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Public-sector pension funds achieve strong investment returns in 2012-13 12

News Release - New Brunswick Investment Management Corporation 12 June 2013

FREDERICTON (GNB) – The financial assets of New Brunswick's Public Service, Teachers’ and Judges’ pension plans grew to more than $10 billion by the end of 2012-13 in large part as a result of strong investment returns achieved by the New Brunswick Investment Management Corporation.

The corporation announced today that net assets under management of as March 31, 2013, reached an all-time high of $10.1 billion, up from $9.4 billion as of March 31, 2012. This increase resulted from $829.9 million in net investment valuation gains and $166.6 million in special funding payments from the plans' sponsors, mainly the provincial government, being offset by net pension payouts of $305.4 million.

The corporation achieved an overall gross rate of return of 9.08 per cent (not adjusted for inflation). The long-term annualized return, since the corporation was formed in 1996, now stands at 6.79 per cent.

"Most importantly, the annualized real return (after adjusting for inflation) since our inception is now 4.75 per cent, thereby continuing to exceed the long-term real return objective of four per cent that has been set out by each pension plan's independent actuary," said John A. Sinclair, president and chief executive officer of the corporation.

Sinclair attributed this success to the hard work and expertise of the corporation’s management and staff as well as its strong risk control philosophy.

Annual investment returns for the Public Service, Teachers' and Judges' plans were 9.1 per cent, 9.07 per cent and 9.09 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 that the overall returns for each pension fund continued to surpass their investment policy benchmarks after considering the corporation’s low operating expenses.

"Investment management costs were only 0.12 per cent of assets under management, and the returns in excess of benchmarks after covering these costs added 0.68 per cent or approximately $67 million in investment earnings to the total assets of the pension funds," said Sinclair. "It is particularly pleasing to have produced returns that exceed the benchmark targets in a period where economic uncertainty and sovereign debt concerns persisted."

Sinclair said the corporation’s investment strategy remained well positioned by continuing to take advantage of the relatively slow economic rebound that has occurred since the financial market crisis in 2008-09 while protecting against interim periods of increased volatility and market declines.

The New Brunswick Investment Management Corporation was formed to operate at arm's length to 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.

Further information about the corporation and a copy of the more detailed fiscal 2012-13 annual report, available this summer, are online.