Quebec Provincial Pension Fund Posts Record Loss In 2008

In a month when losses in the billions are frequently in the headline, this loss tops them all. Quebec pension giant posts $39.8B loss.

The Caisse de dépôt et placement du Québec has reported the greatest losses in the pension fund’s history with a $39.8 billion loss for 2008.  As a result of this 25 per cent drop in the fund’s assets, the Caisse assets were worth $120.1 billion as of Dec. 31, 2008.  Quebec Finance Minister Monique Jérôme-Forget has called special hearings to investigate this historic loss.

The fund was set up in 1954 and has never seen a loss as big as this.  There has been much speculation about the damage the slumping stock market and the troubles with asset-backed commercial paper stocks (ABCP) would have on the fund’s performance.

“As with all other investors, the first element that explains our return this year is the global financial crisis that broke out in the 4th quarter,” said Caisse president and CEO Fernand Perreault.  “In hindsight, we placed far too much confidence in these securities…. It was a mistake to accumulate so much ABCP.”

Another factor, that caused major problems for the Caisse was lower than anticipated returns on real estate investments. The portfolio lost the fund $3.7 billion last year. The pension fund is one of Canada’s largest pools of investment capital and is a major investor in real estate, blue-chip Canadian companies and some well-known Quebec firms such as Quebecor Media.

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