The Canada Pension Plan investment fund grew to $98 billion as of the end of March, as surging equity markets helped to boost returns to a healthy 15.5%.

That topped the median return for Canadian pension plans of 14.9% and was almost twice the 8.5% it earned in the previous year.

In its annual report released today, the CPP said its portfolio grew by $16.7 billion in the past year, with $3.6 billion of the increase coming from net new contributions and investment gains accounting for the other $13.1 billion.

Gains in its stock market holdings – especially in the energy and financial services sectors – were responsible for 85% of the fund’s gains. The Canadian equity component of the fund jumped 29.9%.

The CPP is in the midst of a major campaign to diversify its holdings into other asset classes and countries. Currently $63 billion of its $98 billion portfolio is invested in Canada.

“We will continue to seek additional international investments because they help reduce concentration risk and over-dependence of the CPP on the domestic economy,” said CPP Investment Board CEO David Denison in a statement.

Actuarial valuations say that net CPP contributions will continue to exceed payouts until 2022. After that, the investment income the fund has been generating will be needed to help pay benefits.

At March 31, 2006, equities totalled $61.7 billion or 63% of the CPP fund. This consisted of publicly traded stocks valued at $57.3 billion or 58.5% of the total fund plus private equity valued at $4.4 billion or 4.5% of the total fund. The fixed income component was comprised of government bonds and money market securities totalling $27.8 billion or 28.3% of the fund. Real return assets represented $8.5 billion or 8.7%. This consisted of real estate valued at $4.2 billion or 4.3% of the fund, inflation-linked bonds valued at $4 billion or 4% of the fund and infrastructure investments valued at $350 million or 0.4% of the fund.