US equities played "pivotal role" in return for UPP
One of Canada’s largest academic pension plans released their annual report on Thursday, while highlighting the Plan’s strong performance and continued growth in its third full reporting year.
The University Pension Plan Ontario (UPP) reported a 10.3 per cent net annual return for 2024, pushing its total net assets from $11.7 billion to $12.8 billion and maintaining a fully funded status of 102 per cent, according to their report.
The fully funded status also includes a $200 million surplus, the UPP noted, crediting its disciplined risk management, resilient investment strategy, and member-focused service expansion for navigating uncertainty while delivering long-term value.
“Our 2024 investment performance highlights the continued progress we’re making in establishing a strong, well-diversified portfolio aligned with our long-term objectives,” said Aaron Bennett, UPP’s chief investment officer, in a statement. “By strengthening internal capabilities and refining our asset mix, we are unlocking the benefits of scale - efficiency, diversification, and control.”
Bennett also acknowledged that public equities, particularly US equities, played “a pivotal role” for the Plan’s overall performance.
“With the surge in economic growth and the decline in interest rates and inflation, various private asset classes began to recover from prior sector underperformance. UPP’s ability to deploy capital in a less crowded investor space recently led to our infrastructure strategies beginning to yield positive results,” he said in the report.
UPP’s investment strategy continues to center on achieving long-term, risk-adjusted returns while balancing the need for contribution stability and benefit predictability. Last year, UPP surpassed $1 billion in private asset commitments since 2022, further diversifying its portfolio.
The year’s gains were partially offset by losses in fixed income, inflation-sensitive bonds, and real estate, which were driven by long-term interest rates and specific sub-sector supply-demand imbalances in areas such as office and retail real estate, highlighted Bennett.
Notably, the Plan added more than $250 million in commitments to climate solutions across asset classes to demonstrate strong alignment with sustainable investing principles.
The organization also made strides in reducing the carbon intensity of its portfolio achieving a 59 per cent drop in greenhouse gas emissions intensity from its 2021 baseline, exceeding its 2025 target.
The pension fund acknowledged these climate milestones underscore UPP’s focus on managing systemic financial risks, including those associated with inequality, which were addressed in its newly released Inequality Stewardship Plan.
Alongside investment growth, 2024 saw the phased rollout of UPP’s enhanced pension administration platform. The upgrades introduce a comprehensive suite of member and employer services, including modern digital tools aimed at improving member and employer experience and transparency.
The plan also welcomed new members from two additional university organizations and two post-secondary institutions, further broadening its reach in Ontario’s academic community.
“UPP was created to protect and grow the pension security of our members, and that responsibility guides every decision we make,” said Barbara Zvan, president and CEO of UPP, reinforcing its commitment to providing secure, stable pension benefits for Ontario’s university faculty and staff.
“This past year marked an important step forward - strengthening the foundation that supports our members through strong investment performance, disciplined risk management, and the continued rollout of dedicated member services,” she added.
As part of its commitment to inflation-sensitive benefits, UPP granted a 2.03 per cent cost-of-living adjustment to its pensioners, survivors, and dependents in pay, effective January 1, 2025.
