Plan performance - 2008

As a result of recent challenging market conditions and unprecedented volatility in global financial markets, the Plan earned a –15.3 per cent total rate of return in 2008, compared with an 8.7 per cent total rate of return in 2007. The Plan’s total return was positively impacted by the returns generated in infrastructure and real estate demonstrating that our shift to an asset mix with increased focus on private market investments has been successful in reducing the volatility of the Plan’s return. Net investment loss for the Funds totalled $8,013 million in 2008, compared with net investment income of $3,938 million a year earlier.

Our strategy includes cross-organizational, active management of our investments. An important element of this strategy is our asset mix initiative, designed to increase our private market investment holdings, reduce volatility, and secure long-term stable investment returns. This creates a better balance between our private market investments and the more volatile public market investments, and between our long-term liabilities and long-term returns.

Contributions to the Plan in 2008 were $2,037 million compared with $1,875 million in 2007. The increase reflects an increase in active members and increased members' salaries.

Annual Rate of Return and Benchmark
(%)

Plan Funding Status

Each year an independent actuary determines the Plan's funded status by comparing the actuarial value of invested assets to the estimated present value of all pension benefits that members have earned to date. On December 31, 2008, the estimated accrued pension obligation for all members (including survivors) of the Plan was $50,080 million, compared with $46,830 million a year earlier. The increase of $3,250 million was primarily due to interest accrued on the pension benefit obligation, plus new benefits accrued during the year, partially offset by benefits paid in 2008 and impacted by experience gains and losses. The Plan had an actuarial value of net assets of $49,801 million at the end of 2008, compared with $46,912 million in the prior year. The resulting funding deficit was $279 million as at December 31, 2008 compared with a funding surplus of $82 million last year due primarily to negative investment returns in 2008.