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Employer pension plans (trusteed pension funds)

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Third quarter 2008 (Previous release)

The market value of assets held in employer-sponsored pension funds fell by 8.7% during the third quarter to $869.0 billion, the largest quarterly decline in a decade.

The decline, equivalent to $82.7 billion, was the result of a significant drop in stock prices and foreign investments. The third-quarter level was well below the peak of $954.6 billion reached at the end of 2007.

The Standard and Poor's/Toronto Stock Exchange closing composite index lost 9.3% of its value during the third quarter.

As a result, the market value of stocks and equity funds accounted for 34.2% of total pension fund assets at the end of the third quarter, down from 38.4% in the same quarter in 2007.

Prior to the market downturn in 2001 and 2002, stocks and equities funds accounted for up to 45% of the market value of pension fund assets.

The market value of bonds accounted for 36.0% of total pension fund assets in the third quarter of 2008. Real estate investments represented 8.4%, mortgages, 1.7% and short-term investments, 3.3%. The remaining assets, which include pooled foreign funds, accounted for 16.3%.

The value of pension funds held in foreign investments has fallen for six consecutive quarters. At the end of the third quarter, foreign investments accounted for 28.9% of total pension fund assets, down from the most recent peak of 31.3% during the first quarter of 2007.

Expenditures of $22.8 billion in the third quarter exceeded revenues of $17.0 billion, for a negative cash flow of $5.8 billion. This was the largest quarterly net income loss in six years and the second time in 2008 that pension funds had experienced a negative cash flow.

The negative cash flow resulted from significant net losses on the sale of securities. Collectively, pension fund managers reported $8.5 billion in third quarter losses, the largest net loss on sale of securities recorded for trusteed pension funds.

Total revenue from contributions in the third quarter of 2008 amounted to $8.3 billion, down 1.6% from the second quarter. Pension benefits paid to retirees grew 5.8%, reaching a high of $9.8 billion. Benefits exceeded pension contributions made by employers and employees for a fifth quarter in a row.

In total, about 5.8 million Canadian workers are members of employer pension plans. Of this group, 4.6 million workers are members of trusteed plans. The remaining 1.2 million members with employer pension plans are managed principally by insurance company contracts. Data in this release refer only to trusteed plans and their pension funds.

Note: With this release, data for quarters back to the first quarter of 2007 have been revised.

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

Definitions, data sources and methods: survey number 2607.

For more information, or to enquire 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@statcan.gc.ca), Income Statistics Division.

Table 1

Trusteed pension funds, market value of assets by type
  Third quarter 2007 Third quarter 2007 Second quarter 2008r Second quarter 2008r Third quarter 2008p Third quarter 2008p
  $ millions % of total $ millions % of total $ millions % of total
Total assets 948,420  100.0 951,728  100.0 868,983  100.0
Bonds 305,769 32.2 331,026 34.8 312,970 36.0
Stocks 363,966 38.4 342,447 36.0 297,053 34.2
Mortgages 13,567 1.4 15,012 1.6 15,119 1.7
Real estate 63,066 6.6 72,348 7.6 73,238 8.4
Short-term 36,820 3.9 32,001 3.4 29,070 3.3
Other assets 161,405 17.0 156,365 16.4 139,785 16.1
Assets, funds under $10 million 3,827 0.4  2,529 0.3 1,748 0.2
revised
preliminary
Note(s):
Data may not add up to totals as a result of rounding.

Table 2

Trusteed pension funds: Revenue and expenditures
  Second quarter 2008r Third quarter 2008p Second quarter to third quarter 2008
  $ millions % change
Total revenue 22,899  17,048 -25.6
Revenue from contributions 8,429 8,292 -1.6
Investment income 11,153 7,573 -32.1
Net profit on sale of securities 2,493 722 -71.0
Miscellaneous revenue 679 330 -51.4
Revenue, funds under $10 million 145 131 -9.7
Total expenditures 15,787  22,805  44.5
Pension payments out of funds 9,269 9,809 5.8
Cost of pensions purchased 300 315 5.0
Cash withdrawals 1,669 1,889 13.2
Administration costs 751 770 2.5
Net loss on sale of securities 1,163 8,473 628.5
Other expenditures 2,104 830 -60.6
Expenditures, funds under $10 million 531 718 35.2
revised
preliminary