The Plan’s assets are divided into 2 portfolios with different goals. These portfolios contain asset classes that are chosen to achieve the objectives of the total portfolio.
The objective of the performance portfolio is to promote the achievement of the Plan’s long-term return target in order to maintain contributions at a reasonable level for plan members and employers.
In 2021, this portfolio posted a return of 18.9%, with a value added of $332.9M compared to the benchmark. All the performance asset classes made positive contributions, posting returns over 10%.
In terms of longer-term investments, all asset classes performed well with the 10 years annualized return outperforming their benchmark indexes, playing a major role in the improvement of the DGPP’s financial health.
10-Year annualized return
To achieve and maintain the target matching level between Plan assets and liabilities to minimize volatility in the financial position.
In 2021, the rate increases improved the DGPP's financial position, despite negative returns in this portfolio. As a result of the current rate management strategy, higher interest rates decreased plan liabilities, that is, the present value of all current and future pension benefits. Since the increase in assets outweighed the increase in benefits owing, the Plan's financial position improved.
Conversely, if interest rates had dropped, the strategy would have protected the Plan's financial health by making sure a significant portion of the assets increased to offset the growth of benefits. While the strategy may involve more volatility on returns over the short term, it’s designed to be profitable over the long term. This strategy is especially important now that we have regained full financial health. It protects and stabilizes the Plan’s financial position, to ensure that both contributions and pension payments are stable at all times and to comply with Desjardins’s risk budget.
Generally speaking, the matching portfolio is a pool of bonds and other fixed income securities. These securities can be managed in the portfolio itself ("fixed income portfolio") or through strategies used to overlay the asset portfolio ("bond overlay"). In 2021, the matching portfolio posted a return of -7.1%.
In 2021, the Plan recorded a return of 6.7%, which is higher than the long-term target return of 5.6%. The comparison of this return to the benchmark of 4.3% shows that, overall, the total portfolio’s investments are performing well relative to the market in general.
Over the longer term, the 10-year annualized return is significantly higher than expectations, at 10.4%. The required returns have therefore been achieved, meaning that the total portfolio has met its objective.
To conclude, the Plan’s financial position has continued to improve due to the contributions made by the two portfolios. The DGPP shows that it can deliver the stability and resilience required to fulfil its promise to every member.
2021 return of the total portfolio
Higher than the long-term target return of 5.6%
and the benchmark of 4.3%
10-year annualized return of the total portfolio