Employer pension plans (trusteed pension funds)

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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.