TORONTO (Reuters) – OMERS Administration Corp, one of Canada’s largest pension funds, reported on Monday a gain of C$4.3 billion ($4.1 billion) in investment income for 2009, recovering from an C$8 billion loss for 2008.
The fund, which invests on behalf of more than 400,000 retired and working municipal employees in the province of Ontario, said its total rate of return for 2009 was 10.6 percent.
That compares to a negative 15.3 percent total rate of return for 2008 for OMERS, the Ontario Municipal Employees Retirement System.
Last week, the Caisse de depot et placement du Quebec, Canada’s biggest pension fund manager, which manages investments for various public and private pension plans, said its net assets climbed to C$131.6 billion in 2009 from C$120.1 billion the year before. It said it had a nearly 10 percent rate of return.
For 2008, the Caisse reported a huge C$39.8 billion loss, prompting the Quebec government to launch an investigation.
OMERS said it plans to increase its assets under management and further participate in large-scale investments with strong cash flows to help it address higher pension obligations.
“Like the majority of the large plans, pension obligations have been increasing at a greater pace than contributions,” Patrick Crowley, OMERS’ chief financial officer, said in a release.
He said that lower net assets as a result of the slump in the economy in 2008, as well as changes in certain actuarial assumptions, have increased OMERS’ pension obligations.
As a result, the plan ran a deficit of C$1.52 billion in 2009 in addition to 2008’s C$4.95 billion deficit.
OMERS said it plans to change its asset mix over the next three years. It is now 61 percent invested in public markets and 39 percent invested in private equity and is looking for a more even split.
“Our long-term objective is to migrate and end up with a result that would have 53 percent invested in public markets over the longer term and 47 percent in the private markets,” Crowley told journalists at a press conference held to discuss OMERS’ results.
In 2009, OMERS got an 11 percent rate of return from public markets, and 13.9 percent from private equity.
OMERS said it will look at buying assets likely to be sold as governments around the world seek funds to pay down debts accumulated in the global economic crisis.
“I think at some point in time the governments will have to dispose of assets,” said OMERS Chief Executive Michael Nobrega.
“We have a fair amount of liquidity on our balance sheets at the current time to actually take advantage of these global opportunities as they come up,” Nobrega said, adding that some infrastructure assets could come on the block soon in the United Kingdom that may be of interest.
Asked about his wish list for the Canadian government budget to be presented this week, Nobrega said he’d like to hear about plans to cut the deficit.
He also said he’d look for signals the government might look at major strategic investments to increase the nation’s productivity, and pointed to power projects, highway building, and renovations of border crossing posts with the United States as examples.
($1=$1.04 Canadian) (Reporting by John McCrank and Pav Jordan; editing by Peter Galloway)