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Canadian Armed Forces Pension Plans Annual Report for the Fiscal Year ended 31 March 2025

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

Major General Martin Gros-Jean

I am pleased to present the Annual Report on the Canadian Armed Forces Pension Plans for the fiscal year ended 31 March 2025. This report provides plan members, parliamentarians, and the Canadian public with information on the governance, administration, and financial results of the plans during the reporting period.

The Canadian Armed Forces (CAF) pension plans are jointly funded by CAF members and the Government of Canada and are designed to support retirement income security for eligible members. The pension plans represent a key component of the CAF total compensation framework and, in conjunction with personal savings, investments, and statutory benefits provided under the Canada Pension Plan (CPP), Québec Pension Plan (QPP), and Old Age Security, contribute to the financial stability of members in retirement.

As Chair of the Canadian Forces Pension Advisory Committee (CFPAC), I provide oversight and advice related to the administration and policy framework of the CAF pension plans, with a focus on effective governance, risk management, and continuous improvement. The Department of National Defence and the CAF remain committed to supporting members throughout their careers and into retirement, including those who are ill or injured, and to recognizing the important role played by military families. The Government of Canada's ongoing investment in the CAF pension plans reflects its commitment to sound stewardship and to the long-term sustainability of these plans in support of CAF members.

On behalf of the Government of Canada, I would like to express my sincere appreciation to Canadian Armed Forces members, past and present, for their dedicated service to Canada. Their professionalism and commitment underpin the trust placed in the CAF and the continued importance of maintaining sustainable and well-managed pension plans. The Government of Canada's ongoing investment in the CAF pension plans reflects its commitment to sound stewardship and to supporting those who serve.

Major General Martin Gros-Jean signature

Major General Martin Gros-Jean

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 2025. 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 2024-2025, CFPP members contributed 9.35% of their pensionable earnings for the first nine months and 9.06% 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 12.25% for the first nine months and 11.64% for the last three months. The YMPE was $68,500 in calendar year 2024 and increased to $71,300 for calendar year 2025.

For FY 2024-2025, 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 the PSPIB to be invested in capital markets.

Fiscal year highlights

Table 1: Plan members, by type
  CFPP RFPP
Active contributors 71,547 18,897
Retired members 93,446 3,026
Deferred annuitants 8,438 12,185
Survivors receiving benefits 20,634 241
Table 2: Financial highlights
  CFPP RFPP
Net assets available for benefits ($millions) 57,321 1,119
Total Annuity Payments ($millions) 3,969 17
Average Annuity Payment per Member ($) 39,138 5,573
Death Benefits paid ($thousands) 37,886 151
Assets under investment with the PSPIB ($millions) 65,419 1,391

Investment performance

CFPP and RFPP funds are invested in private and public markets in accordance with the Public Sector Pension Investment Board Act (PSPIBA). The 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.

A graphical representation of the pension fund assets-Long description below

Image description

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

  • 26.6 percent Public Market Equities,
  • 23.7 percent Government Fixed Income,
  • 13.6 percent Private Equity,
  • 8.9 percent Real Estate,
  • 10.7 percent Infrastructure,
  • 10.1 percent Credit Investments,
  • 6.0 percent Natural Resources,
  • 0.5 percent Complementary Portfolio.

5-year average benchmark rate of return

The investment gain reflects a consolidated 5-year net annual rate of return of 10.6% in FY 2024-2025. 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 2025 Annual Report of the PSPIB .

A bar graph showing the five year average rate of return as compared to the five year average benchmark rate of return from the year 2021 through 2025-Long description below

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 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.
  • For year 2025 the average rate of return was 10.6 percent compared to a 9.1 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 2025, plan administrative expenses totaled 3 million. The following table shows the breakdown (in $ thousands).
  CFPP RFPP Total
Public Services and Procurement Canada (PSPC)
Salaries and employee benefits $27,000 $4,145 $31,145
Operation and maintenance 11,496 1,759 13,255
Subtotal - PSPC $38,496 $5,904 $44,400
Department of National Defence (DND)
Salaries and employee benefits $2,905 $445 $3,350
Operation and maintenance 641 130 771
Subtotal - DND $3,546 $575 $4,121
Office of the Chief Actuary - Actuarial fees $925 $141 $1,066
Total - Government Departments $42,967 $6,620 $49,587
Public Service Pension Investment Board (PSPIB)
Salaries and employee benefits $98,000 $2,064 $100,064
Operation and maintenance 24,000 505 24,505
Professional and consulting fees 22,000 477 22,477
Other 6,000 123 6,123
Total - PSPIB $150,000 $3,169 $153,169
Total administrative expenses $192,967 $9,789 $202,756

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): The 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 the PSPIB and invested in equities, fixed income securities, real estate, private equity, and infrastructure. The relevant financial results of the 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 2025

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 2025, 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. The 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

Christiane Fox
Deputy Minister

Major General Martin Gros-Jean
Deputy Commander MILPERSCOM

Ottawa, Canada

12 February 2026

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 2025, 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 2025, 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:

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

Mimma Venema, CPA, CA, CGA
Principal
for the Auditor General of Canada

Ottawa, Canada

12 February 2026

CFPP Financial Statements

Table 4: Statement of Financial Position (Canadian $ millions)
  As at 31 March 2025 As at 31 March 2024table 4 note 1
Assets
Canadian Forces Pension Fund (Note 4) $4 $79
Cash and cash equivalents (Note 5) 483 480
Investments (Note 5) 65,419 57,330
Contributions receivable
From plan members (Note 8) 83 92
From employer (Note 8) 135 150
Transfers receivable from Reserve Force (Note 4 and Note 8) 4 59
Other assets 29 24
Total assets $66,157 $58,214
Liabilities
Accounts payable and other liabilities $111 $95
Investment-related liabilities (Note 5) 2,164 2,064
Borrowings (Note 5 and Note 9) 6,561 5,158
Total liabilities $8,836 $7,317
Net assets available for benefits $57,321 $50,897
Pension obligations
Funded (Note 12) $44,210 $41,431
Unfunded (Note 12 and Note 20) 43,977 43,956
Total pension obligations $88,187 $85,387
Deficit to be financed by the Government of Canada (Note 13) $(30,866) $(34,490)

Table 4 Note

Table 4 Note 1

Certain comparative figures have been reclassified to conform to the current year's presentation. Refer to Note 5(A) for additional information.

The accompanying notes are an integral part of these financial statements.

Return to table 4 note 1 referrer
Table 5: Statement of Changes in Net Assets Available for Benefits Year ended 31 March (Canadian $ millions)
  2025 2024
Net assets available for benefits, beginning of year $50,897 $47,111
Increase in net assets available for benefits
Investment income, excluding changes in fair values of investment assets and investment liabilities (Note 14) 1,693 1,525
Changes in fair values of investment assets and investment liabilities, realized and unrealized gains (Note 14) 5,238 2,381
Contributions
From plan members (Note 15) 614 669
From employer (Note 15) 920 1,073
Transfers from other pension plans (Note 4) 63 45
Total increase in net assets available for benefits $8,528 $5,693
Decrease in net assets available for benefits
Benefits paid with respect to service after 31 March 2000 (Note 17) $1,331 $1,204
Change in transfers receivable from Reserve Force 55 2
Refunds and transfers (Note 17) 138 159
Investment-related expenses (Note 18) 393 370
Administrative expenses (Note 19) 187 172
Total decrease in net assets available for benefits $2,104 $1,907
Net increase in net assets available for benefits $6,424 $3,786
Net assets available for benefits, end of year $57,321 $50,897

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)
  2025 Funded 2025 Unfunded 2025 Total 2024 Funded 2024 Unfunded 2024 Total
Pension obligations, beginning of year $41,431 $43,956 $85,387 $39,256 $46,838 $86,094
Increase in pension obligations
Interest on pension obligations 2,531 1,441 3,972 2,436 1,384 3,820
Benefits earned 1,494 0 1,494 1,436 0 1,436
Experience losses (Note 12) 0 0 0 260 287 547
Changes in actuarial assumptions: losses (Note 12) 240 1,339 1,579 0 0 0
Cost of new elections 17 0 17 16 0 16
Transfers from other pension plans (Note 4) 63 0 63 45 0 45
Total increase in pension obligations $4,345 $2,780 $7,125 $4,193 $1,671 $5,864
Decrease in pension obligations
Benefits paid (Note 17) $1,331 $2,638 $3,969 $1,204 $2,605 $3,809
Experience: gains (Note 12) 60 106 166 0 0 0
Changes in actuarial assumptions: gains (Note 12) 0 0 0 617 1,932 2,549
Refunds and transfers (Note 17) 138 9 147 159 10 169
Administrative expenses included in the service cost (Note 19 and Note 20) 37 6 43 38 6 44
Total decrease in pension obligations $1,566 $2,759 $4,325 $2,018 $4,553 $6,571
Net increase (decrease) in pension obligations $2,779 $21 $2,800 $2,175 $(2,882) $(707)
Pension obligations, end of year $44,210 $43,977 $88,187 $41,431 $43,956 $85,387

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, 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. The 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, the 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% (9.35% in 2024) for the first 9 months and 9.06% (9.35% in 2024) for the last 3 months of pensionable earnings, up to the maximum covered by the Canada Pension Plan (CPP) or Québec Pension Plan (QPP), and 12.25% (12.37% in 2024) for the first 9 months and 11.64% (12.25% in 2024) for the last 3 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 the 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. The pension reduction factor is coordinated with the base CPP and QPP and does not consider the enhancements that were phased-in between 2019 and 2025. Also, benefits are fully indexed to the 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.

The 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. The 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, the PSPIB's subsidiaries that are formed to hold investments or those that provide the PSPIB with services that relate to its investment activities are consolidated, since these entities are not considered investment assets. The 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 2025 were authorized for issue by the signatories on 12 February 2026.

(B) Interests in other entities

Management, through the activities of the 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 the PSPIB. The 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 the PSPIB has significant influence, as in certain cases, the 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, the 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 the PSPIB's ownership interest, other contractual arrangements, or a combination thereof.

(II) Joint control

The 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, as well as cash and cash equivalents, are managed, together with related financial liabilities representing investment-related liabilities, according to the PSPIB'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 mandatorily 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 at FVTPL as 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 the 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 initially 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 one of the following conditions is met:

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, the 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 to the functional currency at the rate of exchange prevailing on the date of the transaction.

Monetary assets and liabilities that are denominated in foreign currencies are translated to the functional currency at the 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

The 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, the 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. The 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

The PSPIB enters into 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 the 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 the 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, and the net amount is reported in the statement of financial position only if the 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 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 1 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 the PSPIB. These fees are paid directly by the 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 the 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 the 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 the PSPIB's portfolio. The pension obligations and the investments held by the PSPIB, as at 31 March 2025, 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

(A) Current 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 International Accounting Standards Board (IASB) and by the Accounting Standards Board of Canada (AcSB), for the year ended 31 March 2025.

(B) Future Accounting Standards

A number of new standards, amendments and interpretations have been issued by the IASB and by the AcSB, but are not yet effective. The following relates to one or more material accounting policies or disclosures:

Improvements to Presentation and Disclosure of Investments for Pension Plans

The AcSB revised Section 4600, Pension Plans to improve the presentation and disclosure of investments held by pension plans.

The amendments:

The amendments are effective for annual reporting periods beginning on or after January 1, 2027, with early application permitted. Management is currently assessing the impact of applying these amendments.

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 Public Service Pension Fund represents the net cash position prior to the transfer to the PSPIB. The 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 2025, $63 million (2024 - $45 million) was transferred between the fund accounts, the balance was transfers received from other plans. The value of the pensionable service due between the pension plans has been estimated at 31 March 2025 to be $4 million (2024 - $59 million).

5. Financial assets and financial liabilities

(A) Classes of financial assets and financial liabilities

Table 7: Financial assets and financial liabilities are aggregated, in the following table, in classes that reflect their respective exposure as well as investment sectors. Their fair values were as follows, as at 31 March ($ millions):
2025 2024
Public markets
Canadian equity $605 $535
Foreign equity 12,275 8,022
Private markets
Real estate 7,251 7,106
Private equity 7,601 7,565
Infrastructure 7,736 7,794
Natural resources 5,029 4,154
Fixed income
Money market securitiestable 7 note 3 1,167 1,826
Government and corporate bonds 6,870 5,150
Inflation-linked bonds 3,626 3,431
Private debt securities 6,439 5,694
Alternative investments 5,430 4,940
Investments before investment-related assetstable 7 note 2 $64,029 $56,217
Investment-related assets
Amounts receivable from pending trades $291 $244
Interest receivable 142 121
Dividends receivable 65 52
Securities purchased under reverse repurchase agreements 486 437
Derivative-related assets 406 259
Investment-related assets $1,390 $1,113
Investments representing financial assets at FVTPLtable 7 note 1table 7 note 2 $65,419 $57,330
Cash and cash equivalentstable 7 note 2table 7 note 3 483 480
Investment-related liabilities
Amounts payable from pending trades $(464) $(103)
Interest payable (46) (32)
Securities sold short (503) (613)
Collateral payable (326) (128)
Securities sold under repurchase agreements (546) (1,001)
Derivative-related liabilities (279) (187)
Investment-related liabilities representing financial liabilities at FVTPL $(2,164) $(2,064)
Borrowings
Capital market debt financing $(6,561) $(5,158)
Borrowings representing financial liabilities at FVTPL $(6,561) $(5,158)
Net investmentstable 7 note 2 $57,177 $50,588
Table 7 Notes
Table 7 Note 1

As at 31 March 2025, $1,518 million out of $65,419 million were investments pledged as described in Note 5 (31 March 2024 - $1,939 million out of $57,330 million).

Return to table 7 note 1 referrer

Table 7 Note 2

Amounts of $468 million and $12 million which were previously included in Investments and Other assets, respectively, on the Statements of Financial Position as at 31 March 2024, have now been reclassified to Cash and cash equivalents to better reflect their unique nature and characteristics. Consequently, the comparative figures were reclassified within this note: Investments before investment-related assets from $56,685 million to $56,217 million, Investments representing financial assets at FVTPL from $57,798 million to $57,330 million, Net investments from $50,576 million to $50,588 million, and Other assets on the Statements of Financial Position from $36 million to $24 million

Return to table 7 note 2 referrer

Table 7 Note 3

Additionally, as of 31 March 2025, the PSPIB changed its accounting policy to classify instruments with maturities of three months or less from acquisition date as Cash and cash equivalents. The change was made to better reflect the nature of cash equivalents as highly liquid instruments with an insignificant risk of changes in value. As a result, $209 million was reclassified from Cash and cash equivalents to Money market securities as at 31 March 2024 ($401 million as at 31 March 2023)

Return to table 7 note 3 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. The 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, upstream oil and gas, and metal and mining. 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 and Cash and Cash equivalents

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 from the acquisition date 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. The 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 the PSPIB's obligation to purchase securities pursuant to short selling transactions. In such transactions, the 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), the 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

The 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 the 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 the 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).

The 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.

The 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):
  2025 2024
Notional value Fair value Notional value Fair value
Assets Liabilities Assets Liabilities
Equity and commodity derivatives
Listed: Futures $942 $- $- $1,071 $- $-
Listed: Options: Purchased 37 - - 30 - -
Written 4 - - - - -
OTC
Swaps 7,633 143 (138) 4,256 94 (41)
Currency derivatives - - - - - -
Listed: Futures 99 - - 72 - -
OTC
Forwards 12,444 100 (47) 11,191 42 (66)
Swaps 616 1 (5) 236 - (6)
Options: Purchased 542 1 - 174 1 -
Written 338 - (1) 202 - (1)
Interest rate derivatives
Listed: Futures 1,619 - - 2,080 - -
Listed: Options: Purchased 5,250 10 - 7,994 4 -
Written 5,344 - (8) 8,255 - (3)
OTC - - - - - -
Forwards 212 2 - 153 - (1)
Swaps 414 7 (1) 467 1 (4)
Options: Purchased 13,352 138 - 10,247 114 -
Written 18,380 - (76) 13,315 - (62)
OTC‑cleared - - - - - -
Swaps 12,706 - - 12,591 - -
Credit derivatives - - - - - -
OTC - - - - - -
Credit default swaps: - - - - - -
Purchased 104 - (3) 119 - (3)
Writtentable 8 note 1 400 4 - 382 3 -
OTC-cleared
Credit default swaps:
Purchased 266 - - 565 - -
Total - $406 $(279) - $259 $(187)
Table 8 Note
Table 8 Note 1

The 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):
2025 2024
Notional value Fair value Notional value Fair value
Assets Liabilities Assets Liabilities
Listed derivatives $13,295 $10 $(8) $19,452 $4 $(3)
OTC derivatives 54,435 396 (271) 40,742 255 (184)
OTC-cleared derivatives 12,972 - - 13,156 - -
Total - $406 $(279) - $259 $(187)
Table 10: The terms to maturity based on notional value for the derivatives were as follows as at 31 March ($ millions):
  2025 2024
Less than 3 months $24,422 $32,936
3 to 12 months 35,709 21,558
Over 1 year 20,571 18,856

(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.

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. The PSPIB determines whether a transfer between levels has occurred and recognizes such transfer 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 2025, classified within the fair value hierarchy ($ millions):
  Level 1 Level 2 Level 3 Total fair value
Public markets
Canadian equity $131 $474 - $605
Foreign equity 11,878 1 396 12,275
Private markets
Real estate - - 7,251 7,251
Private equity - - 7,601 7,601
Infrastructure - - 7,736 7,736
Natural resources - - 5,029 5,029
Fixed income
Money market securities 1,018 149 - 1,167
Government and corporate bonds 2,157 4,713 - 6,870
Inflation-linked bonds 3,611 15 - 3,626
Private debt securities - - 6,439 6,439
Alternative investments - 3,332 2,098 5,430
Investments before investment-related assets $18,795 $8,684 $36,550 $64,029
Investment-related assets
Amounts receivable from pending trades $- $291 $- $291
Interest receivable - 142 - 142
Dividends receivable - 65 - 65
Securities purchased under reverse repurchase agreements - 486 - 486
Derivative-related assets 10 396 - 406
Investment-related assets $10 $1,380 $- $1,390
Investments representing financial assets at FVTPL $18,805 $10,064 $36,550 $65,419
Cash and cash equivalents 114 369 - 483
Investment-related liabilities
Amounts payable from pending trades $- $(464) $- $(464)
Interest payable - (46) - (46)
Securities sold short (503) - - (503)
Collateral payable - (326) - (326)
Securities sold under repurchase agreements - (546) - (546)
Derivative-related liabilities (8) (271) - (279)
Investment-related liabilities representing financial liabilities at FVTPL $(511) $(1,653) $- $(2,164)
Borrowings
Capital market debt financing $- $(6,561) $- $(6,561)
Borrowings representing financial liabilities at FVTPL $- $(6,561) $- $(6,561)
Net investments $18,408 $2,219 $36,550 $57,177
Table 12: The following table shows the fair value of financial assets and financial liabilities as at 31 March 2024, classified within the fair value hierarchy ($ millions):
  Level 1 Level 2 Level 3 Total fair value
Public markets
Canadian equity $185 $350 $- $535
Foreign equity 7,478 98 446 8,022
Private markets
Real estate - - 7,106 7,106
Private equity - - 7,565 7,565
Infrastructure - - 7,794 7,794
Natural resources - - 4,154 4,154
Fixed income
Money market securities 1,658 168 - 1,826
Government and corporate bonds 1,329 3,820 1 5,150
Inflation-linked bonds 3,410 21 - 3,431
Private debt securities - - 5,694 5,694
Alternative investments - 3,030 1,910 4,940
Investments before investment-related assetstable 12 note 1 $14,060 $7,487 $34,670 $56,217
Investment-related assets
Amounts receivable from pending trades $- $244 $- $244
Interest receivable - 121 - 121
Dividends receivable - 52 - 52
Securities purchased under reverse repurchase agreements - 437 - 437
Derivative-related assets 4 255 - 259
Investment-related assets $4 $1,109 $- $1,113
Investments representing financial assets at FVTPL $14,064 $8,596 $34,670 $57,330
Cash and cash equivalentstable 12 note 1 85 395 - 480
Investment-related liabilities
Amounts payable from pending trades $- $(103) $- $(103)
Interest payable - (32) - (32)
Securities sold short (613) - - (613)
Collateral payable - (128) - (128)
Securities sold under repurchase agreements - (1,001) - (1,001)
Derivative-related liabilities (3) (184) - (187)
Investment-related liabilities representing financial liabilities at FVTPL $(616) $(1,448) $- $(2,064)
Borrowings
Capital market debt financing $- $(5,158) $- $(5,158)
Borrowings representing financial liabilities at FVTPL $- $(5,158) $- $(5,158)
Net investmentstable 12 note 1 $13,533 $2,385 $34,670 $50,588
Table 12 Note
Table 12 Note 1

As at 31 March 2025, cash and cash equivalents were disclosed separately on the Statements of Financial Position in order to better reflect their unique nature and characteristics (see note 5(A))

Return to table 12 note 1 referrer

As at 31 March 2024, foreign equity securities with a fair value of $65 million were indirectly held and classified as Level 2. During the year ended 31 March 2025, these securities were transferred to Level 1 as they became directly held by the PSPIB.

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 the PSPIB.

(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.

The fair value of investments classified as Level 3 in private markets is determined quarterly and adjusted to reflect the impact of any significant market or investment specific events or circumstances. 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, the PSPIB ensures their independence and that valuation methods used are consistent with the professional appraisal standards outlined above. In validating the work performed by appraisers, the 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 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 the 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.

While the impact of trade tariffs on the broader global economy continues to remain uncertain, the determination of fair value for investments classified as Level 3 reflected, where applicable, the effect of tariffs that were imposed on or before 31 March 2025. Although trade tariffs announced or imposed after this reporting date were not reflected in such valuations, related uncertainties present at 31 March 2025, and their impact on the fair value of investments were taken into consideration as applicable.

(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 2025:
Financial assets Type of investment Fair value ($ millions) Significant valuation techniques Significant unobservable inputs Range (weighted average)
Public markets
Foreign equity Direct investments $396 NAVtable 13 note 1 N/A N/A
Private markets
Real estate Direct and co-investments $6,586 Discounted cash flow (DCF) Discount ratetable 13 note 2table 13 note 3 2.90% - 18.00% (7.88%)
- - - Terminal capitalization ratetable 13 note 2table 13 note 3 3.20% - 12.50% (6.01%)
- - Direct capitalization Capitalization ratetable 13 note 2table 13 note 4 3.15% - 10.00% (5.62%)
- - - Stabilized occupancy ratetable 13 note 4table 13 note 5 98.00% - 100.00% (99.62%)
- - Sales comparison approach Price per square foottable 13 note 4table 13 note 5 $2.71 - $68.63 ($62.50)
- - NAVtable 13 note 1 N/A N/A
- - Transaction price N/A N/A
Fund investments $665 NAVtable 13 note 1 N/A N/A
Other private markets Direct and co-investments $15,296 DCF Discount ratetable 13 note 2 4.70% - 19.00% (9.55%)
- - Market comparables N/A N/A
- - NAVtable 13 note 1 N/A N/A
- - Transaction price N/A N/A
Fund investments $5,070 NAVtable 13 note 1 N/A N/A
Fixed income
Private debt securities Direct and co-investments $5,026 DCF Discount ratetable 13 note 2 2.59% - 38.69% (11.23%)
  - NAVtable 13 note 1 N/A N/A
  - Transaction price N/A N/A
Fund investments $1,413 NAVtable 13 note 1 N/A N/A
Alternative investments Fund investments $2,098 NAVtable 13 note 1 N/A N/A
Total - $36,550 - - -
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 the 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: 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 14 note 1 N/A N/A
Private markets
Real estate Direct and co-investments $6,439 Discounted cash flow (DCF) Discount ratetable 14 note 2table 14 note 3 2.90%-18.00% (7.80%)
- - - Terminal capitalization ratetable 14 note 2table 14 note 3 3.20%-12.25% (6.08%)
- - Direct capitalization Capitalization ratetable 14 note 2table 14 note 4 2.51% - 10.00% (4.85%)
- - - Stabilized occupancy ratetable 14 note 4 table 14 note 5 98.00% - 100.00% (99.57%)
- - Sales comparison approach Price per square foottable 14 note 4table 14 note 5 $4.28 - $1,827.48 ($165.83)
- - 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 $14,325 DCF Discount ratetable 14 note 2 5.19% - 18.50% (9.58%)
- - Market comparables N/A N/A
- - NAVtable 14 note 1 N/A N/A
- - Transaction price N/A N/A
Fund investments $5,188 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 $4,310 DCF Discount ratetable 14 note 2 7.02% - 30.09% (12.24%)
- - NAVtable 14 note 1 N/A N/A
- - Transaction price N/A N/A
Fund investments $1,384 NAVtable 14 note 1 N/A N/A
Alternative investments Fund investments $1,910 NAVtable 14 note 1 N/A N/A
Total - $34,670 - - -
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 the 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 2025 ($ millions):
  Opening balance Purchases Sales Settlements Realized gains Unrealized gainstable 15 note 1 Transfer out of Level 3 Closing balance
Public markets $446 $0 $(175) $0 $88 $37 $0 $396
Private markets  26,619 2,398 (3,618) 0 1,355 863 0 27,617
Fixed income 5,695 2,538 (2,056) 0 71 191 0 6,439
Alternative investments 1,910 293 (372) 0 120 147 0 2,098
Total $34,670 $5,229 $(6,221) $0 $1,634 $1,238 $0 $36,550
Table 15 Note
Table 15 Note 1

Includes pension plan allocation adjustments.

Return to table 15 note 1 referrer

There were no transfers into or out of Level 3 during the year ended 31 March 2025.

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 2024 ($ millions):
  Opening balance Purchases Sales Settlements Realized gains Unrealized gains (losses)table 16 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 16 Note
Table 16 Note 1

Includes pension plan allocation adjustments.

Return to table 16 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.

(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 the 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 2025 (31 March 2024 - 3% increase and 3% 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 the PSPIB. In the case of fund investments, the fair value is determined as indicated in Note 5(C) (II).

(D) Collateral pledged and received

Table 17: The 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, as at 31 March ($ millions):
  2025 2024
Securities lending and borrowing    
Securities lent $1,152 $786
Collateral heldtable 17 note 1 1,196 815
Securities borrowed 503 501
Collateral pledgedtable 17 note 2table 17 note 5 520 516
Securities repurchase and reverse repurchase agreements
Securities sold under repurchase agreements 553 1,003
Collateral pledgedtable 17 note 5 547 1,003
Securities purchased under reverse repurchase agreements 487 438
Collateral heldtable 17 note 3 487 438
Derivative contracts
Collateral pledgedtable 17 note 5 451 420
Collateral heldtable 17 note 4 425 384
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 2025, were $282 million and $913 million, respectively ($105 million and $710 million, respectively as at 31 March 2024). 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 collateral received is in the form of securities of which nil has been used in connection with short selling transactions as at 31 March 2025 ($112 million as at 31 March 2024).

Return to table 17 note 3 referrer

Table 17 Note 4

As part of collateral held, cash amounted to $44 million as at 31 March 2025 ($23 million as at 31 March 2024) and securities amounted to $381 million as at 31 March 2025 ($361 million as at 31 March 2024). All cash collateral is reinvested.

Return to table 17 note 4 referrer

Table 17 Note 5

The total of $1,518 million of collateral pledged was recognized as financial assets as disclosed in Note 5(A) ($1,939 million as at 31 March 2024).

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 the PSPIB. As at 31 March 2025, 147 investment entity subsidiaries were incorporated in North America, 37 in Europe, 21 in Oceania, 7 in Central and South America, 2 in Asia and 1 in Africa (145 in North America, 28 in Europe, 19 in Oceania, 8 in Central and South America, 2 in Asia and 1 in Africa as at 31 March 2024).

In addition, the PSPIB controlled 89 investees directly or through its investment entity subsidiaries as at 31 March 2025 (31 March 2024 - 92 investees).

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

Table 18: As at 31 March 2025:
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
Willow Topco Limited Infrastructure Europe 63 Controlled
Forth Ports Limited Infrastructure Europe 51 Jointly controlled
TDF S.A.S. Infrastructure Europe 22 Associate
Australian Food and Fibre Limited Natural Resources Oceania 83 Jointly controlled
Revera inc. Real estate North America 100 Controlled
Cubico Sustainable Investments Limited Infrastructure Global 50 Jointly controlled
Table 19: 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

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

(B) Structured entities

The 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 the 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

The 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, the 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 the 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 the 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 the 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 2025, 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 the 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, the 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 the 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 March 31:
31 March 2025 31 March 2024
Active VaR 3.5% 5.0%
Absolute VaR 18.4% 19.2%

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. The PSPIB uses stress testing and scenario analysis, such as scenarios in connection with the United States trade policies, 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 2025 ($ 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 $483table 21 note 1 $483
Money market securities 0 0 0 0 1,167table 21 note 1 1,167
Government and corporate bonds 108 2,452 2,257 1,713 340table 21 note 2 6,870
Inflation-linked bonds 0 1,870 993 763 0 3,626
Private debt securities 9 2,298 1,780 907 1,445table 21 note 3 6,439
Total fixed income $117 $6,620 $5,030 $3,383 $3,435 $18,585
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 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 $480table 22 note 1 $480
Money market securities 0 0 0 0 1,826table 22 note 1 1,826
Government and corporate bonds 88 1,936 1,826 1,254 46table 22 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 22 note 3 5,694
Total fixed income $95 $5,816 $4,191 $2,702 $3,777 $16,581
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

Certain comparative figures have been reclassified to conform to the current year’s presentation, refer to Note 5 for additional information.

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 $40,497 million as at 31 March 2025 ($35,176 million as at 31 March 2024) 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 $5,430 million as at 31 March 2025 ($4,940 million as at 31 March 2024), 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 the PSPIB's capital market debt financing are disclosed in Note 9(B).

Interest Rate Benchmark Reform

As at 31 March 2025, the PSPIB no longer held financial instruments that had yet to transition to alternative reference rates.

(III) Foreign currency risk

The 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, the PSPIB may take, through foreign forward contracts or cross currency swaps, positions in foreign currencies.

Table 23: The underlying foreign currency exposures of net investments for the pension plan were as follows as at 31 March ($ millions):
Currency 2025
Fair value % of total
US Dollar $37,130 67.7
Euro 5,423 9.9
Japanese Yen 2,725 5.0
British Pound 2,548 4.6
Indian Rupee 1,354 2.5
Australian Dollar 875 1.6
Mexican Peso 641 1.2
Swiss Franc 600 1.1
Hong Kong Dollar 512 0.9
Brazilian Real 497 0.9
Others 2,503 4.6
Total $54,808 100.0
Table 24: As at 31 March 2025, the PSPIB and its investment entity subsidiaries also had commitments, denominated in foreign currencies of, 234 million for the pension plan (US ,720 million, €463 million, £79 million, 10 million Mexican pesos, 6 million Australian dollars, 173 million Indian rupees and 545 million Japanese yen) which were not included in the foreign currency exposure table above.
Currency 2024
Fair value % of total
US 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

As at 31 March 2024, the PSPIB and its investment entity subsidiaries also had commitments, denominated in foreign currencies of $5,568 million for the pension plan (US $3,342 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.

(B) Credit risk

The PSPIB is exposed to credit risk, which is the risk of non-performance of a debtor on whom the 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 the PSPIB. To perform this evaluation for public issuers and counterparties, the 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, the PSPIB uses the lowest of the available ratings. For private issuers, the PSPIB assigns internal credit ratings to issuers and measures the combined risk profile against set targets. To assign risk ratings to issuers, the PSPIB uses methodologies comparable to those used by recognized rating agencies.

As at 31 March 2025, the pension plan's maximum exposure to credit risk amounted to $19 billion (31 March 2024 - $17 billion). This amount is presented before collateral held and netting arrangements that do not qualify for offsetting under IFRS Accounting Standards. 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.

Table 25: To monitor the evolution of credit risk, the PSPIB periodically produces a concentration report by credit rating of credit-sensitive securities. The concentration of credit risk by credit rating was as follows as at 31 March 2025 ($ millions):
  Government and corporate bondstable 25 note 1 Inflation-linked bondstable 25 note 1 Cash equivalentstable 25 note 1 Money market securitiestable 25 note 1 Reverse repurchase agreements OTC derivativestable 25 note 2 Private debt securitiestable 25 note 1 Totaltable 25 note 1
AAA-AA $5,596 $3,638 $327 $1,053 $162 $70 $0 $10,846
A 940 0 30 3 221 326 84 1,604
BBB 252 0 0 0 103 0 168 523
BB or below 84 0 0 0 0 0 6,219 6,303
No ratingtable 25 note 3 52 0 21 0 0 0 44 117
Total $6,924 $3,638 $378 $1,056 $486 $396 $6,515 $19,393
Table 25 Notes
Table 25 Note 1

Includes interest receivable.

Return to table 25 note 1 referrer

Table 25 Note 2

As disclosed in Note 5(B).

Return to table 25 note 2 referrer

Table 25 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 25 note 3 referrer
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 1table 26 note 4 Money market securitiestable 26 note 1table 26 note 4 Reverse repurchase agreements OTC derivativestable 26 note 2 Private debt securitiestable 26 note 1 Totaltable 26 note 1
AAA-AA $3,316 $3,420 $275 $1,696 $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 $368 $1,722 $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 26 Note 4

Certain comparative figures have been reclassified to conform to the current year's presentation, refer to Note 5(A) for additional information.

Return to table 26 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, the PSPIB requires that counterparties provide adequate collateral and meet its credit rating requirements. The PSPIB frequently monitors the credit rating of its counterparties as determined by recognized credit rating agencies. With respect to derivative contracts, the PSPIB has the ability to terminate all trades with most counterparties whose credit rating is downgraded below its requirements.

For OTC derivatives, the PSPIB's policy also requires the use of the International Swaps and Derivatives 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 the PSPIB to realize any collateral placed with it in the case of default of the counterparty. The CSA also requires the 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. The 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 the PSPIB and its counterparties is disclosed in Note 5(D).

In the case of the securities lending program, the 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.

The 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, the 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

The 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 27: Financial assets
Recognized financial liabilities  Gross amount of recognized financial assets  Less: gross amount of recognized financial liabilities offset Net amount of financial assets presented in the statement of financial position Less: related amounts not offset in the statement of financial position  
Collateral held and not recognized Net
As at 31 March 2025
Reverse repurchase agreements $486 $0 $486table 27 note 1 $11 $475 $0
OTC- derivatives 396 0 396table 27 note 2 266 90 40
Total $882 $0 $882 $277 $565 $40
As at 31 March 2024 - - - - - -
Reverse repurchase agreements $437 $0 $437table 27 note 1 $149 $288 $0
OTC-derivatives 255 0 255table 27 note 2 168 83 4
Total $692 $0 $692 $317 $371 $4
Table 27 Notes
Table 27 Note 1

As described in Note 5(A) (X).

Return to table 27 note 1 referrer

Table 27 Note 2

As described in Note 5(B).

Return to table 27 note 2 referrer
Table 28: Financial liabilities
  Gross amount of recognized financial liabilities Less: gross amount of recognized financial assets offset Net amount of financial liabilities presented in the statement of financial position Less: related amounts not offset in the statement of financial position  
Recognized financial assets Collateral pledged and not derecognized Net
As at 31 March 2025
Repurchase agreements $546 $0 $546table 28 note 1 $11 $535 $0
OTC-derivatives 271 0 271table 28 note 2 232 27 12
Collateral payable 44 0 44table 28 note 3 34 0 10
Total $861 $0 $861 $277 $562 $22
As at 31 March 2024
Repurchase agreements $1,001 $0 $1,001table 28 note 1 $149 $852 $0
OTC-derivatives 184 0 184table 28 note 2 147 32 5
Collateral payable 23 0 23table 28 note 3 21 0 2
Total $1,208 $0 $1,208 $317 $884 $7
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 28 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 28 note 3 referrer

(C) Liquidity risk

Liquidity risk corresponds to the risk that the PSPIB will not be able to meet its financial obligations on a timely basis, with sufficient and readily available cash resources. The 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. The 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 the 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.

The PSPIB has the ability to raise additional capital through the use of its capital market debt program. This program allows the 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, the 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).

Table 29: 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 2025 ($ millions) and excluding the impact of guarantees and indemnities disclosed in Note 22:
  Less than 3 months 3 to 12 months Over 1 year Total
Non-derivative-related financial liabilitiestable 29 note 1
Amounts payable from pending trades $(464) $0 $0 $(464)
Interest payable (32) (14) 0 (46)
Securities sold short (503) 0 0 (503)
Collateral payable (326) 0 0 (326)
Securities sold under repurchase agreements (407) (139) 0 (546)
Capital market debt financingtable 29 note 2 (1,325) (850) (4,386) (6,561)
Trade payable and other liabilities (81) (1) (29) (111)
Total $(3,138) $(1,004) $(4,415) $(8,557)
Derivative-related financial instruments
Derivative-related assets $202 $147 $57 $406
Derivative-related liabilitiestable 29 note 1 (118) (134) (27) (279)
Total $84 $13 $30 $127
Table 29 Note
Table 29 Note 1

Liabilities are presented in the earliest period in which the counterparty can request payment.

Return to table 29 note 1 referrer

Table 29 Note 2

The total undiscounted cash flows amounted to $7,693 million as at 31 March 2025.

Return to table 29 note 2 referrer
Table 30: 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 ($ millions) and excluding the impact of guarantees and indemnities disclosed in Note 22:
  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 Note
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 $5,913 million as at 31 March 2024.

Return to table 30 note 2 referrer

8. Contributions receivable

(A) Contributions receivable

Table 31: The contributions receivable as at 31 March are as follows ($ millions):
  2025 2024
Contributions receivable from plan members for past service $83 $92
Contributions receivable from employer for past service 135 150
Total contributions receivable $218 $242

(B) Transfers receivable from Reserve Force

Table 32: The transfers receivable as at 31 March are as follows ($ millions):
  2025 2024
Transfers receivable from Reserve Force $4 $59
Total transfers receivable from Reserve Force $4 $59

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

The 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 US currencies. Subject to customary terms and conditions, these credit facilities are available at variable interest rates such as the prime rate and the US base rate.

These credit facilities were not drawn upon as at 31 March 2025, and 31 March 2024.

(B) Capital market debt financing

The 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 the PSPIB. The capital raised is primarily used to finance private market investments. It is unconditionally and irrevocably guaranteed by the PSPIB in accordance with its corporate leverage policy.

The maximum amount authorized by the 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.

The PSPIB's capital market debt financing was in compliance with the limits authorized by the PSPIB's Board of Directors during the years ended 31 March 2025, and 31 March 2024.

Table 33: 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):
    2025 2024
Currency Term at issuance Interest Rate (%) Capital amounts payable at maturity Fair value Interest rate (%) Capital amounts payable at maturity Fair value
AUD 364 days or less 3.97-4.53 $12 $12 4.28 $25 $25
EUR 215 days or less 2.41-2.70 187 186 3.85-3.93 137 136
GBP 245 days or less 4.49-4.74 90 89 5.18-5.24 100 100
USD 365 days or less 4.17-5.33 1,680 1,663 4.73-5.49 1,051 1,036
Total short-term notes   $1,969 $1,950   $1,313 $297
Table 34: The following outlines the terms as well as the fair value of the medium-term notes issued under the capital market debt program allocated to the pension plan as at 31 March ($ millions):
  2025 2024
Maturity Series Currency Interest Rate (%) Capital Amounts Payable at Maturity Fair Value Capital Amounts Payable at Maturity Fair Value
April 2024 7 CAD 3.29 0 0 227 227
September 2024 G2 USD 0.50 0 0 323 316
March 2025 G5 USD SOFRtable 34 note 2+24 bps 0 0 258 258
November 2025 11 CAD 3.00 224 225 222 217
June 2026 13 CAD 0.90 286 281 272 253
June 2026 G1 USD 1.00 274 264 258 238
June 2027 G6 USD 3.50 274 271 258 250
March 2028 14 CAD 1.50 191 184 186 170
October 2028 G3 USD 1.63 274 252 258 228
February 2029 A1 AUD 4.60 257 260 253 255
June 2029 G8 CAD 3.75 381 396 267 266
October 2029 G15 USD 3.75 343 336 0 0
January 2030 12 CAD 2.05 238 229 239 216
December 2030 G13table 34 note 1 CAD 4.40 191 204 191 196
September 2031 A2table 34 note 1 AUD 4.50 171 170 0 0
March 2032 G4table 34 note 1 CAD 2.60 191 183 191 172
August 2032 G7 AUD 4.57 39 38 39 38
January 2033 G9 AUD 4.82 34 34 34 34
June 2033 G11 CAD 4.15 478 501 477 476
July 2034 G14 EUR 3.25 326 325 0 0
February 2035 A3 AUD 5.25 214 216 0 0
March 2038 G10 EUR 3.68 30 29 28 29
July 2043 G12 EUR 3.68 22 21 21 22
December 2055 G16 CAD 4.25 191 192 0 0
Total medium-term notes $4,629 $4,611 $4,002 $3,861
Total capital market debt financing $6,598 $6,561 $5,315 $5,158
Table 34 Notes
Table 34 Note 1

Green bonds

Return to table 34 note 1 referrer

Table 34 Note 2

Secured Overnight Financing Rate

Return to table 34 note 2 referrer

Unrealized losses in connection with borrowings amounted to $230 million for the year ended 31 March 2025 (unrealized losses of $7 million for the year ended 31 March, 2024).

Table 35: Interest expense, for the years ended 31 March, was as follows ($ millions):
  2025 2024
Short-term promissory notes $81 $69
Medium-term notes 133 98
Total $214 $167

(C) Reconciliation of liabilities arising from financing activities

Table 36: The following provides a reconciliation of liabilities arising from financing activities, including both changes arising from cash and non-cash changes for the year ended 31 March 2025 ($ millions):
        Non-cash changes  
  Opening balance Proceeds from borrowings Repayment of borrowings Foreign exchange losses Fair valuetable 36 note 1 losses Closing balance
Capital market debt financing $5,158 $7,458 $(6,284) $91 $138 $6,561
Borrowings $5,158 $7,458 $(6,284) $91 $138 $6,561
Table 36 Note
Table 36 Note 1

Includes interest on short-term promissory notes, which added to cost approximates their fair value.

Return to table 36 note 1 referrer
Table 37: The following provides a reconciliation of liabilities arising from financing activities, including both changes arising from cash and non-cash changes for the year ended 31 March 2024 ($ millions):
        Non-cash changes  
  Opening balance Proceeds from borrowings Repayment of borrowings Foreign exchange gains Fair value lossestable 37 note 1 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

10. Related party transactions

(A) Certain investees

Transactions between the PSPIB and its unconsolidated subsidiaries, jointly controlled investees and associates or subsidiaries of such entities are related party transactions. The 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 the 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 the 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.

The 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, the 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 Canadian Forces Pension Plan and Reserve Force Pension Plan are disclosed in Note 4 and in Note 8(B).

11. Capital management

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

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 the 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 the 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:

Table 38: The principal actuarial assumptions used in measuring the pension obligations were as follows as at 31 March:
  2025
(%)		 2024
(%)
Discount rates
Funded pension benefitstable 38 note 1 6.1 6.1
Unfunded pension benefitstable 38 note 2 3.1 3.4
Long-term rate of inflation 2.0 2.0
Long-term general wage increase 2.5 2.5

Table 38 Notes

Table 38 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 2024).

Return to table 38 note 1 referrer

Table 38 Note 2

In regards to unfunded pension benefits, the discount rates disclosed in the table reflect the equivalent flat discount rate.

Return to table 38 note 2 referrer

For the year ended 31 March 2025, the pension plan recorded total net losses of $1,413 million (total net gains of $2,002 million in 2024) consisting of net losses due to changes in actuarial assumptions of $1,579 million (net gains of $2,549 million in 2024) and net experience gains of $166 million (net experience losses of $547 million in 2024).

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 the 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 the PSPIB or by its investment entity subsidiaries.

Table 39: The investment income of the pension plan consists of the following for the years ended 31 March ($ millions):
  2025 2024
  Interest and dividends Change in fair valuetable 39 note 1 Total investment Income Interest and dividends Change in fair valuetable 39 note 1 Total investment income
Public markets $269 $1,070table 39 note 2 $1,339 $206 $1,219table 39 note 2 $1,425
Private markets
Real estate 112 28table 39 note 2 140 110 (971)table 39 note 2 (861)
Private equity 164 939table 39 note 2 1,103 90 760table 39 note 2 850
Infrastructure 164 1,004table 39 note 2 1,168 173 747table 39 note 2 920
Natural resources 76 291table 39 note 2 367 56 72table 39 note 2 128
Fixed income 890 1,000table 39 note 2 1,890 876 57table 39 note 2 933
Alternative investments 5 629 634 3 451 454
Total before giving effect to investment-related assets and liabilities $1,680 $4,961 $6,641 $1,514 $2,335 $3,849
Investment-related assets and liabilities 13 619 632 11 55 66
Capital market debt financing 0 (342) (342) 0 (9) (9)
Investment income $1,693 $5,238 $6,931 $1,525 $2,381 $3,906

Table 39 Notes

Table 39 Note 1

Change in fair value includes realized and unrealized gains (losses) as described in the 31 March 2025 Plan Account financial statements Note 2(J).

Return to table 39 note 1 referrer

Table 39 Note 2

Investment-related expenses of $58 million were incurred by PSP Investments' investment-entity subsidiaries for the year ended 31 March 2025 (31 March 2024 - $34 million). 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 Plan Account financial statements prepared under IFRS.

Return to table 39 note 2 referrer

15. Contributions

Table 40: The contributions related to funded benefits for the years ended 31 March are as follows ($ millions):
  2025 2024
From plan members
Current service contributions $600 $641
Past service contributions 23 22
Change in contributions receivable (9) 6
Total plan member contributions $614 $669
From employer
Current service contributions $901 $1,025
Past service contributions 34 35
Change in contributions receivable (15) 13
Total employer contributions $920 $1,073
Total plan member and employer contributions $1,534 $1,742

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 2025 (no special employer contribution in 2024) since no actuarial deficit was identified in the triennial actuarial valuation of the pension plan as at 31 March 2022, which was tabled in Parliament on 24 November 2023. The next triennial actuarial valuation for funding purposes, the 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 41: The value of benefit payments for funded benefits, for the years ended 31 March is as follows ($ millions):
  2025 2024
Retirement benefit payments $1,329 $1,202
Minimum benefit payments 2 2
Total benefit payments $1,331 $1,204

(B) Refunds and transfers

Table 42: The value of refunds and transfers for funded benefits, for the years ended 31 March is as follows ($ millions):
  2025 2024
Returns of contributions and transfer value payments $108 $126
Payments with respect to division of pension benefits 27 32
Transfers to other pension plans 3 1
Total refunds and transfers $138 $159

18. Investment-related expenses

Table 43: Investment-related expenses allocated to the pension plan are comprised of the following for the years ended 31 March ($ millions):
  2025 2024
Interest expense $279 $259
Transaction costs 37 30
External investment management fees and performance feestable 43 note 1 15 10
Other (net)table 43 note 2 62 71
Total $393 $370

Table 43 Notes

Table 43 Note 1

Consists of amounts incurred for investments in public markets that are paid directly by the PSPIB. Certain management and performance fees are not paid directly by the PSPIB, but rather by investment structures such as funds and other investment vehicles held by the PSPIB. Such fees are embedded in the fair value of investments. Management fees amounted to $138 million for the year ended 31 March 2025 ($134 million for the year ended 31 March 2024). Performance fees amounted to $116 million for the year ended 31 March 2025 ($110 million for the year ended 31 March 2024).

Return to table 43 note 1 referrer

Table 43 Note 2

Investment- related expenses of $58 million were incurred by the PSPIB's investment- entity subsidiaries for the year ended 31March 2025 ($34 million were incurred for the year ended 31 March 2024). 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 43 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.

The PSPIB's costs of operation are charged to the four plans for which the 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. The 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 2025, 19.2% of the PSPIB's costs of operation were allocated to the Canadian Forces Pension Plan (19.4% in 2024) as plan-related administrative expenses, such as salaries and employee benefits, operations and maintenance, professional and consulting fees, and other operating fees.

Table 44: Administrative expenses, for the years ended 31 March, consist of the following ($ millions):
  2025 2024
PSPC
Salaries and employee benefits $27 $28
Operations and maintenance 12 12
PSPC Total $39 $40
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) $43 $45
PSPIB
Salaries and employee benefits $98 $85
Operations and maintenance 24 22
Professional and consulting fees 22 22
Other 6 5
PSPIB Total $150 $134
Total administrative expensestable 44 note 1 $193 $179

Table 44 Note

Table 44 Note 1

Administrative expenses related to the funded service for 2025 totaled $187 million ($172 million in 2024).

Return to table 44 note 1 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.

Table 45: The following summarizes the financial position of the superannuation account and contributions receivable for service before 1 April 2000 as at 31 March ($ millions):
  2025 2024
Balance of account
Superannuation account $44,883 $46,170
Contributions receivable from plan members for past service 6 7
Contributions receivable from employer for past service 6 7
Subtotal $44,895 $46,184
Pension obligationtable 45 note 1 $43,977 $43,956
Excess/(Shortfall) of the balance of the account over the pension obligation $918 $2,228

Table 45 Note

Table 45 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 45 note 1 referrer

The CFSA requires that any actuarial shortfall resulting from a lower balance in the superannuation account than the actuarial liability be 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 2025, no special employer contribution was credited to the superannuation account (a special employer contribution of $3,298 million in 2024) to cover the actuarial shortfall, based on the triennial actuarial valuation of the pension plan as at 31 March 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 46: The following summarizes the transactions in the superannuation account for unfunded pension benefits for the year ended 31 March ($ millions):
  2025 2024
Opening balance $46,184 $44,172
Increase
Contributions by plan members 2 2
Contributions by employer    
Regular contributions 2 2
Special contributions 0 3,298
Net change in prior service contributions receivable (2) 0
Interest income 1,362 1,331
Total increase $1,364 $4,633
Decrease
Benefits paid $2,638 $2,605
Refunds and transfers 9 10
Administrative expenses 6 6
Total decrease $2,653 $2,621
Closing balance $44,895 $46,184

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 47: The following summarizes the financial position of the RCA account as at 31 March ($ millions):
  2025 2024
Balance of the accounts
RCA account $560 $537
Refundable tax receivable 550 530
Subtotal $1,110 $1,067
Pension obligations $1,155 $1,013
(Shortfall)/excess of the balance of the account over the pension obligations $(45) $54

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 48: The following summarizes the transactions in the RCA account for the years ended 31 March ($ millions):
  2025 2024
Opening balance $1,067 $1,025
Increase
Contributions by plan members 6 6
Contributions by employer 37 38
Interest income 17 16
Increase in refundable tax receivable 20 20
Total increase $80 $80
Decrease
Benefits paid $17 $15
Refunds and transfers 0 3
Refundable tax remittance 20 20
Total decrease $37 $38
Closing balance $1,110 $1,067

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 2025, no special employer contribution was credited to RCA (no special employer contribution in 2024), since no actuarial shortfalls were identified in the triennial actuarial valuation of the pension plan as at 31 March 2022.

22. Guarantees and indemnities

The 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 the 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, the 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, the PSPIB has not received any material claims or made any material payment for such indemnities.

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

The 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, the 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:

23. Commitments

Table 49: The 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. The portion of the PSPIB's commitments that would be assumed by the pension plan is as follows as at 31 March ($ millions):
  2025 2024
Foreign equity $0 $1
Real estate 635 737
Private equity 1,933 2,171
Infrastructure 1,820 762
Natural resources 71 92
Private debt securities 2,207 1,651
Alternative investments 384 297
Total $7,050 $5,711

Funding in connection with the above commitments can be called upon at various dates extending until 2041 as at 31 March 2025 (31 March 2024 - 2041).

Financial statements of the Reserve Force Pension Plan

for the fiscal year ended 31 March 2025

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 2025, 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. The 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

Christiane Fox
Deputy Minister

Major General Martin Gros-Jean
Deputy Commander MILPERSCOM

Ottawa, Canada

12 February 2026

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 2025, 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 2025, 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:

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

Mimma Venema, CPA, CA, CGA
Principal
for the Auditor General of Canada

Ottawa, Canada

12 February 2026

RFPP Financial Statements

Table 50: Statement of Financial Position (Canadian $ thousands)
  As at 31 March 2025 As at 31 March 2024table 50 note 1
Assets
Cash and cash equivalents (Note 5) $10,279 $10,244
Investments (Note 5) 1,390,955 1,223,282
Contributions receivable    
From plan members (Note 8) 8,300 9,644
From employer (Note 8) 8,300 9,644
Other assets 620 542
Total assets $1,418,454 $1,253,356
Liabilities
Accounts payable and other liabilities $2,360 $2,041
Reserve Force Pension Fund (Note 4) 107,635 109,371
Investment-related liabilities (Note 5) 46,004 44,036
Borrowings (Note 5 and Note 9) 139,500 110,053
Due to Canadian Forces Pension Plan (Note 4) 4,000 59,000
Total Liabilities $299,499 $324,501
Net assets available for benefits $1,118,955 $928,855
Pension obligations (Note 12) $877,204 $755,595
Surplus (Note 13) $241,751 $173,260

Table 50 Note

Table 50 Note 1

Certain comparative figures have been reclassified to conform to the current year's presentation. Refer to Note 5(A) for additional information.

The accompanying notes are an integral part of these financial statements.

Return to table 50 note 1 referrer
Table 51: Statement of Changes in Net Assets Available for Benefits Year ended 31 March (Canadian $ thousands)
  2025 2024
Net assets available for benefits, beginning of year $928,855 $844,650
Increase in net assets available for benefits
Investment income, excluding changes in fair values of investment assets and investment liabilities (Note 14) 36,033 32,674
Changes in fair values of investment assets and investment liabilities, realized and unrealized gains (Note 14) 111,570 50,874
Contributions
From plan members (Note 15) 26,905 25,396
From employer (Note 15) 49,871 60,113
Special employer contribution for actuarial deficit (Note 16) 4,100 4,100
Change (decrease) in amount due to Canadian Forces Pension Plan 55,000 2,000
Total increase in net assets available for benefits $283,479 $175,157
Decrease in net assets available for benefits
Benefits paid (Note 17) 16,731 15,064
Refunds and transfers (Note 17) 58,477 58,288
Investment-related expenses (Note 18) 8,382 7,904
Administrative expenses (Note 19) 9,789 9,696
Total decrease in net assets available for benefits $93,379 $90,952
Net increase in net assets available for benefits $190,100 $84,205
Net assets available for benefits, end of year $1,118,955 $928,855

Table 51 Note

The accompanying notes are an integral part of these financial statements.
Table 52: Statement of Changes in Pension Obligations Year ended 31 March (Canadian $ thousands)
  2025 2024
Pension obligations, beginning of year $755,595 $963,617
Increase in pension obligations
Interest on pension obligations 44,028 61,148
Benefits earned 67,000 85,000
Experience losses (Note 12) 92,048 0
Cost of new elections 1,500 1,288
Total increase in pension obligations $204,576 $147,436
Decrease in pension obligations
Benefits paid (Note 17) $16,731 $15,064
Experience gains (Note 12) 0 191,515
Change in actuarial assumptions: gains (Note 12) 1,139 83,788
Refunds and transfers (Note 17) 58,477 58,288
Administrative expenses included in the service cost (Note 19) 6,620 6,803
Total decrease in pension obligations $82,967 $355,458
Net increase (decrease) in pension obligations $121,609 $(208,022)
Pension obligations, end of year $877,204 $755,595

Table 52 Note

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 , performs periodic actuarial valuations of the pension plan. Pursuant to the CFSA and the RFPP Regulations, as amended by the Public Sector Pension Investment Board Act, 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. The 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 (i.e., public service, Royal Canadian Mounted Police (RCMP), 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, the 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 2024) 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 2024).

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, starting in the fiscal year in which the actuarial report is tabled in Parliament. CFSA also allows any surplus to be lowered by reducing government and pension 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 pension plan member contributions under the pension fund may be reduced and amounts managed by the 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. The pension reduction factor is coordinated with the base CPP and QPP and does not consider the enhancements that were phased-in between 2019 and 2025. 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.

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.

The 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. The 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, the PSPIB's subsidiaries that are formed to hold investments or those that provide the PSPIB with services that relate to its investment activities are consolidated, since these entities are not considered investment assets. The 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 2025 were authorized for issue by the signatories on 12 February 2026.

(B) Interests in other entities

Management, through the activities of the 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 the PSPIB. The 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 the PSPIB has significant influence, as in certain cases, the 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, the 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 the PSPIB ownership interest, other contractual arrangements, or a combination thereof.

(II) Joint control

The 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, as well as cash and cash equivalents, are managed, together with related financial liabilities representing investment-related liabilities, according to the PSPIB'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 mandatorily 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 at FVTPL as 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 the 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 initially 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 one of the following conditions is met:

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, the 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 to the functional currency at the rate of exchange prevailing on the date of the transaction.

Monetary assets and liabilities that are denominated in foreign currencies are translated to the functional currency at the 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

The 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, the 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. The 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

The PSPIB enters into 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 the 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 the 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 and the net amount is reported in the statement of financial position only if the 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 1 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 the PSPIB. These fees are paid directly by the 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 the 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 the 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 the PSPIB's portfolio. The pension obligations and the investments held by the PSPIB, as at 31 March 2025, 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

(A) Current Accounting Standards

Management has determined that there is no material impact on the financial statements arising from new standards, amendments and interpretations that have been issued by the International Accounting Standards Board (IASB) and by the Accounting Standards Board of Canada (AcSB), effective for the year ended 31 March 2025.

(B) Future Accounting Standards

A number of new standards, amendments and interpretations have been issued by the IASB, but are not yet effective. The following relates to one or more material accounting policies or disclosures:

Improvements to Presentation and Disclosure of Investments for Pension Plans

The AcSB revised Section 4600, Pension Plans to improve the presentation and disclosure of investments held by pension plans.

The amendments:

The amendments are effective for annual reporting periods beginning on or after January 1, 2027, with early application permitted. Management is currently assessing the impact of applying these amendments.

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. At year-end, the balance in the Reserve Force Pension Fund represents the net cash position prior to the transfer to the PSPIB. The 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 2025, $48,384 thousand (2024 - $45,208 thousand) was transferred between the fund accounts. The value of the pensionable service due between the pension plans has been estimated at 31 March 2025 to be $4,000 thousand (2024 - $59,000 thousand).

5. Financial assets and financial liabilities

(A) Classes of financial assets and financial liabilities

Table 53: Financial assets and financial liabilities are aggregated, in the following table, in classes that reflect their respective exposure as well as in investment sectors. Their fair values were as follows, as at 31 March ($ thousands):
  2025 2024
Public markets
Canadian equity $12,873 $11,416
Foreign equity 261,001 171,188
Private markets
Real estate 154,178 151,627
Private equity 161,626 161,419
Infrastructure 164,478 166,314
Natural resources 106,921 88,629
Fixed income
Money market securitiestable 53 note 3 24,806 38,962
Government and corporate bonds 146,081 109,882
Inflation-linked bonds 77,097 73,216
Private debt securities 136,903 121,498
Alternative investments 115,450 105,413
Investments before investment-related assetstable 53 note 2 $1,361,414 $1,199,564
Investment-related assets
Amounts receivable from pending trades $6,180 $5,190
Interest receivable 3,016 2,571
Dividends receivable 1,374 1,101
Securities purchased under reverse repurchase agreements 10,340 9,333
Derivative-related assets 8,631 5,523
Total investment-related assets $29,541 $23,718
Investments representing financial assets at FVTPLtable 53 note 1table 53 note 2 $1,390,955 $1,223,282
Cash and cash equivalentstable 53 note 2table 53 note 3 10,279 10,244
Investment-related liabilities
Amounts payable from pending trades $(9,840) $(2,203)
Interest payable (985) (673)
Securities sold short (10,693) (13,087)
Collateral payable (6,941) (2,725)
Securities sold under repurchase agreements (11,616) (21,361)
Derivative-related liabilities (5,929) (3,987)
Investment-related liabilities representing financial liabilities at FVTPL $(46,004) $(44,036)
Borrowings
Capital market debt financing $(139,500) $(110,053)
Borrowings representing financial liabilities at FVTPL $(139,500) $(110,053)
Net investmentstable 53 note 2 $ 1,215,730 $ 1,079,437
Table 53 Notes
Table 53 Note 1

As at 31 March 2025, $32,295 thousand out of $1,390,955 thousand were investments pledged as described in Note 5 (31 March 2024 - $41,376 thousand out of $1,223,282 thousand).

Return to table 53 note 1 referrer

Table 53 Note 2

Amounts of $9,995 thousand and $250 thousand which were previously included in Investments and Other assets, respectively, on the Statements of financial Position as at 31 March 2024, have now been reclassified to Cash and cash equivalents to better reflect their unique nature and characteristics. Consequently, the comparative figures were reclassified within this note: Investments before investment-related assets from $1,209,559 thousand to $1,119,564 thousand, Investments representing financial assets at FVTPL from $1,233,276 thousand to $1,223,282 thousand, Net investments from $1,079,187 thousand to $1,079,437 thousand, and Other assets on the Statements of Financial Position from $792 thousand to $542 thousand.

Return to table 53 note 2 referrer

Table 53 Note 3

Additionally, as of 31 March 2025, the PSPIB changed its accounting policy to classify instruments with maturities of three month or less from acquisition date as Cash and cash equivalents. The change was made to better reflect the nature of cash equivalents as highly liquid instruments with an insignificant risk of changes in value. As a result, $4,457 thousand was reclassified from Cash and cash equivalents to Money market securities as at 31 March 2024 ($8,603 thousand as at 31 March 2023).

Return to table 53 note 3 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. The 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 and metal and mining. 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 and Cash and Cash equivalents

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 from the acquisition date 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. The 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 the PSPIB's obligation to purchase securities pursuant to short selling transactions. In such transactions, the 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), the 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

The 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 the 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 the 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).

The 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.

The 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

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.

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 54: The following table summarizes the derivatives portfolio as at 31 March ($ thousands):
  2024 2024
Notional Value Fair Value Notional Value Fair Value
Assets Liabilities Assets Liabilities
Equity and commodity derivatives
Listed: Futures $20,031 $- $- $22,860 $- $-
Listed: Warrants and rights - 2 - - 4 -
Listed: Options: Purchased 776 3 - 648 - -
Written 75 - (2) - - -
OTC
Swaps 162,291 3,038 (2,955) 90,816 2,013 (865)
Currency derivatives
Listed: Futures 2,096 - - 1,542 - -
OTC
Forwards 264,599 2,136 (992) 238,805 888 (1,398)
Swaps 13,094 14 (107) 5,032 - (138)
Options: Purchased 11,515 27 - 3,721 22 -
Written 7,184 - (26) 4,315 - (17)
Interest rate derivatives
Listed: Futures 34,432 - - 44,384 - -
Listed: Options: Purchased 111,626 216 - 169,516 73 -
Written 113,644 - (158) 176,129 - (67)
OTC
Forwards 4,505 33 - 3,264 - (15)
Swaps 8,798 141 (19) 9,966 22 (88)
Options: Purchased 283,888 2,944 - 218,645 2,435 -
Written 390,833 - (1,615) 284,094 - (1,330)
OTC-cleared
Swaps 270,167 - - 268,651 - -
Credit derivatives
OTC
Credit default swaps:
Purchased 2,203 - (55) 2,539 - (69)
Writtentable 54 note 1 8,510 77 - 8,154 66 -
OTC-cleared - - - - - -
Credit default swaps:
Purchased 5,655 - - 12,063 - -
Total - $8,631 $(5,929) - $5,523 $(3,987)
Table 54 Note
Table 54 Note 1

The 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 54 note 1 referrer
Table 55: Total derivative-related assets and liabilities as at 31 March are comprised of ($ thousands):
  2025 2024
Notional Value Fair Value Notional Value Fair Value
Assets Liabilities Assets Liabilities
Listed derivatives $282,680 $221 $(160) $415,079 $77 $(67)
OTC derivatives 1,157,420 8,410 (5,769) 869,351 5,446 (3,920)
OTC-cleared derivatives 275,822 - - 280,714 - -
Total - $8,631 $(5,929) - $5,523 $(3,987)
Table 56: The terms to maturity based on notional value for the derivatives as at 31 March is as follows ($ thousands):
  2025 2024
Less than 3 months $519,279 $702,791
3 to 12 months 759,254 460,007
Over 1 year 437,389 402,346

(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.

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. The PSPIB determines whether a transfer between levels has occurred and recognizes such transfers at the beginning of the reporting period.

Table 57: The following table shows the fair value of financial assets and financial liabilities as at 31 March 2025 classified within the fair value hierarchy ($ thousands):
  Level 1 Level 2 Level 3 Total Fair Value
Public markets
Canadian equity $2,778 $10,095 $- $12,873
Foreign equity 252,548 13 8,440 261,001
Private markets
Real estate - - 154,178 154,178
Private equity - - 161,626 161,626
Infrastructure - - 164,478 164,478
Natural resources - - 106,921 106,921
Fixed income
Money market securities 21,635 3,171 - 24,806
Government and corporate bonds 45,869 100,212 - 146,081
Inflation-linked bonds 76,785 312 - 77,097
Private debt securities - - 136,903 136,903
Alternative investments - 70,849 44,601 115,450
Investments before investment-related assets $399,615 $184,652 $777,147 $1,361,414
Investment-related assets
Amounts receivable from pending trades $- $6,180 $- $6,180
Interest receivable - 3,016 - 3,016
Dividends receivable - 1,374 - 1,374
Securities purchased under reverse repurchase agreements - 10,340 - 10,340
Derivative-related assets 221 8,410 - 8,631
Investment-related assets $221 $29,320 $- $29,541
Investments representing financial assets at FVTPL $399,836 $213,972 $777,147 $1,390,955
Cash and cash equivalents 2,424 7,855 - 10,279
Investment-related liabilities
Amounts payable from pending trades $- $(9,840) $- $(9,840)
Interest payable - (985) - (985)
Securities sold short (10,693) - - (10,693)
Collateral payable - (6,941) - (6,941)
Securities sold under repurchase agreements - (11,616) - (11,616)
Derivative-related liabilities (160) (5,769) - (5,929)
Investment-related liabilities representing financial liabilities at FVTPL $(10,853) $(35,151) $- $(46,004)
Borrowings        
Capital market debt financing $- $(139,500) $- $(139,500)
Borrowings representing financial liabilities at FVTPL $- $(139,500) $- $(139,500)
Net investments $391,407 $47,176 $777,147 $1,215,730
Table 58: The following table shows the fair value of financial assets and financial liabilities as at 31 March 2024 classified within the fair value hierarchy ($ thousands):
  Level 1 Level 2 Level 3 Total Fair Value
Public markets
Canadian equity $3,941 $7,475 $- $11,416
Foreign equity 159,566 2,084 9,538 171,188
Private markets
Real estate - - 151,627 151,627
Private equity - - 161,419 161,419
Infrastructure - - 166,314 166,314
Natural resources - - 88,629 88,629
Fixed income
Money market securities 35,371 3,591 - 38,962
Government and corporate bonds 28,354 81,517 11 109,882
Inflation-linked bonds 72,771 445 - 73,216
Private debt securities - - 121,498 121,498
Alternative investments - 64,660 40,753 105,413
Investments before investment-related assets $300,003 $159,772 $739,789 $1,199,564
Investment-related assets
Amounts receivable from pending trades $- $5,190 $- $5,190
Interest receivable - 2,571 - 2,571
Dividends receivable - 1,101 - 1,101
Securities purchased under reverse repurchase agreements - 9,333 - 9,333
Derivative-related assets 77 5,446 - 5,523
Total investment-related assets $77 $23,641 $- $23,718
Investments representing financial assets at FVTPL $300,080 $183,413 $739,789 $1,223,282
Cash and cash equivalentstable 58 note 1 1,829 8,415 - 10,244
Investment-related liabilities
Amounts payable from pending trades $- $(2,203) $- $(2,203)
Interest payable - (673) - (673)
Securities sold short (13,087) - - (13,087)
Collateral payable - (2,725) - (2,725)
Securities sold under repurchase agreements - (21,361) - (21,361)
Derivative-related liabilities (67) (3,920) - (3,987)
Investment-related liabilities representing financial liabilities at FVTPL $(13,154) $(30,882) $- $(44,036)
Borrowings
Capital market debt financing $- $(110,053) $- $(110,053)
Borrowings representing financial liabilities designated at FVTPL $- $(110,053) $- $(110,053)
Net investmentstable 58 note 1 $288,755 $50,893 $739,789 $1,079,437
Table 58 Note
Table 58 Note 1

As at 31 March 2025, cash and cash equivalents were disclosed separately on the Statements of Financial Position in order to better reflect their unique nature and characteristics (see note 5(A)).

Return to table 58 note 1 referrer

As at 31 March 2024, foreign equity securities with a fair value of $1,394 thousand were indirectly held and classified as Level 2. During the year ended 31 March 2025, these securities were transferred to Level 1 as they became directly held by the PSPIB.

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 the PSPIB.

(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.

The fair value of investments classified as Level 3 in private markets is determined quarterly and adjusted to reflect the impact of any significant market or investment specific events or circumstances. 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, the PSPIB ensures their independence and that valuation methods used are consistent with the professional appraisal standards outlined above. In validating the work performed by appraisers, the 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 the 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.

While the impact of trade tariffs on the broader global economy continues to remain uncertain, the determination of fair value for investments classified as Level 3 reflected, where applicable, the effect of tariffs that were imposed on or before 31 March 2025. Although trade tariffs announced or imposed after this reporting date were not reflected in such valuations, related uncertainties present at 31 March 2025, and their impact on the fair value of investments were taken into consideration as applicable.

(III) Level 3 significant inputs
Table 59: The following table outlines key information with respect to significant inputs related to financial assets categorized within Level 3 as at 31 March 2025:
Financial assets Type of Investment Fair Value ($thousands) Significant Valuation Techniques Significant Unobservable Inputs Range (Weighted Average)
Public markets
Foreign equity Direct investments $8,440 NAVtable 59 note 1 N/A N/A
Private markets
Real estate Direct and co-investments $140,037 Discounted cash flow (DCF) Discount ratetable 59 note 2table 59 note 3 2.90%-18.00% (7.88%)
- - - Terminal capitalization ratetable 59 note 2table 59 note 3 3.20%-12.50% (6.01%)
- - Direct capitalization Capitalization ratetable 59 note 2table 59 note 4 3.15% - 10.00% (5.62%)
- - - Stabilized occupancy ratetable 59 note 4table 59 note 5 98.00% - 100.00% (99.62%)
- - Sales comparison approach Price per square foottable 59 note 4table 59 note 5 $2.71 - $68.63 ($62.50)
- - NAVtable 59 note 1 N/A N/A
- - Transaction price N/A N/A
Fund investments $14,141 NAVtable 59 note 1 N/A N/A
Other private markets Direct and co-investments $325,233 DCF Discount ratetable 59 note 2 4.70% - 19.00% (9.55%)
- - Market comparables N/A N/A
- - NAVtable 59 note 1 N/A N/A
- - Transaction price N/A N/A
Fund Investments $107,792 NAVtable 59 note 1 N/A N/A
Fixed income
Private debt securities Direct and co-investments $106,860 DCF Discount ratetable 59 note 2 2.59% - 38.69% (11.23%)
- - NAVtable 59 note 1 N/A N/A
- - Transaction price N/A N/A
Fund investments $30,043 NAVtable 59 note 1 N/A N/A
Alternative investments Fund investments $44,601 NAVtable 59 note 1 N/A N/A
Total - $777,147 - - -
Table 59 Notes
Table 59 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 PSP Investments.

Return to table 59 note 1 referrer

Table 59 Note 2

An increase (decrease) in this unobservable input, taken individually, generally results in a decrease (increase) in fair value.

Return to table 59 note 2 referrer

Table 59 Note 3

An increase (decrease) in the discount rate is generally accompanied by an increase (decrease) of the terminal capitalization rate.

Return to table 59 note 3 referrer

Table 59 Note 4

There is no predictable direct relationship between this input and any other significant unobservable input.

Return to table 59 note 4 referrer

Table 59 Note 5

An increase (decrease) in this unobservable input, taken individually, generally results in an increase (decrease) in fair value.

Return to table 59 note 5 referrer
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 the 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
(IV) Level 3 reconciliation
Table 61: The following table shows a reconciliation of all movements related to financial assets categorized within Level 3 for the year ended 31 March 2025 ($ thousands):
  Opening balance Purchases Sales Settle-ments Realized gains Unrealized gainstable 61 note 1 Transfer into Level 3 Closing balance
Public markets $9,538 $8 $(3,727) $- $1,873 $748 $- $8,440
Private markets  567,989 51,067 (77,021) - 28,849 16,319 - 587,203
Fixed income 121,509 54,067 (43,801) (5) 1,509 3,624 - 136,903
Alternative investments 40,753 6,234 (7,908) - 2,552 2,970 - 44,601
Total $739,789 $111,376 $(132,457) $(5) $34,783 $23,661 $- $777,147
Table 61 Note
Table 61 Note 1

Includes plan account allocation adjustments.

Return to table 61 note 1 referrer

There were no transfers into or out of Level 3 during the year ended 31 March 2025.

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 out of Level 3 Closing balance
Public markets $4,052 $1,862 $(550) $- $326 $3,848 $- $9,538
Private markets 543,927 57,763 (38,021) - 9,039 (4,977) 258 567,989
Fixed income 125,444 24,918 (30,048) - 1,186 9 - 121,509
Alternative investments 39,217 2,288 (4,491) - 1,043 2,696 - 40,753
Total $712,640 $86,831 $(73,110) $- $11,594 $1,576 $258 $739,789
Table 62 Note
Table 62 Note 1

Includes plan account 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.

(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 the 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 2025 (3% increase and 3% decrease as at 31 March 2024) 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 the PSPIB. In the case of fund investments, the fair value is determined as indicated in Note 5(C) (II).

(D) Collateral pledged and received

Table 63: The 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, as at 31 March ($ thousands):
  2025 2024
Securities lending and borrowing
Securities lent $24,486 $16,775
Collateral heldtable 63 note 1 25,425 17,391
Securities borrowed 10,693 10,697
Collateral pledgedtable 63 note 2table 63 note 5 11,057 11,002
Securities repurchase and reverse repurchase agreements
Securities sold under repurchase agreements 11,767 21,392
Collateral pledgedtable 63 note 5 11,641 21,404
Securities purchased under reverse repurchase agreements 10,352 9,355
Collateral heldtable 63 note 3 10,356 9,337
Derivative contracts
Collateral pledgedtable 63 note 5 9,597 8,970
Collateral heldtable 63 note 4 9,043 8,192
Table 63 Notes
Table 63 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 2025, were $6,005 thousand and $19,420 thousand, respectively (31 March 2024 - $2,233 thousand and $15,158 thousand, respectively). All cash amounts are reinvested.

Return to table 63 note 1 referrer

Table 63 Note 2

The minimum fair value of collateral required is equal to 100% of the fair value of the securities borrowed.

Return to table 63 note 2 referrer

Table 63 Note 3

The collateral received is in the form of securities of which nil has been used in connection with short selling transactions as at 31 March 2025 (31 March 2024 - $2,391 thousand).

Return to table 63 note 3 referrer

Table 63 Note 4

As part of collateral held, cash amounted to $942 thousand as at 31 March 2025 (31 March 2024 - $495 thousand) and securities amounted to $8,101 thousand as at 31 March 2025 (31 March 2024 - $7,697 thousand). All cash collateral is reinvested.

Return to table 63 note 4 referrer

Table 63 Note 5

The total of $32,295 thousand of collateral pledged was recognized as financial assets as disclosed in Note 5(A) (31 March 2024 - $41,376 thousand).

Return to table 63 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 the PSPIB. As at 31 March 2025, 147 investment entity subsidiaries were incorporated in North America, 37 in Europe, 21 in Oceania, 7 in Central and South America, 2 in Asia and 1 in Africa (31 March 2024 - 145 in North America, 28 in Europe, 19 in Oceania, 8 in Central and South America, 2 in Asia and 1 in Africa).

In addition, the PSPIB controlled 89 investees directly or through its investment entity subsidiaries as at 31 March 2025 (31 March 2024 - 92 investees).

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

Table 64: As at 31 March 2025:
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
Willow Topco Limited Infrastructure Europe 63 Controlled
Forth Ports Limited Infrastructure Europe 51 Jointly controlled
TDF S.A.S Infrastructure Europe 22 Associate
Australian Food and Fiber Limited Natural Resources Oceania 83 Jointly controlled
Revera inc. Real Estate North America 100 Controlled
Cubico Sustainable Investments Limited Infrastructure Global 50 Jointly controlled
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.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

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

(B) Structured entities

The 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 the 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

The 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, the 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 the 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 the 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 the 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 2025, 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 the 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, the 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 the 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 66: The following table shows the Active VaR and the Absolute VaR expressed as a percentage of net investments as at March 31:
  31 March 2025 31 March 2024
Active VaR 3.5% 5.0%
Absolute VaR 18.4% 19.2%

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. The PSPIB uses stress testing and scenario analysis, such as scenarios in connection with the United States trade policies, 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 67: 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 2025 ($ thousands):
  Less than 1 year 1 to 5 years 5 to 10 years Over 10 years Other Total
Cash and cash equivalents $- $- $- $- $10,279table 67 note 1 $10,279
Money market securities - - - - 24,806table 67 note 1 24,806
Government and corporate bonds 2,288 52,160 47,988 36,425 7,220table 67 note 2 146,081
Inflation-linked bonds - 39,766 21,105 16,226 - 77,097
Private debt securities 184 48,867 37,846 19,276 30,730table 67 note 3 136,903
Total fixed income $2,472 $140,793 $106,939 $71,927 $73,035 $395,166
Table 67 Notes
Table 67 Note 1

Due to their short-term maturity, these investments are not significantly exposed to interest rate risk.

Return to table 67 note 1 referrer

Table 67 Note 2

Certain fixed income securities are not significantly exposed to fair value changes arising from interest rate risk as their prescribed interest rates are variable.

Return to table 67 note 2 referrer

Table 67 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 67 note 3 referrer
Table 68: 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 ($ thousands):
  Less than 1 year 1 to 5 years 5 to 10 years Over 10 years Other Total
Cash and cash equivalents $- $- $- $- $10,244table 68 note 1 $10,244table 68 note 1
Money market securities - - - - 38,962table 68 note 1 38,962
Government and corporate bonds 1,873 41,288 38,968 26,761 992table 68 note 2 109,882
Inflation-linked bonds - 37,340 20,891 14,985 - 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 $80,606 $353,802
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 fair value changes arising from interest rate risk as their prescribed interest 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 68 Note 4

Certain comparative figures have been reclassified to conform to the current year's presentation, refer to Note 5(A) for additional information.

Return to table 68 note 4 referrer

All equity investments within Canadian equity, foreign equity, real estate, private equity, infrastructure and natural resources amounting to $861,077 thousand as at 31 March 2025 ($750,593 thousand as at 31 March 2024) 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 $115,450 thousand as at 31 March 2025 ($105,413 thousand as at 31 March 2024), 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 the PSPIB's capital market debt financing are disclosed in Note 9(B).

Interest Rate Benchmark Reform

As at 31 March 2025, the PSPIB no longer held financial instruments that had yet to transition to alternative reference rates.

(III) Foreign currency risk

The 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, the PSPIB may take, through foreign forward contracts or cross currency swaps, positions in foreign currencies.

Table 69: The underlying foreign currency exposures of net investments for the pension plan were as follows as at 31 March ($ thousands):
  2025
Currency Fair Value % of Total
US dollar $789,484 67.7
Euro 115,305 9.9
Japanese yen 57,930 5.0
British pound 54,177 4.6
Indian rupee 28,791 2.5
Australian dollar 18,604 1.6
Mexican peso 13,621 1.2
Swiss franc 12,749 1.1
Hong Kong dollar 10,886 0.9
Brazilian real 10,576 0.9
Others 53,212 4.6
Total $1,165,335 100.0

As at 31 March 2025, the PSPIB and its investment entity subsidiaries also had commitments, denominated in foreign currencies of $132,545 thousand for the pension plan (US $79,089 thousand, €9,838 thousand, £1,681 thousand, 222 thousand Mexican pesos, 121 thousand Australian dollars, 3,679 thousand Indian rupees and 11,582 thousand Japanese yen) which were not included in the foreign currency exposure table above.

Table 70: 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
US 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, the PSPIB and its investment entity subsidiaries also had commitments, denominated in foreign currencies of $118,805 thousand for the pension plan (US $71,312 thousand, €12,569 thousand, £1,693 thousand, 4,525 thousand Mexican pesos, 553 thousand Australian dollars, 4,190 thousand Indian rupees and 12,820 thousand Japanese yen) which were not included in the foreign currency exposure table above.

(B) Credit Risk

The PSPIB is exposed to credit risk, which is the risk of non-performance of a debtor on whom the 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 the PSPIB. To perform this evaluation for public issuers and counterparties, the 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, the PSPIB uses the lowest of the available ratings. For private issuers, the PSPIB assigns internal credit ratings to issuers and measures the combined risk profile against set targets. To assign risk ratings to issuers, the PSPIB uses methodologies comparable to those used by recognized rating agencies.

As at 31 March 2025, the pension plan's maximum exposure to credit risk amounted to $412 million (31 March 2024 - $367 million). This amount is presented before collateral held and netting arrangements that do not qualify for offsetting under IFRS Accounting Standards. 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.

Table 71: To monitor the evolution of credit risk, the PSPIB periodically produces a concentration report by credit rating of credit-sensitive securities. The concentration of credit risk by credit rating was as follows as at 31 March 2025 ($ thousands):
  Government and corporate bondstable 71 note 1 Inflation-linked bondstable 71 note 1 Cash equivalentstable 71 note 1 Money market securitiestable 71 note 1 Reverse repurchase agreements OTC derivativestable 71 note 2 Private debt securitiestable 71 note 1 Totaltable 71 note 1
AAA-AA $118,971 $77,345 $6,964 $22,378 $3,447 $1,495 $- $230,600
A 19,989 - 634 71 4,695 6,915 1,784 34,088
BBB 5,358 - - - 2,198 - 3,578 11,134
BB or below 1,787 - - - - - 132,232 134,019
No ratingtable 71 note 3 1,111 - 445 - - - 940 2,496
Total $147,216 $77,345 $8,043 $22,449 $10,340 $8,410 $138,534 $412,337
Table 71 Notes
Table 71 Note 1

Includes interest receivable.

Return to table 71 note 1 referrer

Table 71 Note 2

As disclosed in note 5(B).

Return to table 71 note 2 referrer

Table 71 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 71 note 3 referrer
Table 72: As at 31 March 2024 ($ thousands):
  Government and corporate bondstable 72 note 1 Inflation-linked bondstable 72 note 1 Cash equivalentstable 72 note 1table 72 note 4 Money market securitiestable 72 note 1table 72 note 4 Reverse repurchase agreements OTC derivativestable 72 note 2 Private debt securitiestable 72 note 1 Totaltable 72 note 1
AAA-AA $70,769 $72,973 $5,860 $36,186 $4,253 $154 $- $190,195
A 31,669 - 1,987 551 4,260 5,292 - 43,759
BBB 5,136 448 - - 820 - 309 6,713
BB or below 2,965 - - - - - 122,298 125,263
No ratingtable 72 note 3 331 - - - - - 270 601
Total $110,870 $73,421 $7,847 $36,737 $9,333 $5,446 $122,877 $366,531
Table 72 Notes
Table 72 Note 1

Includes interest receivable.

Return to table 72 note 1 referrer

Table 72 Note 4

As disclosed in note 5(B).

Return to table 72 note 4 referrer

Table 72 Note 2

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 72 note 2 referrer

Table 72 Note 3

Certain comparative figures have been reclassified to conform to the current year's presentation, refer to Note 5(A) for additional information.

Return to table 72 note 3 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, the PSPIB requires that counterparties provide adequate collateral and meet its credit rating requirements. The PSPIB frequently monitors the credit rating of its counterparties as determined by recognized credit rating agencies. With respect to derivative contracts, the PSPIB has the ability to terminate all trades with most counterparties whose credit rating is downgraded below its requirements.

For OTC derivatives, the 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 the PSPIB to realize any collateral placed with it in the case of default of the counterparty. The CSA also requires the 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. The 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 the PSPIB and its counterparties is disclosed in Note 5(D).

In the case of the securities lending program, the 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.

The 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, the 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

The 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 73: 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 2025
Reverse repurchase agreements $10,340 $- $10,340table 73 note 1 $234 $10,106 $-
OTC- derivatives 8,414 4 8,410table 73 note 2 5,651 1,903 856
Total $18,754 $4 $18,750 $5,885 $12,009 $856
As at 31 March 2024 - - - - - -
Reverse repurchase agreements $9,333 $- $9,333table 73 note 1 $3,184 $6,147 $2
OTC- derivatives 5,446 - 5,446table 73 note 2 3,579 1,789 78
Total $14,779 $- $14,779 $6,763 $7,936 $80
Table 73 Notes
Table 73 Note 1

As described in Note 5(A) (X).

Return to table 73 note 1 referrer

Table 73 Note 2

As described in Note 5(B).

Return to table 73 note 2 referrer
Table 74: 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 2025
Repurchase agreements $11,616 $- $11,616table 74 note 1 $234 $11,382 $-
OTC- derivatives 5,773 4 5,769table 74 note 2 4,918 593 258
Collateral payable 942 - 942table 74 note 3 733 - 209
Total $18,331 $4 $18,327 $5,885 $11,975 $467
As at 31 March 2024
Repurchase agreements $21,361 $- $21,361table 74 note 1 $3,184 $18,177 $-
OTC- derivatives 3,920 - 3,920table 74 note 2 3,133 685 102
Collateral payable 495 - 495table 74 note 3 446 - 49
Total $25,776 $- $25,776 $6,763 $18,862 $151
Table 74 Notes
Table 74 Note 1

As described in Note 5(A) (X).

Return to table 74 note 1 referrer

Table 74 Note 2

As described in Note 5(B).

Return to table 74 note 2 referrer

Table 74 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 74 note 3 referrer

(C) Liquidity risk

Liquidity risk corresponds to the risk that the PSPIB will not be able to meet its financial obligations on a timely basis, with sufficient and readily available cash resources. The 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. The 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 the 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.

The PSPIB has the ability to raise additional capital through the use of its capital market debt program. This program allows the 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, the 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).

Table 75: 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 2025 ($ thousands) and excluding the impact of guarantees and indemnities disclosed in Note 20:
  Less than 3 months 3 to 12 months Over 1 year Total
Non-derivative-related financial liabilitiestable 75 note 1
Amounts payable from pending trades $(9,840) $- $- $(9,840)
Interest payable (689) (296) - (985)
Securities sold short (10,693) - - (10,693)
Collateral payable (6,941) - - (6,941)
Securities sold under repurchase agreements (8,660) (2,956) - (11,616)
Capital market debt financingtable 75 note 2 (28,176) (18,072) (93,252) (139,500)
Trade payable and other liabilities (1,716) (22) (622) (2,360)
Total $(66,715) $(21,346) $(93,874) $(181,935)
Derivative-related financial instruments
Derivative-related assets $4,287 $3,127 $1,217 $8,631
Derivative-related liabilities table 75 note 1 (2,517) (2,839) (573) (5,929)
Total $1,770 $288 $644 $2,702
Table 75 Note
Table 75 Note 1

Liabilities are presented in the earliest period in which the counterparty can request payment.

Return to table 75 note 1 referrer

Table 75 Note 2

The total undiscounted cash flows amounted to $163,571 thousand as at 31 March 2025

Return to table 75 note 2 referrer
Table 77: 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:
  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) $- $- $(2,203)
Interest payable (577) (96) - (673)
Securities sold short (13,087) - - (13,087)
Collateral payable (2,725) - - (2,725)
Securities sold under repurchase agreements (19,982) (1,379) - (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 liabilities table 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 $126,168 thousand as at 31 March 2024.

Return to table 77 note 2 referrer

8. Contributions Receivable

Table 79: The contributions receivable as at 31 March are as follows ($ thousands):
  2025 2024
Contributions receivable from plan members for past service $8,300 $9,644
Contributions receivable from employer for past service 8,300 9,644
Total contributions receivable $16,600 $19,288

9. Borrowings

(A) Credit facilities

The 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 US currencies. Subject to customary terms and conditions, these credit facilities are available at variable interest rates such as the prime rate and the US base rate.

These credit facilities were not drawn upon as at 31 March 2025, and 31 March 2024.

(B) Capital market debt financing

The 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 the PSPIB. The capital raised is primarily used to finance private market investments. It is unconditionally and irrevocably guaranteed by the PSPIB in accordance with its corporate leverage policy.

The maximum amount authorized by the 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.

The PSPIB's capital market debt financing was in compliance with the limits authorized by the PSPIB's Board of Directors during the years ended 31 March 2025, and 31 March 2024.

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):
    2025 2024
Currency Term at issuance Interest Rate (%) Capital amounts payable at maturity Fair value Interest rate (%) Capital amounts payable at maturity Fair value
AUD 364 days or less 3.97-4.53 $253 $249 4.28 $540 $537
EUR 215 days or less 2.41-2.70 3,972 3,960 3.85-3.93 2,917 2,893
GBP 245 days or less 4.49-4.74 1,919 1,901 5.18-5.24 2,138 2,123
USD 365 days or less 4.17-5.33 35,720 35,362 4.73-5.49 22,421 22,117
Total short-term notes   $41,864 $41,472   $28,016 $27,670
Table 81: The following outlines the terms as well as the fair value of the medium-term notes issued under the capital market debt program allocated to the pension plan as at 31 March ($ thousands):
  2025 2024
Maturity Series Currency Interest Rate (%) Capital Amounts Payable at Maturity Fair Value Capital Amounts Payable at Maturity Fair Value
April 2024 7 CAD 3.29 - - 4,835 4,835
September 2024 G2 USD 0.50 - - 6,892 6,742
March 2025 G5 USD SOFRtable 81 note 2+24 bps - - 5,514 5,514
November 2025 11 CAD 3.00 4,765 4,776 4,727 4,623
June 2026 13 CAD 0.90 6,083 5,965 5,798 5,395
June 2026 G1 USD 1.00 5,836 5,615 5,514 5,076
June 2027 G6 USD 3.50 5,836 5,757 5,514 5,332
March 2028 14 CAD 1.50 4,055 3,923 3,973 3,625
October 2028 G3 USD 1.63 5,836 5,356 5,514 4,866
February 2029 A1 AUD 4.60 5,455 5,523 5,396 5,441
June 2029 G8 CAD 3.75 8,110 8,410 5,704 5,669
October 2029 G15 USD 3.75 7,295 7,150 - -
January 2030 12 CAD 2.05 5,069 4,874 5,093 4,605
December 2030 G13table 81 note 1 CAD 4.40 4,055 4,343 4,075 4,178
September 2031 A2table 81 note 1 AUD 4.50 3,637 3,614 - -
March 2032 G4table 81 note 1 CAD 2.60 4,055 3,889 4,075 3,660
August 2032 G7 AUD 4.57 836 816 827 815
January 2033 G9 AUD 4.82 727 716 719 719
June 2033 G11 CAD 4.15 10,142 10,649 10,186 10,187
July 2034 G14 EUR 3.25 6,935 6,901 - -
February 2035 A3 AUD 5.25 4,546 4,600 - -
March 2038 G10 EUR 3.68 630 624 596 626
July 2043 G12 EUR 3.68 473 452 447 475
December 2055 G16 CAD 4.25 4,055 4,075 - -
Total medium-term notes $98,431 $98,028 $85,399 $82,383
Total capital market debt financing $140,295 $139,500 $113,415 $110,053
Table 81 Notes
Table 81 Note 1

Green bonds

Return to table 81 note 1 referrer

Table 81 Note 2

Secured overnight financing rate

Return to table 81 note 2 referrer

Unrealized losses in connection with borrowings amounted to $4,892 thousand for the year ended 31 March 2025 (unrealized losses of $166 thousand for the year ended 31 March 2024).

Table 82: Interest expense, for the years ended 31 March was as follows ($ thousands):
  2025 2024
Short-term promissory notes $1,729 $1,484
Medium-term notes 2,819 2,097
Total $4,548 $3,581

(C) Reconciliation of liabilities arising from financing activities

Table 83: The following provides a reconciliation of liabilities arising from financing activities, including both changes arising from cash and non-cash changes for the year ended 31 March 2025 ($ thousands):
Non-cash changes  
  Opening balance Proceeds from borrowings Repayment of borrowings Foreign exchange losses Fair valuetable 83 note 1 losses Closing balance
Capital market debt financing $110,053 $158,849 $(134,294) $1,958 $2,934 $139,500
Borrowings $110,053 $158,849 $(134,294) $1,958 $2,934 $139,500
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: The following provides a reconciliation of liabilities arising from financing activities, including both changes arising from cash and non-cash changes for the year ended 31 March 2024 ($ thousands):
Non-cash changes  
  Opening balance Proceeds from borrowings Repayment of borrowings Foreign exchange gains Fair valuetable 84 note 1 losses Closing balance
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 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 the PSPIB and its unconsolidated subsidiaries, jointly controlled investees and associates or subsidiaries of such entities are related party transactions. The 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 the 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 the 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.

The 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, the 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

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

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 the 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 the 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, which was the most recent valuation available when the OCA performed their valuation on behalf of the plan sponsor. 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 accrued pension benefits 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:
  2025
(%)		 2024
(%)
Discount rates 6.1 6.1
Long-term rate of inflation 2.0 2.0
Long-term general wage increase 2.5 2.5

Table 5 Note

In regard to 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).

For the year ended 31 March 2025, the pension plan recorded total net losses of $90,909 thousand (total net gains of $275,303 thousand in 2024), consisting of net gains due to changes in actuarial assumptions of $1,139 thousand (net gains of $83,788 thousand in 2024) and net experience losses of $92,048 thousand (net experience gains of $191,515 thousand in 2024).

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 the 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 the 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):
  2025 2024
  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 $5,729 $22,798table 86 note 2 $28,527 $4,421 $26,052table 86 note 2 $30,473
Private markets
Real estate 2,377 592table 86 note 2 2,969 2,359 (20,768)table 86 note 2 (18,409)
Private equity 3,484 19,991table 86 note 2 23,475 1,934 16,232table 86 note 2 18,166
Infrastructure 3,498 21,382table 86 note 2 24,880 3,709 15,978table 86 note 2 19,687
Natural resources 1,614 6,211table 86 note 2 7,825 1,209 1,530table 86 note 2 2,739
Fixed income 18,954 21,283table 86 note 2 40,237 18,755 1,203table 86 note 2 19,958
Alternative investments 108 13,399 13,507 57 9,652 9,709
Total before giving effect to investment-related assets and liabilities $35,764 $105,656 $141,420 $32,444 $49,879 $82,323
Investment-related assets and liabilities $269 $13,196 $13,465 $230 $1,171 $1,401
Capital market debt financing $- $(7,282) $(7,282) $- $(176) $(176)
Investment income $36,033 $111,570 $147,603 $32,674 $50,874 $83,548

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 $1,244 thousand were incurred by the PSPIB's investment-entity subsidiaries for the year ended 31 March 2025 ($717 thousand for the year ended 31 March 2024). 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 86 note 2 referrer

15. Contributions

Table 87: The contributions related to funded benefits for the years ended 31 March are as follows ($ thousands):
  2025 2024
From plan members    
Current service contributions $25,583 $25,801
Past service contributions 2,666 2,635
Change in contributions receivable (1,344) (3,040)
Total plan member contributions $26,905 $25,396
From employer
Current service contributions $48,549 $60,518
Past service contributions 2,666 2,635
Change in contributions receivable (1,344) (3,040)
Total employer contributions $49,871 $60,113
Total plan member and employer contributions $76,776 $85,509

16. Special employer contribution for actuarial deficit

An annual adjustment payment of $4,100 thousand was made to the pension fund in the fiscal year ended 31 March 2025 ($4,100 thousand at 31 March 2024), based on the triennial actuarial valuation of the pension plan as at 31 March 2022, which 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 88: The value of benefit payments for funded benefits, for the years ended 31 March, is as follows ($ thousands):
  2025 2024
Retirement benefit payments $16,580 $14,857
Minimum benefit payments 151 207
Total benefit payments $16,731 $15,064

(B) Refunds and transfers

Table 89: The value of refunds and transfers, for the years ended 31 March, is as follows ($ thousands):
  2025 2024
Returns of contributions and transfer value payments $10,125 $13,048
Transfers to the Public Service Pension Plan (32) 32
Transfers to the Canadian Forces Pension Plan 48,384 45,208
Total refunds and transfers $58,477 $58,288

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):
  2025 2024
Interest expense $5,939 $5,527
Transaction costs 802 646
External investment management fees and performance feestable 90 note 1 310 223
Other (net)table 90 note 2 1,331 1,508
Total $8,382 $7,904

Table 90 Notes

Table 90 Note 1

Consists of amounts incurred for investments in public markets that are paid directly by the PSPIB. Certain management and performance fees are not paid directly by the PSPIB, but rather by investment structures such as funds and other investment vehicles held by the PSPIB. Such fees are embedded in the fair value of investments. Management fees amounted to $2,932 thousand for the year ended 31 March 2025 ($2,860 thousand for the year ended 31 March 2024). Performance fees amounted to $2,477 thousand for the year ended 31 March 2025 ($2,350 thousand for the year ended 31 March 2024).

Return to table 90 note 1 referrer

Table 90 Note 2

Investment- related expenses of $1,244 thousand were incurred by the PSPIB's investment- entity subsidiaries for the year ended 31 March 2025 ($717 thousand were incurred for the year ended 31 March 2024). 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.

The PSPIB's costs of operation are charged to the four plans for which the 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. The 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 2025, 0.4% of the PSPIB's costs of operation were allocated to the Reserve Force Pension Plan (0.4% in 2024) 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):
  2025 2024
PSPC
Salaries and employee benefits $4,145 $4,263
Operations and maintenance 1,759 1,771
PSPC Total $5,904 $6,034
DND
Salaries and employee benefits $445 $460
Operations and maintenance 130 166
DND Total $575 $626
OCA - Actuarial fees $141 $143
Total for government departments (included in the service cost) $6,620 $6,803
PSPIB
Salaries and employee benefits $2,064 $1,850
Operations and maintenance 505 472
Professional and consulting fees 477 471
Other 123 100
PSPIB Total $3,169 $2,893
Total administrative expenses $9,789 $9,696

20. Guarantees and indemnities

The 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 the 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, the 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, the PSPIB has not received any material claims or made any material payment for such indemnities.

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

The 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, the 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:

21. Commitments

Table 92: The 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. The portion of the PSPIB's commitments that would be assumed by the pension plan was as follows as at 31 March ($ thousands):
  2025 2024
Foreign equity $6 $12
Real estate 13,507 15,716
Private equity 41,093 46,344
Infrastructure 38,708 16,256
Natural resources 1,501 1,957
Private debt securities 46,928 35,221
Alternative investments 8,156 6,345
Total $149,899 $121,851

Funding in connection with the above commitments can be called upon at various dates extending until 2041 as at 31 March 2025 (until 2041 as at 31 March 2024).

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:
  2025 2024
Opening Balance $46,169,652,261 $44,157,882,558
Receipts and other credits
Member contributions $1,736,110 $1,778,734
Employer contributions 1,735,333 1,778,734
Actuarial Adjustment - 3,298,000,000
Transfers from other pension funds
Interest 1,361,600,209 1,330,681,026
Repayment of annuity 344,529 260,865
Total receipts and other credits $1,365,416,181 $4,632,499,359
Payments and other charges
Annuities $2,637,235,639 $2,603,553,563
Minimum benefit payments 237,557 387,470
Pension benefit division payments 8,581,776 10,297,279
Transfer value 4,135 5,135
Administrative expenses 6,074,457 6,426,209
Total payments and other charges $2,652,133,564, $2,620,669,656
Closing balance $44,882,934,878 $46,169,652,261

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:
  2025 2024
Opening Balance $40,140,966 $25,027,599
Receipts and other credits
Member contributions $622,837,996 $662,964,198
Employer contributions 935,330,165 1,060,048,956
Transfers from other pension funds 302,184 363,355
Rollovers from RFPF 101,830,958 6,163,431
Repayment of annuity 595,889 504,495
Total receipts and other credits $1,660,897,192 $1,730,044,435
Payments and other charges
Annuities $1,329,771,197 $1,202,323,444
Minimum benefit payments 2,034,091 2,177,371
Pension division payments 27,209,435 32,420,462
Pension transfer value 105,527,157 123,833,368
Return of contributions 2,163,578 1,804,192
Transfers to other pension funds 3,365,282 1,113,376
Administrative expenses 37,190,908 38,231,256
Total payments and other charges $1,507,261,648 $1,401,903,469
Transfers to the PSPIB $190,000,000 $313,027,599
Closing balance $3,776,510 $40,140,966

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:
  2025 2024
Opening Balance $(55,919,581) $(110,498,465)
Receipts and other credits
Member contributions $28,248,632 $28,435,887
Employer contributions 51,215,335 63,153,293
Actuarial Adjustments 4,100,000 4,100,000
Total receipts and other credits $83,563,967 $95,689,180
Payments and other charges
Annuities $16,580,167 $14,856,756
Minimum benefit payments 151,491 207,080
Pension transfer value payment 10,011,517 12,857,464
Return of contributions 114,341 190,391
Transfers to CFPF 101,834,279 6,163,431
Transfers to other pension funds (32,089) 32,089
Administrative expenses 6,619,755 6,803,085
Total payments and other charges $135,279,461 $41,110,296
Closing balance $(107,635,075) $(55,919,581)

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 $210,000 during the calendar year 2025 ($202,000 in 2024). 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:
  2025 2024
Opening Balance $536,764,527 $514,800,276
Receipts and other credits
Member contributions $5,687,122 $6,146,852
Employer contributions 37,332,341 38,005,999
Interest 16,435,440 16,188,227
Total receipts and other credits $59,454,903 $60,341,078
Payments and other charges
Annuities $16,867,491 $15,303,664
Pension division payments 2,094 1,182,762
Return of contributions 6 35
Pension transfer value payments 352,611 1,682,224
Refundable tax 19,532,969 20,208,142
Total payments and other charges $36,755,171 $38,376,827
Closing balance $559,464,259 $536,764,527

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.
  2025 2024
Opening Balance $161,666,965 $166,641,508
Receipts and other credits
Member contributions $21,725,954 $21,318,424
Employer contributionstable 97 note 1 3,382,016 3,115,647
Interest 4,774,283 5,012,542
Total receipts and other credits $29,882,253 $29,446,613
Payments and other charges
Benefits payments $37,885,793 $34,421,156
Total payments and other charges $37,885,793 $34,421,156
Closing balance $153,663,425 $161,666,965

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 costs, 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 to maintain an annuitant's 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 a 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 US 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 the 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

© His Majesty the King in Right of Canada, represented by the Minister of National Defence, 2026

ISSN: 2817-853X

Page details

2026-04-01