The CBC Pension Board of Trustees held its quarterly meeting on March 27 (by videoconference, of course, ecause of the COVID-19!) While this spring meeting is generally devoted to the assessment of the past year (i.e. the results until December 31 of the previous year), it goes without saying that the effects of the coronavirus largely permeated the trustees’ deliberations.
Let’s start with the results for 2019, which was an exceptional year, before discussing the impact up to now of the current crisis. Our assets went from 7 to 8 billion dollars as of December 31, 2019, an increase of more than 18%. This means that we ended the year with a $2.8 billion surplus and that on a going concern basis, our funding is at 153%, whereas on a solvency basis (i.e. in the unlikely hypothesis that the CBC was to close shop tomorrow morning), we have reached 102.3%, and the average for the last three years exceeded 100%. So, for the first time in ten years, each of those three indexes were over 100%! This means that our Pension Plan maintains its solid financial footing and that we were in an excellent position to confront the current crisis.
Of course, we are feeling the effects that the coronavirus is having on financial markets and the world economy in general. Within a few weeks, the exceptional gains of last year were erased: as of March 22 of this year, our assets had shrunk back to 2018 level (i.e. the billion dollars added last year had vanished), and preliminary estimates show that our funding ratio on a going concern basis has dropped by approximately 15% remaining well above 100% (so, no reason to panic!), and the one on a solvency basis has dropped by less than 10%.
But the situation remains very fluid and last week’s modest rebound on the financial markets has somewhat improved the situation. It remains to be seen what global effect the coronavirus crisis will have if it lasts for any length of time. One thing is sure, though, the investment strategy adopted in 2008-09, which had protected us from the worst effects of that economic crisis, continues to protect us in the current one.
Our Pension Plan remains solid and you have no reason to fear for your pension cheque.
CBC Pension Plan Board of Trustees