University pension plan records 9.1% loss in 2022

Declining assets and solvency ratio highlight challenges faced by the jointly sponsored pension plan

University pension plan records 9.1% loss in 2022

The University Pension Plan (UPP) has disclosed a 9.1% loss in 2022, according to its recently released annual report. The jointly sponsored defined benefit pension plan experienced a decline in assets from $11.8 billion to $10.8 billion over the course of the year. The plan's solvency ratio also decreased to 103.3% from 111% in 2021.

In a letter included in the annual report, Barbara Zvan, President and CEO of the UPP, acknowledged the unprecedented challenges faced in the past year.

“This past year brought unprecedented challenges for individuals and investors alike, with far-reaching impacts,” said Zvan. “While conditions like these can certainly be stressful, I want to assure our members there is no impact to the security of their pensions.”

The most significant losses within the UPP were observed in the public equities portfolio, which declined by 14.1%. The fixed-income portfolio also experienced sharp declines, dropping 12.2%.

However, the portfolio's absolute return component saw growth of 16%, leading to the overall performance.

Although the UPP's private equity holdings declined by 3%, various alternative asset classes generated robust returns. The real estate portfolio grew by 12.5%, infrastructure by 6.8%, and private debt by 3.6%.

Zvan emphasized that despite the investment losses, the UPP remains financially strong and its investment strategy is designed for long-term results.

"While we take short-term investment performance seriously, UPP's investment strategy is purposely designed for long-term results," she stated.

The annual report also highlighted the UPP's environmental, social, and governance (ESG) achievements.

Carbon emissions were reduced by 21% during the year, and the carbon footprint of the pension plan, encompassing both direct and indirect greenhouse gas emissions, decreased by 4%.

Furthermore, the UPP actively engaged in proxy voting, casting ballots on 5,855 motions. The plan voted in favour of 202 proposals aimed at improving accountability on ESG-related issues.

Notably, it opposed the election of 129 corporate directors at 111 companies lacking diversity in their boards.