Evidence of meeting #22 for Finance in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was plan.
A recording is available from Parliament.
10:30 a.m.
Senior Vice-President, Public Market Investments, Canada Pension Plan Investment Board
I don't think it's a clear statement, in any event.
10:30 a.m.
Voices
Oh, oh!
April 28th, 2009 / 10:30 a.m.
Senior Vice-President, Public Market Investments, Canada Pension Plan Investment Board
It's true that we're getting net contributions coming in for the next 11 years, but there are obviously some significant liabilities attached to all of those cash--
10:35 a.m.
Conservative
Mike Wallace Conservative Burlington, ON
To all of this cash coming in. Okay.
In terms of being secure in your funding aspects, which you've talked about, why would you choose the 11-year horizon? Is there a reason it's 11 years and not 12 or 10? It seems odd to me that we have an 11-year vision; on money coming in today, it pays out in 11 years. How does that work? I have no idea.
10:35 a.m.
Senior Vice-President, Public Market Investments, Canada Pension Plan Investment Board
This is just strictly a function of the demographics and the contribution and payout rates, so in 11 years, the total contributions coming in on an annual basis equal the total benefits being paid out on an annual basis. It's not something we've chosen. That's a function of how--
10:35 a.m.
Conservative
Mike Wallace Conservative Burlington, ON
It's a function of how old the population is and how many people there are, based on future estimates by actuaries.
10:35 a.m.
Senior Vice-President, Public Market Investments, Canada Pension Plan Investment Board
Right.
10:35 a.m.
Conservative
Mike Wallace Conservative Burlington, ON
It's a function of how many people will still be living at 65 and and how many will live until 95 or whatever. I would--
10:35 a.m.
Conservative
Mike Wallace Conservative Burlington, ON
I'll leave it at that.
I appreciate the information.
You're happy to share your résumé with everybody at the committee?
10:35 a.m.
Voices
Oh, oh!
10:35 a.m.
NDP
Thomas Mulcair NDP Outremont, QC
I want to come back to Mr. Raymond, because his nod does not appear in the record. He nodded yes with his head when I told him that if they had lost 13.7% in the first three quarters, it was easy to forecast that the losses would be higher for the year.
The fiscal year has already been over for a month. What is the best estimate of losses for the full year?
10:35 a.m.
Chief Operations Officer and Senior Vice-President, Canada Pension Plan Investment Board
In February, we reported our December 31 results, which were for the first three quarters of the year. Correctly, there was a decline of $13.8 billion, which translates into a negative 13.7%. If you want to compare the 2008 calendar year, just because some people think in calendar years, there was a decline of $18.3 billion, with a decline of 14.4%. Our year-end, as you pointed out, is March 31. Our annual report is expected to be out at the end of May and that--
10:35 a.m.
NDP
Thomas Mulcair NDP Outremont, QC
I understand this, and we went through this with the PSP Investments last week, but they were able to give us an estimation. You know what your number is, even though you might have your annual report coming out in a couple of weeks. You're before Parliament now.
By the way, I must say that I appreciate the fact that you're here today. I'm a little disappointed that David Denison declined, as he decides who gets to present here. It's a pleasure for us to meet with you, Ms. Warmbold, and with you, Mr. Raymond, but I think that at a time like this the chairman should have had the guts to come before Parliament. It would have shown at least a bit of courage, conviction, and respect.
That being said, you know what the number is, and I'm asking you to give it to us now. What's the number for fiscal 2008-09?
10:35 a.m.
Chief Operations Officer and Senior Vice-President, Canada Pension Plan Investment Board
I think to respect our stewards--
10:35 a.m.
NDP
Thomas Mulcair NDP Outremont, QC
I'd like you to respect Parliament and the Canadians who elected us here.
What is the closest estimation of your number? You're not the auditor, that's fine, but what's the number?
10:35 a.m.
Chief Operations Officer and Senior Vice-President, Canada Pension Plan Investment Board
We have a very transparent disclosure process. We actually give out quarterly results.
10:35 a.m.
NDP
10:35 a.m.
Chief Operations Officer and Senior Vice-President, Canada Pension Plan Investment Board
I'm afraid, until it's been signed off--one, by our auditors, and two, by our board of directors--and then tabled before our stewards, it would be completely inappropriate to--
10:35 a.m.
NDP
Thomas Mulcair NDP Outremont, QC
I find that a singular lack of respect, bordering on contempt, for this process.
10:35 a.m.
NDP
Thomas Mulcair NDP Outremont, QC
Mr. Chairman, I'd like to move on to the question of the benchmarks that we were discussing before.
We have before us Mr. Raymond, who is in charge of public markets. There's also a Mark Wiseman, who is the senior vice-president of private markets. Mr. Wiseman is not here.
The private market benchmarks don't reflect liquidity risk, leverage, and the beta--in other words, the market returns A--of the underlying investments, allowing you to easily beat them so that you can justify your bonuses. I've looked through the annual report, and despite what Ms. Warmbold said before, there is no indication in there of what those benchmarks were.
Indeed, in your presentation you say, word for word, that your performance bonuses—which you obviously have every intention of paying yourselves again this year—are based on two factors: how the fund performs overall and whether you generate returns above a market-based benchmark. But you don't give them for the private markets. We just don't have them.
So I'd like to make the following suggestion. Now that you've heard what's happening in the real world, where people who have worked in sawmills all their lives are losing their pensions, and now that you know that your base salary is already the highest of anybody anyway, with the millions of dollars you paid yourselves last time, I'm going to make a strong suggestion to you that you refrain from paying yourselves....
And I understand the subtlety here, that it's not you, it's the board, but let's not kid ourselves. Let's be honest and say that at this time of grave economic crisis, the last thing you should allow yourselves to do is to be paid bonuses.
If you really need to be convinced of that, at least make a proposal that any bonuses that are based on this four-year examination be put in abeyance. Find a technique, find a mechanism, to put them in abeyance, at least until we can measure those four years.
Coming as it does, at the end of a year when you've lost at least $15 billion to $20 billion in the CPP fund, I think very few Canadians would put up with seeing people who are already paid a base salary as much as you are paid also paying themselves a bonus.
10:40 a.m.
NDP
Thomas Mulcair NDP Outremont, QC
Thank you, Mr. Chairman.
I would like to say it in French for those who did not understand.
In the current context, during this serious economic crisis, we find it unjustifiable, even scandalous, for people who are already making hundreds of thousands of dollars a year to continue giving themselves several million dollars in bonuses a year, as has been the case until now. At the very least, put the money aside so that we can determine whether your performance is as good as you say, and, for goodness' sake, start being more transparent about performance measures.
