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Employer pension plans (trusteed pension funds)

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The Daily

Thursday, June 12, 2008
Fourth quarter 2007

The market value of retirement savings held in employer-sponsored pension funds increased at its slowest pace in five years in 2007 with only marginal gains in the last two quarters of the year.

Assets in these pension funds closed 2007 with a market value of $966.0 billion, up 4.8% over 2006. This was the smallest increase in value since the devaluations of assets in 2001 and 2002.

Assets edged up 0.9% during the last three months of 2007, after only a slight gain in the third quarter.

Between 2003 and 2006, fund asset increases ranged from 10.8% to 15.3%, more than double the 4.8% gain posted in 2007.

As 2007 closed out, pension fund assets held in stocks and equity funds accounted for 37.2% of total assets, down from 39.1% in the third quarter. The share of assets held in bonds and bond funds increased from 32.0% to 33.8% and real estate assets increased to 7.1%. Short-term assets accounted for 3.5%, mortgages 1.5%, and the remaining assets which include pooled foreign funds accounted for 16.9%.

Domestic holdings rose slightly to 69.9% of total fund assets in 2007, while the share in foreign holdings edged down from 30.9% to 30.1%. However, the share of foreign holdings has increased 9.3 percentage points since 2000 and 4.5 points since 2005.

Pension revenues peaked in the fourth quarter at $35.3 billion, up 24.7% over the third quarter when revenues fell 18.6%.

The boost in fourth-quarter revenues was due to a 15.4% increase in employer and employee contributions, a 41.7% increase in investment income from fourth quarter dividends paid on stocks, and an 18.7% increase in net profit on the sale of securities.

Expenditures in the fourth quarter increased 7.4% to $13.8 billion. However, with the increase in revenues, net income was up 39.2%, compared with a 31.7% loss in the previous quarter.

Contributions for 2007 declined 5.7% to $32.8 billion, the first annual decrease in seven years. Pension benefits paid to retirees rose 6.4% to 33.8 billion in 2007, the first time benefits have exceeded contributions since 2002.

Of the 5.7 million Canadian workers belonging to employer pension plans, about 4.6 million were members of trusteed plans in 2007. The remaining approximate 1 million workers with employer pension plans were covered principally by insurance company contracts.

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 inquire about the concepts, methods, or data quality of this release, contact Client Services (613-951-7355; toll-free 1-888-297-7355; fax: 613 951-3012;, Income Statistics Division.