Asset mix

Investment objectives

The Plan has become more mature as Plan members age and the number of retirees increases. This warrants a liability-driven investment strategy in which the Plan's asset mix better matches its liabilities and interest rate risk is reduced over time. In addition, it's anticipated that such a strategy will reduce the lan's funded status volatility. The first step, completed in 2016, called for an increase in bond holdings and the extension of bond durations. This has led to a better match of assets to liabilities. Furthermore, alternative investment holdings will continue to increase gradually depending on investment opportunities. The glide path is based on funded status triggers. An asset mix change will occur when a predetermined funded status is reached. There were no funded status triggers in 2016.

The Plan's investment objectives are to select the appropriate asset mix and risk level to achieve returns above the benchmark and meet the Plan's long-term funding needs. Sound investment decisions contribute to the sustainability and affordability of the Plan and support Canada Post as it fulfills the promise to Plan members of providing pension benefits, at a reasonable cost.

Over the long term, investment performance is evaluated against the Plan's funding objectives and against the rate of return needed for the Plan to meet its pension obligations to members over time, as determined by the actuarial valuation. Over the short term, the Plan relies on a benchmark portfolio to evaluate investment performance. The Plan's benchmark portfolio represents the performance of the market index for each of the asset classes in the Plan.

Asset mix

The Plan's actual asset mix as at December 31, 2016, compared to the benchmark target allocation is shown in the following chart. At any given time, the asset mix may vary from the long-term targets. The SIPP-DB has minimum and maximum limits to allow for flexibility as market conditions change.

Rates of return by asset class and total Plan