NBIMC adapting well to pension plan changes, strong fiscal management to continue
FREDERICTON (GNB) – The New Brunswick Investment Management Corporation reported its investment returns for the fiscal year ending March 31, 2014 averaged 13.56 per cent for its pension fund clients.
The corporation manages the financial assets of the Public Service, Teachers' and Judges' pension plans. Until recently, it served as the pension fund trustee for the three plans but, with the conversion of the Public Service plan to a shared-risk plan, and similar changes announced to the governance of the Teachers' plan, the corporation will no longer serve as their trustee. However, the corporation will continue its role as investment manager for each of these plans.
“Although our role as investment manager for each of these plans continues, our future reporting of the plans' overall investment performance will be to their joint trustee boards,” said John A. Sinclair, president and chief executive officer of the corporation. “We also expect to provide our successful portfolio management capabilities and experience to the trustees on a consultative basis, and will continue to offer a selection of 25 separate pooled funds that are designed to provide our clients with a full spectrum of investment strategies that assist in their diversification and hedging objectives.”
The corporation reported that net assets under management as of March 31, 2014, reached an all-time high of $11.6 billion, up from $10.1 billion in the prior year. This increase resulted from $1.334 billion in net investment gains, partially offset by net pension payouts of $335 million, and the addition of $507 million in assets from two new non-pension fund public sector clients.
The corporation achieved an overall gross rate of return of 13.56 per cent (not adjusted for inflation) on pension assets under management. The long-term annualized return, since the corporation was formed in 1996, now stands at 7.15 per cent.
“Most importantly, the annualized real return (after adjusting for inflation) since our inception is now 5.16 per cent, thereby continuing to exceed the long-term real return objective of four per cent that has previously been set out by each pension plan's independent actuary,” said Sinclair.
Annual investment returns for the Teachers' and Judges' plans, for which the corporation remained trustee for as of March 31, were 13.36 per cent and 13.72 per cent, respectively. The returns for the different client pension funds come about through the different proportions of investment assets held by each fund.
Sinclair said the slowly-improving economy and continued solid corporate-earnings growth contributed to strong equity returns, both in Canada and internationally. However, fixed income markets were affected during the year by uncertainty around central bank interest rate policies amid the United States Federal Reserve Board's decision to begin to remove their quantitative easing policies of recent years.
The New Brunswick Investment Management Corporation was formed to operate at arm's length from government as a Crown corporation. Its team of more than 40 New Brunswick-based investment professionals provides innovative, cost-effective investment management solutions that have met the requirements of more than 51,000 pension plan members since 1996.
MEDIA CONTACT: John A. Sinclair, president and chief executive officer, New Brunswick Investment Management Corporation, 506-444-5800.