments

Listed derivative financial instruments are recorded at fair value using quoted market prices that are based on the most representative price within the bid-ask spread. OTC-cleared derivatives are recorded at fair value using prices obtained from the CCP. OTC derivatives are valued using appropriate valuation techniques such as discounted cash flows. These techniques use significant inputs that are observable in the market such as current market yields.

(ii) Notional values and fair values of derivative-related assets and liabilities

Notional values of derivative financial instruments are not recorded as assets or liabilities as they represent the face amount of the contract. Except for credit derivatives, notional values do not represent the potential gain or loss associated with the market or credit risk of such transactions disclosed below. Rather, they serve as the basis upon which the cash flows and the fair value of the contracts are determined.

Table 8: The following table summarizes the derivatives portfolio as at 31 March ($ millions):

	2024			2023
	Notional value	Fair value		Notional value	Fair value
		Assets	Liabilities		Assets	Liabilities
Equity and commodity derivatives
Listed: Futures	$1,071	$0	$0	$710	$0	$0
Listed: Options: Purchased	30	0	0	175	6	0
Written	0	0	0	230	0	(3)
OTC
Swaps	4,256	94	(41)	3,979	127	(44)
Options: Purchased	0	0	0	16	0	0
Currency derivatives
Listed: Futures	72	0	0	44	0	0
OTC
Forwards	11,191	42	(66)	20,670	136	(160)
Swaps	236	0	(6)	686	17	(6)
Options: Purchased	174	1	0	396	2	0
Written	202	0	(1)	512	0	(2)
Interest rate derivatives
Listed: Futures	2,080	0	0	423	0	0
Listed: Options: Purchased	7,994	4	0	9,334	1	0
Written	8,255	0	(3)	8,548	0	(1)
OTC
Forwards	153	0	(1)	272	2	(1)
Swaps	467	1	(4)	670	6	(3)
Options: Purchased	10,247	114	0	12,623	123	0
Written	13,315	0	(62)	14,735	0	(92)
OTC‑cleared
Swaps	12,591	0	0	15,559	0	0
Credit derivatives
OTC
Credit default swaps:
Purchased	119	0	(3)	108	0	(2)
Writtentable 8 note 1	382	3	0	232	3	0
OTC-cleared
Credit default swaps:
Purchased	565	0	0	389	0	0
Total	-	$259	$(187)	-	$423	$(314)
Table 8 Note Table 8 Note 1 PSPIB, through written credit default swaps, indirectly guarantees the underlying reference obligations. The maximum potential exposure is the notional amount of the written credit default swaps as shown in the table above. Return to table 8 note 1 referrer

Table 9: Total derivative-related assets and liabilities as at 31 March are comprised of ($ millions):

	2024			2023
	Notional value	Fair value		Notional value	Fair value
		Assets	Liabilities		Assets	Liabilities
Listed derivatives	$19,452	$4	$(3)	$19,464	$7	$(4)
OTC derivatives	40,742	255	(184)	54,899	416	(310)
OTC-cleared derivatives	13,156	0	0	15,948	0	0
Total	-	$259	$(187)	-	$423	$(314)

Table 10: The terms to maturity based on the notional value for the derivatives were as follows as at 31 March ($ millions):

	2024	2023
Less than 3 months	$32,936	$44,180
3 to 12 months	21,558	28,656
Over 1 year	18,856	17,475

(C) Fair value hierarchy

(I) Classification

Financial assets and financial liabilities described under Note 5(A) are classified within the fair value hierarchy, described as follows, based on the lowest level of input that is significant to the fair value measurement as a whole.

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that PSPIB can access at the end of the reporting period
• Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or the liability, either directly or indirectly. Level 2 inputs include:
  1. quoted prices for similar assets or liabilities in active markets
  2. quoted prices for identical or similar assets or liabilities in markets that are not active
  3. inputs other than quoted prices that are observable for the asset or liability
  4. market-corroborated inputs
• Level 3 inputs are unobservable inputs for the asset or liability that are used within model-based techniques. They reflect PSPIB’s assessment of the assumptions that market participants would use in pricing the assets or liabilities

The classification within the levels of the hierarchy is established at the time of the initial determination of fair value of the asset or liability and reviewed at the end of each reporting period. PSPIB determines whether a transfer between levels has occurred and recognizes such transfers at the beginning of the reporting period.

Table 11: The following table shows the fair value of financial assets and financial liabilities as at 31 March 2024, classified within the fair value hierarchy ($ millions):

	Level 1	Level 2	Level 3	Total fair value
Investments Public markets
Canadian equity	$185	$350	$0	$535
Foreign equity	7,478	98	446	8,022
Private markets
Real estate	0	0	7,106	7,106
Private equity	0	0	7,565	7,565
Infrastructure	0	0	7,794	7,794
Natural resources	0	0	4,154	4,154
Fixed income
Cash and cash equivalents	256	421	0	677
Money market securities	1,487	130	0	1,617
Government and corporate bonds	1,329	3,820	1	5,150
Inflation-linked bonds	3,410	21	0	3,431
Private debt securities	0	0	5,694	5,694
Alternative investments	0	3,030	1,910	4,940
Total investments	$14,145	$7,870	$34,670	$56,685
Investment-related assets
Amounts receivable from pending trades	$0	$244	$0	$244
Interest receivable	0	121	0	121
Dividends receivable	0	52	0	52
Securities purchased under reverse repurchase agreements	0	437	0	437
Derivative-related assets	4	255	0	259
Total investment-related assets	$4	$1,109	$0	$1,113
Investments representing financial assets at FVTPL	$14,149	$8,979	$34,670	$57,798
Investment-related liabilities
Amounts payable from pending trades	$0	$(103)	$0	$(103)
Interest payable	0	(32)	0	(32)
Securities sold short	(613)	0	0	(613)
Collateral payable	0	(128)	0	(128)
Securities sold under repurchase agreements	0	(1,001)	0	(1,001)
Derivative-related liabilities	(3)	(184)	0	(187)
Investment-related liabilities representing financial liabilities at FVTPL	$(616)	$(1,448)	$0	$(2,064)
Borrowings
Capital market debt financing	$0	$(5,158)	$0	$(5,158)
Borrowings representing financial liabilities designated at FVTPL	$0	$(5,158)	$0	$(5,158)
Net investments	$13,533	$2,373	$34,670	$50,576

Table 12: The following table shows the fair value of financial assets and financial liabilities as at 31 March 2023, classified within the fair value hierarchy ($ millions):

	Level 1	Level 2	Level 3	Total fair value
Investments Public markets
Canadian equity	$529	$333	$0	$862
Foreign equity	6,400	199	188	6,787
Private markets
Real estate	0	0	7,914	7,914
Private equity	0	0	6,907	6,907
Infrastructure	0	0	6,915	6,915
Natural resources	0	0	3,590	3,590
Fixed income
Cash and cash equivalentstable 12 note 1	635	711	0	1,346
Money market securitiestable 12 note 1	1,459	145	0	1,604
Government and corporate bonds	1,563	2,902	1	4,466
Inflation-linked bonds	2,200	0	0	2,200
Private debt securities	0	0	5,840	5,840
Alternative investments	0	2,963	1,826	4,789
Total investments	$12,786	$7,253	$33,181	$53,220
Investment-related assets
Amounts receivable from pending trades	$0	$488	$0	$488
Interest receivable	0	97	0	97
Dividends receivable	0	40	0	40
Securities purchased under reverse repurchase agreements	0	246	0	246
Derivative-related assets	7	416	0	423
Total investment-related assets	$7	$1,287	$0	$1,294
Investments representing financial assets at FVTPL	$12,793	$8,540	$33,181	$54,514
Investment-related liabilities
Amounts payable from pending trades	$0	$(209)	$0	$(209)
Interest payable	0	(22)	0	(22)
Securities sold short	(449)	(31)	0	(480)
Collateral payable	0	(184)	0	(184)
Securities sold under repurchase agreements	0	(1,814)	0	(1,814)
Derivative-related liabilities	(4)	(310)	0	(314)
Investment-related liabilities representing financial liabilities at FVTPL	$(453)	$(2,570)	$0	$(3,023)
Borrowings
Capital market debt financing	$0	$(4,624)	$0	$(4,624)
Borrowings representing financial liabilities designated at FVTPL	$0	$(4,624)	$0	$(4,624)
Net investments	$12,340	$1,346	$33,181	$46,867
Table 12 Note Table 12 Note 1 During the year ended 31 March 2024, cash and cash equivalents were reclassified out of money market securities and presented separately in order to better reflect their unique nature and characteristics. Accordingly, comparative figures were reclassified to present cash and cash equivalents separately and to decrease money market securities by the same amount. Return to table 12 note 1 referrer

As at 31 March 2023, foreign equity securities with a fair value of $6 million were indirectly held and classified as Level 2. During the year ended 31 March 2024, these securities were transferred to Level 1 as they became directly held by PSPIB.

There were no significant transfers between Level 1 and Level 2 during the year ended 31 March 2023.

(II) Process for Level 3 fair value determination

The valuation process is monitored and governed by an internal valuation committee (VC). This committee is responsible for overseeing all aspects of fair value determination. This includes valuation methodologies and procedures for each type of investment and ensuring they are complied with. Valuation methodologies established are based on widely recognized practices that are consistent with professional appraisal standards. Such standards include, among others, the International Private Equity and Venture Capital Valuation Guidelines, the Canadian Uniform Standards of Professional Appraisal Practice and the Uniform Standards of Professional Appraisal Practice in the United States of America.

For the year ended 31 March 2024, the fair value of investments classified as Level 3 in private markets was determined quarterly and adjusted to reflect the impact of any significant market or investment‑specific events or circumstances. For the year ended 31 March 2023, such fair value was determined at least semi-annually. For each investment, the relevant valuation methodology is applied consistently over time as appropriate in the prevailing circumstances. The appropriateness of significant changes in valuation methodologies is reviewed by the VC.

In cases where the services of third-party appraisers are used, PSPIB ensures their independence and that the valuation methods used are consistent with professional appraisal standards outlined above. In validating the work performed by appraisers, PSPIB ensures that the assumptions used correspond to financial information and forecasts of the underlying investment.

With respect to fund investments classified as Level 3, the annual fair value is generally determined based on the most recent audited financial statements received from the fund’s general partner. For interim reporting periods, fair value is obtained from information provided by the fund’s administrators and is reviewed by PSPIB to ensure reasonableness and adherence to acceptable industry valuation methods. Where necessary, the impact of restrictions on the sale or redemption of such investments is taken into consideration in determining fair value.

To reflect the impact, where applicable, of significant market movements or other events occurring up to the end of the reporting period, adjustments to private markets and fund investments are made as appropriate. Such adjustments are based on a number of factors including public market trading comparables, investment-specific characteristics as well as market conditions and uncertainties at that time.

(III) Level 3 significant inputs

Table 13: The following table outlines key information with respect to significant inputs related to financial assets categorized within Level 3 as at 31 March 2024:

Financial assets	Type of investment	Fair value ($ millions)	Significant valuation techniques	Significant unobservable inputs	Range (weighted average)
Public markets
Foreign equity	Direct investments	$446	NAVtable 13 note 1	n/a	n/a
Private markets
Real estate	Direct and co-investments	$6,439	Discounted cash flow (DCF)	Discount ratetable 13 note 2 table 13 note 3	2.90%-18.00% (7.80%)
				Terminal capitalization ratetable 13 note 2 table 13 note 3	3.20%-12.25% (6.08%)
			Direct capitalization	Capitalization ratetable 13 note 2 table 13 note 4	2.51%—10.00% (4.85%)
				Stabilized occupancy ratetable 13 note 4 table 13 note 5	98.00%—100.00% (99.57%)
			Sales comparison approach	Price per square foottable 13 note 4 table 13 note 5	$4.28—$1,827.48 ($165.83)
			NAVtable 13 note 1	n/a	n/a
			Transaction price	n/a	n/a
	Fund investments	$667	NAVtable 13 note 1	n/a	n/a
Other private markets	Direct and co-investments	$14,325	DCF	Discount ratetable 13 note 2	5.19%—18.50% (9.58%)
			Market comparables	n/a	n/a
			NAVtable 13 note 1	n/a	n/a
			Transaction price	n/a	n/a
	Fund investments	$5,188	NAVtable 13 note 1	n/a	n/a
Fixed income
Corporate bonds	Asset-backed term notes	$1	Third-party pricingtable 13 note 1	n/a	n/a
Private debt securities	Direct and co-investments	$4,310	DCF	Discount ratetable 13 note 2	7.02%—30.09% (12.24%)
			NAVtable 13 note 1	n/a	n/a
			Transaction price	n/a	n/a
	Fund investments	$1,384	NAVtable 13 note 1	n/a	n/a
Alternative investments	Fund investments	$1,910	NAVtable 13 note 1	n/a	n/a
Total		$34,670
Table 13 Notes Table 13 Note 1 In certain cases, when investments are held through funds, partnerships or similar structures, fair value is determined by third parties where valuation information is not available to PSPIB. Return to table 13 note 1 referrer Table 13 Note 2 An increase (decrease) in this unobservable input, taken individually, generally results in a decrease (increase) in fair value. Return to table 13 note 2 referrer Table 13 Note 3 An increase (decrease) in the discount rate is generally accompanied by an increase (decrease) of the terminal capitalization rate. Return to table 13 note 3 referrer Table 13 Note 4 There is no predictable direct relationship between this input and any other significant unobservable input. Return to table 13 note 4 referrer Table 13 Note 5 An increase (decrease) in this unobservable input, taken individually, generally results in an increase (decrease) in fair value. Return to table 13 note 5 referrer

Table 14: Key information with respect to significant inputs related to financial assets categorized within Level 3 as at 31 March 2023:

Financial assets	Type of investment	Fair value ($ millions)	Significant valuation techniques	Significant unobservable inputs	Range (weighted average)
Public markets
Foreign equity	Direct investments	$188	NAVtable 14 note 1	n/a	n/a
Private markets
Real estate	Direct and co-investments	$7,247	Discounted cash flow (DCF)	Discount ratetable 14 note 2 table 14 note 3	3.30%—19.00% (7.40%)
				Terminal capitalization ratetable 14 note 2 table 14 note 3	3.56%—12.00% (5.60%)
			Direct capitalization	Capitalization ratetable 14 note 2 table 14 note 4	2.35%—10.00% (4.62%)
				Stabilized occupancy ratetable 14 note 4 table 14 note 5	98.00%—100.00% (99.55%)
			Sales comparison approach	Price per square foottable 14 note 4 table 14 note 5	$3.42—$1,750.44 ($256.48)
			NAVtable 14 note 1	n/a	n/a
			Transaction price	n/a	n/a
	Fund investments	$667	NAVtable 14 note 1	n/a	n/a
Other private markets	Direct and co-investments	$12,528	DCF	Discount ratetable 14 note 2	5.50%—20.00% (9.68%)
			Market comparables	n/a	n/a
			NAVtable 14 note 1	n/a	n/a
			Transaction price	n/a	n/a
	Fund investments	$4,884	NAVtable 14 note 1	n/a	n/a
Fixed income
Corporate bonds	Asset-backed   term notes	$1	Third-party pricingtable 14 note 1	n/a	n/a
Private debt securities	Direct and co-investments	$4,416	DCF	Discount ratetable 14 note 2	4.25%—23.48% (12.56%)
			NAVtable 14 note 1	n/a	n/a
			Transaction price	n/a	n/a
	Fund investments	$1,424	NAVtable 14 note 1	n/a	n/a
Alternative investments	Fund investments	$1,826	NAVtable 14 note 1	n/a	n/a
Total		$33,181
Table 14 Notes Table 14 Note 1 In certain cases, when investments are held through funds, partnerships or similar structures, fair value is determined by third parties where valuation information is not available to PSPIB. Return to Table 14 note 1 referrer Table 14 Note 2 An increase (decrease) in this unobservable input, taken individually, generally results in a decrease (increase) in fair value. Return to Table 14 note 2 referrer Table 14 Note 3 An increase (decrease) in the discount rate is generally accompanied by an increase (decrease) of the terminal capitalization rate. Return to Table 14 note 3 referrer Table 14 Note 4 There is no predictable direct relationship between this input and any other significant unobservable input. Return to Table 14 note 4 referrer Table 14 Note 5 An increase (decrease) in this unobservable input, taken individually, generally results in an increase (decrease) in fair value. Return to table 14 note 5 referrer

(IV) Level 3 reconciliation

Table 15: The following table shows a reconciliation of all movements related to financial assets categorized within Level 3 for the year ended 31 March 2024 ($ millions):

	Opening balance	Purchases	Sales	Settlements	Realized gains	Unrealized gains (losses)table 15 note 1	Transfer out of Level 3	Closing balance
Public markets	$188	$87	$(26)	$0	$15	$182	$0	$446
Private markets	25,326	2,698	(1,778)	0	423	(62)	12	26,619
Fixed income	5,841	1,164	(1,404)	0	55	39	0	5,695
Alternative investments	1,826	107	(210)	0	49	138	0	1,910
Total	$33,181	$4,056	$(3,418)	$0	$542	$297	$12	$34,670
Table 15 Note Table 15 Note 1 Includes pension plan allocation adjustments. Return to table 15 note 1 referrer

As at 31 March 2023, listed foreign equity securities with a fair value of $12 million were classified under Level 1. During the year ended 31 March 2024, those securities were transferred to Level 3 as the investment became privately held and its fair value was determined based on significant unobservable inputs.

Table 16: The following table shows a reconciliation of all movements related to financial assets categorized within Level 3 for the year ended 31 March 2023 ($ millions):

	Opening balance	Purchases	Sales	Settlements	Realized gains (losses)	Unrealized gains (losses)table 16 note 1	Transfer in (out) of Level 3	Closing balance
Public markets	$262	$7	$(25)	$0	$5	$(52)	$(9)	$188
Private markets	22,899	3,522	(1,951)	0	666	232	(42)	25,326
Fixed income	4,974	1,531	(837)	0	69	104	0	5,841
Alternative investments	1,642	133	(113)	0	21	143	0	1,826
Total	$29,777	$5,193	$(2,926)	$0	$761	$427	$(51)	$33,181
Table 16 Note Table 16 Note 1 Includes pension plan allocation adjustments. Return to table 16 note 1 referrer

1. Includes the pension plan allocation adjustments.

As at 31 March 2022, a public market investment of $9 million in a non-listed fund that held listed securities was classified under Level 3 due to the nature of the contractual restrictions on the redemption of fund units. During the year ended 31 March 2023, the listed securities held by the fund were transferred to PSPIB and were classified as Level 1. Additionally, as at 31 March 2022, a private market investment of $42 million was classified under Level 3 as its fair value was determined based on significant unobservable inputs. During the year ended 31 March 2023, this investment was transferred to Level 2 as the related securities became publicly traded. These securities held by PSPIB are unregistered and can only be sold upon their registration.

(V) Level 3 sensitivity analysis

In the course of measuring fair value of financial instruments classified as Level 3, valuation techniques used incorporate assumptions that are based on non-observable data. Significant assumptions used for each asset class are described in Note 5(C) (III). Although such assumptions reflect PSPIB’s best judgment, with all other variables held constant, the use of reasonably possible alternative assumptions could yield different fair value measures representing, at a minimum, a 3% increase and 3% decrease as at 31 March 2024 (31 March 2023—4% increase and 4% decrease) in the fair value of financial instruments categorized as Level 3 This excludes fund investments where a sensitivity analysis is not possible given the underlying assumptions used are not available to PSPIB. In the case of fund investments, the fair value is determined as indicated in Note 5(C) (II).

(D) Collateral pledged and received

PSPIB is party to agreements that involve pledging and holding collateral, as outlined in Notes 2(F), 2(G) and 7(B) (I). The following table illustrates the fair values of the pension plan’s allocated collateral, as well as the securities under the lending and borrowing programs and the securities under the repurchase and reverse repurchase agreements.

Table 17: Fair values as at 31 March ($ millions):

	2024	2023
Securities lending and borrowing
Securities lent	$786	$842
Collateral heldtable 17 note 1	815	882
Securities borrowed	501	371
Collateral pledgedtable 17 note 2table 17 note 3	516	394
Securities repurchase and reverse repurchase agreements
Securities sold under repurchase agreements	1,003	1,836
Collateral pledgedtable 17 note 3	1,003	1,825
Securities purchased under reverse repurchase agreements	438	249
Collateral heldtable 17 note 4	438	248
Derivative contracts
Collateral pledgedtable 17 note 3	420	417
Collateral heldtable 17 note 5	384	359
Table 17 Notes Table 17 Note 1 The minimum fair value of securities collateral denominated in the same currency required is equal to 102%, and in the case of securities denominated in different currencies 105%. In exchange for securities lent, cash and securities received as at 31 March 2024, were $105 million and $710 million, respectively ($163 million and $719 million, respectively as at 31 March 2023). All cash amounts are reinvested. Return to table 17 note 1 referrer Table 17 Note 2 The minimum fair value of collateral required is equal to 100% of the fair value of the securities borrowed. Return to table 17 note 2 referrer Table 17 Note 3 The total of $1,939 million of collateral pledged was recognized as financial assets as disclosed in Note 5(A) ($2,636 million as at 31 March 2023). Return to table 17 note 3 referrer Table 17 Note 4 The collateral received is in the form of securities of which $112 million has been used in connection with short selling transactions as at 31 March 2024 ($109 million as at 31 March 2023) and nil has been used in connection with securities sold under repurchase agreements ($59 million as at 31 March 2023). Return to table 17 note 4 referrer Table 17 Note 5 As part of collateral held, cash amounted to $23 million as at 31 March 2024 ($22 million as at 31 March 2023) and securities amounted to $361 million as at 31 March 2024 ($337 million as at 31 March 2023). All cash collateral is reinvested. Return to table 17 note 5 referrer

6. Interest in other entities

(A) Subsidiaries, joint ventures and associates

In the normal course of business, investments in private markets are commonly held through investment entity subsidiaries formed by PSPIB. As at 31 March 2024, 145 investment entity subsidiaries were incorporated in North America, 28 in Europe, 19 in Oceania, 8 in Central and South America, 2 in Asia and 1 in Africa (31 March 2023—128 in North America, 28 in Europe, 19 in Oceania, 8 in Central and South America, 2 in Asia and 1 in Africa).

In addition, PSPIB controlled 92 investees directly or through its investment entity subsidiaries as at 31 March 2024 (31 March 2023—84 investees).

The following tables present, in descending order, the most significant investees held directly or indirectly by PSPIB where it has control, joint control or significant influence.

Table 18: As at 31 March 2024:

Entity’s name	Financial asset class	Principal place of business	Ownership interest held by PSPIB (%)	Relationship to PSPIB
AviAlliance GmbH	Infrastructure	Europe	100	Controlled
Roadis Transportation Holding, S.L.U.	Infrastructure	Global	100	Controlled
American Wholesale Insurance Holding Company, LLC	Private equity	North America	17	Associate
SEGRO European Logistics Partnership S.à.r.l.	Real estate	Europe	50	Jointly controlled
Kaingaroa Timberlands Limited	Natural resources	Oceania	56	Jointly controlled
Andante InvesteeCo Inc.	Infrastructure	Oceania	30	Jointly controlled
Willow Topco Limited	Infrastructure	Europe	63	Jointly controlled
TDF S.A.S.	Infrastructure	Europe	22	Associate
Forth Ports Limited	Infrastructure	Europe	51	Jointly controlled
Cubico Sustainable Investments Limited	Infrastructure	Global	50	Jointly controlled

Table 19: As at 31 March 2023:

Entity’s name	Financial asset class	Principal place of business	Ownership interest held by PSPIB (%)	Relationship to PSPIB
AviAlliance GmbH	Infrastructure	Europe	100	Controlled
American Wholesale Insurance Holding Company, LLC	Private equity	North America	22	Associate
SEGRO European Logistics Partnership S.à.r.l.	Real estate	Europe	50	Jointly controlled
Kaingaroa Timberlands Limited	Natural resources	Oceania	56	Jointly controlled
Roadis Transportation Holding, S.L.U.	Infrastructure	Global	100	Controlled
Willow Topco Limited	Infrastructure	Europe	74	Jointly controlled
TDF S.A.S.	Infrastructure	Europe	22	Associate
Revera inc.	Real estate	North America	100	Controlled
Forth Ports Limited	Infrastructure	Europe	51	Jointly controlled
Alliant	Private equity	North America	12	Associate

In addition to the above, PSPIB consolidates wholly owned subsidiaries that solely provide it with services that relate to its investment activities. Such services consist of investment management and financing of private market investments within the context of PSPIB’s capital market debt program described in Note 9(B).

(B) Structured entities

PSPIB holds interests in partnerships and funds mainly in the context of its investments in private markets. Given their nature, such entities commonly have the characteristics of a structured entity, that is, an entity where contractual arrangement matter more than voting rights in determining control and directing relevant activities. These entities are held as investments and do not expose PSPIB to additional risks or returns compared to interests held in non-structured entities.

Information regarding structured entities is included, as applicable, within disclosures of investment risk management under Note 7, guarantees and indemnities under Note 22 and commitments under Note 23.

7. Investment risk management

PSPIB is required to act in the best interests of the contributors and beneficiaries under the pension plan and for maximizing returns without undue risk of loss. In pursuit of this objective, PSPIB established an Enterprise Risk Management Policy (ERM Policy). The ERM Policy provides a framework for identifying, evaluating, managing, mitigating, monitoring and reporting the investment and non-investment risks to which PSPIB is exposed.

As part of the overall ERM policy, the objective of the Investment Risk Management Policy (IRM Policy) is to support the management of risk inherent to the investment decision-making process. The IRM Policy outlines a framework detailing how investment activities should comply with PSPIB’s risk philosophy and align with the tolerance and limits of its risk appetite. The IRM Policy also supplements the Statement of Investment Policies, Standards and Procedures (SIP&P), whose objective is to effectively manage investment risks related to the implementation of PSPIB’s various investment strategies. Investment risks include market, credit and liquidity risks.

(A) Market risk

Market risk is the risk that the value of an investment will fluctuate as a result of an adverse financial outcome due to changes in the factors that drive that value, such as changes in market prices, changes caused by factors specific to the individual investment, volatility in share and commodity prices, interest rate, foreign exchange or other factors affecting similar securities traded in the market.

(I) Measurement of market risk

As at 31 March 2024, the active annualized Value at Risk (“Active VaR”) was used as a primary measure of total portfolio market risk, to supplement the absolute annualized VaR (“Absolute VaR”) and monitor more closely the market risk directly attributable to PSPIB’s active investment management decisions. Active and Absolute VaR are used as key measures of total portfolio market risk.

The Absolute VaR quantifies, with a given confidence level, the loss in value of the total portfolio that one can expect, due to fluctuations in market prices, not to be exceeded over a given period. The VaR is also evaluated on an active basis by measuring the Active VaR. This measurement helps determine if the total portfolio deviates significantly from the Policy Portfolio, established with the SIP&P in mind.

For both Active VaR and Absolute VaR, PSPIB uses a historical VaR incorporating ten years’ worth of market returns scaled to a twelve-month holding period at a 95% confidence level. That is, statistically PSPIB would expect to see its total portfolio underperformance relative to the Policy Portfolio exceed the Active VaR and its total portfolio losses exceed the Absolute VaR only 5% of the time over a one-year period. For investments that are not actively traded, the calculation of the VaR uses securities with similar risk attributes as a proxy.

The VaR is statistically valid under normal market conditions. Although it includes potential losses derived from observed historical returns, it also assumes that the future will behave in a pattern similar to the past. Consequently, if future market conditions differ significantly from those of the past, potential losses may differ from those originally estimated.

Table 20: The following table shows the Active VaR and the Absolute VaR expressed as a percentage of net investments as at the end of the period:

	31 March 2024	31 March 2023
Active VaR	5.0%	4.8%
Absolute VaR	19.2%	19.6%

Stress testing

Although the VaR is a widely accepted risk measure, it is complemented by other risk measurement methodologies that provide greater insight on market risk. PSPIB uses stress testing and scenario analysis to examine the impact on financial results of abnormally large movements in risk factors. Such techniques are used to test a portfolio’s sensitivity to various risk factors and key model assumptions. These methods also use historically stressed periods to evaluate how a current portfolio reacts under such circumstances. Stress testing and scenario analysis are also deployed to assess new product performance.

(II) Interest rate risk

Interest rate risk refers to the risk that fluctuations in interest rates will directly affect the fair value of the pension plan’s net asset values.

Table 21: The terms to maturity of the classes of financial instruments, outlined in Note 5(A), with the most significant exposure to interest rate risk were as follows as at 31 March 2024 ($ millions):

	Less than 1 year	1 to 5 years	5 to 10 years	Over 10 years	Other	Total
Cash and cash equivalents	$0	$0	$0	$0	$677table 21 note 1	$677
Money market securities	0	0	0	0	1,617table 21 note 1	1,617
Government and corporate bonds	88	1,936	1,826	1,254	46table 21 note 2	5,150
Inflation-linked bonds	0	1,750	979	702	0	3,431
Private debt securities	7	2,130	1,386	746	1,425table 21 note 3	5,694
Total fixed income	$95	$5,816	$4,191	$2,702	$3,765	$16,569
Table 21 Notes Table 21 Note 1 Due to their short-term maturity, these investments are not significantly exposed to interest rate risk. Return to table 21 note 1 referrer Table 21 Note 2 Certain fixed income securities are not significantly exposed to interest rate risk as their prescribed rates are variable. Return to table 21 note 2 referrer Table 21 Note 3 Information in connection with the terms to maturity of fund and certain directly held investments included as part of private debt securities is not available. Return to table 21 note 3 referrer

Table 22: The terms to maturity of the classes of financial instruments, outlined in Note 5(A), with the most significant exposure to interest rate risk were as follows as at 31 March 2023 ($ millions):

	Less than 1 year	1 to 5 years	5 to 10 years	Over 10 years	Other	Total
Cash and cash equivalents	$0	$0	$0	$0	$1,346table 22 note 1 table 22 note 4	$1,346
Money market securities	0	0	0	0	1,604table 22 note 1 table 22 note 4	1,604
Government and corporate bonds	131	1,962	1,280	1,029	64table 22 note 2	4,466
Inflation-linked bonds	0	937	763	500	0	2,200
Private debt securities	200	1,288	2,190	798	1,364table 22 note 3	5,840
Total fixed income	$331	$4,187	$4,233	$2,327	$4,378	$15,456
Table 22 Notes Table 22 Note 1 Due to their short-term maturity, these investments are not significantly exposed to interest rate risk. Return to table 22 note 1 referrer Table 22 Note 2 Certain fixed income securities are not significantly exposed to interest rate risk as their prescribed rates are variable. Return to table 22 note 2 referrer Table 22 Note 3 Information in connection with the terms to maturity of fund and certain directly held investments included as part of private debt securities is not available. Return to table 22 note 3 referrer Table 22 Note 4 During the year ended 31 March 2024, cash and cash equivalents were reclassified out of money market securities and presented separately in order to better reflect their unique nature and characteristics. Accordingly, comparative figures were reclassified to present cash and cash equivalents separately and to decrease money market securities by the same amount. Return to table 22 note 4 referrer

All equity investments within Canadian equity, foreign equity, real estate, private equity, infrastructure and natural resources amounting to $35,176 million as at 31 March 2024 ($32,975 million as at 31 March 2023) do not have specified terms to maturity nor are they significantly exposed to interest rate risk.

Alternative investments described in Note 5(A) (IV), which amounted to $4,940 million as at 31 March 2024 ($4,789 million as at 31 March 2023), also have no specified terms to maturity. Certain of these investments, as well as reverse repurchase agreements and derivative contracts described in Notes 5(A) (X) and 5(B), respectively, are subject to interest rate risk exposures. These exposures are reflected in the VaR calculation described in Note 7(A) (I).

The terms to maturity of PSPIB’s capital market debt financing are disclosed in Note 9(B).

Interest Rate Benchmark Reform

PSPIB holds a number of financial instruments that will mature after the date the Interbank Offered Rate (IBOR) to which they refer is anticipated to be discontinued as a result of the reform. A steering committee oversees the transition from IBORs to alternative reference rates (ARRs) to mitigate the risks related to the discontinuation or unavailability of such rates, which are primarily operational. With respect to non-derivative financial instruments, PSPIB has been identifying agreements referring to IBORs and engaging in a timely contract remediation process with the related counterparties. For derivative contracts, PSPIB has adhered to the International Swaps and Derivatives Association (ISDA) Fallbacks Protocol that took effect on 25 January 2021, which provides an efficient mechanism to switch to ARRs as IBORs become unavailable.

The following table shows the fair value of non-derivative financial instruments and the notional value of derivative financial instruments that have yet to transition to ARRs.

Table 23: As at 31 March 2024, only instruments referencing Canadian Dollar Offered Rate (CDOR) and expected to mature after 28 June 2024, remain ($ millions):

	CDOR
Non-derivative financial assets fair value	$70
Derivatives notional	$143

1. Foreign currency risk

PSPIB is exposed to currency risk through holding of investments that is, (i.e. direct and indirect holdings of securities, units in pooled funds and units in limited partnerships) or investment-related liabilities in various currencies. Fluctuations in the relative value of the Canadian dollar against these foreign currencies can result in a positive or a negative effect on the fair value of the investments. To mitigate this risk, PSPIB may take, through foreign forward contracts or cross currency swaps, positions in foreign currencies.

Table 24: The underlying foreign currency exposures of net investments for the pension plan were as follows as at 31 March, 2024 ($ millions):

Currency	2024
	Fair value	% of total
U.S. dollar	$32,641	67.2
Euro	5,136	10.6
Japanese yen	1,893	3.9
British pound	1,807	3.7
Indian rupee	1,097	2.3
Australian dollar	832	1.7
Mexican peso	792	1.6
Brazilian real	599	1.2
Swiss franc	463	1.0
Singapore dollar	335	0.7
Hong Kong dollar	320	0.7
New Taiwan dollar	299	0.6
Others	2,339	4.8
Total	$48,553	100.0

As at 31 March 2024, PSPIB and its investment entity subsidiaries also had commitments, denominated in foreign currencies of $45,568 million for the pension plan (US $29,342 million, €589 million, £79 million, 212 million Mexican pesos, 26 million Australian dollars, 196 million Indian rupees, and 601 million Japanese yen), which were not included in the foreign currency exposure table above.

Table 25: The underlying foreign currency exposures of net investments for the pension plan were as follows as at 31 March, 2023 ($ millions):

Currency	2023
	Fair value ($ millions)	% of total
US dollar	$29,690	66.0
Euro	5,428	12.1
Hong Kong dollar	2,029	4.5
British pound	1,660	3.7
Japanese yen	1,091	2.4
Indian rupee	725	1.6
Mexican peso	708	1.6
New Taiwan dollar	402	0.9
Singapore dollar	390	0.9
Swiss franc	361	0.8
South African rand	326	0.7
Others	2,154	4.8
Total	$44,964	100.0

As at 31 March 2023, PSPIB and its investment entity subsidiaries also had commitments, denominated in foreign currencies of $6,283 million for the pension plan (U.S. $3,950 million, €490 million, £80 million, 4 million South African rands, 348 million Mexican pesos, 45 million Australian dollars, 424 million Indian rupees and 818 million Japanese yen) which were not included in the foreign currency exposure table above.

(B) Credit risk

PSPIB is exposed to credit risk, which is the risk of non-performance of a debtor on whom PSPIB relies to fulfill contractual or financial obligations. That is, the risk that the issuer of a debt security or that the counterparty to a derivative contract, to a securities lending and borrowing transaction or to securities purchased under reverse repurchase agreements, is unable to meet its financial obligations.

Credit risk encompasses the risk of a deterioration of creditworthiness and the relevant concentration risk. Credit risk monitoring entails an evaluation of the credit quality of each issuer and counterparty that transacts with PSPIB. To perform this evaluation for public issuers and counterparties, PSPIB relies on four recognized credit rating agencies. A minimum of two credit ratings are used to classify each security. If the agencies disagree as to a security’s credit quality, PSPIB uses the lowest of the available ratings. For private issuers, PSPIB assigns internal credit ratings to issuers and measures the combined risk profile against set targets. To assign risk ratings to issuers, PSPIB uses methodologies comparable to those used by recognized rating agencies.

As at 31 March 2024, the pension plan’s maximum exposure to credit risk amounted to $17 billion (31 March 2023—$16 billion). This amount is presented before collateral held and netting arrangements that do not qualify for offsetting under IFRS. The maximum credit exposure excludes guarantees disclosed in Note 22 as well as investments in funds classified as alternative investments in Note 5(A). Such funds hold fixed income securities among other types of instruments.

To monitor the evolution of credit risk, PSPIB periodically produces a concentration report by credit rating of credit-sensitive securities. The concentration of credit risk by credit rating was as follows.

Table 26: As at 31 March 2024 ($ millions):

	Government and corporate bondstable 26 note 1	Inflation-linked bondstable 26 note 1	Cash equivalentstable 26 note 1	Money market securitiestable 26 note 1	Reverse repurchase agreements	OTC derivativestable 26 note 2	Private debt securitiestable 26 note 1	Totaltable 26 note 1
AAA-AA	$3,316	$3,420	$484	$1,487	$199	$7	$0	$8,913
A	1,484	0	93	26	200	248	0	2,051
BBB	241	21	0	0	38	0	14	314
BB or below	139	0	0	0	0	0	5,731	5,870
No ratingtable 26 note 3	16	0	0	0	0	0	13	29
Total	$5,196	$3,441	$577	$1,513	$437	$255	$5,758	$17,177
Table 26 Notes Table 26 Note 1 Includes interest receivable. Return to table 26 note 1 referrer Table 26 Note 2 As disclosed in Note 5(B). Return to table 26 note 2 referrer Table 26 Note 3 Includes securities for public issuers and counterparties that are either not rated by credit rating agencies or rated by a single credit rating agency. Return to table 26 note 3 referrer

Table 27: As at 31 March 2023 ($ millions)

	Government and corporate bondstable 27 note 1	Inflation-linked bondstable 27 note 1	Cash equivalentstable 27 note 1 table 27 note 4	Money market securitiestable 27 note 1 table 27 note 4	Reverse repurchase agreements	OTC derivativestable 27 note 2	Private debt securitiestable 27 note 1	Totaltable 27 note 1
AAA-AA	$2,912	$2,205	$976	$1,495	$31	$14	$0	$7,633
A	1,296	0	265	8	204	402	0	2,175
BBB	128	0	0	0	11	0	67	206
BB or below	145	0	0	0	0	0	5,774	5,919
No ratingtable 27 note 3	20	0	0	0	0	0	53	73
Total	$4,501	$2,205	$1,241	$1,503	$246	$416	$5,894	$16,006
Table 27 Notes Table 27 Note 1 Includes interest receivable. Return to table 27 note 1 referrer Table 27 Note 2 As disclosed in Note 5(B). Return to table 27 note 2 referrer Table 27 Note 3 Includes securities for public issuers and counterparties that are either not rated by credit rating agencies or rated by a single credit rating agency. Return to table 27 note 3 referrer Table 27 Note 4 During the year ended 31 March 2024, cash and cash equivalents were reclassified out of money market securities and presented separately in order to better reflect their unique nature and characteristics. Accordingly, comparative figures were reclassified to present cash and cash equivalents separately and to decrease money market securities by the same amount. Return to table 27 note 4 referrer

(I) Counterparty risk

Counterparty risk represents the credit risk from current and potential exposure related to transactions involving derivative contracts, securities lending and borrowing as well as securities repurchase and reverse repurchase agreements. In order to minimize counterparty risk, PSPIB requires that counterparties provide adequate collateral and meet its credit rating requirements. PSPIB frequently monitors the credit rating of its counterparties as determined by recognized credit rating agencies. With respect to derivative contracts, PSPIB has the ability to terminate all trades with most counterparties whose credit rating is downgraded below its requirements.

For OTC derivatives, PSPIB’s policy also requires the use of the ISDA Master Agreement with all counterparties to derivative contracts. The ISDA Master Agreement provides the contractual framework within which dealing activities across a full range of OTC products are conducted. In the case of OTC-cleared derivatives, trading activities are regulated between parties under terms that are customary to such transactions.

As a credit mitigation technique, the ISDA Master Agreement contractually binds counterparties to close-out netting provisions in the case of default by one of the counterparties. Additionally, the Credit Support Annex (CSA) to the ISDA Master Agreement enables PSPIB to realize any collateral placed with it in the case of default of the counterparty. The CSA also requires PSPIB to contribute further collateral when requested. All collateral transactions under the CSA are in cash, high-quality debt instruments or securities. The CSA also regulates the exchange of collateral when the credit exposure to a counterparty exceeds a predetermined threshold. Counterparties are generally authorized to sell, repledge or otherwise use collateral held. Similarly, in the case of OTC-cleared derivatives, collateral is required in cash, high quality debt instruments or securities and can be sold, repledged or otherwise used. PSPIB does not sell, repledge or otherwise use any collateral held in the form of securities but does reinvest all cash collateral, with respect to derivative contracts.

With respect to transactions involving securities lending and borrowing agreements as well as securities repurchase and reverse repurchase agreements, collateral requirements are in place to mitigate counterparty risk. Notes 2(F) and 2(G) describe collateral requirements in securities lending and borrowing programs as well as securities repurchase and reverse repurchase agreements.

Information in connection with collateral pledged by PSPIB and its counterparties is disclosed in Note 5(D).

In the case of the securities lending program, PSPIB’s exposure to counterparty risk is further mitigated as the custodian of the securities lent assumes the risk that a counterparty will be unable to meet its obligations associated with the collateral requirements.

PSPIB is responsible for counterparty risk monitoring and mitigation as well as maintaining a comprehensive, disciplined, and enterprise-wide process for tracking and managing counterparty risk. As such, PSPIB measures counterparty risk on an ongoing basis, evaluates and tracks the creditworthiness of current counterparties and mitigates counterparty risk through collateral management.

(II) Offsetting

PSPIB is subject to ISDA Master Agreements in relation to its OTC derivative financial instruments as described. Such agreements contain close-out netting provisions applicable only in the case of default. In certain cases, such agreements also allow for offsetting. In cases where the conditions for offsetting were met, financial instruments have been presented net in the Statement of Financial Position. Securities repurchase and reverse repurchase agreements, described in Notes 2(G) and 5(D) are subject to similar arrangements; however, they are not offset as the conditions for offsetting are not met.

The following tables present the financial assets and liabilities described above ($ millions):

Table 28: Financial assets

	Gross amount of recognized financial assets	Less: gross amount of recognized financial liabilities set off	Net amount of financial assets presented in the statement of financial position	Less: related amounts not set off in the statement of financial position
				Recognized financial liabilities	Collateral held and not recognized	Net
As at 31 March 2024
Reverse repurchase agreements	$437	$0	$437table 28 note 1	$149	$288	$0
OTC- derivatives	255	0	255table 28 note 2	168	83	4
Total	$692	$0	$692	$317	$371	$4
As at 31 March 2023
Reverse repurchase agreements	$ 246	$0	$246table 28 note 1	$235	$11	$0
OTC-derivatives	416	0	416table 28 note 2	296	89	31
Total	$662	$0	$662	$531	$100	$31
Table 28 Notes Table 28 Note 1 As described in Note 5(A) (X). Return to table 28 note 1 referrer Table 28 Note 2 As described in Note 5(B). Return to table 28 note 2 referrer

Table 29: Financial liabilities

	Gross amount of recognized financial liabilities	Less: gross amount of recognized financial assets set off	Net amount of financial liabilities presented in the statement of financial position	Less: related amounts not set off in the statement of financial position
				Recognized financial assets	Collateral pledged and not derecognized	Net
As at 31 March 2024
Repurchase agreements	$1,001	$0	$1,001table 29 note 1	$149	$852	$0
OTC-derivatives	184	0	184table 29 note 2	147	32	5
Collateral payable	23	0	23table 29 note 3	21	0	2
Total	$1,208	$0	$1,208	$317	$884	$7
As at 31 March 2023
Repurchase agreements	$1,814	$0	$1,814table 29 note 1	$235	$1,579	$0
OTC-derivatives	310	0	310table 29 note 2	276	33	1
Collateral payable	22	0	22table 29 note 3	20	0	2
Total	$2,146	$0	$2,146	$531	$1,612	$3
Table 29 Notes Table 29 Note 1 As described in Note 5(A) (X). Return to table 29 note 1 referrer Table 29 Note 2 As described in Note 5(B). Return to table 29 note 2 referrer Table 29 Note 3 As described in Note 5(A) (IX). The balance consists of cash collateral receivable with respect to certain OTC derivative transactions and is included in Note 5(A) as part of collateral payable. Return to table 29 note 3 referrer

(C) Liquidity risk

Liquidity risk corresponds to the risk that PSPIB will not be able to meet its financial obligations on a timely basis, with sufficient and readily available cash resources. PSPIB’s cash position is monitored on a daily basis. In general, investments in cash, money market securities, floating rate notes, bonds and public equities are expected to be highly liquid as they will be invested in securities that are actively traded. PSPIB utilizes appropriate measures and controls to monitor liquidity risk in order to ensure that there is sufficient liquidity to meet financial obligations as they come due. A liquidity report taking into consideration future forecasted cash flows is prepared and presented to PSPIB’s senior management on a weekly basis. This ensures that sufficient cash reserves are available to meet forecasted cash outflows. Additionally, sufficient sources of liquidity are maintained for deployment in case of market disruption.

PSPIB has the ability to raise additional capital through the use of its capital market debt program. This program allows PSPIB to issue short-term promissory notes and medium-term notes. Note 9(B) provides additional information on the usage of the capital market debt program. Furthermore, PSPIB maintains credit facilities for general corporate purposes. Note 9(A) provides additional information with respect to such credit facilities.

The terms to maturity of the notional amount of derivatives are disclosed in Note 5(B).

Financial liabilities

The following tables present the fair value of non-derivative-related financial liabilities as well as derivative-related financial instruments, aggregated according to their maturities and excluding the impact of guarantees and indemnities disclosed in Note 22:

Table 30: 31 March 2024 ($ millions)

	Less than 3 months	3 to 12 months	Over 1 year	Total
Non-derivative-related financial liabilitiestable 30 note 1
Amounts payable from pending trades	$(103)	$0	$0	$(103)
Interest payable	(27)	(5)	0	(32)
Securities sold short	(613)	0	0	(613)
Collateral payable	(128)	0	0	(128)
Securities sold under repurchase agreements	(936)	(65)	0	(1,001)
Capital market debt financingtable 30 note 2	(1,202)	(896)	(3,060)	(5,158)
Trade payable and other liabilities	(67)	(1)	(27)	(95)
Total	$(3,076)	$(967)	$(3,087)	$(7,130)
Derivative-related financial instruments
Derivative-related assets	$115	$56	$88	$259
Derivative-related liabilitiestable 30 note 1	(98)	(45)	(44)	(187)
Total	$17	$11	$44	$72
Table 30 Notes Table 30 Note 1 Liabilities are presented in the earliest period in which the counterparty can request payment. Return to table 30 note 1 referrer Table 30 Note 2 The total undiscounted cash flows amounted to $5,888 million as at 31 March 2024. Return to table 30 note 2 referrer

Table 31: As at 31 March 2023 ($ millions)

	Less than 3 months	3 to 12 months	Over 1 year	Total
Non-derivative-related financial liabilitiestable 31 note 1
Amounts payable from pending trades	$(209)	$0	$0	$(209)
Interest payable	(20)	(2)	0	(22)
Securities sold short	(480)	0	0	(480)
Collateral payable	(184)	0	(0)	(184)
Securities sold under repurchase agreements	(1,687)	(127)	0	(1,814)
Capital market debt financingtable 31 note 2	(719)	(933)	(2,972)	(4,624)
Trade payable and other liabilities	(72)	(1)	(28)	(101)
Total	$(3,371)	$(1,063)	$(3,000)	$(7,434)
Derivative-related financial instruments
Derivative-related assets	$232	$120	$71	$423
Derivative-related liabilitiestable 31 note 1	(177)	(98)	(39)	(314)
Total	$55	$22	$32	$109
Table 31 Notes Table 31 Note 1 Liabilities are presented in the earliest period in which the counterparty can request payment. Return to table 31 note 1 referrer Table 31 Note 2 The total undiscounted cash flows amounted to $5,167 million as at 31 March 2023. Return to table 31 note 2 referrer

8. Contributions receivable

(A)Contributions receivable

Table 32: The contributions receivable as at 31 March are as follows ($ millions):

	2024	2023
Contributions receivable from plan members for past service	$92	$86
Contributions receivable from employer for past service	150	137
Total contributions receivable	$242	$223

(B)Transfers receivable from Reserve Force

Table 33: The transfers receivable as at 31 March are as follows ($ millions):

	2024	2023
Transfers receivable from Reserve Force	$59	$61
Total transfers receivable from Reserve Force	$59	$61

Members of the Reserve Force Pension Plan are automatically eligible for inclusion in the Canadian Forces Pension Plan when an eligibility threshold of 55 months of full-time service in a 60 month period is reached. Once qualified, the present value of service accumulated under the Reserve Force Pension Plan is calculated and transferred to the Canadian Forces Pension Plan; however a timing difference exists between the time when the amounts become eligible for a transfer and when the transfer occurs. The value of these assets will continue to be reassessed every year by OCA to factor in any changes to the actuarial assumptions.

9. Borrowings

(A) Credit facilities

PSPIB maintains a revolving credit facility in the amount of $2 billion and a demand line of credit in the amount of $1 billion (together “the credit facilities”).

The credit facilities are for general corporate purposes and are available in either Canadian or U.S. currencies. Subject to customary terms and conditions, these credit facilities are available at variable interest rates such as the prime rate and the U.S. base rate.

These credit facilities were not drawn upon as at 31 March 2024, and 31 March 2023.

(B) Capital market debt financing

PSPIB’s capital market debt program consists of the private placement of short-term promissory notes as well as medium-term notes issued by PSP Capital Inc., a wholly-owned subsidiary of PSPIB. The capital raised is primarily used to finance private market investments. It is unconditionally and irrevocably guaranteed by PSPIB in accordance with its corporate leverage policy.

The maximum amount authorized by PSPIB’s Board of Directors for the capital market debt program is limited to $12 billion for all aggregate short-term note programs, 6 billion Australian dollars for the Australian dollar-denominated medium-term note program and $20 billion for the medium-term note program.

PSPIB’s capital market debt financing was in compliance with the limits authorized by PSPIB’s Board of Directors during the years ended 31 March 2024, and 31 March 2023

Table 34: The following outlines the terms as well as the fair value of the short-term notes issued under the capital market debt program allocated to the pension plan as at 31 March ($ millions):

		2024			2023
Currency	Term at issuance	Interest Rate (%)	Capital amounts payable at maturity	Fair value	Interest rate (%)	Capital amounts payable at maturity	Fair value
CAD	180 days or less	0	$0	$0	4.41—4.44	$8	$8
USD	365 days or less	4.73—5.49	1,051	1,036	2.40—5.56	1,395	1,376
EUR	215 days or less	3.85—3.93	137	136	0	0	0
GBP	245 days or less	5.18—5.24	100	100	0	0	0
AUD	79 days or less	4.28	25	25	0	0	0
Total short-term notes			$1,313	$1,297		$1,403	$1,384

Table 35: The following outlines the terms as well as the fair value of the medium-term notes issued under the capital market debt program allocated to the pension plan as at 31 March ($ millions):

				2024		2023
Maturity	Series	Currency	Interest Rate	Capital Amounts Payable at Maturity	Fair Value	Capital Amounts Payable at Maturity	Fair Value
November 2023	9	CAD	2.09%	$0	$0	$272	$268
April 2024	7	CAD	3.29%	227	227	253	250
September 2024	G2	USD	0.50%	323	316	325	309
March 2025	G5	USD	SOFRtable 35 note 1+24 bps	258	258	260	259
November 2025	11	CAD	3.00%	222	217	240	236
June 2026	13	CAD	0.90%	272	253	278	255
June 2026	G1	USD	1.00%	258	238	260	236
June 2027	G6	USD	3.50%	258	250	260	254
March 2028	14	CAD	1.50%	186	170	192	175
October 2028	G3	USD	1.63%	258	228	260	229
February 2029	A1	AUD	4.63%	253	255	0	0
June 2029	G8	CAD	3.75%	267	266	267	271
January 2030	12	CAD	2.05%	239	216	238	217
December 2030	G13table 35 note 2	CAD	4.40%	191	196	0	0
March 2032	G4table 35 note 2	CAD	2.60%	191	172	192	177
August 2032	G7	AUD	4.57%	39	38	40	40
January 2033	G9	AUD	4.82%	34	34	35	35
June 2033	G11	CAD	4.15%	477	476	0	0
March 2038	G10	EUR	3.68%	28	29	28	29
July 2043	G12	EUR	3.68%	$21	$22	$0	$0
Total medium-term notes				$4,002	$3,861	$3,400	$3,240
Total capital market debt financing				$5,315	$5,158	$4,803	$4,624
Table 35 Notes Table 35 Note 1 Secured overnight financing rate. Return to table 35 note 1 referrer Table 35 Note 2 Green bonds. Return to table 35 note 2 referrer

Unrealized losses in connection with borrowings amounted to $7 million for the year ended 31 March 2024 (unrealized losses of $50 million for the year ended 31 March, 2023).

Table 36: Interest expense, for the year ended 31 March, was as follows ($ millions):

	2024	2023
Short-term promissory notes	$69	$43
Medium-term notes	98	64
Total	$167	$107

(C) Reconciliation of liabilities arising from financing activities

The following provides a reconciliation of liabilities arising from financing activities, including both changes arising from cash and non-cash changes.

Table 37: For the year ended 31 March 2024 ($ millions):

				Non-cash changes
	Opening balance	Proceeds from borrowings	Repayment of borrowings	Foreign exchange losses	Fair valuetable 37 note 1 gains	Closing balance
Capital market debt financing	$4,624	$6,028	$(5,500)	$(18)	$24	$5,158
Borrowings	$4,624	$6,028	$(5,500)	$(18)	$24	$5,158
Table 37 Note Table 37 Note 1 Includes interest on short-term promissory notes, which added to cost approximates their fair value. Return to table 37 note 1 referrer

Table 38: For the year ended 31 March 2023 ($ millions)

				Non-cash changes
	Opening balance	Proceeds from borrowings	Repayment of borrowings	Foreign exchange losses	Fair valuetable 38 note 1 gains	Closing balance
Capital market debt financing	$4,409	$5,444	$(5,294)	$115	$(50)	$4,624
Borrowings	$4,409	$5,444	$(5,294)	$115	$(50)	$4,624
Table 38 Note Table 38 Note 1 Includes interest on short-term promissory notes, which added to cost approximates their fair value. Return to table 38 note 1 referrer

10. Related party transactions

(A) Certain investees

Transactions between PSPIB and its unconsolidated subsidiaries, jointly controlled investees and associates or subsidiaries of such entities are related party transactions. PSPIB enters into investment transactions with such related parties in the normal course of its business, more specifically, as part of private markets and certain fixed income investments described under Note 5(A) as well as guarantees, indemnities and commitments described under Notes 22 and 23, respectively. Since balances in connection with all investment transactions are measured at FVTPL, those transactions undertaken with related parties have the same impact on net assets available for benefits as those with unrelated parties.

Transactions between PSPIB and its consolidated subsidiaries, as well as related balances are eliminated upon consolidation and, therefore, are not disclosed in this note.

(B) Government-related entities

Since PSPIB is a Crown corporation, it is considered to be a government-related entity. Other entities that are controlled, jointly controlled or significantly influenced by the government are also considered government-related entities.

PSPIB may enter into investment transactions with government-related entities in the normal course of its business, more specifically, as part of private markets and certain fixed income investments described under Note 5(A). Such investment transactions are carried out on terms that are equivalent to those that may prevail in transactions with unrelated parties and are subject to the same internal processes. In this respect, transactions with such related parties have the same impact on the net assets available for benefits as those with unrelated parties. Consequently, management is availing itself of the exemption under IAS 24 Related Parties from making specific disclosures on transactions and balances with such government-related entities.

Transactions between Canadian Forces Pension Plan and Reserve Force Pension Plan are disclosed in Note 4 and in Note 8(B).

11. Capital management

PSPIB manages the pension plan’s investments. PSPIB’s investment objectives are:

• To invest fund transfers in the best interests of the beneficiaries and contributors under the CFSA. The funds received are invested with a view of achieving a maximum rate of return, without undue risk of loss, having regard to the funding, policies and requirements of the pension plan established under the CFSA and the ability of the pension plan to meet its financial obligations. The funds are also invested in accordance with PSPIB’s Investment Risk Management policy which is outlined in Note 7
• To maintain an appropriate credit rating to achieve access to the capital markets at the lowest cost of capital. Through PSP Capital Inc. and its leverage policies, PSPIB has the ability to raise capital by issuing short-term promissory notes and medium-term notes. Note 9(B) provides information on the capital market debt financing, and Note 7(C) provides information on PSPIB’s liquidity

The pension plan’s capital consists of the actuarial funding surplus or deficit determined regularly by the actuarial funding valuation prepared by the OCA. The purpose of this actuarial valuation is to determine the financial position of the pension plan by testing its ability to meet obligations to current plan members and their survivors. Using various assumptions, the OCA projects the future pension benefits to estimate the current value of the pension obligations on a funding basis, which is compared with the sum of: the investment assets held by PSPIB (net of investment-related liabilities and borrowings), including their projected earnings; and the discounted value of future plan member and government contributions, including future earnings on contributions. The result of this comparison is either an actuarial surplus or an actuarial deficit.

It is government policy that the obligations pertaining to service before 1 April 2000, are unfunded and are paid as they become due. For the obligations pertaining to service since 1 April 2000, the objective of managing the capital position of the pension plan is to ensure that the investments held by PSPIB are sufficient to meet the related future pension obligations.

12. Pension obligations

The OCA performs an actuarial valuation for accounting purposes as at 31 March of each fiscal year to measure and report the pension obligations, and to attribute the costs of the benefits to the period using the projected benefit method prorated on service. The assumptions used in the actuarial valuation are based on management’s best estimates of expected long-term experience and short-term forecasts, as well as the majority of the demographic assumptions underlying the triennial actuarial valuation for funding purposes of the pension plan, as at 31 March 2022. The assumptions include estimates of discount rates, future inflation, returns on investments, general wage increases, workforce composition, retirement rates and mortality rates.

The discount rates used to measure the present value of the pension obligations are as follows:

• for funded pension benefits, the streamed expected rates of return on invested funds; and
• for unfunded pension benefits, the government’s cost of borrowing derived from the yields on the actual zero-coupon yield curve for Government of Canada bonds which reflect the timing of the expected future cash flows

Table 39: The principal actuarial assumptions used in measuring the pension obligations were as follows as at 31 March:

	2024 (%)	2023 (%)
Discount rates
Funded pension benefitstable 39 note 1	6.1	6.0
Unfunded pension benefitstable 39 note 2	3.4	3.0
Long-term rate of inflation	2.0	2.0
Long-term general wage increase	2.5	2.6
Table 39 Notes Table 39 Note 1 In regards to funded pension benefits, the streamed discount rates used to measure the pension obligations are equivalent to the flat discount rates presented in the table. The ultimate discount rate is expected to reach 6.1% by 2032 (6.0% by 2033 in 2023). Return to table 39 note 1 referrer Table 39 Note 2 In regards to unfunded pension benefits, the discount rates disclosed in the table reflect the equivalent flat discount rate. Return to table 39 note 2 referrer

For the year ended 31 March 2024, the pension plan recorded total net gains of $2,002 million (total net gains of $2,694 million in 2023) consisting of net gains of $2,549 million (net gains of $4,454 million in 2023) due to changes in actuarial assumptions and net losses of $547 million (net losses of $1,760 million in 2023) due to experience.

13. Deficit to be financed by the Government of Canada

The financial statement deficit does not impact the benefit payments to plan members because the government has a statutory obligation to pay the pension benefits it sponsors. Pursuant to pension legislation, the transactions for funded and unfunded pension benefits are tracked in the pension accounts within the accounts of Canada.

(A) Funded pension benefits

The pension plan is financed from employee and employer contributions, as well as from investment earnings. Funded pension benefits relate to post-March 2000 service that falls within the Income Tax Act limits. An amount equal to contributions less benefit payments and other charges is invested by PSPIB. Funded pension benefits also include pre-April 2000 service purchased since 1 April 2000.

(B) Unfunded pension benefits

Unfunded pension benefits related to pre-April 2000 service are tracked in the pension plan superannuation account since there are no invested funds maintained for this account (see Note 20). Employee and employer contributions for unfunded pension benefits are part of the CRF.

14. Investment income

The investment income of the pension plan is presented for each major class of financial assets and liabilities and has two categories: interest and dividends, and net unrealized and realized gains (losses). This presentation reflects the substance of the investment income generated by the underlying investments, whether directly held by PSPIB or by its investment entity subsidiaries.

Table 40: The investment income of the pension plan consists of the following for the years ended 31 March ($ millions):

	2024			2023
	Interest and dividends	Change in fair valuetable 40 note 1	Total investment Income	Interest and dividends	Change in fair valuetable 40 note 1	Total investment income
Public markets	$206	$1,219table 40 note 2	$1,425	$223	$(328)table 40 note 2	$(105)
Private markets
Real estate	110	(971)table 40 note 2	(861)	100	(55)table 40 note 2	45
Private equity	90	760table 40 note 2	850	30	221table 40 note 2	251
Infrastructure	173	747table 40 note 2	920	161	765table 40 note 2	926
Natural resources	56	72table 40 note 2	128	83	176table 40 note 2	259
Fixed income	876	57table 40 note 2	933	655	104table 40 note 2	759
Alternative investments	3	451	454	3	382	385
Total before giving effect to investment-related assets and liabilities	$1,514	$2,335	$3,849	$1,255	$1,265	$2,520
Investment-related assets and liabilities	11	55	66	10	(43)	(33)
Capital market debt financing	0	(9)	(9)	0	(147)	(147)
Investment income	$1,525	$2,381	$3,906	$1,265	$1,075	$2,340
Table 40 Notes Table 40 Note 1 Change in fair value includes realized and unrealized gains (losses) as described in Note 2(J). Return to table 40 note 1 referrer Table 40 Note 2 As described in Note 18, investment-related expenses of $34 million were incurred by PSPIB’s investment-entity subsidiaries for the year ended 31 March 2024 ($12 million were incurred for the year ended 31 March 2023). They are presented as part of investment-related expenses in accordance with Section 4600, while they are presented as part of investment income in PSPIB’s financial statements prepared under IFRS. Return to table 40 note 2 referrer

15. Contributions

Table 41: The contributions related to funded benefits for the years ended 31 March are as follows ($ millions):

	2024	2023
From plan members
Current service contributions	$641	$537
Past service contributions	22	20
Change in contributions receivable	6	(10)
Total plan member contributions	$669	$547
From employer
Current service contributions	$1,025	$879
Past service contributions	35	32
Change in contributions receivable	13	(18)
Total employer contributions	$1,073	$893
Total plan member and employer contributions	$1,742	$1,440

16.Special employer contribution for actuarial deficit

The CFSA requires that any actuarial deficit be dealt with by the government, through transferring equal instalments to the pension fund over a period of up to 15 years by means of special employer contributions based on triennial actuarial valuations for funding purposes, starting in the fiscal year in which the actuarial report is tabled in Parliament.

No special employer contribution was made to the pension fund in the fiscal year ended 31 March 2024 (no special employer contribution in 2023) since no actuarial deficit was identified in the triennial actuarial valuation of the pension plan as at 31 March 2022, that was tabled in Parliament on 24 November 2023. The next triennial actuarial valuation of the pension plan as at 31 March 2025, is expected to be tabled in Parliament in calendar year 2026.

17. Benefit payments and refunds and transfers

(A) Benefit payments

Table 42: The value of benefit payments for funded benefits, for the years ended 31 March is as follows ($ millions):

	2024	2023
Retirement benefit payments	$1,202	$1,070
Minimum benefit payments	2	2
Total benefit payments	$1,204	$1,072

(B) Refunds and transfers

Table 43: The value of refunds and transfers for funded benefits, for the years ended 31 March is as follows ($ millions):

	2024	2023
Returns of contributions and transfer value payments	$126	$203
Payments with respect to division of pension benefits	32	37
Transfers to other pension plans	1	1
Total refunds and transfers	$159	$241

18. Investment-related expenses

Table 44: Investment-related expenses allocated to the pension plan are comprised of the following for the years ended 31 March ($ millions):

	2024	2023
Interest expense	$259	$155
Transaction costs	30	27
External investment management feestable 44 note 1	10	13
Other (net)table 44 note 2	71	41
Total	$370	$236
Table 44 Notes Table 44 Note 1 Consists of amounts incurred for investments in public markets that are paid directly by PSPIB. Other fees are paid by certain pooled fund investments classified under alternative investments which amounted to $62 million for the year ended 31 March 2024 ($37 million for the year ended 31 March 2023). Such fees are embedded in the fair value of the funds. Similarly, management fees related to investments in private markets and private debt securities are not paid directly by PSPIB. Such fees, which generally vary between 0.2% and 2.5% of the total invested and/or committed amount, totaled $112 million for the year ended 31 March 2024 ($113 million for the year ended 31 March 2023). Such fees are embedded in the fair value of the investments. Return to table 44 note 1 referrer Table 44 Note 2 Investment-related expenses of $34 million were incurred by PSPIB’s investment entity subsidiaries for the year ended 31 March 2024 ($12 million were incurred for the year ended 31 March 2023). They are presented as part of investment-related expenses in accordance with Section 4600, while they are presented as part of investment income in PSPIB’s financial statements prepared under IFRS. Return to table 44 note 2 referrer

19. Administrative expenses

The legislation provides for administrative expenses to be charged to the pension plan. The Treasury Board approves the administrative expenses chargeable to the pension plan.

PSPC, as the day-to-day administrator, recovers from the pension plan administrative expenses for the activities directly attributable to its administration. These costs include salaries and benefits, systems maintenance and development, accommodation, and other operating costs of administering the pension plan within the department.

DND, as the program manager of the pension plan, provides policy interpretation support, information to plan members, financing and funding services and support to the Pension Advisory Committee, and charges its administrative costs to the pension plan.

The OCA provides actuarial valuation services. The costs related to these services are charged to the pension plan.

PSPIB’s costs of operation are charged to the four plans for which PSPIB provides investment services, namely, the public service pension plan, the Canadian Forces Pension Plan, the Reserve Force Pension Plan and the Royal Canadian Mounted Police Pension Plan. PSPIB allocates the direct costs of investment activities, such as external investment management fees and custodial fees that are included in each pension plan’s administrative expenses, based upon the net investments of each pension plan at the time the expense was incurred.

In 2024, 19.2% of PSPIB’s costs of operation were allocated to the Canadian Forces Pension Plan (19.4% in 2023) as plan-related administrative expenses, such as salaries and employee benefits, operations and maintenance, professional and consulting fees, and other operating fees.

Table 45: Administrative expenses, for the years ended 31 March, consist of the following ($ millions):

	2024	2023
PSPC
Salaries and employee benefits	$28	$24table 45 note 2
Operations and maintenance	12	11table 45 note 2
PSPC Total	$40	$35
DND
Salaries and employee benefits	$3	$3
Operations and maintenance	1	1
DND Total	$4	$4
OCA
Actuarial fees	$1	$1
Total for government departments (included in the service cost)	$45	$40
PSPIB
Salaries and employee benefits	$85	$88
Operations and maintenance	22	22
Professional and consulting fees	22	27
Other	5	7
PSPIB Total	$134	$144
Total administrative expensestable 45 note 1	$179	$184
Table 45 Notes Table 45 Note 1 Administrative expenses related to the funded service for 2024 totalled $172 million ($168 million in 2023). Return to table 45 note 1 referrer Table 45 Note 2 Comparative figures were reclassified to conform to the current year’s presentation. Return to table 45 note 2 referrer

20. Superannuation account

A separate superannuation account has been established within the accounts of Canada in accordance with the CFSA and is not consolidated in the pension plan financial statements. In order for the government to track transactions made through the CRF, the superannuation account records contributions, benefit payments, interest and transfers that pertain to service before 1 April 2000. The superannuation account does not contain separate invested funds; rather, it is credited with notional interest as though net cash flows were invested quarterly in 20-year Government of Canada bonds issued at prescribed rates and held to maturity.

The following summarizes the financial position of the superannuation account and contributions receivable for service before 1 April 2000.

Table 46:As at 31 March ($ millions):

	2024	2023
Balance of account
Superannuation account	$46,170	$44,158
Contributions receivable from plan members for past service	7	7
Contributions receivable from employer for past service	7	7
Subtotal	$46,184	$44,172
Pension obligationtable 46 note 1	$43,956	$46,838
Excess/(Shortfall) of the balance of the account over the pension obligation	$2,228	$(2,666)
Table 46 Notes Table 46 Note 1 Pension obligation is consolidated in the pension plan’s financial statements. The actuarial assumptions used to measure the pension obligation related to the superannuation account are included in Note 12. Return to table 46 note 1 referrer

The CFSA requires that any actuarial shortfall resulting from a lower balance in the superannuation account than the actuarial liability is addressed by the government, through crediting the superannuation account in equal instalments over a period of up to 15 years by means of special employer contributions based on triennial actuarial valuations for funding purposes, starting in the fiscal year in which the actuarial report is tabled in Parliament.

For the year ended 31 March 2024, a special employer contribution of $3,298 million was credited to the superannuation account (no special employer contribution in 2023) to cover the actuarial shortfall, based on the triennial actuarial valuation of the pension plan as at March 31 2022.

The CFSA also allows the excess, based on the actuarial valuation for funding purposes, to be reduced by decreasing the superannuation account over a period of up to 15 years; however, if the balance of the superannuation account exceeds 110% of the amount required to meet the cost of the benefits payable, the excess amount must be reduced by decreasing the superannuation account annually over a period of up to 15 years.

Table 47: The following summarizes the transactions in the superannuation account for unfunded pension benefits for the year ended 31 March ($ millions):

	2024	2023
Opening balance	$44,172	$45,319
Increase
Contributions by plan members	2	2
Contributions by employer
Regular contributions	2	2
Special contributions	3,298	0
Net change in prior service contributions receivable	0	(2)
Interest income	1,331	1,405
Total increase	$4,633	$1,407
Decrease
Benefits paid	$2,605	$2,525
Refunds and transfers	10	13
Administrative expenses	6	16
Total decrease	$2,621	$2,554
Closing balance	$46,184	$44,172

21. Retirement compensation arrangement

The retirement compensation arrangement (RCA) has been established under the authority of the Special Retirement Arrangements Act to provide supplementary pension benefits to certain plan members. Since this arrangement is covered by separate legislation, the balance of the RCA and the related pension obligations are not consolidated in the financial statements of the pension plan.

RCA provides for benefits in excess of those permitted under the Income Tax Act restrictions for registered pension plans.

Pursuant to the legislation, transactions pertaining to the RCA, such as contributions, benefits, and interest credits, are recorded in the RCA account, which is maintained within the accounts of Canada. The legislation also requires that the RCA account be credited with interest quarterly at the same rates as those credited to the Superannuation account.

The RCA is registered with the Canada Revenue Agency (CRA), and a transfer is made annually between the RCA account and the CRA either to remit a 50% refundable tax in respect of the net increase in the accounts (contributions and interest credits less payments and other charges) or to receive a 50% tax reimbursement in respect of the net decrease in the accounts (payments and other charges less contributions and interest credits).

Table 48: The following summarizes the financial position of the RCA account as at 31 March ($ millions):

	2024	2023
Balance of the accounts
RCA account	$537	$515
Refundable tax receivable	530	510
Subtotal	$1,067	$1,025
Pension obligations	$1,013	$953
Excess/(Shortfall) of the balance of the account over the pension obligations	$54	$72

The actuarial assumptions used to value the pension obligations pertaining to the RCA account are consistent in all respects with those used for the superannuation account.

Table 49: The following summarizes the transactions in the RCA account for the years ended 31 March ($ millions):

	2024	2023
Opening balance	$1,025	$992
Increase
Contributions by plan members	6	4
Contributions by employer	38	28
Interest income	16	16
Increase in refundable tax receivable	20	17
Total increase	$80	$65
Decrease
Benefits paid	$15	$14
Refunds and transfers	3	1
Refundable tax remittance	20	17
Total decrease	$38	$32
Closing balance	$1,067	$1,025

Actuarial shortfalls resulting from a lower balance in the RCA account than the actuarial liabilities are addressed by crediting the RCA account in equal instalments over a period of up to 15 years through special employer contributions based on triennial actuarial valuations for funding purposes, starting in the fiscal year in which the actuarial report is tabled in Parliament.

For the year ended 31 March 2024, no special employer contribution was credited to RCA (no special employer contribution in 2023), since no actuarial shortfalls were identified in the triennial actuarial valuation of the pension plan as at 31 March 2022.

22.Guarantees and indemnities

PSPIB provides indemnification to its directors, its officers, its employees and to certain PSPIB representatives asked to serve as directors or officers of entities in which PSPIB or its investment entity subsidiaries have made an investment or have a financial interest. As a result, but subject to the Public Sector Pension Investment Board Act, PSPIB may be required to indemnify these representatives for costs incurred, such as claims, actions or litigation in connection with the exercise of their duties, unless the liability of such a representative relates to a failure to act honestly and in good faith. To date, PSPIB has not received any claims or made any payment for such indemnities.

In certain cases, PSPIB also provides indemnification to third parties in the normal course of business. As a result, PSPIB may be required to indemnify such third parties in connection with the performance of their contractual obligations. To date, PSPIB has not received any claims nor made any payments for such indemnities.

PSPIB unconditionally and irrevocably guarantees all credit facilities, as well as short-term promissory notes and medium-term notes issued by PSP Capital Inc., as described in Note 9.

In certain investment transactions, PSPIB and its investment entity subsidiaries provided guarantees, indemnifications or issued letters of credit to third parties, the most significant of which are as follows:

• As at 31 March 2024 and 2023, PSPIB and its investment entity subsidiaries agreed to guarantee and, in some cases, provide indemnification for the performance of certain investees under contractual agreements. The majority of these agreements are borrowing arrangements. In the event a default occurs under such agreements, which is of limited recourse in certain cases, PSPIB or its investment entity subsidiaries could assume obligations of up to $2,717 million as at 31 March 2024 (31 March 2023—$2,643 million), of which $519 million has been allocated to the pension plan (31 March 2023—$508 million) plus applicable interest and other related costs. The arrangements mature between May 2024 and June 2042 as of 31 March 2024 (31 March 2023—between June 2023 and June 2042)
• Additionally, PSPIB and its investment entity subsidiaries issued letters of credit totalling $1 million as at 31 March 2024 (31 March 2023—$1 million), of which nil has been allocated to the pension plan (31 March 2023—nil) in relation to investment transactions

23. Commitments

PSPIB and its investment entity subsidiaries have committed to enter into investment transactions, which will be funded over the next several years in accordance with agreed terms and conditions.

Table 50: The portion of PSPIB’s commitments that would be assumed by the pension plan is as follows as at 31 March ($ millions):

	2024	2023
Foreign equity	$1	$1
Real estate	737	882
Private equity	2,171	2,529
Infrastructure	762	1,136
Natural resources	92	129
Private debt securities	1,651	1,339
Alternative investments	297	394
Total	$5,711	$6,410

Funding in connection with the above commitments can be called upon at various dates extending until 2041 as at 31 March 2024 (31 March 2023—2041).

Financial statements of the Reserve Force Pension Plan for the fiscal year ended 31 March 2024

Statement of Responsibility

Responsibility for the integrity and fairness of the financial statements of the Reserve Force Pension Plan (the pension plan) rests with the management of the Department of National Defence. In support of this responsibility, management has developed and maintained books, records, internal controls and management practices designed to provide reasonable assurance as to the reliability of the financial information and to ensure that transactions are in accordance with the Canadian Forces Superannuation Act (CFSA) and the Reserve Force Pension Plan Regulations made under the CFSA, as well as the Financial Administration Act and its regulations.

The financial statements of the pension plan for the year ended 31 March 2024, have been prepared in accordance with the stated accounting policies set out in Note 2 of the financial statements, which are based on Canadian accounting standards for pension plans, and on a basis consistent with that of the preceding year. The information included in the financial statements is based on management’s best estimates and judgement, with due consideration given to materiality.

Additional information is obtained as required, from the Public Sector Pension Investment Board (PSPIB) to meet accounting and reporting requirements. PSPIB maintains its own systems of financial management and internal controls to account for the funds managed on behalf of the pension plan in accordance with the Public Sector Pension Investment Board Act, regulations and by-laws.

These financial statements have been audited by the Auditor General of Canada, the independent auditor for the Government of Canada.

Approved by:

Original signed by

Ottawa, Canada
Date: 26 February 2025

Independent Auditor’s Report

To the Minister of National Defence

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of the Reserve Force Pension Plan (the pension plan), which comprise the statement of financial position as at 31 March 2024, and the statement of changes in net assets available for benefits and statement of changes in pension obligations for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the pension plan as at 31 March 2024, and the changes in its net assets available for benefits and changes in its pension obligations for the year then ended in accordance with Canadian accounting standards for pension plans.

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the pension plan in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other Information

Management is responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the stated accounting policies set out in Note 2 of the financial statements, which are based on Canadian accounting standards for pension plans, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the pension plan’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the pension plan or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the pension plan’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the pension plan’s internal control
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the pension plan’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the pension plan to cease to continue as a going concern
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the pension plan to express an opinion on the financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on Compliance with Specified Authorities

Opinion

In conjunction with the audit of the financial statements, we have audited transactions of the Reserve Force Pension Plan coming to our notice for compliance with specified authorities. The specified authorities against which compliance was audited are the Canadian Forces Superannuation Act, the Reserve Force Pension Plan Regulations, the Public Sector Pension Investment Board Act and regulations, and the by-laws of the Public Sector Pension Investment Board.

In our opinion, the transactions of the Reserve Force Pension Plan that came to our notice during the audit of the financial statements have complied, in all material respects, with the specified authorities referred to above.

Responsibilities of Management for Compliance with Specified Authorities

Management is responsible for the Reserve Force Pension Plan’s compliance with the specified authorities named above, and for such internal control as management determines is necessary to enable the Reserve Force Pension Plan to comply with the specified authorities.

Auditor’s Responsibilities for the Audit of Compliance with Specified Authorities

Our audit responsibilities include planning and performing procedures to provide an audit opinion and reporting on whether the transactions coming to our notice during the audit of the financial statements are in compliance with the specified authorities referred to above.

Original signed by

Original signed by

Ottawa, Canada
26 February 2025

RFPP Financial Statements

Table 51:Statement of Financial Position (Canadian $ thousands)

	As at 31 March 2024	As at 31 March 2023
Assets
Investments (Note 5)	$1,233,276	$1,170,828
Contributions receivable
From plan members (Note 8)	9,644	12,684
From employer (Note 8)	9,644	12,684
Other assets	792	762
Total assets	$1,253,356	$1,196,958
Liabilities
Reserve Force Pension Fund (Note 4)	$109,371	$124,905
Investment-related liabilities (Note 5)	44,036	64,921
Borrowings (Note 5 and Note 9)	110,053	99,322
Due to Canadian Forces Pension Plan (Note 4)	59,000	61,000
Accounts payable and other liabilities	2,041	2,160
Total Liabilities	$324,501	$352,308
Net assets available for benefits	$928,855	$844,650
Pension obligations (Note 12)	$755,595	$963,617
Surplus/(Deficit) to be financed by the Government of Canada (Note 13)	$173,260	$(118,967)
Commitments (Note 21) The accompanying notes are an integral part of these financial statements

Table 52:Statement of Changes in Net Assets Available for Benefits
Year ended 31 March (Canadian $ thousands)

	2024	2023
Net assets available for benefits, beginning of year	$844,650	$806,836
Increase in net assets available for benefits
Investment income, excluding changes in fair values of investment assets and investment liabilities (Note 14)	32,674	27,212
Changes in fair values of investment assets and investment liabilities, realized and unrealized gains (Note 14)	50,874	23,123
Contributions
From plan members (Note 15)	25,396	22,143
From employer (Note 15)	60,113	54,074
Special employer contribution for actuarial deficit (Note 16)	4,100	17,400
Change (decrease) in amount due to Canadian Forces Pension Plan	2,000	12,400
Total increase in net assets available for benefits	$175,157	$156,352
Decrease in net assets available for benefits
Benefits paid (Note 17)	15,064	13,290
Refunds and transfers (Note 17)	58,288	90,764
Investment-related expenses (Note 18)	7,904	5,074
Administrative expenses (Note 19)	9,696	9,410
Total decrease in net assets available for benefits	$90,952	$118,538
Net increase in net assets available for benefits	$84,205	$37,814
Net assets available for benefits, end of year	$928,855	$844,650
Commitments (Note 21) The accompanying notes are an integral part of these financial statements

Table 53:Statement of Changes in Pension Obligations
Year ended 31 March (Canadian $ thousands)

	2024	2023
Pension obligations, beginning of year	$963,617	$906,199
Increase in pension obligations
Interest on pension obligations	61,148	49,493
Benefits earned	85,000	87,000
Experience losses (Note 12)	0	71,038
Cost of new elections	1,288	757
Total increase in pension obligations	$147,436	$208,288
Decrease in pension obligations
Benefits paid (Note 17)	$15,064	$13,290
Experience gains (Note 12)	191,515	0
Change in actuarial assumptions: gains (Note 12)	83,788	40,508
Refunds and transfers (Note 17)	58,288	90,764
Administrative expenses included in the service cost (Note 19)	6,803	6,308
Total decrease in pension obligations	$355,458	$150,870
Net increase (decrease) in pension obligations	$(208,022)	$57,418
Pension obligations, end of year	$755,595	$963,617
The accompanying notes are an integral part of these financial statements.

1. Description of the Reserve Force Pension Plan

The Reserve Force Pension Plan (the pension plan), governed by Part I.1 of the Canadian Forces Superannuation Act (CFSA) and Reserve Force Pension Plan Regulations (RFPP Regulations) made under the CFSA, provides pension benefits for all eligible members of the Reserve Force component of the Canadian Armed Forces. The pension plan was created on 1 March 2007.

The main provisions of the pension plan are summarized below.

(A) General

The pension plan is a contributory defined benefit plan covering eligible members of the Reserve Force as defined in the National Defence Act. Membership in the pension plan is compulsory for all eligible members, excluding those members who have sufficient full-time service to become eligible for membership in the Canadian Forces Pension Plan under Part I of the CFSA. Reserve Force members join the Reserve Force Pension Plan automatically after earning 10% of the Year’s Maximum Pensionable Earnings (YMPE) in two consecutive 12-month periods.

The Government of Canada (the government) is the sole sponsor of the pension plan. The Minister of National Defence is the Minister responsible for the CFSA and its RFPP Regulations. The Department of National Defence is responsible for the management of the pension plan and maintains the books of accounts, while Public Services and Procurement Canada (PSPC) provides the day-to-day administration. The Office of the Chief Actuary (OCA), an independent unit within the Office of the Superintendent of Financial Institutions (OSFI), performs periodic actuarial valuations of the pension plan. Pursuant to the CFSA and the RFPP Regulations, transactions are recorded in the Reserve Force Pension Fund (pension fund). Members were provided with an option to buy back service earned prior to the creation of the pension plan.

While the pension plan matures, an amount equal to contributions in excess of benefit payments and administrative costs is transferred to the Public Sector Pension Investment Board (PSPIB) and invested in capital markets. PSPIB is a Crown corporation whose statutory objectives are to manage the funds transferred to it for investment and to maximize investment returns without undue risk of loss, having regard to the funding, policies and requirements of the public sector pension plans (i.e., public service, Royal Canadian Mounted Police, Canadian Forces and Reserve Force). When the pension plan is mature to a state where benefit payments are greater than incoming contributions, which is the normal state for any mature pension plan, PSPIB will transfer amounts to the Consolidated Revenue Fund (CRF) for benefit payments and administrative costs, or as required under the circumstance of a non-permitted surplus (refer to RFPP Regulations section 86 (3) for definition of non-permitted surplus).

(B) Funding policy

The pension plan is funded from plan member and employer contributions, and from investment earnings. For the fiscal year, plan members of the pension plan with less than 35 years of pensionable service contributed 5.2% (5.2% in 2023) of pensionable earnings up to the maximum of 66 2/3 times the defined benefit limit specified by the Income Tax Act. Plan members with more than 35 years of pensionable service contributed 1% (1% in 2023).

The RFPP Regulations provide that all pension obligations arising from the pension plan be met by the government. The RFPP Regulations require that any actuarial deficit in the pension fund be dealt with by transferring equal instalments to the pension fund over a period of up to 15 years, commencing in the year in which the actuarial report is tabled in Parliament. CFSA also allows any surplus to be lowered by reducing government and plan member contributions. In addition, if there is an amount considered to be a non-permitted surplus related to the pension fund, no further government pension contributions are permitted, while plan member contributions under the pension fund may be reduced and amounts from PSPIB may be transferred to the government’s CRF.

(C) Benefits

The pension plan provides pension benefits to members based on the total pensionable service and total pensionable earnings during the service period. The benefits are determined by a formula set out in the legislation; they are not based on the financial status of the pension plan. The basic benefit formula is 1.5% multiplied by indexed pensionable earnings.

Pension benefits are coordinated with the CPP and QPP and are reduced when the plan member reaches age 65 or earlier if the member receives a disability benefit from the CPP or QPP. The pension reduction factor is 0.7% for members born before 1943, declining gradually for members born from 1943 to 1946 until it reaches 0.625% for members born after 1946. Benefits are fully indexed to the annual increase in the Consumer Price Index. Other benefits include survivor pensions, deferred annuities, annual allowances, transfer values, cash termination allowances or minimum benefits in the event of death, early unreduced retirement pensions, and disability pensions.

2. Significant accounting policies

The significant accounting policies that have been applied in the preparation of these financial statements are summarized below.

(A) Basis of presentation

These financial statements present information on the pension plan on a going-concern basis. They are prepared to assist plan members and others in reviewing the activities of the pension plan for the year, not to portray the funding requirements of the pension plan.

These financial statements are prepared in Canadian dollars, the pension plan’s functional currency, in accordance with the accounting policies stated below, which are based on Canadian accounting standards for pension plans in Part IV of the Chartered Professional Accountants (CPA) Canada Handbook (Section 4600). Section 4600 provides specific accounting guidance on investments and pension obligations. For accounting policies that do not relate to either investments or pension obligations, the pension plan complies with International Financial Reporting Standards (IFRS) in Part I of the CPA Canada Handbook. To the extent that IFRS in Part I are inconsistent with Section 4600, Section 4600 takes precedence. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian accounting standards for pension plans.

PSPIB is a Crown corporation whose statutory objectives are to manage the funds transferred to it for investment and to maximize investment returns without undue risk of loss. PSPIB qualifies as an investment entity as defined under IFRS 10 Consolidated Financial Statements and forms part of the pension plan reporting entity. Pursuant to Section 4600, PSPIB’s subsidiaries that are formed to hold investments or those that provide PSPIB with services that relate to its investment activities are consolidated, since these entities are not considered investment assets. PSPIB’s investment in subsidiaries, associates, and joint ventures that are considered investment assets are measured at fair value in accordance with Section 4600. Financial liabilities are also measured at fair value in accordance with Section 4600.

The financial statements for the year ended 31 March 2024 were authorized for issue by the signatories on 26 February 2025.

(B) Interests in other entities

Management, through the activities of PSPIB, assesses control, joint control and significant influence with respect to the investees disclosed in Note 6 as follows:

(I) Control and significant influence

A subsidiary is an entity which is controlled by PSPIB. PSPIB determines that it controls an investee when it has power over the investee, is exposed, or has rights, to variable returns from its investment in the investee and has the ability to affect those returns through its power over the investee.

An associate is an entity over which PSPIB has significant influence, as in certain cases, PSPIB does not have control over an investee but has the power to participate in the financial and operating policy decisions of the investee. In such cases, PSPIB determines that it has significant influence over the investee.

In the context of control or significant influence, power over an investee is obtained through voting rights conveyed by PSPIB ownership interest, other contractual arrangements, or a combination thereof.

(II) Joint control

PSPIB determines that it is party to a joint venture arrangement when it has joint control over an investee and has rights to the net assets of the investee. Such investees are reported as jointly controlled. Joint control is established through a contractual arrangement which requires the unanimous consent of the parties sharing control for the activities that significantly affect the returns of the arrangement.

Generally, decision-making regarding such activities is governed through voting rights conveyed by the ownership interest of each party. In certain cases, it is governed solely through contractual arrangements or in conjunction with the ownership interest of each party.

(C) Financial instruments

(I) Classification

Financial assets representing investments are managed, together with related financial liabilities, according to the entity’s business model to maximize the rate of return. The performance of such financial instruments is evaluated on a fair value basis and they are classified at fair value through profit or loss (FVTPL). They are described in detail in Note 5(A).

Borrowings, as described under Note 9, are financial liabilities that are designated to be measured at FVTPL since they are part of the portfolios of investments that are managed together and whose performance is evaluated on a fair value basis.

(II) Recognition

Financial assets and financial liabilities are recorded at the date upon which PSPIB becomes a party to the associated contractual provisions. In the case of traded financial assets, they are recorded as of the trade date.

(III) Initial and subsequent measurement

All financial assets and financial liabilities are recorded in the statement of financial position at fair value and continue to be measured as such on a recurring basis. After initial measurement, subsequent changes in the fair value of financial assets and financial liabilities classified at FVTPL are recorded in the statement of changes in net assets available for benefits.

(IV) Derecognition

A financial asset (or, where applicable, a part thereof) is derecognized when the following conditions are met:

• The rights to receive cash flows from the asset have expired, or
• PSPIB has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows to a third party, and
• PSPIB has transferred substantially all the risks and rewards of the asset, or
• In cases where PSPIB has neither transferred nor retained substantially all the risks and rewards of the asset, it has transferred control of the asset

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expired.

(D) Determination of fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

At initial recognition, PSPIB evaluates the facts and circumstances related to a transaction to confirm that the transaction price represents the fair value of an asset or a liability. At each subsequent reporting date, market prices are used to determine fair value where an active market exists (such as a recognized securities exchange), as they reflect actual and regularly occurring market transactions on an arm’s length basis. If quoted market prices are not available, then fair value is estimated using valuation techniques based on inputs existing at the end of the reporting period that are derived from observable market data.

Valuation techniques are generally applied to investments in private markets, alternative investments, over-the-counter (OTC) derivatives and certain fixed income securities. The values derived from applying these techniques are impacted by the choice of valuation model and the underlying assumptions made concerning factors such as the amounts and timing of future cash flows, discount rates, volatility and credit risk. In certain cases, such assumptions are not supported by market observable data.

The determination of fair value of all financial assets and financial liabilities is described in Note 5.

(E) Foreign currency translation

Foreign currency transactions during the period, including purchases and sales of securities, income and expenses are translated at the rate of exchange prevailing on the date of the transaction.

Monetary assets and liabilities that are denominated in foreign currencies are translated at the functional currency rate of exchange prevailing at the end of the reporting period.

Foreign currency transaction gains and losses on all monetary assets and liabilities are included in investment income.

(F) Securities lending and securities borrowing and related collateral

PSPIB participates in securities lending and borrowing programs whereby it lends and borrows securities in order to enhance portfolio returns. Lending and borrowing transactions including related collateral under such programs do not transfer the risks or rewards of ownership of the securities to the counterparty. Consequently, PSPIB does not derecognize securities lent or pledged as collateral, or recognize securities borrowed or received as collateral. Cash amounts received are recognized as described in Note 5(A) (IX).

The securities lending and borrowing programs require collateral in cash, high-quality debt instruments or securities. Collateral transactions are conducted under terms that are usual and customary in standard securities lending and borrowing programs. PSPIB and its counterparties are authorized to sell, repledge or otherwise use collateral held. The same securities or equivalent securities must be returned to the counterparty at the end of the contract, unless an event of default occurs.

(G) Securities sold under repurchase agreements and purchased under reverse repurchase agreements and related collateral

PSPIB is party to repurchase and reverse repurchase agreements. Such agreements involve the sale of securities by one counterparty with a simultaneous agreement to repurchase such securities at a specified price and at a specified future date.

Securities sold or purchased under the repurchase and reverse repurchase agreements respectively, including related collateral, are not derecognized or recognized as all risks and rewards of ownership related to such securities are not transferred. As such, in the case where PSPIB is the counterparty selling securities under such agreements, all income (loss) related to such securities continues to be reported in investment income, and obligations to repurchase the securities sold are accounted for as investment-related liabilities.

The difference between the fair value of the securities sold and the repurchase price is recorded as interest expense within investment-related expenses. In the case where PSPIB is the counterparty purchasing securities under such agreements, no income (loss) related to such securities is recognized, and obligations to resell the securities are accounted for as investment-related receivables. The difference between the fair value of the securities purchased and resale price is recorded in investment income.

Transactions under repurchase and reverse repurchase agreements involve pledging collateral consisting of cash or securities deemed acceptable by the counterparties. Collateral transactions are conducted under terms that are usual and customary in standard repurchase arrangements. Such terms require the relevant counterparty to pledge additional collateral based on the changes in the fair value of the existing collateral pledged, as well as the related securities sold or purchased. The counterparties are authorized to sell, repledge or otherwise use collateral held. The securities pledged as collateral must be returned to the relevant counterparty at the end of the contract, unless an event of default occurs.

(H) Offsetting of financial instruments

Financial assets and financial liabilities are offset with the net amount reported in the statement of financial position only if PSPIB has a current legally enforceable right to offset the recognized amounts and the intent to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(I) Pension obligations

The present value of accrued pension benefits is calculated by OCA on behalf of the plan sponsor, the government, by using the projected benefit method up to termination or retirement, based on management’s best estimate assumptions including streamed expected rates of return on invested funds.

(J)Investment income

Investment income is made up of interest, dividends, gains (losses) on the disposal of financial assets and financial liabilities as well as gains (losses) which reflect the change in unrealized appreciation (depreciation) of financial assets held and financial liabilities outstanding at the end of the reporting period. Interest is recognized, on a consistent basis, using the prescribed rates until maturity. Dividends are recognized when the right to receive them has been obtained, generally on the ex-dividend date.

(K) Contributions

Contributions for current service are recorded in the year in which the related payroll costs are incurred. Contributions for past service that are receivable over a period in excess of one year are recorded at the estimated net present value of the contributions to be received.

(L) Benefits earned, benefits paid, and refunds and transfers

Benefits earned are accrued as employees render pensionable services.

The benefits paid are recognized as a reduction of pension obligations when the payments are made. The benefits paid are recognized as a reduction of net assets available for benefits when the payments are made.

Benefit payments, refunds to former members and transfer payments to other plans are recorded in the period in which they are paid.

(M) Investment-related expenses

Investment-related expenses are made up of interest expense, transaction costs, external investment management fees and other (net).

Transaction costs are incremental costs directly attributable to the acquisition, due diligence, issue, or disposal of a financial asset or financial liability, and they are expensed as incurred.

External investment management fees are directly attributable to the external management of assets on behalf of PSPIB. These fees are paid directly by PSPIB and comprise base fees accrued as a percentage of the fair value of the assets managed externally and performance fees accrued as a function of various performance indicators. This excludes amounts not paid directly by PSPIB for certain pooled fund investments classified under alternative investments and for investments in private markets as outlined in Note 18.

(N) Significant accounting judgments, estimates and assumptions

In preparing the financial statements, management makes certain judgments, estimates and assumptions that can affect the amounts reported therein. Significant judgments include those related to the determination of the investment entity status of PSPIB as described in Note 2(A).

Management also makes estimates and assumptions in the measurement, risk assessment and related disclosures surrounding investments in private markets, certain fixed income securities and the pension obligations.

The main assumptions made by management regarding measurement of financial instruments are outlined in Note 5(C) (III), and those regarding the assessment of risk are outlined in Note 7.

The pension obligations are actuarially determined, and the actual experience may differ significantly from the assumptions used in the calculation of the pension obligations. The significant actuarial assumptions used in measuring the pension obligations are found in Note 12.

The economic environment continues to be subject to global uncertainty and heightened geopolitical tensions, which could impact the actuarial assumptions used to measure the present value of the pension obligations and the market value of PSPIB’s portfolio. The pension obligations and the investments held by PSPIB, as at 31 March 2024, as well as the return on investments for the year, reflect the impacts resulting from these events to the extent known and estimable at the reporting date.

Although assumptions reflect management’s best estimates actual results may differ from such estimates due to the uncertainties involved in using them.

(3) Current and future changes in accounting standards

Management has determined that there is no anticipated material impact on the financial statements arising from new standards, amendments and interpretations that have been issued by the IASB but that are not yet effective.

(4) Reserve Force Pension Fund

The government has a statutory obligation to pay benefits relating to the pension plan. This pension obligation is to plan members and their beneficiaries.

In 1999, the pension legislation was amended to allow the government to invest funds in order to provide for the pension obligation. This legislation created the PSPIB to manage and invest amounts that are transferred regularly to it from the CRF. The transactions are recorded in the Reserve Force Pension Fund. The Reserve Force Pension Fund is a flow-through account. PSPIB investment assets and investment-related liabilities are reflected directly in the pension plan’s financial statements. At year end, the balance in the Reserve Force Pension Fund represents net contributions transferable to the PSPIB, and would also reflect any incoming transfers amounts transferred from the PSPIB. PSPIB investment assets and investment related liabilities are reflected directly in the pension plan’s financial statements.

Related Party—Canadian Forces Pension Plan

The Reserve Force Pension Plan (RFPP) is related, through common legislation (the CFSA), to the Canadian Forces Pension Plan (CFPP). Transactions with the CFPP related to member service and contributions are considered to be in the normal course of operations, in accordance with section 83 of the RFPP Regulations, and are recorded at the exchange amount as required by that section.

Members of the RFPP are automatically eligible for inclusion in the CFPP when an eligibility threshold of 55 months of full-time service in a 60-month period is reached. Once qualified, the present value of service accumulated under the RFPP is calculated and transferred to the CFPP; however a timing difference exists between when the amounts become eligible for a transfer and when the transfer occurs. The value of these assets will continue to be reassessed every year by OCA to factor in any changes to the actuarial assumptions.

For the year ended 31 March 2024, $45,208 thousand (2023—$75,002 thousand) was transferred between the fund accounts. The value of the pensionable service due between the two pension plans has been estimated at 31 March 2024 to be $59,000 thousand (2023—$61,000 thousand).

(5) Financial assets and financial liabilities

(A)Classes of financial assets and financial liabilities

Financial assets and financial liabilities are aggregated in the following table, in classes that reflect their respective exposure as well as in investment sectors.

Table 54: Fair values as at 31 March ($ thousands):

	2024	2023
Investments
Public markets
Canadian equity	$11,416	$18,520
Foreign equity	171,189	145,785
Private markets
Real estate	151,627	169,971
Private equity	161,419	148,336
Infrastructure	166,314	148,525
Natural resources	88,629	77,095
Fixed income
Cash and cash equivalentstable 54 note 1	14,451	28,911
Money market securitiestable 54 note 1	34,505	34,442
Government and corporate bonds	109,882	95,915
Inflation-linked bonds	73,216	47,251
Private debt securities	121,498	125,433
Alternative investments	105,413	102,847
Total investments	$1,209,559	$1,143,031
Investment-related assets
Amounts receivable from pending trades	$5,189	$10,497
Interest receivable	2,571	2,073
Dividends receivable	1,101	860
Securities purchased under reverse repurchase agreements	9,333	5,282
Derivative-related assets	5,523	9,085
Total investment-related assets	$23,717	$27,797
Investments representing financial assets at FVTPLtable 54 note 2	$1,233,276	$1,170,828
Investment-related liabilities
Amounts payable from pending trades	$(2,203)	$(4,455)
Interest payable	(673)	(481)
Securities sold short	(13,087)	(10,308)
Collateral payable	(2,725)	(3,954)
Securities sold under repurchase agreements	(21,361)	(38,970)
Derivative-related liabilities	(3,987)	(6,753)
Investment-related liabilities representing financial liabilities at FVTPL	$(44,036)	$(64,921)
Borrowings
Capital market debt financing	$(110,053)	$(99,322)
Borrowings representing financial liabilities designated at FVTPL	$(110,053)	$(99,322)
Net investments	$1,079,187	$ 1,006,585
Table 54 Notes Table 54 Note 1 During the year ended 31 March 2024, cash and cash equivalents were reclassified out of money market securities and presented separately in order to better reflect their unique nature and characteristics. Accordingly, comparative figures were reclassified to present cash and cash equivalents separately and to decrease money market securities by the same amount. Return to table 54 note 1 referrer Table 54 Note 2 As at 31 March 2024, $41,376 thousand out of $1,233,276 thousand were investments pledged as described in Note 5(D) (31 March 2023—$56,609 thousand out of $1,170,828 thousand). Return to table 54 note 2 referrer

(I) Public markets

Public markets consist of Canadian and foreign investments in the following securities: common shares, American depository receipts, global depository receipts, participation notes, preferred shares, income trust units, exchange traded funds units, pooled funds units, and securities convertible into common shares of publicly listed issuers.

Valuation techniques

Direct investments in Canadian and foreign equities are measured at fair value using quoted prices in active markets and are based on the most representative price within the bid-ask spread.

In the case of investments in pooled funds, fair value is measured using unit values obtained from each of the funds’ administrators, which are derived from the fair value of the underlying investments in each pooled fund. PSPIB reviews the fair value received, and where necessary, the impact of restrictions on the sale or redemption of such investments is taken into consideration.

(II) Private markets

Private markets consist of investments in real estate, private equity, infrastructure, and natural resources.

Real estate investments are comprised of direct equity positions in various private entities, fund investments, as well as properties in the real estate sector. Real estate investments focus on partnerships, companies, and properties operating mainly in the retirement and residential, office, retail and industrial sectors, as well as private funds invested in real estate assets. Real estate investments are presented net of all third-party financing.

Private equity investments are comprised of fund investments with similar objectives, co-investments in private entities, as well as direct equity positions.

Infrastructure investments are comprised of direct equity positions, fund investments and co-investments in various private entities. Infrastructure investments focus on entities engaged in the management, ownership or operation of assets in energy, transportation and other regulated businesses. Infrastructure investments are presented net of all third-party financing.

Natural resources investments are comprised of direct equity positions, fund investments and co-investments in various private entities. Natural resources investments focus on entities engaged in the management, ownership or operation of assets in timberlands, agriculture and upstream oil and gas. Natural resources investments are presented net of all third-party financing.

Valuation techniques

The process for fair value measurement of private markets investments is described in Note 5(C) (II) and the valuation techniques, together with the significant inputs used, are described in Note 5(C) (III).

(III) Fixed income

(i) Cash and cash equivalents

Cash includes demand deposits with financial institutions.

Cash equivalents include treasury bills, certificates of deposit, bankers’ acceptances and other fixed-income securities with maturities of 90 days or less that are held to meet short-term financial commitments. Such instruments are readily convertible into known amounts of cash and have an insignificant risk of change in value

(i) Money market securities, bonds and private debt securities

Fixed income consists of money market securities, government and corporate bonds, inflation-linked bonds and private debt securities. Money market securities include instruments having a maximum term to maturity of one year, such as treasury bills, certificates of deposit and bankers’ acceptances.

Government and corporate bonds include Canadian and foreign, federal, provincial, territorial and municipal bonds, floating rate notes, asset-backed term notes and mortgage-backed securities. Inflation-linked bonds are fixed income securities that earn inflation-adjusted returns.

Private debt securities are fixed income securities of private companies held directly or through private funds. Such debt securities take the form of senior debt, mezzanine and distressed debt and primary and secondary investments in leveraged loans. Private debt securities also include third-party loans such as junior and senior debts, construction loans, bridge loans, income-participating loans, as well as other structured finance products in the real estate sector.

Valuation techniques

Treasury bills are valued based on prices obtained from third-party pricing sources. Such prices are determined using the most representative price within a spread of dealer quotations. Certificates of deposit and bankers’ acceptances are recorded at cost plus accrued interest, which approximates their fair value given their short-term nature.

Fair values of government and most corporate bonds, inflation-linked bonds and mortgage-backed securities are based on prices obtained from third-party pricing sources. Such prices are determined using either an appropriate interest rate curve with a spread associated with the credit quality of the issuer or other generally accepted pricing methodologies.

The fair values of certain corporate bonds, private debt securities and asset-backed term notes are determined using valuation techniques. Such techniques, together with the significant inputs used, are described in Note 5(C) (III).

The fair value measurement of fund investments included as part of private debt securities is described in Note 5(C) (II).

(IV) Alternative investments

Alternative investments consist mainly of units of funds that hold a mix of equity, fixed income and derivative instruments, as well as hedge funds.

Valuation techniques

The fair value of these investments is determined based on the fair values reported by the funds’ administrators or general partners and reflects the fair value of the underlying equity, fixed income or derivative instruments, as applicable. PSPIB reviews the fair value received and, where necessary, the impact of restrictions on the sale or redemption of such investments is taken into consideration.

(V) Amounts receivable and payable from pending trades

Amounts receivable from pending trades consist of proceeds on sales of investments, excluding derivative financial instruments, which have been traded but remain unsettled at the end of the reporting period.

Amounts payable from pending trades consist of the cost of purchases of investments, excluding derivative financial instruments, which have been traded but remain unsettled at the end of the reporting period.

Valuation techniques

The fair value of amounts receivable and payable from pending trades reflects the value at which their underlying original sale or purchase transactions were undertaken.

(VI) Interest and dividends receivable

Interest and dividends are recorded at the amounts expected to be received at the end of the reporting period, which due to their short-term maturity, approximates fair value.

(VII) Interest payable

With respect to the borrowings described in Note 5(A) (XI), interest is accrued at the amount expected to be paid at the end of the reporting period, which approximates fair value.

(VIII) Securities sold short

Securities sold short reflect PSPIB’s obligation to purchase securities pursuant to short selling transactions. In such transactions, PSPIB sells securities it does not own with an obligation to purchase similar securities on the market to cover its position.

Valuation techniques

Using quoted market prices that are based on the most representative price within the bid-ask spread, the fair value of securities sold short is measured using the same method as the similar long positions presented within public markets and fixed income.

(IX) Collateral payable

As part of securities lending and certain OTC derivative transactions, when cash is received, it is recognized as collateral payable. The payable balance reflects the obligation of the transferee to return the amount to the transferor at the end of the transaction in the absence of an event of default by the transferor.

(X) Securities sold under repurchase agreements and purchased under reverse repurchase agreements

As described in Note 2(G), PSPIB is party to repurchase and reverse repurchase agreements.

Valuation techniques

Obligations to repurchase or resell the securities sold or purchased under such agreements are recorded at cost plus accrued interest, which due to their short-term maturity approximates fair value.

(XI) Borrowings under the capital market debt program

PSPIB’s capital market debt program is described in Note 9(B).

Valuation techniques

Short-term promissory notes are recorded at cost plus accrued interest, which due to their short-term maturity approximates fair value. The fair value of PSPIB’s medium-term notes is based on prices that are obtained from third-party pricing sources. Such prices are determined using an interest rate curve with a spread consistent with PSPIB’s credit quality.

(B) Derivative-related assets and liabilities

Derivative financial instruments are financial contracts that are settled at a future date. The value of such instruments is derived from changes in the value of the underlying assets, interest or exchange rates. Derivative financial instruments do not, typically, require an initial net investment. In certain cases, they require an initial net investment that is less than what would be required to hold the underlying position directly. Derivative financial instruments can be listed or traded OTC. OTC instruments consist of those that are bilaterally negotiated and settled, and those that are cleared (OTC-cleared) by a central clearing party (CCP).

PSPIB uses derivative financial instruments to enhance returns or to replicate investments synthetically. Derivatives are also used to reduce the risk associated with existing investments.

PSPIB uses the following types of derivative financial instruments:

(I) Swaps

Swaps are transactions whereby two counterparties exchange cash flow streams with each other based on predetermined conditions that include a notional amount and a term. Swaps are used to increase returns or to adjust exposures of certain assets without directly purchasing or selling the underlying assets.

(II) Futures

Futures are standardized contracts to take or make delivery of an asset (buy or sell) at a predefined price and predefined future date. Futures are used to adjust exposures to specified assets without directly purchasing or selling the underlying assets.

(III) Forwards

Forwards are contracts involving the sale by one party and the purchase by another party of a predefined amount of an underlying instrument, at a predefined price and at a predefined date in the future. Forwards are used to adjust exposures to specified assets without directly purchasing or selling the underlying assets.

(IV) Options

Options are contracts where the seller gives the purchaser the right, but not the obligation, to buy or sell a given amount of an underlying security, index, commodity, currency, interest rate, credit or other financial instrument, at an agreed-upon price stipulated in advance, either at a determined date or at any time before the predefined maturity date.

(V) Warrants and rights

Warrants are options to purchase an underlying asset which is in the form of a transferable security and which can be listed on an exchange or traded OTC.

Rights are securities giving shareholders entitlement to purchase new shares issued by a corporation at a predetermined price (normally less than the current market price) in proportion to the number of shares already owned. Rights are issued only for a short period of time, after which they expire.

Valuation techniques

(i) Determination of fair value of derivative financial instruments

Listed derivative financial instruments are recorded at fair value using quoted market prices that are based on the most representative price within the bid-ask spread. OTC-cleared derivatives are recorded at fair value using prices obtained from the CCP. OTC derivatives are valued using appropriate valuation techniques such as discounted cash flows. These techniques use significant inputs that are observable in the market such as current market yields.

(ii)Notional values and fair values of derivative-related assets and liabilities

Notional values of derivative financial instruments are not recorded as assets or liabilities as they represent the face amount of the contract. Except for credit derivatives, notional values do not represent the potential gain or loss associated with the market or credit risk of such transactions disclosed below. Rather, they serve as the basis upon which the cash flows and the fair value of the contracts are determined.

Table 55: The following table summarizes the derivatives portfolio as at 31 March ($ thousands):

	2024			2023
	Notional Value	Fair Value		Notional Value	Fair Value
		Assets	Liabilities		Assets	Liabilities
Equity and commodity derivatives
Listed
Futures	$22,860	$0	$0	$15,242	$0	$0
Warrants and rights	0	4	0	4	9	0
Options: Purchased	648	0	0	3,762	120	0
Written	0	0	0	4,933	0	(49)
OTC
Swaps	90,816	2,013	(865)	85,461	2,720	(941)
Options: Purchased	0	0	0	349	0	0
Currency derivatives
Listed
Futures	1,542	0	0	948	0	0
OTC
Forwards	238,805	888	(1,398)	443,932	2,906	(3,465)
Swaps	5,032	0	(138)	14,724	366	(136)
Options: Purchased	3,721	22	0	8,512	38	0
Written	4,315	0	(17)	11,001	0	(34)
Interest rate derivatives
Listed
Futures	44,384	0	0	9,089	0	0
Options: Purchased	169,516	73	0	200,451	31	0
Written	176,129	0	(67)	183,600	0	(29)
OTC
Forwards	3,264	0	(15)	5,851	51	(17)
Swaps	9,966	22	(88)	14,379	135	(55)
Options: Purchased	218,645	2,435	0	271,117	2,649	0
Written	284,094	0	(1,330)	316,470	0	(1,983)
OTC-cleared
Swaps	268,651	0	0	334,165	0	0
Credit derivatives
OTC
Credit default swaps:
Purchased	2,539	0	(69)	2,320	0	(44)
Writtentable 55 note 1	8,154	66	0	4,982	60	0
OTC-cleared
Credit default swaps:
Purchased	12,063	0	0	8,349	0	0
Total	-	$5,523	$(3,987)	-	$9,085	$(6,753)
Table 55 Note Table 55 Note 1 PSPIB, through written credit default swaps, indirectly guarantees the underlying reference obligations. The maximum potential exposure is the notional amount of the written credit default swaps as shown in the table above. Return to table 55 note 1 referrer

Table 56:Total derivative-related assets and liabilities as at 31 March are comprised of ($ thousands)

	2024			2023
	Notional Value	Fair Value		Notional Value	Fair Value
		Assets	Liabilities		Assets	Liabilities
Listed derivatives	$415,079	$77	$(67)	$418,029	$160	$(78)
OTC derivatives	869,351	5,446	(3,920)	1,179,098	8,925	(6,675)
OTC-cleared derivatives	280,714	0	0	342,514	0	0
Total		$5,523	$(3,987)		$9,085	$(6,753)

Table 57: The terms to maturity based on notional value for the derivatives as at 31 March is as follows ($ thousands):

	2024	2023
Less than 3 months	$702,791	$948,859
3 to 12 months	460,007	615,459
Over 1 year	402,346	375,323

(C) Fair value hierarchy

(I) Classification

Financial assets and financial liabilities described under Note 5(A) are classified within the fair value hierarchy, described as follows, based on the lowest level of input that is significant to the fair value measurement as a whole.

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that PSPIB can access at the end of the reporting period
• Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or the liability, either directly or indirectly. Level 2 inputs include:
  1. quoted prices for similar assets or liabilities in active markets
  2. quoted prices for identical or similar assets or liabilities in markets that are not active
  3. inputs other than quoted prices that are observable for the asset or liability
  4. market-corroborated inputs
• Level 3 inputs are unobservable inputs for the asset or liability that are used within model-based techniques. They reflect PSPIB’s assessment of the assumptions that market participants would use in pricing the assets or liabilities

The classification within the levels of the hierarchy is established at the time of the initial determination of fair value of the asset or liability and reviewed at the end of each reporting period. PSPIB determines whether a transfer between levels has occurred and recognizes such transfers at the beginning of the reporting period.

Table 58: The following table shows the fair value of financial assets and financial liabilities as at 31 March 2024 classified within the fair value hierarchy ($ thousands):

	Level 1	Level 2	Level 3	Total Fair Value
Investments
Public markets
Canadian equity	$3,941	$7,475	$0	$11,416
Foreign equity	159,567	2,084	9,538	171,189
Private markets
Real estate	0	0	151,627	151,627
Private equity	0	0	161,419	161,419
Infrastructure	0	0	166,314	166,314
Natural resources	0	0	88,629	88,629
Fixed income
Cash and cash equivalents	5,471	8,980	0	14,451
Money market securities	31,729	2,776	0	34,505
Government and corporate bonds	28,354	81,517	11	109,882
Inflation-linked bonds	72,771	445	0	73,216
Private debt securities	0	0	121,498	121,498
Alternative investments	0	64,660	40,753	105,413
Total investments	$301,833	$167,937	$739,789	$1,209,559
Investment-related assets
Amounts receivable from pending trades	$0	$5,189	$0	$5,189
Interest receivable	0	2,571	0	2,571
Dividends receivable	0	1,101	0	1,101
Securities purchased under reverse repurchase agreements	0	9,333	0	9,333
Derivative-related assets	77	5,446	0	5,523
Total investment-related assets	$77	$23,640	$0	$23,717
Investments representing financial assets at FVTPL	$301,910	$191,577	$739,789	$1,233,276
Investment-related liabilities
Amounts payable from pending trades	$0	$(2,203)	$0	$(2,203)
Interest payable	0	(673)	0	(673)
Securities sold short	(13,087)	0	0	(13,087)
Collateral payable	0	(2,725)	0	(2,725)
Securities sold under repurchase agreements	0	(21,361)	0	(21,361)
Derivative-related liabilities	(67)	(3,920)	0	(3,987)
Investment-related liabilities representing financial liabilities at FVTPL	$(13,154)	$(30,882)	$0	$(44,036)
Borrowings
Capital market debt financing	$0	$(110,053)	$0	$(110,053)
Borrowings representing financial liabilities designated at FVTPL	$0	$(110,053)	$0	$(110,053)
Net investments	$288,756	$50,642	$739,789	$1,079,187

Table 59: The following table shows the fair value of financial assets and financial liabilities as at 31 March 2023 classified within the fair value hierarchy ($ thousands):

	Level 1	Level 2	Level 3	Total Fair Value
Investments
Public markets
Canadian equity	$11,375	$7,145	$0	$18,520
Foreign equity	137,468	4,265	4,052	145,785
Private markets
Real estate	0	0	169,971	169,971
Private equity	0	0	148,336	148,336
Infrastructure	0	0	148,525	148,525
Natural resources	0	0	77,095	77,095
Fixed income
Cash and cash equivalentstable 59 note 1	13,638	15,273	0	28,911
Money market securitiestable 59 note 1	31,325	3,117	0	34,442
Government and corporate bonds	33,573	62,331	11	95,915
Inflation-linked bonds	47,250	1	0	47,251
Private debt securities	0	0	125,433	125,433
Alternative investments	0	63,630	39,217	102,847
Total investments	$274,629	$155,762	$712,640	$1,143,031
Investment-related assets
Amounts receivable from pending trades	$0	$10,497	$0	$10,497
Interest receivable	0	2,073	0	2,073
Dividends receivable	0	860	0	860
Securities purchased under reverse repurchase agreements	0	5,282	0	5,282
Derivative-related assets	160	8,925	0	9,085
Total investment-related assets	$160	$27,637	$0	$27,797
Investments representing financial assets at FVTPL	$274,789	$183,399	$712,640	$1,170,828
Investment-related liabilities
Amounts payable from pending trades	$0	$(4,455)	$0	$(4,455)
Interest payable	0	(481)	0	(481)
Securities sold short	(9,638)	(670)	0	(10,308)
Collateral payable	0	(3,954)	0	(3,954)
Securities sold under repurchase agreements	0	(38,970)	0	(38,970)
Derivative-related liabilities	(78)	(6,675)	0	(6,753)
Investment-related liabilities representing financial liabilities at FVTPL	$(9,716)	$(55,205)	$0	$(64,921)
Borrowings
Capital market debt financing	$0	$(99,322)	$0	$(99,322)
Borrowings representing financial liabilities designated at FVTPL	$0	$(99,322)	$0	$(99,322)
Net investments	$265,073	$28,872	$712,640	$1,006,585
Table 59 Note Table 59 Note 1 During the year ended 31 March 2024, cash and cash equivalents were reclassified out of money market securities and presented separately in order to better reflect their unique nature and characteristics. Accordingly, comparative figures were reclassified to present cash and cash equivalents separately and to decrease money market securities by the same amount Return to table 59 note 1 referrer

As at 31 March 2023, foreign equity securities with a fair value of $138 thousand were indirectly held and classified as Level 2. During the year ended 31 March 2024, these securities were transferred to Level 1 as they became directly held by PSPIB.

There were no significant transfers between Level 1 and Level 2 during the year ended 31 March 2023.

(II) Process for Level 3 fair value determination

The valuation process is monitored and governed by an internal valuation committee (VC). This committee is responsible for overseeing all aspects of fair value determination. This includes valuation methodologies and procedures for each type of investment and ensuring they are complied with. Valuation methodologies established are based on widely recognized practices that are consistent with professional appraisal standards. Such standards include, among others, the International Private Equity and Venture Capital Valuation Guidelines, the Canadian Uniform Standards of Professional Appraisal Practice and the Uniform Standards of Professional Appraisal Practice in the United States of America.

For the year ended 31 March 2024, the fair value of investments classified as Level 3 in private markets was determined quarterly and adjusted to reflect the impact of any significant market or investment specific events or circumstances. For the year ended 31 March 2023, such fair value was determined at least semi-annually. For each investment, the relevant valuation methodology is applied consistently over time as appropriate in the prevailing circumstances. The appropriateness of significant changes in valuation methodologies is reviewed by the VC.

In cases where the services of third-party appraisers are used, PSPIB ensures their independence and that the valuation methods used are consistent with professional appraisal standards outlined above. In validating the work performed by appraisers, PSPIB ensures that the assumptions used correspond to financial information and forecasts of the underlying investment.

With respect to fund investments classified as Level 3, the annual fair value is generally determined based on the most recent audited financial statements received from the fund’s general partner. For interim reporting periods, fair value is obtained from information provided by the fund’s administrators and is reviewed by PSPIB to ensure reasonableness and adherence to acceptable industry valuation methods. Where necessary, the impact of restrictions on the sale or redemption of such investments is taken into consideration in determining fair value.

To reflect the impact, where applicable, of significant market movements or other events occurring up to the end of the reporting period, adjustments to private markets and fund investments are made, as appropriate. Such adjustments are based on a number of factors including public market trading comparables, investment-specific characteristics as well as market conditions and uncertainties at that time.

(III) Level 3 significant inputs

Table 60: The following table outlines key information with respect to significant inputs related to financial assets categorized within Level 3 as at 31 March 2024:

Financial assets	Type of Investment	Fair Value ($thousands)	Significant Valuation Techniques	Significant Unobservable Inputs	Range (Weighted Average)
Public markets
Foreign equity	Direct investments	$9,538	NAVtable 60 note 1	n/a	n/a
Private markets
Real estate	Direct and co-investments	$137,404	Discounted cash flow (DCF)	Discount ratetable 60 note 2table 60 note 3	2.90%-18.00% (7.80%)
				Terminal capitalization ratetable 60 note 2table 60 note 3	3.20%-12.25% (6.08%)
			Direct capitalization	Capitalization ratetable 60 note 2table 60 note 4	2.51% – 10.00% (4.85%)
				Stabilized occupancy ratetable 60 note 4table 60 note 5	98.00% – 100.00% (99.57%)
			Sales comparison approach	Price per square foottable 60 note 4table 60 note 5	$4.28 – $1,827.48 ($165.83)
			NAVtable 60 note 1	n/a	n/a
			Transaction price	n/a	n/a
	Fund investments	$14,223	NAVtable 60 note 1	n/a	n/a
Other private markets	Direct and co-investments	$305,654	DCF	Discount ratetable 60 note 2	5.19% – 18.50% (9.58%)
			Market comparables	n/a	n/a
			NAVtable 60 note 1	n/a	n/a
			Transaction price	n/a	n/a
	Fund Investments	$110,708	NAVtable 60 note 1	n/a	n/a
Fixed income
Corporate bonds	Asset-backed term notes	$11	Third-party pricingtable 60 note 1	n/a	n/a
Private debt securities	Direct and co-investments	$91,976	DCF	Discount ratetable 60 note 2	7.02% – 30.09% (12.24%)
			NAVtable 60 note 1	n/a	n/a
			Transaction price	n/a	n/a
	Fund investments	$29,522	NAVtable 60 note 1	n/a	n/a
Alternative investments	Fund investments	$40,753	NAVtable 60 note 1	n/a	n/a
Total		$739,789
Table 60 Notes Table 60 Note 1 In certain cases, when investments are held through funds, partnerships or similar structures, fair value is determined by third parties where valuation information is not available to PSPIB. Return to table 60 note 1 referrer Table 60 Note 2 An increase (decrease) in this unobservable input, taken individually, generally results in a decrease (increase) in fair value. Return to table 60 note 2 referrer Table 60 Note 3 An increase (decrease) in the discount rate is generally accompanied by an increase (decrease) of the terminal capitalization rate Return to table 60 note 3 referrer Table 60 Note 4 There is no predictable direct relationship between this input and any other significant unobservable input Return to table 60 note 4 referrer Table 60 Note 5 An increase (decrease) in this unobservable input, taken individually, generally results in an increase (decrease) in fair value. Return to table 60 note 5 referrer

Table 61: The following table outlines key information with respect to significant inputs related to financial assets categorized within Level 3 as at 31 March 2023:

Financial assets	Type of Investment	Fair Value ($thousands)	Significant Valuation Techniques	Significant Unobservable Inputs	Range (Weighted Average)
Public markets
Foreign equity	Direct investments	$4,052	NAVtable 60 note 1	n/a	n/a
Private markets
Real estate	Direct and co-investments	$155,644	Discounted cash flow (DCF)	Discount ratetable 60 note 2table 60 note 3	3.30% - 19.00% (7.40%)
				Terminal capitalization ratetable 60 note 2table 60 note 3	3.56% - 12.00% (5.60%)
			Direct capitalization	Capitalization ratetable 60 note 2table 60 note 4	2.35% - 10.00% (4.62%)
				Stabilized occupancy ratetable 60 note 4table 60 note 5	98.00% to 100.00% (99.55%)
			Sales comparison approach	Price per square foottable 60 note 4table 60 note 5	$3.42 - $1,750.44 ($256.48)
			NAVtable 60 note 1	n/a	n/a
			Transaction price	n/a	n/a
	Fund investments	$14,327	NAVtable 60 note 1	n/a	n/a
Other private markets	Direct and co-investments	$269,062	DCF	Discount ratetable 60 note 2	5.50% - 20.00% (9.68%)
			Market comparables	n/a	n/a
			NAVtable 60 note 1	n/a	n/a
			Transaction price	n/a	n/a
	Fund Investments	$104,894	NAVtable 60 note 1	n/a	n/a
Fixed income
Corporate bonds	Asset-backed term notes	$11	Third-party pricingtable 60 note 1	n/a	n/a
Private debt securities	Direct and co-investments	$94,843	DCF	Discount ratetable 60 note 2	4.25% - 23.48% (12.56%)
			NAVtable 60 note 1	n/a	n/a
			Transaction price	n/a	n/a
	Fund investments	$30,590	NAVtable 60 note 1	n/a	n/a
Alternative investments	Fund investments	$39,217	NAVtable 60 note 1	n/a	n/a
Total		$712,640
Table 61 Notes Table 61 Note 1 In certain cases, when investments are held through funds, partnerships or similar structures, fair value is determined by third parties where valuation information is not available to PSPIB. Return to table 61 note 1 referrer Table 61 Note 2 An increase (decrease) in this unobservable input, taken individually, generally results in a decrease (increase) in fair value. Return to table 61 note 2 referrer Table 61 Note 3 An increase (decrease) in the discount rate is generally accompanied by an increase (decrease) of the terminal capitalization rate. Return to table 61 note 3 referrer Table 61 Note 4 There is no predictable direct relationship between this input and any other significant unobservable input. Return to table 61 note 4 referrer Table 61 Note 5 An increase (decrease) in this unobservable input, taken individually, generally results in an increase (decrease) in fair value. Return to table 61 note 5 referrer

(IV) Level 3 reconciliation

Table 62: The following table shows a reconciliation of all movements related to financial assets categorized within Level 3 for the year ended 31 March 2024 ($ thousands):

	Opening balance	Purchases	Sales	Settle-ments	Realized gains	Unrealized gains (losses)table 62 note 1	Transfer into Level 3	Closing balance
Public markets	$4,052	$1,862	$(550)	$0	$326	$3,848	$0	$9,538
Private markets	543,927	57,763	(38,021)	0	9,039	(4,977)	258	567,989
Fixed income	125,444	24,918	(30,048)	0	1,186	9	0	121,509
Alternative investments	39,217	2,288	(4,491)	0	1,043	2,696	0	40,753
Total	$712,640	$86,831	$(73,110)	$0	$11,594	$1,576	$258	$739,789
Table 62 Note Table 62 Note 1 Includes the pension plan allocation adjustments. Return to table 62 note 1 referrer

As at 31 March 2023, listed foreign equity securities with a fair value of $258 thousand were classified under Level 1. During the year ended 31 March 2024, those securities were transferred to Level 3 as the investment became privately held and its fair value was determined based on significant unobservable inputs.

Table 63: The following table shows a reconciliation of all movements related to financial assets categorized within Level 3 for the year ended 31 March 2023 ($ thousands):

	Opening balance	Purchases	Sales	Settle-ments	Realized gains	Unrealized gains (losses)table 63 note 1	Transfer out of Level 3	Closing balance
Public markets	$5,649	$153	$(529)	$0	$112	$(1,139)	$(194)	$4,052
Private markets	493,270	75,805	(41,994)	0	14,328	3,417	(899)	543,927
Fixed income	107,140	32,960	(18,026)	0	1,494	1,876	0	125,444
Alternative investments	35,362	2,870	(2,416)	0	445	2,956	0	39,217
Total	$641,421	$111,788	$(62,965)	$0	$16,379	$7,110	$(1,093)	$712,640
Table 63 Note Table 63 Note 1 Includes the pension plan allocation adjustments. Return to table 63 note 1 referrer

As at 31 March 2022, a public market investment of $194 thousand in a non-listed fund that held listed securities was classified under Level 3 due to the nature of the contractual restrictions on the redemption of fund units. During the year ended 31 March 2023, the listed securities held by the fund were transferred to PSPIB and were classified as Level 1. Additionally, as at 31 March 2022, a private market investment of $899 thousand was classified under Level 3 as its fair value was determined based on significant unobservable inputs. During the year ended 31 March 2023, this investment was transferred to Level 2 as the related securities became publicly traded. These securities held by PSPIB are unregistered and can only be sold upon their registration.

(V) Level 3 sensitivity analysis

In the course of measuring fair value of financial instruments classified as Level 3, valuation techniques used incorporate assumptions that are based on non-observable data. Significant assumptions used for each asset class are described in Note 5(C) (III). Although such assumptions reflect PSPIB’s best judgment, with all other variables held constant, the use of reasonably possible alternative assumptions could yield different fair value measures representing, at a minimum, a 3% increase and 3% decrease as at 31 March 2024 (4% increase and 4% decrease as at 31 March 2023) in the fair value of financial instruments categorized as Level 3. This excludes fund investments, where a sensitivity analysis is not possible given the underlying assumptions used are not available to PSPIB. In the case of fund investments, the fair value is determined as indicated in Note 5(C) (II).

(D) Collateral pledged and received

PSPIB is party to agreements that involve pledging and holding collateral, as outlined in Notes 2(F), 2(G) and 7(B) (I). The following table illustrates the fair values of the pension plan’s allocated collateral, as well as the securities under the lending and borrowing programs and the securities under the repurchase and reverse repurchase agreements.

Table 64: Fair values as at 31 March ($ thousands):

	2024	2023
Securities lending and borrowing
Securities lent	$16,775	$18,087
Collateral heldtable 64 note 1	17,391	18,935
Securities borrowed	10,697	7,969
Collateral pledgedtable 64 note 2table 64 note 3	11,002	8,466
Securities repurchase and reverse repurchase agreements
Securities sold under repurchase agreements	21,392	39,435
Collateral pledgedtable 64 note 3	21,404	39,189
Securities purchased under reverse repurchase agreements	9,355	5,354
Collateral heldtable 64 note 4	9,337	5,337
Derivative contracts
Collateral pledgedtable 64 note 3	8,970	8,954
Collateral heldtable 64 note 5	8,192	7,701
Table 64 Notes Table 64 Note 1 The minimum fair value of securities collateral denominated in the same currency required is equal to 102%, and in the case of securities denominated in different currencies 105%. In exchange for securities lent, cash and securities received as at 31 March 2024 were $2,233 thousand and $15,158 thousand, respectively ($3,495 thousand and $15,440 thousand, respectively, as at 31 March 2023). All cash amounts are reinvested. Return to table 64 note 1 referrer Table 64 Note 3 The minimum fair value of collateral required is equal to 100% of the fair value of the securities borrowed. Return to table 64 note 2 referrer Table 64 Note 3 The total of $41,376 thousand of collateral pledged was recognized as financial assets as disclosed in Note 5(A) ($56,609 thousand, as at 31 March 2023). Return to table 64 note 3 referrer Table 64 Note 4 The collateral received is in the form of securities of which $2,391 thousand has been used in connection with short selling transactions as at 31 March 2024 ($2,339 thousand as at 31 March 2023) and nil has been used in connection with securities sold under repurchase agreements ($1,267 thousand, as at 31 March 2023). Return to table 64 note 4 referrer Table 64 Note 5 As part of collateral held, cash amounted to $495 thousand as at 31 March 2024 ($468 thousand as at 31 March 2023) and securities amounted to $7,697 thousand as at 31 March 2024 ($7,233 thousand as at 31 March 2023). All cash collateral is reinvested. Return to table 64 note 5 referrer

6. Interest in other entities

(A) Subsidiaries, joint ventures and associates

In the normal course of business, investments in private markets are commonly held through investment entity subsidiaries formed by PSPIB. As at 31 March 2024, 145 investment entity subsidiaries were incorporated in North America, 28 in Europe, 19 in Oceania, 8 in Central and South America, 2 in Asia and 1 in Africa (31 March 2023—128 in North America, 28 in Europe, 19 in Oceania, 8 in Central and South America, 2 in Asia and 1 in Africa).

In addition, PSPIB controlled 92 investees directly or through its investment entity subsidiaries as at 31 March 2024 (31 March 2023—84 investees).

The following tables present, in descending order, the most significant investees held directly or indirectly by PSPIB where it has control, joint control or significant influence.

Table 65: As at 31 March 2024:

Entity’s name	Financial asset class	Principal place of business	Ownership interest held by PSPIB (%)	Relationship to PSPIB
AviAlliance GmbH	Infrastructure	Europe	100	Controlled
Roadis Transportation Holding, S.L.U.	Infrastructure	Global	100	Controlled
American Wholesale Insurance Holding Company, LLC	Private equity	North America	17	Associate
SEGRO European Logistics Partnership S.a.r.l.	Real estate	Europe	50	Jointly controlled
Kaingaroa Timberlands Limited	Natural resources	Oceania	56	Jointly controlled
Andante InvesteeCo Inc.	Infrastructure	Oceania	30	Jointly controlled
Willow Topco Limited	Infrastructure	Europe	63	Jointly controlled
TDF S.A.S.	Infrastructure	Europe	22	Associate
Forth Ports Limited	Infrastructure	Europe	51	Jointly controlled
Cubico Sustainable Investments Limited	Infrastructure	Global	50	Jointly controlled

Table 66: As at 31 March 2023:

Entity’s name	Financial asset class	Principal place of business	Ownership interest held by PSPIB (%)	Relationship to PSPIB
AviAlliance GmbH	Infrastructure	Europe	100	Controlled
American Wholesale Insurance Holding Company, LLC	Private equity	North America	22	Associate
SEGRO European Logistics Partnership S.a.r.l.	Real estate	Europe	50	Jointly controlled
Kaingaroa Timberlands Limited	Natural resources	Oceania	56	Jointly controlled
Roadis Transportation Holding, S.L.U.	Infrastructure	Global	100	Controlled
Willow Topco Limited	Infrastructure	Europe	74	Jointly controlled
TDF S.A.S.	Infrastructure	Europe	22	Associate
Revera inc.	Real estate	North America	100	Controlled
Forth Ports Limited	Infrastructure	Europe	51	Jointly controlled
Alliant	Private equity	North America	12	Associate

In addition to the above, PSPIB consolidates wholly owned subsidiaries that solely provide it with services that relate to its investment activities. Such services consist of investment management and financing of private market investments within the context of PSPIB’s capital market debt program described in Note 9(B).

(B) Structured entities

PSPIB holds interests in partnerships and funds mainly in the context of its investments in private markets. Given their nature, such entities commonly have the characteristics of a structured entity, that is, an entity where contractual arrangement matter more than voting rights in determining control and directing relevant activities. These entities are held as investments and do not expose PSPIB to additional risks or returns compared to interests held in non-structured entities.

Information regarding structured entities is included, as applicable, within disclosures of investment risk management under Note 7, guarantees and indemnities under Note 20 and commitments under Note 21.

7. Investment risk management

PSPIB is required to act in the best interests of the contributors and beneficiaries under the pension plan and for maximizing returns without undue risk of loss. In pursuit of this objective, PSPIB established an Enterprise Risk Management Policy (ERM Policy). The ERM Policy provides a framework for identifying, evaluating, managing, mitigating, monitoring and reporting the investment and non-investment risks to which PSPIB is exposed.

As part of the overall ERM policy, the objective of the Investment Risk Management Policy (IRM Policy) is to support the management of risk inherent to the investment decision-making process. The IRM Policy outlines a framework detailing how investment activities should comply with PSPIB’s risk philosophy and align with the tolerance and limits of its risk appetite. The IRM Policy also supplements the Statement of Investment Policies, Standards and Procedures (SIP&P), whose objective is to effectively manage investment risks related to the implementation of PSPIB’s various investment strategies. Investment risks include market, credit and liquidity risks.

(A) Market risk

Market risk is the risk that the value of an investment will fluctuate as a result of an adverse financial outcome due to changes in the factors that drive that value, such as changes in market prices, changes caused by factors specific to the individual investment, volatility in share and commodity prices, interest rate, foreign exchange or other factors affecting similar securities traded in the market.

(I) Measurement of market risk

As at 31 March 2024, the active annualized Value at Risk (“Active VaR”) was used as a primary measure of total portfolio market risk, to supplement the absolute annualized VaR (“Absolute VaR”) and monitor more closely the market risk directly attributable to PSPIB’s active investment management decisions. Active and Absolute VaR are used as key measures of total portfolio market risk.

The Absolute VaR quantifies, with a given confidence level, the loss in value of the total portfolio that one can expect, due to fluctuations in market prices, not to be exceeded over a given period. The VaR is also evaluated on an active basis by measuring the Active VaR. This measurement helps determine if the total portfolio deviates significantly from the Policy Portfolio, established with the SIP&P in mind.

For both Active VaR and Absolute VaR, PSPIB uses a historical VaR incorporating ten years’ worth of market returns scaled to a twelve-month holding period at a 95% confidence level. That is, statistically PSPIB would expect to see its total portfolio underperformance relative to the Policy Portfolio exceed the Active VaR and its total portfolio losses exceed the Absolute VaR only 5% of the time over a one-year period. For investments that are not actively traded, the calculation of the VaR uses securities with similar risk attributes as a proxy.

The VaR is statistically valid under normal market conditions. Although it includes potential losses derived from observed historical returns, it also assumes that the future will behave in a pattern similar to the past. Consequently, if future market conditions differ significantly from those of the past, potential losses may differ from those originally estimated.

Table 67: The following table shows the Active VaR and the Absolute VaR expressed as a percentage of net investments as at the end of the period:

	31 March 2024	31 March 2023
Active VaR	5.0%	4.8%
Absolute VaR	19.2%	19.6%

Stress testing

Although the VaR is a widely accepted risk measure, it is complemented by other risk measurement methodologies that provide greater insight on market risk. PSPIB uses stress testing and scenario analysis to examine the impact on financial results of abnormally large movements in risk factors. Such techniques are used to test a portfolio’s sensitivity to various risk factors and key model assumptions. These methods also use historically stressed periods to evaluate how a current portfolio reacts under such circumstances. Stress testing and scenario analysis are also deployed to assess new product performance.

(II) Interest rate risk

Interest rate risk refers to the risk that fluctuations in interest rates will directly affect the fair value of the pension plan’s net asset values.

The terms to maturity of the classes of financial instruments, outlined in Note 5(A), with the most significant exposure to interest rate risk were as follows

Table 68: As at 31 March 2024 ($ thousands):

	Less than 1 year	1 to 5 years	5 to 10 years	Over 10 years	Other	Total
Cash and cash equivalents	$0	$0	$0	$0	$14,451table 68 note 1	$14,451
Money market securities	0	0	0	0	$34,505table 68 note 1	$34,505
Government and corporate bonds	1,873	41,288	38,968	26,671	992table 68 note 2	109,882
Inflation-linked bonds	0	37,340	20,891	14,985	0	73,216
Private debt securities	153	45,444	29,566	15,927	30,408table 68 note 3	121,498
Total fixed income	$2,026	$124,072	$89,425	$57,673	$80,356	$353,552
Table 68 Notes Table 68 Note 1 Due to their short-term maturity, these investments are not significantly exposed to interest rate risk. Return to table 68 note 1 referrer Table 68 Note 2 Certain fixed income securities are not significantly exposed to interest rate risk as their prescribed rates are variable. Return to table 68 note 2 referrer Table 68 Note 3 Information in connection with the terms to maturity of fund and certain directly held investments included as part of private debt securities is not available. Return to table 68 note 3 referrer

Table 69: As at 31 March 2023 ($ thousands):

	Less than 1 year	1 to 5 years	5 to 10 years	Over 10 years	Other	Total
Cash and cash equivalents	$0	$0	$0	$0	$28,911table 69 note 1table 69 note 4	$28,911
Money market securities	0	0	0	0	34,442table 69 note 1table 69 note 4	34,442
Government and corporate bonds	2,805	42,147	27,491	22,097	1,375table 69 note 2	95,915
Inflation-linked bonds	0	20,129	16,386	10,736	0	47,251
Private debt securities	4,289	27,665	47,036	17,138	29,305table 69 note 3	125,433
Total fixed income	$7,094	$89,941	$90,913	$49,971	$94,033	$331,952
Table 69 Notes Table 69 Note 1,4 Due to their short-term maturity, these investments are not significantly exposed to interest rate risk. Return to table 69 note 1 referrer Table 69 Note 2 Certain fixed income securities are not significantly exposed to interest rate risk as their prescribed rates are variable. Return to table 69 note 2 referrer Table 69 Note 3 Information in connection with the terms to maturity of fund and certain directly held investments included as part of private debt securities is not available. Return to table 69 note 3 referrer Table 69 Note 4 During the year ended 31 March 2024, cash and cash equivalents were reclassified out of money market securities and presented separately in order to better reflect their unique nature and characteristics. Accordingly, comparative figures were reclassified to present cash and cash equivalents separately and to decrease money market securities by the same amount. Return to table 69 note 4 referrer

All equity investments within Canadian equity, foreign equity, real estate, private equity, infrastructure and natural resources amounting to $750,594 thousand as at 31 March 2024 ($708,232 thousand as at 31 March 2023) do not have specified terms to maturity nor are they significantly exposed to interest rate risk.

Alternative investments described in Note 5(A) (IV), which amounted to $105,413 thousand as at 31 March 2024 ($102,847 thousand as at 31 March 2023), also have no specified terms to maturity. Certain of these investments, as well as reverse repurchase agreements and derivative contracts described in Notes 5(A) (X) and 5(B), respectively, are subject to interest rate risk exposures. These exposures are reflected in the VaR calculation described in Note 7(A) (I).

The terms to maturity of PSPIB’s capital market debt financing are disclosed in Note 9(B).

Interest Rate Benchmark Reform

PSPIB holds a number of financial instruments that will mature after the date the Interbank Offered Rate (IBOR) to which they refer is anticipated to be discontinued as a result of the reform. A steering committee oversees the transition from IBORs to alternative reference rates (ARRs) to mitigate the risks related to the discontinuation or unavailability of such rates, which are primarily operational. With respect to non-derivative financial instruments, PSPIB has been identifying agreements referring to IBORs and engaging in a timely contract remediation process with the related counterparties. For derivative contracts, PSPIB has adhered to the International Swaps and Derivatives Association (ISDA) Fallbacks Protocol that took effect on 25 January 2021, which provides an efficient mechanism to switch to ARRs as IBORs become unavailable.

The following table shows the fair value of non-derivative financial instruments and the notional value of derivative financial instruments that have yet to transition to ARRs.

Table 70: As at 31 March 2024, only instruments referencing Canadian Dollar Offered Rate (CDOR) and expected to mature after 28 June 2024, remain ($ thousands):

	CDOR
Non-derivative financial assets fair value	$1,497
Derivatives notional	$3,058

(III) Foreign currency risk

PSPIB is exposed to currency risk through holding of investments (i.e. direct and indirect holdings of securities, units in pooled funds and units in limited partnerships) or investment-related liabilities in various currencies. Fluctuations in the relative value of the Canadian dollar against these foreign currencies can result in a positive or a negative effect on the fair value of the investments. To mitigate this risk, PSPIB may take, through foreign forward contracts or cross currency swaps, positions in foreign currencies.

Table 71: The underlying foreign currency exposures of net investments for the pension plan were as follows as at 31 March ($ thousands):

	2024
Currency	Fair Value	% of Total
U.S. dollar	$696,488	67.2
Euro	109,593	10.6
Japanese yen	40,403	3.9
British pound	38,568	3.7
Indian rupee	23,399	2.3
Australian dollar	17,753	1.7
Mexican peso	16,906	1.6
Brazilian real	12,772	1.2
Swiss franc	9,877	1.0
Singapore dollar	7,148	0.7
Hong Kong dollar	6,833	0.7
New Taiwan dollar	6,386	0.6
Others	49,918	4.8
Total	$1,036,044	100.0

As at 31 March 2024, PSPIB and its investment entity subsidiaries also had commitments, denominated in foreign currencies of $118,805 thousand for the pension plan (U.S. $71,312 thousand, €12,569 thousand, £1,693 thousand, 4,525 thousand Mexican pesos, 553 thousand Australian dollars, 4,190 thousand Indian rupees, 12,820 thousand Japanese yen), which were not included in the foreign currency exposure table above.

Table 72: The underlying foreign currency exposures of net investments for the pension plan were as follows as at 31 March, 2023 ($ thousands):

	2023
Currency	Fair Value	% of Total
U.S. dollar	$637,667	66.0
Euro	116,572	12.1
Hong Kong dollar	43,571	4.5
British pound	35,653	3.7
Japanese yen	23,421	2.4
Indian rupee	15,563	1.6
Mexican peso	15,199	1.6
New Taiwan dollar	8,630	0.9
Singapore dollar	8,366	0.9
Swiss franc	7,763	0.8
South African rand	6,995	0.7
Others	46,273	4.8
Total	$965,673	100.0

As at 31 March 2023, PSPIB and its investment entity subsidiaries also had commitments, denominated in foreign currencies of $134,938 thousand for the pension plan (U.S. $84,828 thousand, €10,532 thousand, £1,717 thousand, 91 thousand South African rands, 7,466 thousand Mexican pesos, 974 thousand Australian dollars, 9,101 thousand Indian rupees, 17,572 thousand Japanese yen), which were not included in the foreign currency exposure table above.

(B) Credit Risk

PSPIB is exposed to credit risk, which is the risk of non-performance of a debtor on whom PSPIB relies to fulfill contractual or financial obligations. That is, the risk that the issuer of a debt security or that the counterparty to a derivative contract, to a securities lending and borrowing transaction or to securities purchased under reverse repurchase agreements, is unable to meet its financial obligations.

Credit risk encompasses the risk of a deterioration of creditworthiness and the relevant concentration risk. Credit risk monitoring entails an evaluation of the credit quality of each issuer and counterparty that transacts with PSPIB. To perform this evaluation for public issuers and counterparties, PSPIB relies on four recognized credit rating agencies. A minimum of two credit ratings are used to classify each security. If the agencies disagree as to a security’s credit quality, PSPIB uses the lowest of the available ratings. For private issuers, PSPIB assigns internal credit ratings to issuers and measures the combined risk profile against set targets. To assign risk ratings to issuers, PSPIB uses methodologies comparable to those used by recognized rating agencies.

As at 31 March 2024, the pension plan’s maximum exposure to credit risk amounted to $367 million ($344 million as at 31 March 2023). This amount is presented before collateral held and netting arrangements that do not qualify for offsetting under IFRS. The maximum credit exposure excludes guarantees disclosed in Note 20 as well as investments in funds classified as alternative investments in Note 5(A) (IV). Such funds hold fixed income securities among other types of instruments.

To monitor the evolution of credit risk, PSPIB periodically produces a concentration report by credit rating of credit-sensitive securities.

Table 73: The concentration of credit risk by credit rating was as follows as at 31 March 2024 ($ thousands):

	Government and corporate bondstable 73 note 1	Inflation-linked bondstable 73 note 1	Cash equivalentstable 73 note 1	Money market securitiestable 73 note 1	Reverse repurchase agreements	OTC derivativestable 73 note 2	Private debt securitiestable 73 note 1	Totaltable 73 note 1
AAA-AA	$70,769	$72,973	$10,317	$31,729	$4,243	$154	$0	$190,195
A	31,669	0	1,987	551	4,260	5,292	0	43,759
BBB	5,136	448	0	0	820	0	309	6,713
BB or below	2,965	0	0	0	0	0	122,298	125,263
No ratingtable 73 note 3	331	0	0	0	0	0	270	601
Total	$110,870	$73,421	$12,304	$32,280	$9,333	$5,446	$122,877	$366,531
Table 73 Notes Table 73 Note 1 Includes interest receivable. Return to table 73 note 1 referrer Table 73 Note 2 As disclosed in note 5(B). Return to table 73 note 2 referrer Table 73 Note 3 Includes securities for public issuers and counterparties that are either not rated by credit rating agencies or rated by a single credit rating agency. Return to table 73 note 3 referrer

Table 74: As at 31 March 2023 ($ thousands):

	Government and corporate bondstable 74 note 1	Inflation-linked bondstable 74 note 1	Cash equivalentstable 74 note 1table 74 note 4	Money market securitiestable 74 note 1table 74 note 4	Reverse repurchase agreements	OTC derivativestable 74 note 2	Private debt securitiestable 74 note 1	Totaltable 74 note 1
AAA-AA	$62,550	$47,355	$20,936	$32,118	$660	$308	$0	$163,927
A	27,840	0	5,710	162	4,387	8,617	0	46,716
BBB	2,739	0	0	0	235	0	1,441	4,415
BB or below	3,111	0	0	0	0	0	124,039	127,150
No ratingtable 74 note 3	429	0	0	0	0	0	1,138	1,567
Total	$96,669	$47,355	$26,646	$32,280	$5,282	$8,925	$126,618	$343,775
Table 74 Notes Table 74 Note 1 Includes interest receivable. Return to table 74 note 1 referrer Table 74 Note 2 As disclosed in note 5(B). Return to table 74 note 2 referrer Table 74 Note 3 Includes securities for public issuers and counterparties that are either not rated by credit rating agencies or rated by a single credit rating agency. Return to table 74 note 3 referrer Table 74 Note 4 During the year ended 31 March 2024, cash and cash equivalents were reclassified out of money market securities and presented separately in order to better reflect their unique nature and characteristics. Accordingly, comparative figures were reclassified to present cash and cash equivalents separately and to decrease money market securities by the same amount. Return to table 74 note 4 referrer

(I) Counterparty risk

Counterparty risk represents the credit risk from current and potential exposure related to transactions involving derivative contracts, securities lending and borrowing as well as securities repurchase and reverse repurchase agreements. In order to minimize counterparty risk, PSPIB requires that counterparties provide adequate collateral and meet its credit rating requirements. PSPIB frequently monitors the credit rating of its counterparties as determined by recognized credit rating agencies. With respect to derivative contracts, PSPIB has the ability to terminate all trades with most counterparties whose credit rating is downgraded below its requirements.

For OTC derivatives, PSPIB’s policy also requires the use of the International Swaps and Derivative Association (ISDA) Master Agreement with all counterparties to derivative contracts. The ISDA Master Agreement provides the contractual framework within which dealing activities across a full range of OTC products are conducted. In the case of OTC-cleared derivatives, trading activities are regulated between parties under terms that are customary to such transactions.

As a credit mitigation technique, the ISDA Master Agreement contractually binds counterparties to close-out netting provisions in the case of default by one of the counterparties. Additionally, the Credit Support Annex (CSA) to the ISDA Master Agreement enables PSPIB to realize any collateral placed with it in the case of default of the counterparty. The CSA also requires PSPIB to contribute further collateral when requested. All collateral transactions under the CSA are in cash, high-quality debt instruments or securities. The CSA also regulates the exchange of collateral when the credit exposure to a counterparty exceeds a predetermined threshold. Counterparties are generally authorized to sell, repledge or otherwise use collateral held. Similarly, in the case of OTC-cleared derivatives, collateral is required in cash, high quality debt instruments or securities and can be sold, repledged or otherwise used. PSPIB does not sell, repledge or otherwise use any collateral held in the form of securities but does reinvest all cash collateral, with respect to derivative contracts.

With respect to transactions involving securities lending and borrowing agreements as well as securities repurchase and reverse repurchase agreements, collateral requirements are in place to mitigate counterparty risk. Notes 2(F) and 2(G) describe collateral requirements in securities lending and borrowing programs as well as securities repurchase and reverse repurchase agreements.

Information in connection with collateral pledged by PSPIB and its counterparties is disclosed in Note 5(D).

In the case of the securities lending program, PSPIB’s exposure to counterparty risk is further mitigated as the custodian of the securities lent assumes the risk that a counterparty will be unable to meet its obligations associated with the collateral requirements.

PSPIB is responsible for counterparty risk monitoring and mitigation as well as maintaining a comprehensive, disciplined, and enterprise-wide process for tracking and managing counterparty risk. As such, PSPIB measures counterparty risk on an ongoing basis, evaluates and tracks the creditworthiness of current counterparties and mitigates counterparty risk through collateral management.

(II) Offsetting

PSPIB is subject to ISDA Master Agreements in relation to its OTC derivative financial instruments as described. Such agreements contain close-out netting provisions applicable only in the case of default. In certain cases, such agreements also allow for offsetting. In cases where the conditions for offsetting were met, financial instruments have been presented net in the statement of financial position. Securities repurchase and reverse repurchase agreements, described in Notes 2(G) and 5(D) are subject to similar arrangements; however, they are not offset as the conditions for offsetting are not met.

The following tables present the financial assets and liabilities described above ($ thousands):

Table 75: Financial Assets

	Gross amount of recognized financial assets	Less: gross amount of recognized financial liabilities set off	Net amount of financial assets presented in the statement of financial position	Less: related amounts not set off in the statement of financial position
				Recognized financial liabilities	Collateral held and not recognized	Net
As at 31 March 2024
Reverse repurchase agreements	$9,333	$0	$9,333table 75 note 1	$3,184	$6,147	$2
OTC- derivatives	5,446	0	5,446table 75 note 2	3,579	1,789	78
Total	$14,779	$0	$14,779	$6,763	$7,936	$80
As at 31 March 2023
Reverse repurchase agreements	$5,282	$0	$5,282table 75 note 1	$5,045	$237	$0
OTC- derivatives	8,925	0	8,925table 75 note 2	6,366	1,898	661
Total	$14,207	$0	$14,207	$11,411	$2,135	$661
Table 75 Notes Table 75 Note 1 As described in Note 5(A) (X). Return to table 75 note 1 referrer Table 75 Note 2 As described in Note 5(B). Return to table 75 note 2 referrer

Table 76: Financial Liabilities

	Gross amount of recognized financial liabilities	Less: gross amounts of recognized financial assets set off	Net amount of financial liabilities presented in the statement of financial position	Less: related amounts not set off in the statement of financial position
				Recognized financial assets	Collateral pledged and not derecognized	Net
As at 31 March 2024
Repurchase agreements	$21,361	$0	$21,361table 76 note 1	$3,184	$18,177	$0
OTC- derivatives	3,920	0	3,920table 76 note 2	3,133	685	102
Collateral payable	495	0	495table 76 note 3	446	0	49
Total	$25,776	$0	$25,776	$6,763	$18,862	$151
As at 31 March 2023
Repurchase agreements	$38,970	$0	$38,970table 76 note 1	$5,045	$33,925	$0
OTC- derivatives	6,675	0	6,675table 76 note 2	5,937	713	25
Collateral payable	468	0	468table 76 note 3	429	0	39
Total	$46,113	$0	$46,113	$11,411	$34,638	$64
Table 76 Notes Table 76 Note 1 As described in Note 5(A) (X). Return to table 76 note 1 referrer Table 76 Note 2 As described in Note 5(B). Return to table 76 note 2 referrer Table 76 Note 3 As described in Note 5(A) (IX). The balance consists of cash collateral received with respect to certain OTC derivative transactions and is included in Note 5(A) as part of collateral payable. Return to table 76 note 3 referrer

(C) Liquidity risk

Liquidity risk corresponds to the risk that PSPIB will not be able to meet its financial obligations on a timely basis, with sufficient and readily available cash resources. PSPIB’s cash position is monitored on a daily basis. In general, investments in cash, money market securities, floating rate notes, bonds and public equities are expected to be highly liquid as they will be invested in securities that are actively traded. PSPIB utilizes appropriate measures and controls to monitor liquidity risk in order to ensure that there is sufficient liquidity to meet financial obligations as they come due. A liquidity report taking into consideration future forecasted cash flows is prepared and presented to PSPIB’s senior management on a weekly basis. This ensures that sufficient cash reserves are available to meet forecasted cash outflows. Additionally, sufficient sources of liquidity are maintained for deployment in case of market disruption.

PSPIB has the ability to raise additional capital through the use of its capital market debt program. This program allows PSPIB to issue short-term promissory notes and medium-term notes. Note 9(B) provides additional information on the usage of the capital market debt program. Furthermore, PSPIB maintains credit facilities for general corporate purposes. Note 9(A) provides additional information with respect to such credit facilities.

The terms to maturity of the notional amount of derivatives are disclosed in Note 5(B).

Financial liabilities

The following tables present the fair value of non-derivative-related financial liabilities as well as derivative-related financial instruments, aggregated according to their maturities as at 31 March 2024 ($ thousands) and excluding the impact of guarantees and indemnities disclosed in Note 20:

Table 77: As at 31 March 2024

	Less than 3 months	3 to 12 months	Over 1 year	Total
Non-derivative-related financial liabilitiestable 77 note 1
Amounts payable from pending trades	$(2,203)	$0	$0	$(2,203)
Interest payable	(577)	(96)	0	(673)
Securities sold short	(13,087)	0	0	(13,087)
Collateral payable	(2,725)	0	0	(2,725)
Securities sold under repurchase agreements	(19,982)	(1,379)	0	(21,361)
Capital market debt financingtable 77 note 2	(25,647)	(19,114)	(65,292)	(110,053)
Trade payable and other liabilities	(1,440)	(22)	(579)	(2,041)
Total	$(65,661)	$(20,611)	$(65,871)	$(152,143)
Derivative-related financial instruments
Derivative-related assets	$2,450	$1,187	$1,886	$5,523
Derivative-related liabilitiestable 77 note 1	(2,079)	(964)	(944)	(3,987)
Total	$371	$223	$942	$1,536
Table 77 Note Table 77 Note 1 Liabilities are presented in the earliest period in which the counterparty can request payment. Return to table 77 note 1 referrer Table 77 Note 2 The total undiscounted cash flows amounted to $5,888 million as at 31 March 2024. Return to table 77 note 2 referrer

The following tables present the fair value of non-derivative-related financial liabilities as well as derivative-related financial instruments, aggregated according to their maturities as at 31 March 2023 ($ thousands) and excluding the impact of guarantees and indemnities disclosed in Note 20:

Table 78: As at 31 March 2023

	Less than 3 months	3 to 12 months	Over 1 year	Total
Non-derivative-related financial liabilitiestable 78 note 1
Amounts payable from pending trades	$(4,455)	$0	$0	$(4,455)
Interest payable	(433)	(48)	0	(481)
Securities sold short	(10,308)	0	0	(10,308)
Collateral payable	(3,954)	0	0	(3,954)
Securities sold under repurchase agreements	(36,239)	(2,731)	0	(38,970)
Capital market debt financingtable 79 note 2	(15,450)	(20,049)	(63,823)	(99,322)
Trade payable and other liabilities	(1,540)	(18)	(602)	(2,160)
Total	$(72,379)	$(22,846)	$(64,425)	$(159,650)
Derivative-related financial instruments
Derivative-related assets	$4,987	$2,570	$1,528	$9,085
Derivative-related liabilitiestable 78 note 1	(3,803)	(2,115)	(835)	(6,753)
Total	$1,184	$455	$693	$2,332
Table 78 Note Table 78 Note 1 Liabilities are presented in the earliest period in which the counterparty can request payment. Return to table 78 note 1 referrer Table 78 Note 2 The total undiscounted cash flows amounted to $110,973 thousand as at 31 March 2023. Return to table 78 note 2 referrer

(8) Contributions Receivable

Table 79: The contributions receivable as at 31 March are as follows ($ thousands):

	2024	2023
Contributions receivable from plan members for past service	$9,644	$12,684
Contributions receivable from employer for past service	9,644	12,684
Total contributions receivable	$19,288	$25,368

9. Borrowings

(A) Credit facilities

PSPIB maintains a revolving credit facility in the amount of $2 billion and a demand line of credit in the amount of $1 billion (together “the credit facilities”).

The credit facilities are for general corporate purposes and are available in either Canadian or U.S. currencies. Subject to customary terms and conditions, these credit facilities are available at variable interest rates such as the prime rate and the U.S. base rate.

These credit facilities were not drawn upon as at 31 March 2024, and 31 March 2023.

(B) Capital market debt financing

PSPIB’s capital market debt program consists of the private placement of short-term promissory notes as well as medium-term notes issued by PSP Capital Inc., a wholly-owned subsidiary of PSPIB. The capital raised is primarily used to finance private market investments. It is unconditionally and irrevocably guaranteed by PSPIB in accordance with its corporate leverage policy.

The maximum amount authorized by PSPIB’s Board of Directors for the capital market debt program is limited to $12 billion for all aggregate short-term note programs, 6 billion Australian dollars for the Australian dollar-denominated medium-term note program and $20 billion for the medium-term note program.

PSPIB’s capital market debt financing was in compliance with the limits authorized by PSPIB’s Board of Directors during the years ended 31 March 2024, and 31 March 2023.

Table 80: The following outlines the terms as well as the fair value of the short-term notes issued under the capital market debt program allocated to the pension plan as at 31 March ($ thousands):

		2024			2023
Currency	Term at issuance	Interest Rate (%)	Capital amounts payable at maturity	Fair value	Interest rate (%)	Capital amounts payable at maturity	Fair value
CAD	180 days or less	0	$0	$0	4.41—4.44	$165	$165
USD	365 days or less	4.73—5.49	22,421	22,117	2.40—5.56	29,895	29,571
EUR	215 days or less	3.85—3.93	2,917	2,893	0	0	0
GBP	245 days or less	5.18—5.24	2,138	2,123	0	0	0
AUD	79 days or less	4.28	540	537	0	0	0
Total short-term notes			$28,016	$27,670		$30,060	$29,736

Table 81: The following outlines the terms as well as the fair value of the medium-term notes issued under the capital market debt program allocated to the pension plan as at 31 March ($ thousands):

						2024				2023
Maturity	Series	Currency		Interest Rate		Capital Amounts Payable at Maturity		Fair Value		Capital Amounts Payable at Maturity		Fair Value
November 2023	9	CAD		2.09%		$0		$0		$5,850		$5,763
April 2024	7	CAD		3.29%		4,835		4,835		5,430		5,374
September 2024	G2	USD		0.50%		6,892		6,742		6,989		6,595
March 2025	G5	USD		SOFRtable 83 note 1+24 bps		5,514		5,514		5,591		5,571
November 2025	11	CAD		3.00%		4,727		4,623		5,164		5,063
June 2026	13	CAD		0.90%		5,798		5,395		5,970		5,484
June 2026	G1	USD		1.00%		5,514		5,076		5,591		5,061
June 2027	G6	USD		3.50%		5,514		5,332		5,591		5,461
March 2028	14	CAD		1.50%		3,973		3,625		4,131		3,764
October 2028	G3	USD		1.63%		5,514		4,866		5,591		4,925
February 2029	A1	AUD		4.63%		5,396		5,441		0		0
June 2029	G8	CAD		3.75%		5,704		5,669		5,742		5,824
January 2030	12	CAD		2.05%		5,093		4,605		5,106		4,657
December 2030	G13table 83 note 2	CAD		4.40%		4,075		4,178		0		0
March 2032	G4table 83 note 2	CAD		2.60%		4,075		3,660		4,131		3,802
August 2032	G7	AUD		4.57%		827		815		861		859
January 2033	G9	AUD		4.82%		719		719		749		759
June 2033	G11	CAD		4.15%		10,186		10,187		0		0
March 2038	G10	EUR		3.68%		596		626		607		624
July 2043	G12	EUR		3.68%		$447		$475		$0		$0
Total medium-term notes						$85,399		$82,383		$73,094		$69,586
Total capital market debt financing						$113,415		$110,053		$103,154		$99,322
Table 81 Notes Table 81 Note 1 Secured overnight financing rate. Return to table 81 note 1 referrer Table 81 Note 2 Green bonds. Return to table 81 note 2 referrer

Unrealized losses in connection with borrowings amounted to $166 thousand for the year ended 31 March 2024 (unrealized losses of $1,075 thousand for the year ended 31 March 2023).

Table 82: Interest expense, for the years ended 31 March was as follows ($ thousands):

	2024	2023
Short-term promissory notes	$1,484	$919
Medium-term notes	2,097	1,375
Total	$3,581	$2,294

(C) Reconciliation of liabilities arising from financing activities

The following provides a reconciliation of liabilities arising from financing activities, including both changes arising from cash and non-cash changes.

Table 83: For the year ended 31 March 2024 ($ thousands):

	Opening balance	Proceeds from borrowings	Repayment of borrowings	Non-cash changes		Closing balance
				Foreign exchange gains	Fair valuetable 83 note 1 losses
Capital market debt financing	$99,322	$129,047	$(118,442)	$(403)	$529	$110,053
Borrowings	$99,322	$129,047	$(118,442)	$(403)	$529	$110,053
Table 83 Note Table 83 Note 1 Includes interest on short-term promissory notes, which added to cost approximates their fair value. Return to table 83 note 1 referrer

Table 84: For the year ended 31 March 2023 ($ thousands):

	Opening balance	Proceeds from borrowings	Repayment of borrowings	Non-cash changes		Closing balance
				Foreign exchange losses	Fair value table 84 note 1 gains
Capital market debt financing	$94,976	$117,211	$(114,274)	$2,482	$(1,073)	$99,322
Borrowings	$94,976	$117,211	$(114,274)	$2,482	$(1,073)	$99,322
Table 84 Note Table 84 Note 1 Includes interest on short-term promissory notes, which added to cost approximates their fair value. Return to table 84 note 1 referrer

10. Related Party Transactions

(A) Certain investees

Transactions between PSPIB and its unconsolidated subsidiaries, jointly controlled investees and associates or subsidiaries of such entities are related party transactions. PSPIB enters into investment transactions with such related parties in the normal course of its business, more specifically, as part of private markets and certain fixed income investments described under Note 5(A) as well as guarantees, indemnities and commitments described under Notes 20 and 21, respectively. Since balances in connection with all investment transactions are measured at FVTPL, those transactions undertaken with related parties have the same impact on net assets available for benefits as those with unrelated parties.

Transactions between PSPIB and its consolidated subsidiaries, as well as related balances, are eliminated upon consolidation and, therefore, are not disclosed in this note.

(B) Government-related entities

Since PSPIB is a Crown corporation, it is considered to be a government-related entity. Other entities that are controlled, jointly controlled or significantly influenced by the government are also considered government-related entities.

PSPIB may enter into investment transactions with government-related entities in the normal course of its business, more specifically, as part of private markets and certain fixed income investments described under Note 5(A). Such investment transactions are carried out on terms that are equivalent to those that may prevail in transactions with unrelated parties and are subject to the same internal processes. In this respect, transactions with such related parties have the same impact on the net assets available for benefits as those with unrelated parties. Consequently, PSPIB is availing itself of the exemption under IAS 24 Related Parties from making specific disclosures on transactions and balances with such government-related entities.

Transactions between the Canadian Forces Pension Plan and the Reserve Force Pension Plan are disclosed in Note 4.

11. Capital management

PSPIB manages the pension plan’s investments. PSPIB’s investment objectives are:

• To invest fund transfers in the best interests of the beneficiaries and contributors under the CFSA. The funds received are invested with a view of achieving a maximum rate of return, without undue risk of loss, having regard to the funding, policies and requirements of the pension plan established under the CFSA and the ability of the pension plan to meet its financial obligations. The funds are also invested in accordance with PSPIB’s Investment Risk Management policies outlined in Note 7
• To maintain an appropriate credit rating to achieve access to the capital markets at the lowest cost of capital. Through PSP Capital Inc. and its leverage policies, PSPIB has the ability to raise capital by issuing short-term promissory notes and medium-term notes. Note 9(B) provides information on the capital market debt financing, and Note 7(C) provides information on PSPIB’s liquidity

The pension plan’s capital consists of the actuarial funding surplus or deficit determined regularly by the actuarial funding valuation prepared by the OCA. The purpose of this actuarial valuation is to determine the financial position of the pension plan by testing its ability to meet obligations to current plan members and their survivors. Using various assumptions, the OCA projects the future pension benefits to estimate the current value of the pension obligations on a funding basis, which is compared with the sum of: the investment assets held by PSPIB (net of investment-related liabilities and borrowings), including their projected earnings; and the discounted value of future plan member and government contributions, including future earnings on contributions. The result of this comparison is either an actuarial surplus or an actuarial deficit.

The objective of managing the capital position of the pension plan is to ensure that the investments held by PSPIB are sufficient to meet the related future pension obligations.

12. Pension obligations

The OCA performs an actuarial valuation for accounting purposes as at 31 March of each fiscal year to measure and report the pension obligations, and to attribute the costs of the benefits to the period using the projected benefit method prorated on service.

The assumptions used in the actuarial valuation are based on management’s best estimates of expected long-term experience and short-term forecasts, as well as the majority of the demographic assumptions underlying the triennial actuarial valuation for funding purposes of the pension plan, as at 31 March 2022. The assumptions include estimates of discount rates, future inflation, returns on investments, general wage increases, workforce composition, retirement rates and mortality rates.

The discount rate used to measure the present value of the accrued pension benefit is the streamed expected rates of return on invested funds.

Table 85: The principal actuarial assumptions used in measuring the pension obligations were as follows as at 31 March:

	2024 (%)	2023 (%)
Discount rates	6.1	6.0
Long-term rate of inflation	2.0	2.0
Long-term general wage increase	2.5	2.6
1. In regard to pension benefits, the streamed discount rate used to measure the pension obligations is equivalent to the flat discount presented in the table. The ultimate discount rate is expected to reach 6.1% by 2032 (6.0% by 2033 in 2023).

For the year ended 31 March 2024, the pension plan recorded total net gains of $275,303 thousand (total net loss of $30,530 thousand in 2023) consisting of gains of $83,788 thousand due to changes in actuarial assumptions (gains of $40,508 thousand in 2023), gains due to experience of $191,515 thousand (nil in 2023) and no losses (net losses of $71,038 thousand in 2023) due to experience.

13. Surplus / Deficit

The financial statement surplus or deficit does not impact the benefit payments to plan members because the government has a statutory obligation to pay the pension benefits it sponsors. Pursuant to pension legislation, the pension benefit transactions are tracked in the pension accounts within the accounts of Canada.

The pension plan is financed from employee and employer contributions, as well as from investment earnings. Pension benefits relate to service that falls within the Income Tax Act limits. An amount equal to contributions less benefit payments and other charges is invested by PSPIB.

14. Investment income

The investment income of the pension plan is presented for each major class of financial assets and liabilities and is comprised of two categories: interest and dividends, and net unrealized and realized gains (losses). This presentation reflects the substance of the investment income generated by the underlying investments, whether directly held by PSPIB or by its investment entity subsidiaries.

Table 86: The investment income of the pension plan consists of the following for the years ended 31 March ($ thousands):

	2024			2023
	Interest and dividends	Change in fair valuetable 86 note 1	Total investment Income	Interest and dividends	Change in fair valuetable 86 note 1	Total investment income
Public markets	$4,421	$26,052table 86 note 2	$30,473	$4,799	$(7,075)table 86 note 2	$(2,276)
Private markets
Real estate	2,359	(20,768)table 86 note 2	(18,409)	2,142	(1,168)table 86 note 2	974
Private equity	1,934	16,232table 86 note 2	18,166	656	4,757table 86 note 2	5,413
Infrastructure	3,709	15,978table 86 note 2	19,687	3,458	16,473table 86 note 2	19,931
Natural resources	1,209	1,530table 86 note 2	2,739	1,782	3,795table 86 note 2	5,577
Fixed income	18,755	1,203table 86 note 2	19,958	14,096	2,229table 86 note 2	16,325
Alternative investments	57	9,652	9,709	61	8,217	8,278
Total before giving effect to investment-related assets and liabilities	$32,444	$49,879	$82,323	$26,994	$27,228	$54,222
Investment-related assets and liabilities	$230	$1,171	$1,401	$218	$(931)	$(713)
Capital market debt financing	$0	$(176)	$(176)	$0	$(3,174)	$(3,174)
Investment income	$32,674	$50,874	$83,548	$27,212	$23,123	$50,335
Table 86 Notes Table 86 Note 1 Change in fair value includes realized and unrealized gains (losses) as described in Note 2(J). Return to table 86 note 1 referrer Table 86 Note 2 As described in Note 18, investment-related expenses of $717 thousand were incurred by PSPIB’s investment-entity subsidiaries for the year ended 31 March 2024 ($262 thousand for the year ended 31 March 2023). They are presented as part of investment-related expenses in accordance with Section 4600, while they are presented as part of investment income in PSPIB’s financial statements prepared under IFRS. Return to table 86 note 2 referrer

15. Contributions

Table 87: The contributions for the years ended 31 March are as follows ($ thousands):

	2024	2023
From plan members
Current service contributions	$25,801	$21,276
Past service contributions	2,635	2,584
Change in contributions receivable	(3,040)	(1,717)
Total plan member contributions	$25,396	$22,143
From employer
Current service contributions	$60,518	$53,207
Past service contributions	2,635	2,584
Change in contributions receivable	(3,040)	(1,717)
Total employer contributions	$60,113	$54,074

16. Special employer contribution for actuarial deficit

An annual adjustment payment of $4,100 thousand was made in the fiscal year ended 31 March 2024 ($17,400 thousand at 31 March 2023), based on the actuarial valuation of the pension plan tabled in Parliament on 24 November 2023. The next triennial actuarial valuation of the pension plan as at 31 March 2025, is expected to be tabled in Parliament in 2026.

17. Benefit payments and refunds and transfers

(A) Benefit payments

Table 88: The value of benefit payments, for the years ended 31 March is as follows ($ thousands):

	2024	2023
Retirement benefit payments	$14,857	$13,204
Minimum benefit payments	207	86
Total benefit payments	$15,064	$13,290

(B) Refunds and transfers

Table 89: The value of refunds and transfers, for the years ended 31 March is as follows ($ thousands):

	2024	2023
Returns of contributions and transfer value payments	$13,048	$15,762
Transfers to the Public Service Pension Plan	32	0
Transfers to the Canadian Forces Pension Plan	45,208	75,002
Total refunds and transfers	$58,288	$90,764

18. Investment—related expenses

Table 90: Investment-related expenses allocated to the pension plan are comprised of the following for the years ended 31 March ($ thousands):

	2024	2023
Interest expense	$5,527	$3,338
Transaction costs	646	577
External investment management feestable 90 note 1	223	272
Other (net)table 90 note 2	1,508	887
Total	$7,904	$5,074
Table 90 Notes Table 90 Note 1 Consists of amounts incurred for investments in public markets that are paid directly by PSPIB. Other fees are paid by certain pooled fund investments classified under alternative investments which amounted to $1,315 thousand for the year ended 31 March 2024 ($802 thousand for the year ended 31 March 2023). Such fees are embedded in the fair value of the funds. Similarly, management fees related to investments in private markets and private debt securities are not paid directly by PSPIB. Such fees, which generally vary between 0.2% and 2.5% of the total invested and/or committed amount, totaled $2,391 thousand for the year ended 31 March 2024 ($2,436 thousand for the year ended 31 March 2023). Such fees are embedded in the fair value of investments. Return to table 90 note 1 referrer Table 90 Note 2 Investment-related expenses of $717 thousand were incurred by PSPIB’s investment entity subsidiaries for the year ended 31 March 2024 ($262 thousand were incurred for the year ended 31 March 2023). They are presented as part of investment-related expenses in accordance with Section 4600, while they are presented as part of investment income in the PSPIB’s financial statements prepared under IFRS. Return to table 90 note 2 referrer

19. Administrative expenses

The legislation provides for administrative expenses to be charged to the pension plan. The Treasury Board approves the administrative expenses chargeable to the pension plan.

PSPC, as the day-to-day administrator, recovers from the pension plan administrative expenses for the activities directly attributable to its administration. These costs include salaries and benefits, systems maintenance and development, accommodation, and other operating costs of administering the pension plan within the department.

DND, as the program manager of the pension plan, provides policy interpretation support, information to plan members, financing and funding services and support to the Pension Advisory Committee, and charges its administrative costs to the pension plan.

The OCA provides actuarial valuation services. The costs related to these services are charged to the pension plan.

PSPIB’s costs of operation are charged to the four plans for which PSPIB provides investment services, namely, the public service pension plan, the Canadian Forces Pension Plan, the Reserve Force Pension Plan and the Royal Canadian Mounted Police pension plan. PSPIB allocates the direct costs of investment activities, such as external investment management fees and custodial fees that are included in each pension plan’s administrative expenses, based upon the net investments of each pension plan at the time the expense was incurred.

In 2024, 0.4% of PSPIB’s costs of operation were allocated to the Reserve Force Pension Plan (0.4% in 2023) as plan-related administrative expenses, such as salaries and employee benefits, operations and maintenance, professional and consulting fees, and other operating fees.

Table 91: Administrative expenses, for the years ended 31 March, consist of the following ($ thousands):

	2024	2023
PSPC
Salaries and employee benefits	$4,263	$3,692table 91 note 1
Operation and maintenance	1,771	1,805table 91 note 1
PSPC Total	$6,034	$5,496
DND
Salaries and employee benefits	$460	$434
Operation and maintenance	166	156
DND Total	$626	$590
OCA—Actuarial fees	$143	$222
Total for government departments (included in the service cost)	$6,803	$6,308
PSPIB
Salaries and employee benefits	$1,850	$1,917
Operation and maintenance	572	611
Professional and consulting fees	471	574
PSPIB Total	$2,893	$3,102
Total administrative expenses	$9,696	$9,410
Table 91 Note Table 91 Note 1 Comparative figures were reclassified to conform to the current year’s presentation. Return to table 91 note 1 referrer

20. Guarantees and indemnities

PSPIB provides indemnification to its directors, its officers, its employees and to certain PSPIB representatives asked to serve as directors or officers of entities in which PSPIB or its investment entity subsidiaries have made an investment or have a financial interest. As a result, but subject to the Public Sector Pension Investment Board Act, PSPIB may be required to indemnify these representatives for costs incurred, such as claims, actions or litigation in connection with the exercise of their duties, unless the liability of such a representative relates to a failure to act honestly and in good faith. To date, PSPIB has not received any claims or made any payment for such indemnities.

In certain cases, PSPIB also provides indemnification to third parties in the normal course of business. As a result, PSPIB may be required to indemnify such third parties in connection with the performance of their contractual obligations. To date, PSPIB has not received any claims nor made any payments for such indemnities.

PSPIB unconditionally and irrevocably guarantees all credit facilities, as well as short-term promissory notes and medium-term notes issued by PSP Capital Inc., as described in Note 9.

In certain investment transactions, PSPIB and its investment entity subsidiaries provided guarantees, indemnifications or issued letters of credit to third parties, the most significant of which are as follows:

• As at 31 March 2024 and 2023, PSPIB and its investment entity subsidiaries agreed to guarantee and, in some cases, provide indemnification for the performance of certain investees under contractual agreements. The majority of these agreements are borrowing arrangements. In the event a default occurs under such agreements, which is of limited recourse in certain cases, PSPIB or its investment entity subsidiaries could assume obligations of up to $2,717 million as at 31 March 2024 ($2,643 million as at 31 March 2023), of which $11,069 thousand has been allocated to the pension plan ($10,920 thousand as at 31 March 2023) plus applicable interest and other related costs. The arrangements mature between May 2024 and June 2042 as of 31 March 2024 (between June 2023 and June 2042 as of 31 March 2023)
• Additionally, PSPIB and its investment entity subsidiaries issued letters of credit totaling $1 million as at 31 March 2024 ($1 million as at 31 March 2023), of which $4 thousand has been allocated to the pension plan ($3 thousand as at 31 March 2023) in relation to investment transactions

21. Commitments

PSPIB and its investment entity subsidiaries have committed to enter into investment transactions, which will be funded over the next several years in accordance with agreed terms and conditions.

Table 92: The portion of PSPIB’s commitments that would be assumed by the pension plan was as follows as at 31 March ($ thousands):

	2024	2023
Foreign equity	$12	$12
Real estate	15,716	18,936
Private equity	46,344	54,323
Infrastructure	16,256	24,389
Natural resources	1,957	2,781
Private debt securities	35,221	28,764
Alternative investments	6,345	8,456
Total	$121,851	$137,661

Funding in connection with the above commitments can be called upon at various dates extending until 2041 as at 31 March 2024 (until 2041 as at 31 March 2023).

Account Transaction Statements

Canadian Forces Superannuation Account

(Unaudited)

The Canadian Forces Superannuation Account records contributions received, benefits paid, and other transactions for members under Part I of the Canadian Forces Superannuation Act for service prior to April 1, 2000. The balance of the account is credited with interest as if the balance were invested in long-term government bonds. This account is no longer presented as an asset for pension plan reporting purposes.

Table 93: The following table provides information on the transactions in the account for the years ended March 31:

	2024	2023
Opening Balance	$44,157,882,558	$45,302,621,656
Receipts and other credits
Member contributions	1,778,734	1,943,694
Employer contributions	1,778,734	1,943,694
Actuarial Adjustment	3,298,000,000	0
Transfers from other pension funds	0	(27,041)
Interest	1,330,681,026	1,404,822,448
Repayment of annuity	260,865	416,243
Total receipts and other credits	$4,632,499,359	$1,409,099,038
Payments and other charges
Annuities	$2,603,553,563	$2,524,569,574
Minimum benefit payments	387,470	381,733
Pension benefit division payments	10,297,279	12,291,166
Return of contributions	0	5,855
Interest on return of contributions	0	133
Transfer value	5,135	387,588
Administrative expenses	6,426,209	16,262,087
Total payments and other charges	$2,620,669,656	$2,553,898,136
Closing balance	$46,169,652,261	$44,157,822,558

Canadian Forces Pension Fund Account

(unaudited)

The Canadian Forces Pension Fund Account records contributions received, benefits paid, and other transactions for members under Part I of the Canadian Forces Superannuation Act for service after 31 March 2000. The net contributions are transferred to the Public Sector Pension Investment Board for investment on a monthly basis.

Table 94: The following table provides information on the transactions in the account for the years ended 31 March:

	2024	2023
Opening Balance	$25,027,599	$(44,282,772)
Receipts and other credits
Member contributions	$662,964,198	$556,570,765
Employer contributions	1,060,048,956	911,477,803
Transfers from other pension funds	363,355	229,224
Rollovers from RFPF	6,163,431	73,433,781
Repayment of annuity	504,495	487,013
Total receipts and other credits	$1,730,044,435	$1,542,198,586
Payments and other charges
Annuities	$1,202,323,444	$1,070,377,219
Minimum benefit payments	2,177,371	1,898,253
Pension division payments	32,420,462	37,227,798
Pension transfer value	123,833,368	201,579,270
Return of contributions	1,804,192	1,873,549
Transfers to other pension funds	1,113,376	981,337
Administrative expenses	38,231,256	23,950,789
Total payments and other charges	$1,401,903,469	$1,337,888,215
Transfers to PSPIB	313,027,599	135,000,000
Closing balance	$40,140,966	$25,027,599

Reserve Forces Pension Plan account

(unaudited)

The Reserve Force Pension Fund Account records contributions received, benefits paid, and other transactions for members under Part I.1 of the Canadian Forces Superannuation Act. The net contributions are transferred to the Public Sector Pension Investment Board for investment on a monthly basis.

Table 95: The following table provides information on the transactions in the account for the years ended March 31:

	2024	2023
Opening Balance	$(110,498,465)	$(98,754,921)
Receipts and other credits
Member contributions	$28,435,887	$23,859,917
Employer contributions	63,153,293	55,791,151
Actuarial Adjustments	4,100,000	17,400,000
Total receipts and other credits	$95,689,180	$97,051,068
Payments and other charges
Annuities	$14,856,756	$13,203,923
Minimum benefit payments	207,080	86,482
Pension transfer value payment	12,857,464	15,499,113
Return of contributions	190,391	263,045
Transfers to CFPF	6,163,431	73,433,782
Transfers to other pension funds	32,089	0
Administrative expenses	6,803,085	6,308,267
Total payments and other charges	$41,110,296	$108,794,612
Closing balance	$(55,919,581)	$(110,498,465)

Retirement Compensation Arrangement Account

(unaudited)

The Retirement Compensation Arrangement (RCA) Account has been established under the authority of the Special Retirement Arrangements Act to provide supplementary benefits to certain pension plan members. The RCA account provides for benefits in excess of those permitted under the Income Tax Act restrictions for registered pension plans. In order to contribute to the RCA, a member must earn in excess of $202,000 during the calendar year 2024 ($196,200 in 2023). This account is discussed in Note 21 of the Financial Statements of the Canadian Forces Pension Plan.

Table 96: The following table provides information on the transactions in the account for the years ended March 31:

	2024	2023
Opening Balance	$514,800,276	$498,611,344
Receipts and other credits
Member contributions	$6,146,852	$4,520,201
Employer contributions	38,005,999	28,091,137
Interest	16,188,227	16,036,171
Total receipts and other credits	$60,341,078	$48,647,509
Payments and other charges
Annuities	$15,303,664	$13,967,341
Pension division payments	1,182,762	$435,173
Return of contributions	35	0
Pension transfer value payments	1,682,224	809,238
Refundable tax	20,208,142	17,246,825
Total payments and other charges	$38,376,827	$32,458,577
Closing balance	$536,764,527	$514,800,276

Supplemental Death Benefit account

(unaudited)

Decreasing term life insurance benefit equal to twice the annual salary is provided to pension plan members. Coverage decreases by 10 per cent per year starting at age 61, and a minimum amount of coverage of $5,000 is provided at no cost to the pension plan member at age 65 for pension plan members entitled to an immediate annuity, and is maintained for life.

Table 97: The following table provides information on the transactions in the account for the years ended March 31.

	2024	2023
Opening Balance	$166,641,508	$169,611,141
Receipts and other credits
Member contributions	$21,318,424	$19,925,899
Employer contributionstable 97 note 1	3,115,647	2,950,202
Interest	5,012,542	5,308,916
Total receipts and other credits	$29,446,613	$28,185,017
Payments and other charges
Benefits payments	$34,421,156	$31,154,650
Total payments and other charges	$34,421,156	$31,154,650
Closing balance	$161,666,965	$166,641,508
Table 97 Note Table 97 Note 1 Where a single premium has not been paid, government contributions are one-twelfth of benefits paid. Return to table 97 note 1 referrer

Glossary

Actuarial assumptions:

estimates used by actuaries of rates of return on pension plan assets, retirement age, mortality rates, future salary levels, and other factors when carrying out an actuarial valuation.

Actuarial valuation:

an actuarial report that provides information on the financial condition of a pension plan such that the future contribution of the pension scheme and its funding level can be clearly understood.

Annual allowance:

an annuity that is reduced because it is taken before eligibility for an immediate annuity. In the Canadian Forces Pension Plan, a plan member is eligible for a reduced pension when they are age 50 or older, with at least two years of pensionable service. This type of benefit is only an option when the member is not eligible for an immediate annuity.

Annuities

Immediate annuity:

benefit payable to pension plan members who retire at any time after reaching sufficient number of years of pensionable service or CAF service; it is calculated according to the following basic pension formula:

Canadian Forces Pension Plan:

• 2 % times
• Number of years of pensionable service (maximum 35 years) times
• Average salary for the 5 consecutive years of highest-paid service

Reserve Force Pension Plan:

• 1.5 % times
• Total pensionable service

Deferred annuity:

benefit available to certain pension plan members who retire before they qualify for an immediate annuity; this benefit is calculated using the same formula as an immediate annuity, but payment of an unreduced annuity is deferred until age 60 (a reduced annuity, or annual allowance, may be taken after age 50).

Asset backed term note (ABTN):

long-term notes that are secured by a pool of assets such as real estate, auto loans, or other commercial assets.

Asset backed commercial paper (ABCP):

short-term corporate securities, typically with a maturity of less than one year, issued by a bank or other conduit, which are backed by assets such as real estate, auto loans, or other commercial assets.

Benefits earned:

the cost of benefits for service provided by members during the fiscal year.

Benchmark:

a standard against which rates of return can be measured, such as stock and bond market indexes developed by stock exchanges and investment dealers.

Canada Pension Plan (CPP):

a mandatory earnings-related pension plan implemented 1 January 1966, to provide basic retirement income to Canadians between the ages of 18 and 70 who work in all the provinces and territories, except in the province of Québec, where the QPP is operated for persons who work in that province.

Canadian Forces Pension Fund Account:

an account established to record transactions relating to service provided by members on or after 31 March 2000.

Canadian Forces Superannuation Account:

an account established by the Canadian Forces Superannuation Act to record transactions relating to service prior to 1 April 2000.

Canadian Forces Superannuation Act:

the legislation that provides pensions for members of the Canadian Forces.

Cash equivalents:

short-term, highly liquid securities (e.g. commercial papers, treasury bills, demand notes) with a term to maturity of less than one year from the date of issue; these investments are relatively easy to convert into cash.

Children’s annual allowance:

dependent children who are under age 18 or children between 18 and 25 may receive allowances if they are enrolled in school or other educational institution full-time (s. 18 of the Canadian Forces Superannuation Regulations, s. 25 of the Canadian Forces Superannuation Act and s. 68 of the Reserve Force Pension Regulations). The allowance is equal to a fraction of the pension plan member's pension for each eligible dependent child, to a specified maximum. The fractions and limits are set out, by pension plan, in the Canadian Forces Superannuation Regulations and the Reserve Force Pension Regulations.

Collateralized debt obligations (CDOs):

a type of asset backed security that is constructed from a portfolio of fixed-income assets. CDOs are usually divided into several risk levels and corresponding interest payments. Any losses are applied first to the lowest risk ratings, before moving up in seniority.

Coming into Force (CIF):

a term for 1 March 2007, when amendments to the Canadian Forces Superannuation Act and new regulations under Pension Modernization became effective. The term is also often used to describe the system, process, and organizational changes that were made at that time to support the new legislation.

Consumer Price Index (CPI):

a measure of price changes produced by Statistics Canada on a monthly basis. The CPI measures the retail prices of a "shopping basket" of about 300 goods and services including food, housing, transportation, clothing, and recreation. The index is "weighted," meaning that it gives greater importance to price changes for some products than others—more to housing, for example, than to entertainment—in an effort to reflect typical spending patterns. Increases in the CPI are also referred to as increases in the cost of living.

Contributions:

a sum paid by the employer (Government of Canada) and Canadian Armed Forces members to fund future retirement benefits; each year, the government, as the employer, contributes amounts sufficient to fund the future benefits earned by members in respect of that year, as determined by the President of the Treasury Board.

Contributions receivable:

amount owing to the pension plan in respect of service provided by members up to the date of the financial statements.

Currency risk:

the risk that the value of investments purchased in foreign currency will fluctuate due to changes in exchange rates.

Defined benefit pension plan:

a type of registered pension plan that promises a certain level of pension, usually based on the pension plan member's salary and years of service; the Canadian Forces Pension Plan and the Reserve Force Pension Plan are defined benefit pension plans.

Derivatives:

financial contracts that derive their value from an underlying asset or index, such as an interest rate or foreign currency exchange rate. Derivatives can be less expensive and easier to acquire than the underlying assets. They can be used to manage risk, reduce cost, and enhance returns.

Elective service:

any period of qualifying employment, either in the Canadian Forces Reserve Forces, Public Service, or Royal Canadian Mounted Police that occurred before the employee became a contributor to either the Canadian Forces Pension Plan or Reserve Force Pension Plan; under certain conditions, the pension plan member may be able to count these periods of prior service as pensionable service.

Excess (shortfall):

the financial status of the pension plan; a positive amount indicates that the pension plan’s assets available for benefits exceed pension obligations, while a negative amount means that pension obligations exceed net assets available for benefits.

Experience gains and losses:

the difference between what has occurred and what was anticipated in the actuarial valuations.

Foreign currency risk:

the risk that an investment’s value will be affected by changes in exchange rates. International investments cause investors to face the risk of currency fluctuations.

Indexation:

automatic adjustment of pensions in accordance with changes in the Consumer Price Index in order to maintain their purchasing power.

Minimum benefit:

a benefit equal to the payment of the Canadian Forces Pension Plan member's pension for a period of five years; if the Canadian Forces Pension Plan member or his or her eligible survivors have not received, in total, pension payments equal to five times the amount of the Canadian Forces Pension Plan member's annual basic pension, the balance in the form of a lump sum becomes payable to his or her designated beneficiary or, if none, to his or her estate. Minimum benefits under the Reserve Force pension plan are subject to the provisions of the Reserve Force Pension Regulations.

Net assets available for benefits:

the cash, receivables, investments, and other accounts net of liabilities available for benefits expected to be paid in the future; for the purposes of this definition, the pension plan's liabilities do not include accrued pension benefits.

Past service:

service provided by members prior to the start of the current fiscal year.

Pensionable service:

periods upon which the plan member’s lifetime retirement benefits are based, including any periods of elective service, regardless of whether he or she has paid fully for those service periods.

Pension obligations:

the present value of benefits earned by members under the pension plan for pensionable service to date.

Public Sector Pension Investment Board:

a crown corporation established on 1 April 2000, under the Public Sector Pension Investment Board Act whose mandate is to invest the employer's and employees' pension contributions for the four major public sector pension plans in the financial markets.

Québec Pension Plan (QPP):

a pension plan, similar to the Canada Pension Plan, that covers persons working in the province of Québec, which is administered by the Régie des rentes du Québec.

Return of contributions:

benefit available to certain pension plan members who retire before reaching sufficient number of years of pensionable service to qualify for an immediate or deferred annuity under the Canadian Forces Pension Plan; it comprises employee contributions, plus interest if applicable.

Standard and Poor’s (S&P)/Toronto Stock Exchange (TSX) Equity Index:

the most diversified Canadian market index representing almost 90 per cent of the capitalization of Canadian-based companies listed on the TSX, excluding income trusts. A committee of the TSX and S&P selects companies for inclusion in the S&P/TSX Equity Index.

S&P 500 Composite Index:

a U.S. index consisting of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market-value-weighted index (stock price times number of shares outstanding), with each stock's weight in the index proportionate to its market value; the Standard and Poor's Company selects stocks for inclusion in the index.

Statement of Investment Policies, Standards and Procedures (“Policy” or SIP&P):

a written investment policy approved by the Public Service Pension Investment Board’s Board of Directors, and reviewed at least annually, relating to each pension plan fund. It addresses matters such as categories of investments; use of derivative products; asset diversification and expected investment returns; management of credit, market, and other financial risks; liquidity of investments; lending of cash and securities; evaluation of investments that are not regularly traded on a public exchange; and the exercise of any voting rights that PSPIB has on behalf of the pension plans through its investments.

Supplementary death benefit:

decreasing term life insurance benefit equal to twice the annual salary of the pension plan member; coverage decreases by 10 per cent per year starting at age 61; a minimum amount of coverage ($5,000) is provided at no cost to the pension plan member at age 65 for pension plan members entitled to an immediate annuity, and is maintained for life.

Survivor:

the person of the same or opposite sex who, at the time of the contributor's death and before his or her retirement:

• was married to the contributor (pension plan member) when the contributor reach age 60; or
• was cohabitating in a relationship of a conjugal nature with the contributor for at least one year and, if the contributor was over age 60, had cohabited continuously with the contributor since before the contributor reached age 60

Survivor allowance:

a pension benefit that is paid to the spouse of a pension plan member who dies. Under the Canadian Forces Pension Plan, the benefit is payable when the pension plan member has two or more years of service.

Transfer value:

the present value of a pension plan member’s earned pension in today’s dollars, payable as a lump-sum if the member is under age 50 with two or more years of service. The calculation is based on a set of actuarial assumptions which include economic and demographic assumptions. The value represents the amount of money that will need to be invested today in order to receive payment equivalent to their deferred annuity at age 60.

Value-at-Risk (VaR):

a method used to measure market risk. VaR is the maximum loss not exceeded within a given probability (defined as the “confidence level”), over a given period of time.

Year's Maximum Pensionable Earnings (YMPE):

the maximum amount of earnings that the Government sets each year and uses to calculate contributions and pensions under the Canada Pension Plan/Québec Pension Plan. Annual changes to this amount are based on increases in the average Canadian wages.

Contact Information

Canadian Armed Forces Pension Centre

Telephone

1-800-267-0325

Monday to Friday

7 am to 5 pm (Eastern time)

Outside Canada and the United States

613-946-1093 (collect calls accepted)

Monday to Friday 8:00 am to 4:00 pm (Eastern time)

In writing

Public Services and Procurement Canada

Government of Canada Pension Centre—Mail Facility

PO Box 9500

Matane QC G4W 0H3

Note: Always include your pension number or service number when writing to us.

Directorate of Pensions and Social Programs (Department of National Defence) (DND Internal only)

Public Service Pension Investment Board

Treasury Board of Canada

Office of the Superintendent of Financial Institutions Canada