Asset mix

Investment objectives

With the maturing of the Plan, as the average age of Plan members increases and the number of retirees grows, the Plan adopted a liability-driven investment strategy, approved by the Board in 2015. The strategy ensures the Plan's asset mix better matches its liabilities and interest rate risk is reduced over time. The strategy moves along a glide path, or a series of steps, whereby asset mix changes will occur when a predetermined funded status is reached. The first step, completed in 2016, increased bond holdings and extended bond durations. Subsequent steps were taken in 2017 and 2018. This has led to a better match of assets to liabilities. Additional investments in alternative investment holdings continue to be made gradually to reduce the volatility of returns. The long bond, inflation-linked bond and alternative assets allocations have been increased, while universe bonds and equity allocations have been reduced. As anticipated, the adoption of the strategy has reduced the Plan's funded status volatility.

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 fulfill the promise to Plan members of providing pension benefits at a reasonable cost.

In the long term, the Plan's record of outperformance has continued. Over 10 years, the Plan's average annual return was 9.0%, meaning the Plan outperformed both its benchmark of 7.7% and the Plan's return objective over time of 6.5%. 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, 2018, 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