Managing Liquidity

To make sure we have sufficient cash on hand to meet current payments to plan members and readily acquire investments, we hold a small percentage of the plan's assets in unencumbered Canadian treasury bills. This level of liquidity supports our large asset base and addresses uncertainty in global credit and equity markets.

We report our actual liquidity position regularly to our board's Investment Committee and also test our position periodically through simulations of catastrophic events.

Benefits of Liquidity

Having cash on hand is vital for several reasons:

  • It allows us to avoid selling high-quality long-term assets to meet short-term funding needs at inopportune times
  • It gives us the ability to adjust our asset mix in response to market movements
  • It enables us to invest in assets such as real estate, infrastructure, timberland and private equity that cannot be quickly monetized
  • It means we can meet short-term, mark-to-market payments embedded in our derivative exposure

As a number of developed countries deleverage, public asset privatizations are likely to emerge and our liquidity strategy will serve us well.