A few short months ago, a global pandemic was seen by many as a theoretical risk. Today it is causing disruptions in economies and stock markets around the world.
While the potential for a global pandemic has always existed, the necessary lockdowns to protect public health and the resulting economic impact of COVID-19 is not something many could have predicted.
And, while many of us are naturally concerned about the impact of the pandemic on our own lives, one thing we don’t have to worry about is the effect on our national pension, the Canada Pension Plan.
The people at the CPP Investments, which is responsible for investing the money in the CPP fund, spend a lot of time thinking about risks that could affect the security of your pension fund – including unforeseen events that may spring up. They have weathered crises before and know that higher levels of market volatility make it even more important to stay focused on the long term.
For example, during the global financial crisis in 2008, the fund lost 18.8 per cent in value in a single year. But just six years later, its investments gained 18.3 per cent in one year alone.
Over the past two decades, the fund has grown from $36.9 billion to $409.6 billion, and the Office of the Chief Actuary of Canada says it continues to be sustainable for 75 years.
And, this year, even with a particularly volatile 90 days leading up to the organization’s financial year-end, it still managed to deliver a positive return for the fiscal year and earned $12.1 billion in investment income after costs.
More importantly, the Fund’s 10-year net annualized rate of return remained strong at 9.9 per cent.
That’s why you can rest assured that this pension will be there for you when you retire – whether that’s tomorrow or 25, 50 or 75 years from now.
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