Find answers to some of the most common questions asked about CPP Investment Board. Have a question that was not answered on this list? Visit our Contact us page or Search for more information options. 

Frequently Asked Questions

  1. Should Canadians be concerned about their CPP pensions?

    Canadians’ CPP pensions are not at risk and Canadians should not be concerned about their CPP pensions. In December 2013, the Chief Actuary of Canada reaffirmed through his triennial review that the CPP remains sustainable at the current contribution rate of 9.9% throughout the 75-year period of his report, based on actuarially accepted assumptions.

    Despite the market volatility we have witnessed in recent years, we remain confident that our investment strategy will deliver the returns required to help sustain the plan for decades and generations. The CPP Fund is broadly diversified and designed for a long investment horizon and multi-generational mandate.

    The $238.8 billion Fund is not being used to help pay pensions today. Starting in 2023 a small portion of the CPP Fund’s investment income will be needed to help pay pensions.

    Even with those payments, the CPP Fund will continue to grow for decades to come.

    When the federal government announced changes to its Old Age Security program (OAS) in February 2012, it reiterated that the CPP remains financially sound and does not need to change.

  2. Do the Q3 F2015 results impact the long-term sustainability of the CPP?

    At December 31, 2014, the CPP Fund totalled $238.8 billion, compared to $234.4 billion at September 30, 2014, an increase of $4.4 billion. As a long-term investor, CPPIB focuses on 10-year returns which aligns with our approach to manage the CPP Fund for decades and generations. For the 10-year period ending December 31, 2014, the Fund had an annualized rate of return of 7.3%, representing $108.8 billion of investment income.

    Our returns should be viewed within the context of our long-term strategy. The Canada Pension Plan’s multigenerational funding and liabilities give rise to an exceptionally long investment horizon.  CPPIB is building a portfolio and investing in assets designed to generate and maximize long-term returns. While we report quarterly and annual results as part of our disclosure policy, we see our primary role as focusing on investment activities with longer-term performance. What matters most is how the CPP Fund performs over the span of multiple years and decades.


  3. What rate of return is necessary to maintain the sustainability of the Canada Pension Plan for generations to come?


    According to the Chief Actuary of Canada’s most recent triennial report released in December 2013 the CPP, which was successfully reformed in 1996–1997, is sustainable at the current contribution rate of 9.9% throughout the 75-year period of his report.

    The Chief Actuary’s projections are based on the assumption that the fund will attain an average annual real rate of return, which takes into account the impact of inflation, of 4% over the 75-year projection period in his report, to help sustain the plan at the current contribution rate.

    Our 10-year nominal annualized return of 7.3% or 5.5% on a real return basis is above the Chief Actuary’s assumption over this period.

    These returns should be viewed in the context of the overall performance of major global financial markets over the past 10 years, which included historic equity declines. Given our long-term view, we remain confident that we will meet and exceed the 4% real rate of return over the 75-year period of the Chief Actuary’s projection.


  4. What is the projected growth of the CPP Fund?

    The CPP Fund is expected to grow significantly between now and 2022. Canada’s Chief Actuary estimates the CPP Fund will grow to approximately $340 billion by 2022. Beyond this time, it will continue to grow, but at a slower rate, as a small portion of the investment income will be needed to help pay pensions. By increasing the long-term value of funds available to the CPP, the CPP Investment Board will help the plan to keep its pension promise to Canadians.

  5. At $238.8 billion in net assets, is the CPP now the largest single-purpose pension fund in Canada?

    Yes. CPP is the largest single-purpose pension fund in Canada. In fact, the CPP is one of the largest and fastest-growing single-purpose pools of assets anywhere in the world.

  6. How does the CPP Investment Board measure its performance against a benchmark?

    Our benchmark is the CPP Reference Portfolio, which comprises a group of broad market indices that embody the long-term investment objectives and associated risk that were envisioned by the CPP stewards at the time of the CPP reforms in 1997. This model portfolio is approved by the board of directors for accountability and measurement purposes only and does not act as a target portfolio for the actual CPP Fund. We seek to generate value-added returns above this benchmark over the long term.

    From the inception of our active management strategy in fiscal 2007 to the end of our most recent fiscal year as of March 31 2014, CPPIB has generated $3.0 billion in cumulative dollar valued-added, net of operating costs, and we remain confident that this value-added performance will continue over longer periods of time.

  7. How would you characterize CPPIB’s investment activities and performance in Q3 F2015?

    The continuing climb in value across most international equity markets contributed to the Fund’s return this quarter, as did our private investments and fixed income assets.

    CPPIB continued to diversify its investments globally across a number of asset classes in order to build a resilient portfolio that is designed to deliver superior returns over the long term.


  8. Did you make changes to your investment strategy as a result of the financial crisis?

    No, we have maintained our long-term investment strategy and the strategic asset weightings for the portfolio. In October 2009, the board of directors and senior management reaffirmed the investment strategy and we continue to capitalize on our comparative advantages and to build internal capabilities to execute on this strategy.

    The $238.8 billion CPP Fund is broadly diversified and structured to help secure Canadians’ CPP pensions over the long-term.

  9. What proportion of the assets is invested in stocks?

    In order to meet our value-added investment objectives, we focus primarily on the long-term performance of the total portfolio rather than the performance of isolated asset classes or individual investment departments. We call this the Total Portfolio Approach. Under this approach we assess each investment according to its underlying risk/return attributes or “economic exposures rather than asset class.”

    Active investments, such as real estate, infrastructure, private equity and private debt are made only if we are confident that their risk/return characteristics will outperform the assets that must be sold to fund the investments. We believe this promotes better investment decision making. As of December 31, 2014, public equities made up 30.9% of the CPP Fund. Our current asset mix is as follows:

    Public Equities: 30.9%
    Private Equities 18.6%
    Fixed Income: 34.0%
    Real Assets (real estate and infrastructure): 16.5%



  10. Why does the CPP Investment Board not use specific asset allocations?

    CPPIB believes that the “asset allocation” approach to investing tends to create pressure, possibly at inopportune times, to buy or dispose of illiquid investments in order to stay close to allocation targets.

  11. Why does the CPP Investment Board seek investments in infrastructure?

    Infrastructure is an attractive asset class for the CPP Investment Board, as these assets provide steady cash flows and investment returns. Their underlying value tends to rise along with inflation, making them a good match for the long-term nature of CPP net liabilities given that CPP benefits are indexed to inflation.

    The CPPIB infrastructure program’s focus is on assets with lower risk and return characteristics, typically characterized by strong regulatory environments, and with low substitution risks. Such investments might include electricity transmission and distribution, gas transmission and distribution, water utilities, toll roads, bridges and tunnels, airports, and ports.

  12. Why don't you invest only in Canada to create economic growth and jobs?

    Our mandate is to help sustain the future pensions of 18 million CPP contributors and beneficiaries and by maximizing returns without undue risk of loss.

    With approximately 31% of our portfolio (or $68.0 billion) invested in Canada as of March 31, 2014, we will always have a large part of the fund invested here but we do not want to be overly dependent on the strength of the Canadian economy and so are systematically looking for opportunities to diversify internationally. Portfolio diversification by asset class and by geography is a fundamental part of the CPP Investment Board’s long-term investment strategy.

    Over time, we will be investing a higher proportion of the Fund in international investments to further diversify the CPP Fund. A strategy that invests predominantly in Canada would not be in the best interests of CPP contributors and beneficiaries. First, it is important to diversify risk exposure beyond the relatively small Canadian economy. Second, greater global diversification allows income from foreign investments to flow back into Canada to support our future pension payments. Third, there are attractive economic sectors available globally that are small in Canada, such as the pharmaceutical industry, technology and branded consumer products. These sectors help to diversify the assets.

  13. What are the total costs of running CPPIB?

    CPPIB is committed to source and secure the most attractive investment opportunities globally in an efficient and cost-effective way.  We have confidence that, with our comparative advantages as an investor, CPPIB’s active management strategy will deliver attractive returns over the long run.

    We disclose our costs on an annual basis. As of March 31, 2014, total costs consisted of the following:

    o   External Management Fees:  External asset managers were paid a total of $947 million in fiscal 2014 compared to $782 million in fiscal 2013. External management fees have increased in recent years, as we increased commitments in areas that complement our internal investment programs.  Whenever possible, fee arrangements are largely performance-based.  We follow the customary practice of reporting investment returns net of fees paid.
    o   Transaction costs: Transaction costs for fiscal 2014 totalled $216 million compared to $177 million in the prior year.  Investment returns are reported net of these costs.  Transaction costs are often associated with the acquisition of private assets such as infrastructure, real estate and private equity, and can vary from year to year according to the number, size and complexity of our investing activities.
    o   Operating expenses: This category covers all other costs incurred to manage the CPP Fund.  Operating expenses were $576 million this year, representing 29.3 cents for every $100 of invested assets, compared to $490 million in fiscal 2013 or 28.9 cents for the prior years.

    CPPIB remains in a growth stage and expenses will increase as we continue to build an enduring, internationally competitive organization to manage the expected growth of the Fund in the decades ahead.

    We remain steadfast in our conviction that building internal investment expertise and capabilities where CPPIB has comparative advantage makes good business sense from a cost perspective.  As an example, we estimate that the total costs for the external management of our $12 billion infrastructure portfolio would range from $210 - $240 million per year.  By contrast, our internal management of the portfolio amounted to approximately $51 million in fiscal 2014.

  14. Is the CPP Investment Board really independent of government?

    Yes.  As a Crown corporation, we are accountable to the federal and provincial finance ministers, who are responsible for the Canada Pension Plan.  However, we were created to operate at arm's length from governments and to make independent investment decisions. As enshrined in the Canada Pension Plan Investment Board Act, the board of directors approves our investment policies and management makes investment decisions consistent with the approved policies. Management is accountable to the board of directors of the CPP Investment Board.

    In the event a politician were to try to influence our investment decision making, we would remind the individual, in writing, of the CPP Investment Board's arm's length relationship to government and the political process. Further, the incident would be reported to our board of directors for review and action if warranted.

  15. How does your Policy on Sustainable Investing compare with that of other large investors in Canada?


    We believe that organizations that manage ESG factors effectively are more likely to create sustainable value over the long term than those that do not. We also believe that our stewardship of CPP Fund assets must go beyond simply buying and selling investments.  Our responsibility is also to conduct ourselves as principled, constructive and active owners.


    We have adopted a fiduciary investment and ownership approach to environmental, social and governance (ESG) issues, focused on engagement, based in part on leading practices in Canada and globally. We are one of the early adopters of this approach in Canada.

    Our approach is consistent with our mandate, investment objectives and fiduciary obligations.

    CPPIB helped develop and is a founding signatory of the United Nations (UN)-supported Principles for Responsible Investment (PRI).  Eric Wetlaufer, Senior Vice-President, Public Market Investments, is currently serving a three-year term as a member of the PRI Advisory Council.

    In addition, we want to learn from, and work with, other leaders in this field, including like-minded investors.

    In keeping with our commitment to disclose our responsible investing activities, our annual Report on Sustainable Investing provides a detailed review of our activities and achievements. For more information about our approach to sustainable investing, please visit the Sustainable Investing section of our website.

  16. What are your current engagement focus areas?

    We currently have four focus areas for our engagement program: the extractive industries (oil & gas and mining), climate change, management compensation and water. These areas have significant potential to affect the long-term value of our portfolio.

    a. Extractive industries make up a large proportion of our portfolio.  Oil and gas and mining companies have significant impacts on both the physical environment and the local communities where they operate.

    b. Climate change has the far-reaching potential to result in both direct and indirect financial implications for companies and long-term shareholder value.  We believe companies that adjust successfully to climate change issues will be rewarded over the long run.

    c. CPPIB believes that a clear and appropriate link between pay and performance is critical to aligning the interests of management with those of long-term investors. 

    d. Water is one of the world’s most critical resources.  Effective risk management of water supply and quality is fundamental to the long-term sustainability of a company’s performance.

  17. Do you use positive or negative screens when making investment decisions?

    Our view as an experienced investor is that “negative screening” could hurt investment returns over time or increase risk, and this would go against our singular investment-only mandate to maximize returns without undue risk of loss. Given this mandate, we integrate ESG into our investment analysis, rather than eliminating investments based on ESG factors alone.

    As an owner, we monitor ESG factors and actively engage with companies to promote improved management of ESG.  Instead of simply “voting with our feet” and selling our shares when issues arise, long-term institutional investors such as CPPIB have the ability to act as patient providers of capital and to work with companies to bring about change.  Through such actions we can make significant, market-wide improvements on ESG factors to the ultimate benefit of all market participants.

    Engagement is widely recognized as an effective strategy for large institutional investors with long-term investment horizons. In general, engagement refers to the use of our ownership position in more than 2500 companies to encourage improved performance on and disclosure of ESG factors. We do this by exercising our proxies, by joining coalitions of like-minded investors and through direct contact with companies.

  18. Does CPPIB's Policy on Responsible Investing restrict you from making certain investments?

    We look at any particular investment within the context of our "investment only" mandate. We evaluate companies based on investment criteria, with the goal of helping sustain the pensions of 18 million Canadians. This doesn’t mean that we don’t consider ESG issues. However, we look at them in a financial context. We follow two sets of guidelines to help us invest responsibly:

    1. Our own Policy on Responsible Investing

    2. The UN-supported Principles for Responsible Investment, which provides a practical framework for investors to integrate consideration of ESG factors into investment decision-making and ownership practices.

  19. What is your general view on the current Canadian pension reform debate?

    We are not advocating for any policy outcome or specific reform proposal. We believe it is important that in-depth discussions and debate on the issue take place. If federal and provincial stewards of the CPP decide to expand the existing CPP model on a mandatory basis, we would be able to manage the additional assets.

  20. What are the principles of the CPP Investment Board’s management compensation framework?

    To successfully manage a $238.8 billion globally diversified Fund requires a very diverse range of investments in public and private markets and the expertise to manage them. As one of the largest funds of its type globally, we require people with significant experience in investment management, investment research, portfolio design and risk management, investment operations and other skills. Our compensation program is a key factor in attracting the talent we need to execute our strategy and achieve our mandate to earn the investment returns needed to help sustain the Canada Pension Plan.

    The CPPIB’s compensation framework meets and, in some cases, exceeds the Principles for Sound Compensation Practices established by the Financial Stability Board and endorsed by the G20 nations. These principles require a substantial proportion of management compensation to be variable, tied to long-term performance and to be assessed and paid for over a prolonged period of time. In accordance with the pay for performance philosophy and the G20 principles, compensation at CPPIB is based on investment performance over four-year periods.

    Calculation of total compensation depends on three factors:

    a. CPP Fund returns;

    b. Actual investment income generated above our market-based benchmarks; and

    c. Performance against predetermined individual objectives.

  21. How are members of the Board of Directors appointed?

    The director nomination process is designed to ensure that the board has directors with proven financial ability or relevant work experience such that the CPP Investment Board will be able to effectively achieve its objectives. Directors are appointed by the federal Governor in Council on the recommendation of the federal finance minister, following the minister’s consultation with the finance ministers of the participating provinces and assisted by an external nominating committee with private-sector involvement. In line with Treasury Board recommendations for Crown corporations, the CPP Investment Board provides assistance in the identification of desirable director competencies and retains and manages an executive search firm to source qualified candidates for consideration.

    The names of those candidates are forwarded to the external nominating committee, which considers them and submits names of qualified candidates to the federal Minister of Finance.

    For more information see Board of Directors.