Plan Funding Remains Strong Despite Volatile Markets

It was a tough year in investment markets as fallout from the pandemic and rising geopolitical tensions tightened markets. Both the global equity and bond markets dropped in response to the war in Ukraine, COVID-19 lockdowns in China and continued supply chain disruptions, while rising inflation and related interest rate increases deepened concerns.

The STRP’s portfolio was negatively impacted as a result and finished the fiscal year with a -7.3% return, decreasing the Plan’s asset base to $6.6 billion. This return compared favourably to the double-digit declines in public bond and equity markets as allocations to alternative investments helped protect the portfolio. The investment team has been steadily increasing investments in real estate, infrastructure, private credit and private equity, and these assets delivered strong returns, mitigating some of the bond and equity losses.

Given the design of the STRP, these investment swings do not have a direct impact on the value of your STF pension. The Federation continues to invest for the long term and, as such, expects there to be down years. The STRP is well-designed to manage periods of volatility for long-term stability. The changes that were made to the STRP in 2015 provided us with the flexibility to manage these types of environments as they happen and the health and funding of the Plan remains stable as a result. We’ve even been able to provide a conditional upgrade to active members and a conditional cost-of-living increase to retirees, who need it now more than ever.