May 04, 2005 17:32 ET

Canada Post Pension Plan Earns Solid Results in 2004

OTTAWA, ONTARIO--(CCNMatthews - May 4, 2005) - Canada Post Corporation today announced sound financial results for its Registered Pension Plan in 2004, the fourth full year of operation.

At December 31, 2004, the Registered Pension Plan held total assets of $10.214 billion compared with $8.797 billion the previous year, representing a gain of $1.417 billion. The Canada Post Pension Plan, now one of the largest in the country, earned a solid return of 11.1% over the year.

"The Canada Post Pension Plan reflects the success our company has achieved in recent years," said Anne Joynt, Canada Post's President and CEO. "The 11.1% return obtained in 2004 is welcome and demonstrates that the investment strategies put in place are sound."

The 2004 returns exceeded the benchmark return of 9.2%, representing the blended return of various Canadian, U.S. and international stock and bond market indices weighted in accordance with the Canada Post asset mix target. Returns over the past four years were 5.5% per annum compared with the benchmark of 2.8%.

Canadian and international equity markets provided strong returns during the year. Fixed income returns were also impressive, although declining yields in the "real return" sector also contributed to an increase in the value of pension liabilities of most Canadian plans. Despite the good returns on assets, the continued decline of the real rate of return is contributing to a growing solvency deficit.

"The 2004 results are consistent with many pension plans in that the Corporation saw a further increase in pension liabilities relative to pension assets," said Douglas Greaves, Vice-President Pension Fund and Chief Investment Officer. "The increase in liabilities, which offset the gains generated by the above target returns on assets in 2004, increased the solvency deficit to $1.274 billion."

The Corporation, as Plan sponsor, made an additional contribution of $129 million to the pension plan in 2004, over and above the normal contribution of $281 million, to further strengthen its funded position. In 2005, the $281 million annual payment will have to be doubled.

The Canada Post Pension Plan, a defined benefit plan that guarantees inflation-protected benefits, has more than 70,000 active members, retired members, deferred pensioners and beneficiaries.

Contact Information

  • Canada Post
    Media Relations, Ottawa
    (613) 734-8888