By Staff
The Nova Scotia’s Teachers’ Pension Plan Trustee Inc. generated a net return of 9.76% in fiscal year 2024, missing its benchmark of 12.54%.
According to its latest annual report, by its fiscal year-end December 31, 2024, the plan’s assets were $6.2B, up from $5.8B in 2023. Notably, the gap between plan liabilities and net assets decreased last year to -$1.4B from -$1.617 in 2023. Indeed, its funded ratio increased from 78.1% to 81.1%.
The TPPTI attributed its under-funded status in part to its mature demographic profile, which it noted had 0.98 active members for every 1 retiree. Nearly two-thirds (61.6%) of plan liabilities relate to retirees and survivors.
TPPTI’s equities portfolio was the only asset allocation that surpassed its benchmark (33.64% vs 32.50%), buoyed by strong results in global markets, particularly in the U.S. equity market, which benefited from returns from mega-cap “Magnificent Seven” stocks. Canadian equities also proved resilient, benefiting from higher commodity prices and stable domestic growth, while technology stocks followed global trends.
Most equity and fixed income markets benefited from easing inflation, resilient consumer spending, and optimism around future monetary easing. Still, global equity portfolios lagged due to an underweight allocation to historically expensive US markets and large cap US technology stocks in particular. International equity portfolios struggled due to security selection, as higher-quality holdings underperformed amid
a rally in lower-quality, more speculative assets.
The plan’s fixed income return came in just shy of its benchmark (25.20% vs 25.50%), as did the plan’s real assets portfolio (29.45% vs 30.00%) The fund’s significant allocation (30%) to real assets (real estate, infrastructure and natural resources), benchmarked against CPI + 4.5%, continued to experience some valuation challenges carried over from 2023. However, TPP’s noted historical trends suggest these assets could experience improved relative performance as inflation moderates and interest rates normalize.
“While the overall health of the TPP continues to trend positively, the plan’s challenging
funded position and mature demographic profile remain very significant concerns for
the TPPTI Board,” said John Rogers, chair of the TPPTI’s Board. “The Board continues to be hopeful that the plan sponsors will consider effecting fundamental changes to improve the plan’s long-term financial sustainability.”
