Investments & Funding

Financial Stability

The LiUNA Pension Fund is a Multi-Employer Defined Benefit Pension Plan and like other defined benefit plans, must be able to meet financial obligations for defined benefits owed to members that may not be fully paid until several decades from now. Both assets and liabilities must be assessed with a long term view. It is the Trustees’ responsibility to ensure the LPF meets these financial obligations.

Although the Trustees adopt a long-term view, to manage risk the Trustees conduct an annual funding valuation to determine the LPF’s liabilities and assets. The annual funding valuation provides a snapshot of the future by determining the amount of money needed to pay benefits earned by members to the valuation date.

Funded Status of the Plan

The LiUNA Pension Fund of Central and Eastern Canada (the “Plan”) is a Registered Multi-Employer Pension Plan. At least every 3 years the Plan must file an actuarial valuation report with the Financial Services Regulatory Authority of Ontario (FSRA) with an update of the financial status of the Plan. The “going-concern” valuation is the primary measure of the health of the Plan and takes a long-term view by looking far into the future to determine the level of contributions required to ensure pension benefits are properly funded. Log on to AccessLPF to read more on the Publications page.

Investment Management

The LPF is designed to provide members with a defined pension benefit when they retire. To do so, the Fund must achieve results that will meet its long-term financial obligations. In other words, the Fund must earn enough investment return so that, together with contributions, the pension earned over each member’s working lifetime can be paid out at retirement. To honour this promise, the Fund is seeking a long-term annualized return in excess of 6% annualized on its investments. We must balance the earning potential of high-growth investments with the need to provide a stable, secure, and predictable retirement Fund with lower risk assets.

The Fund’s investment assets are managed externally by professional investment managers and advice from external professionals including legal experts and investment consultants. Each manager has a specific investment mandate – such as stocks, bonds, real estate or infrastructure – and that manager is governed by the guidelines set out by the Board of Trustees in the Fund’s Statement of Investment Policies and Procedures (SIP&P). The objective of each investment manager is to obtain an average annual rate of return greater than its designated benchmark. The benchmark is the yardstick against which the investment performance can be compared for the purposes of determining investment skill within their respective sector.

Asset Mix

The Fund continuously seeks out investments that provide higher expected long-term rates of return in order to maximize the value of our members’ pensions, while managing risk and volatility through diversification and other strategies. The Pension Committee and Board of Trustees monitors the Fund’s performance on a continuous basis and takes the necessary steps to safeguard the assets. For example, in recent years, we’ve found that increasing our holdings in private companies, real estate properties, and infrastructure assets has proven to be a very successful strategy for growing the Fund.

Asset Allocation December 31, 2022

Fund Performance

The average annual rate of return for the five-and-ten-years ending December 31, 2022 were 5.2% and 8.0% respectively. During 2022, the Fund earned an annual rate of return of -3.2%. Despite the Fund generating a negative return for the year, this compares very favourably to equity and bond markets which were down -14.4% and -11.3% respectively for the year. The Fund’s return was a result of good diversification across alternative investments which, on average, generated a positive return, especially within infrastructure and private equity.

We expect long-term performance results of the Fund to continue to exceed the greater than 6% annual goal.

Although past performance is not necessarily an indicator of future results, we are continuing with our strategy of a diversified portfolio for continued growth. The Fund continues to search for ways to earn stable, less-volatile returns by expanding investments in the types of alternative arrangements explained above. Over the long-term, the Fund’s asset mix is expected to produce higher and more stable returns that will continue to strengthen the Fund and benefit members.