Pension fund grows by nearly 12% in 2020

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As of press time in April, the pension fund was sitting at over $1 billion and was 140% fully funded. Photo: Watchara Ritjan/Shutterstock

The Anglican Church of Canada’s pension fund grew by nearly 12% in 2020 after markets bounced back—and then some—from March lows, says Judy Robinson, executive director of the General Synod Pension Plan.

“It performed spectacularly, I’m happy to report,” Robinson says. “In March last year, when the pandemic first reared its ugly head globally, all the markets kind of crashed, and the pension fund was down more than 10%…. But then the year’s recovery was really quite phenomenal.”

As this story was being written, the fund was sitting at more than $1 billion—a “remarkable milestone for us,” she says. The pension plan is now about 140% fully funded, meaning that for every dollar owed to retired and active Anglican Church of Canada employees, the plan has $1.40 in assets.

(In 2013, after the funded ratio had fallen to 95.3%, the trustees of the General Synod Pension Fund asked for (and later received) permission from the Ontario government for a three-year window to improve the plan’s funding level, in order to avoid possible pension reductions of 20% to 30%.)

Many of the world’s stock markets grew in 2020, despite the economic turbulence—some more than others. The S&P 500, an index of U.S. stocks, grew by more than 16%; the Canadian S&P/TSX Composite Index gained only a little over 2% during the year.

Stocks, however, make up only roughly half of the church’s pension fund. And it wasn’t just the fund’s stock holdings that performed well last year, Robinson says.

Judy Robinson. Photo: Contributed

“It was really everything,” she says. “Stocks performed really well, and interest rates went down so bonds performed really well, and we have some infrastructure investments that performed really well. So it was just really across the board.” (Bond prices generally increase as interest rates decrease.)

Robinson says the fund has performed in the top 25% of similarly invested pension funds for more than a decade.

“We have some very, very capable trustees who make investment decisions, and they have selected asset managers and asset classes that have performed really, really well,” she says. “We’re reaping the benefits of that.”

She cautions, however, that with stock prices now high, and interest rates extremely low, it may be challenging to find investments that can deliver comparable returns in the coming years.

One investing technique that drew an unusual amount of attention in early 2021 is short selling, whereby the investor gains if the price of a share declines, but loses if the price increases. The practice is often associated with hedge funds.

In late January, some retail investors aggressively bought up stock in GameStop, a U.S. computer game retailer, and some other companies that they believed to be heavily shorted. Conversations on the Reddit internet platform suggest they were motivated by a desire to cause financial losses to hedge funds, and the U.S. financial establishment generally, for perceived injustices.

The General Synod Pension Fund, Robinson says, does not have any short positions, and so was not impacted by the so-called GameStop short squeeze.

“It’s not within our mandate. None of our managers are allowed to short stock, so we don’t have that kind of risk in the fund,” she says.

It’s good the fund is invested in stocks, because although stock markets can be prone to dramatic drops, such as those the world saw in March, these tend to be short-term, Robinson says.

“We have a very, very long-term view and because the pension plan is so well-funded, we have tolerance for some ups and downs, some volatility,” she says.

“It would be not good decision-making to not be invested in stocks…. Stocks have outperformed bonds over the long term in every period of time that you can study.”

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Tali Folkins

Tali Folkins

Tali Folkins has worked as a staff reporter for the Law Times and the New Brunswick Telegraph-Journal. His writing has appeared in The Globe and Mail and The United Church Observer.

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