Financial position of the Plan
Net assets available for benefits
The Canada Post Corporation Registered Pension Plan posted a 7.9% return in 2016. The Plan ended the year with net assets available for benefits of $23,192 million (including $26 million in the DC component), an increase of $1,187 million from $22,005 million (including $18 million in the DC component) at the end of 2015.
Changes in net assets available for benefits
The $1,187 million increase in net assets available for benefits represented investment income of $1,721 million and contributions of $512 million, offset by pension benefit payments of $941 million and expenses of $105 million.
Investment income – comprising interest, dividend, as well as realized and unrealized gains and losses – was $1,721 million for 2016, compared to $1,522 million for 2015.
Plan contributions in 2016 were $512 million compared to $519 million in 2015, a decrease of $7 million.
Pension benefit payments for 2016 were $941 million compared to $882 million in 2015, an increase of $59 million. This was mostly the result of a 6.8% increase in the number of retirees over 2015.
|Contributions to the Plan (in millions)||2016||2015|
|Canada Post current service||246||246|
|Canada Post special payments||34||34|
|Benefits payments (in millions)||2016||2015|
|Total benefits paid||$941||$882|
Changes in pension obligations
Pension obligations were $20,301 million (including $26 million in the DC component) compared to $19,234 million (including $18 million in the DC component) in 2015, an increase of $1,067 million. The increase is mainly due to interest accrued on the pension obligations, new benefits accrued and changes in actuarial assumptions partially offset by benefits paid during 2016.
The difference between assets available for benefits and pension obligations as at December 31, 2016, resulted in a surplus of $2,891 million, as disclosed in the financial statements based on standards of the Chartered Professional Accountants of Canada (CPA Canada).
The going-concern surplus as of the same date is estimated at $1,767 million. The difference between the accounting surplus of $2,891 million and the estimated going-concern surplus of $1,767 million is an actuarial asset value adjustment (or smoothing) of $1,124 million. The smoothed assets valuation method recognizes gains or losses on investments over a five-year period to minimize fluctuations due to market volatility. This actuarial adjustment is no longer permitted as a valuation methodology for accounting purposes under CPA Canada Section 4600 since 2011.