INVESTMENTS
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Performance
Since our inception, we have been focused on maintaining a return that is equal to or greater than the assumed actuarial discount rate of 6% over the long term.
2023 highlights
Despite ongoing uncertainty in 2023, the Plan’s results rebounded significantly, delivering an 8.8% net investment return, exceeding its 6.0% discount rate. Importantly, the Plan’s four- and ten-year net annualized returns of 7.2% and 7.9%, respectively, continue to contribute positively to the Plan’s long-term sustainability.
2023 Net Rate of Return on Invested Assets
Net Rate of Return on Invested Assets (4-year annualized)
Net Rate of Return on Invested Assets (10-year annualized)
Invested Assets
Approach
Investment strategy
Assets are invested, balancing investment risk with investment return, to ensure the long-term sustainability of the Plan.
Our investment strategy recognizes the long-term nature of the Plan’s pension obligations and is developed based on asset-liability studies and detailed risk assessments focused on identifying the best possible asset allocation for the Plan. Our Statement of Investment Policies and Procedures (SIPP) ensures the Plan’s assets are prudently invested, supported by strong governance.
We take a long-term perspective in our investment approach. As such, a strong focus on risk mitigation is imperative to TPPC’s investment strategy and permeates every aspect of the investment process from asset class diversification to extensive due diligence and manager selection, rigorous monitoring of the Plan’s assets, environmental, social and governance considerations, and engagement with a wide variety of relevant industry participants.
Our investment policies
Statement of Investment Policies and Procedures (SIPP)
The SIPP articulates the Plan’s governance arrangements and investment parameters, including the asset allocation strategy, risk tolerance, permitted asset classes, risk constraints, investment policies, and monitoring procedures. The SIPP also outlines the principles that guide our investment approach, including diversification, time horizon, liquidity, and approach to responsible investing.
Our Board of Directors approves the SIPP on at least an annual basis — most recently in March 2025.
Responsible Investing (RI)
We have a fiduciary obligation to Plan members to provide prudent investment management and to consider risks that may affect the Plan’s performance.
We believe that the consideration of environmental, social and governance (ESG) factors in investment activities can positively impact the Plan’s long-term investment returns through improved risk management and investment opportunities.
Asset allocation
Our diversified portfolio is selected to optimize investment returns and mitigate risk and volatility.
Management recommends the asset allocation to the TPPC Board. Their recommendations are based on periodic asset liability modelling studies and updates, which form the foundation of the Plan’s investment strategy. Taking place every three to five years, these studies are used to validate our financial projections against a variety of diverse economic and demographic scenarios and to determine if any adjustments to the asset allocation are needed to optimize the likelihood of the Plan meeting its funding requirements.
To mitigate risk, the Plan’s investment portfolio is well diversified across asset classes (equities, fixed income, and real assets), investment styles, geographies, and sectors. See below for the Plan’s actual asset allocation at the end of each of the past four years, and the approved Strategic Asset Allocation.
Progression of actual asset allocation towards the Strategic Asset Allocation (2020 – 2023)
Plan Assets | 2020 | 2021 | 2022 | 2023 | SAA Target | |
|---|---|---|---|---|---|---|
Public Equity | 49.4% | 50.6% | 46.3% | 46.6% | 38.0% | |
Private Equity | 4.8% | 5.8% | 6.1% | 6.1% | 7.0% | |
Real Estate | 6.5% | 6.6% | 8.6% | 8.1% | 12.5% | |
Infrastructure | 7.9% | 8.3% | 11.4% | 13.5% | 17.5% | |
Bonds | 16.1% | 14.5% | 13.9% | 14.2% | 15.5% | |
Mortgages | 6.7% | 2.6% | 1.5% | 0.1% | 0.0% | |
Private Credit | 7.2% | 8.2% | 10.0% | 9.5% | 7.5% | |
Cash | 1.4% | 3.4% | 2.2% | 1.9% | 2.0% | |
Responsible investing
Our beliefs
Our primary investment objective is to ensure that the Plan can meet its pension obligations as they come due.
As an asset owner, we have a fiduciary responsibility to Plan members, which means we have a legal obligation to act in members’ best interests. Part of fulfilling this responsibility is providing prudent investment management and considering risks that may affect the Plan’s performance.
We believe that considering environmental, social, and governance (ESG) factors in investment activities can positively impact the Plan’s long-term investment returns through improved risk management and investment opportunities. Additionally, we believe that companies managing ESG risks are better positioned to sustain and grow long-term value. Integrating ESG into our investment process better positions us to meet our fiduciary obligations and deliver on our objectives.
Defining ESG
Responsible Investing (RI) is an approach that incorporates relevant ESG factors in the investment decision process and supports our approach to being good stewards of capital.
How a company performs as a steward of nature, including energy use, waste management, pollution, natural resource conservation, and treatment of animals.
How a company manages relationships with employees, suppliers, customers, and the communities where it operates, including its labor practices, diversity, human rights, consumer protection, and community engagement.
How a company is directed and controlled, including how it fosters transparency and accountability.
Our approach
Our RI approach is grounded in our ESG Framework, which sets forth four principles that function in an iterative process.
Integrate
The Plan’s investments are externally managed by various investment management firms. We have adopted an ESG due diligence questionnaire to guide our review of managers’ ESG practices.
During the selection and appointment process, TPPC reviews how managers identify, assess, and manage ESG risks and opportunities for investments in their portfolios. As part of our ongoing monitoring process, we consider how each manager’s approach to RI is developing over time.
Engage
We aspire to improve the ESG performance of investee companies. We believe that ongoing dialogue and engagement have a greater impact and are more likely to influence positive change than divestment (selling our investments) or negative screening (excluding certain sectors from our investments).
Our ongoing communication with our investment managers enables us to understand how they are engaging with their portfolio companies. In addition, we monitor investment managers’ capital stewardship and require managers to annually report on votes cast at investee companies’ shareholder meetings. For private markets investments, we may participate on fund advisory boards and committees.
Inform
We engage in continuous learning on ESG trends and best practices. TPPC’s RI approach is also included in staff and Board member onboarding training.
Evolve
As we engage with our investment managers and stay abreast of emerging trends, our approach to RI will continue to progress. We have identified four ESG priority areas where we plan to focus our investment process and engagement activities:
- Climate change: How investee companies are measuring their greenhouse gas emissions and setting reduction goals, managing climate risks, and capturing climate change-related opportunities.
- Diversity, equity, and inclusion: How investee companies are increasing diversity of their boards and workforces and integrating equitable and inclusive practices into their business.
- Labour practices: How investee companies are advancing fair labour practices and safe workplaces.
- Inequality: How investee companies are contributing to global social and economic equality of members of society.
Collaboration
TPPC is a member of the Canadian Coalition for Good Governance (CCGG) and has endorsed its Stewardship Principles. The CCGG promotes good governance practices in Canadian public companies, and the improvement of the regulatory environment to ensure alignment of the interests of boards and management with those of their shareholders.
TPPC is a member of the Institutional Limited Partners Association (ILPA), a global industry association composed of limited partner investors in private equity funds. The association’s Private Equity Principles promote the alignment of interests between limited partners and general partners with an emphasis on transparency and good governance.
TPPC is a member of the Pension Investment Association of Canada (PIAC), an organization focused on promoting sound investment practices and good governance for the benefit of pension plan sponsors and beneficiaries.