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Employer pension plans (trusteed pension funds)

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The Daily

Thursday, January 4, 2007
Second quarter 2006

The value of retirement savings of 4.6 million Canadian workers with trusteed pension plans declined during the second quarter of 2006, halting seven consecutive quarters of gains.

Market value of assets amounted to $819 billion, down 2% from the first quarter. The losses reflect the performance of Canadian stocks in the Toronto Stock Exchange for the same period.

Despite the second-quarter decline, fund values have been increasing steadily over the last three years. They have gained $287 billion since bottoming out at $532 billion in the first quarter of 2003 (a 54% increase).

Stocks and equity funds accounted for 39% of pension fund assets at the end of the second quarter; bonds and bond funds, 33%; real estate, 6%; short-term investments, 4%; mortgages, 1%; and other assets 17%.

Domestic holdings accounted for 72% of total fund assets. The share of investments in foreign holdings has increased to 28%, up from 24% one year ago.

Pension fund revenues declined 2.8% to $27.6 billion, the result principally of a 9.1% drop in employer contributions following large special payments for unfunded liabilities in the first quarter of 2006.

Expenditures increased 8.5% to $10.3 billion with funds reporting losses on the sale of securities and increases in purchases of annuities. Net cash flow of $17.2 billion was down 8.5% compared to the first quarter.

Pension benefits paid to retirees amounted to $7.4 billion, the third quarter in a row that benefit payments have surpassed $7 billion.

Annual payments peaked in 2004 at $28.3 billion. However, payments for the first six months of 2006 are up 5.8% over those in the same period of 2004.

About 5.7 million Canadian workers belong to employer pension plans. Of these, about 4.6 million are members of trusteed plans. (Data in this release refer only to the trusteed plans, and all values are in current dollars).

The remaining 1.1 million workers with employer pension plans are covered by the consolidated revenue funds of the federal and provincial governments, or by insurance company contracts or Government of Canada annuities.

Available on CANSIM: tables 280-0002 to 280-0004.

Definitions, data sources and methods: survey number 2607.

For more information about the current survey results and related products and services, or to enquire about the concepts, methods, or data quality of this release, contact Client Services (613-951-7355 or toll-free 1-888-297-7355; fax: 613-951-3012;, Income Statistics Division.