Canadian Pension Plan
The Canadian-Pension-Plan is in the top 10 largest pension funds in the world. All individuals over the age of 18 who work inside of Canada are eligible to contribute toward and receive benefits from the Canadian Pension Plan (CPP). In 2019 there are changes coming to the CPP to gradually enhance the pension Canada Pension Plan enhancement.
CPP Asset Allocation
Being one of the worlds largest funds, it’s sole mandate is to invest the assets of the CPP Fund with a view to achieving a maximum rate of return without undue risk of loss. This distinguishes CPP from a sovereign wealth fund that are swayed by political agendas.
The CPP has 320 billion in assets and according to the Chief Actuary forward looking numbers it is sustainable for a 75 year period and that is estimating inflation at 3.9%.
Source: CPP performance
The CPP asset allocation As of March 31, 2017.
Fund Size: $316.7B Asset Mix:
55.4% Equity; 21.5% Fixed Income; 23.1% Real Assets
Canadian Equity: 3.3%
US/EAFE Equity: 27.9%
Emerging Equity: 5.7%
Private Equity: 18.5%
Fixed/Plus/Global Bonds/Mortgages/Credit: 21.5%
Real Estate: 12.6%
Rate of return
1 year (2017) 11.8%
5 year 11.8%
10 year 6.7%
Notice Canadian equity is 3.3%. In my opinion this is acceptably considering Canadian stock market cap is only 2,360 bn.
Most Canadian investors have a home bias and if you live, work, bank, invest, own a business, and hold your assets in just one country , you are putting all of your eggs in one basket.
As a Canadian for your own long-term portfolio you might want to consider a similar asset allocation. After all, these funds are faced with the pressure of providing millions of people with a secure retirement now and decades into the future.
Don’t wait for retirement to enjoy life !!