Our transition toward a fit-for-purpose pension fund

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Pursuing UPP’s target asset mix

When UPP began assuming management for the pension assets of participating organizations in July 2021, we identified opportunities within the combined portfolio to enhance long-term performance. As a result of our findings, we developed a multi-year transition plan toward one unified and cost effective portfolio tailored to UPP’s funding objectives and investment beliefs.

UPP’s target asset mix is specifically designed to fund our pension benefits for the long term. It will help us maintain a healthy funding and liquidity position, stay well-equipped to pay members’ pensions, and remain agile to investment opportunities as markets evolve. The pace at which UPP can shift toward our target asset mix depends on both structural and transitionary elements, including market movement, liquidity, available investment opportunities, and the duration of investment commitments within the original portfolios. For more information on our target asset mix see our:

Where we're headed

In the short to medium term, UPP will continue to transition the portfolio with these goals in mind:

UPP's exposure evolution

The Plan’s asset mix is diversified across a broad range of asset classes, organized in three categories: return enhancing, interest rate sensitive, and inflation sensitive. Under this structure, we divide our total fund assets based on their exposure to key economic drivers as well as their risk-return characteristics and roles in funding the pension.

In line with our target asset mix, we explore new investments with a focus on enhanced cost efficiency and control, alignment with our members’ needs, and long-term value.

Since embarking on our portfolio transition journey, we have made significant progress in shifting our exposure toward certain asset classes. In 2024, we further reduced our exposure to public equities and increased our investments in interest rate–sensitive assets. We also increased our allocation to inflation-hedging assets, including investing in renewable energy, digital infrastructure, and multi-residential real estate. These shifts support better portfolio alignment with our investment approach and pension liabilities. We continuously explore new investments that reflect this priority.

UPP’s exposure evolution

Inception July 1, 2021 – December 2024

Circular chart representing return-enhancing assets. Allocation decreased from 71.9% at inception in July 2021 to 53.6% in December 2024. The target is 52%, with a range of 42% to 62%.

Return enhancing strategies: generally reduce funding risk over the long term by delivering higher relative rates of return. They can, however, display higher relative volatility (a measure of market risk) in the short term.

Asset subclasses: public equities, private equities, private debt, absolute return.

Circular chart showing allocation to interest rate-sensitive assets. The allocation increased from 29.2% at inception (July 2021) to 43.4% in December 2024. The target is 42%, with a range of 23% to 58%.

Interest rate sensitive strategies: generally reduce funding risk over the long term by helping offset the effects of changing interest rates to our assets and liabilities. This includes long-dated government bonds, which are a stable source of long-term returns and help align our fixed income portfolio with the interest rate sensitivity of our liabilities.

Asset subclasses: fixed income, inflation sensitive bonds

Circular chart illustrating inflation-sensitive asset allocation. As of December 2024, the allocation is 7.7%, up from 4.6% at inception in July 2021. The target allocation is 16%, with a permitted range of 3% to 18%.

Inflation sensitive strategies: provide stable long-term returns while helping mitigate the impact of inflation on the long-term value of the Plan liabilities, which are linked to salary levels and partially indexed to changes in inflation.

Asset subclasses: infrastructure,
real estate

Circular chart showing the allocation to leverage strategies. As of December 2024, the allocation is -4.7%, compared to -5.7% at inception in July 2021. The target allocation is 10%, with a range of 15% to -15%.

Total fund operating cash: helps us dynamically change our exposures in a fast-moving market. Proactive liquidity planning ensures we can maintain our desired asset mix and meet our liability obligations while remaining a reliable source for markets when liquidity is scarce.

In 2024, UPP’s Canadian holdings represented 44% of the Plan’s assets, held in bonds, equities, real estate, and infrastructure.

Recent investment activity

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