Pension Satellite Account, 2014
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Growth in pension wealth driven by strong performance in international equity markets
Pension wealth rose 9.3% (or $280 billion) to $3.3 trillion at the end of 2014, following a 9.7% increase (or $264 billion) in 2013. The increase in pension wealth for 2014 was broad-based, with social security, employer-based pension plans and individual registered savings plans posting gains.
The ratio of pension assets to household credit market debt has been rising since 2011. Pension assets were 1.79 times the credit market debt held by households in 2014, up from 1.71 in 2013 and 1.63 in 2012. Despite the recent growth, the ratio was still below 1.84 reached in 2006 before the financial crisis, as well as the record high of 2.13 in 1999.
The growth in pension wealth in 2014 was mainly driven by the strong performance in international equity markets. Pension wealth accounted for 57.4% of total financial assets held by Canadian households at the end of 2014, up from the 57.1% in 2013.
Trusteed pension plan assets drive growth of employer-based pension plans
Wealth in employer-based pension plans rose 8.9% (or $153 billion) to $1.9 trillion at the close of 2014. All three components of employer-based pension plans were up in 2014: trusteed pension plans rose 10.1% (or $140 billion), government-consolidated revenue arrangements increased 1.5% (or $3 billion), and other employer-based pension plans grew 10.3% (or $10 billion).
Assets in individual registered saving plans increased 8.1% (or $83 billion) to $1.1 trillion at the end of 2014. This followed a 10.7% increase (or $100 billion) in 2013.
Assets held in employer-based pension plans and individual registered saving plans combined accounted for 91.1% of total pension wealth at the end of 2014, compared with 91.7% of total pension wealth in 2013.
Wealth in social security plans rose 17.6% (or $44 billion) from a year earlier to $292 billion at the close of 2014. This followed a 16.6% (or $35 billion) increase in 2013.
Contributions and investment income of pension plans continue to grow
Pension plan contributions grew 4.1% in 2014, following a 5.3% gain in 2013. In 2014, contributions grew 5.2% for employer-based plans, 3.5% for individual registered savings plans and 2.9% for social security plans.
In 2014, the investment income of pension plans rose 5.0%. Gains occurred in all three pension tiers: employer-based pension plans, individual registered savings plans and social security plans.
Withdrawals from pension plans rose 5.4% in 2014, following a 5.7% gain in 2013. The slower pace was attributable to weaker growth in two of the three pension tiers. Employer-based pension plans rose 5.6% in 2014, following a 6.6% increase in 2013. Social security plans increased 3.9% in 2014, following a 4.5% gain in 2013. Conversely, individual registered savings plans rose 8.4%, following a 7.0% gain a year earlier.
Pension plan contributions and investment income combined grew 4.4%, following a 4.1% gain in 2013. Revaluations added $173 billion to pension wealth in 2014, down from a $185 billion addition to pension wealth in 2013.
Note to readers
The Pension Satellite Account (PSA) provides an integrated stock-flow representation of the Canadian pension system. The PSA fully articulates the wealth positions (level of assets) as well as the pension inflows (contributions and investment income), outflows (withdrawals), and realized and unrealized gains and losses that contribute to change in wealth (revaluations and other changes in assets).
The PSA presents annual estimates for each of the three tiers of the Canadian pension system: social security, employer-based pension plans, and voluntary individual registered savings plans. The institutional dimension of the PSA presentation has been mainly defined by data availability. The breakdown of the three tiers into further detail is provided where data supported it and reflects a mixture of detail by program and by institutional dimension.
As well as incorporating new and revised source data, this release reflects revised estimates in accordance with the 2015 comprehensive revision of the Canadian System of Macroeconomic Accounts.
Specifically, trusteed pension plans' assets, contributions, and investment income are now measured on an accrual basis. Their assets are equal to pension entitlements. This is the sum of invested assets and the claims of pension funds on pension managers—underfunded pension liabilities. The claims of pension funds on pension managers exist only for defined benefit plans.
Contributions for defined contribution plans remain the sum of the amounts contributed by the employer and employee to the plan. On the other hand, defined benefit plans' contributions are now measured as the amount of pension entitlements earned by the employee for current period service plus the administrative cost of operating the plan.
Investment income for defined contribution plans continues to be the income receipts (monetary interest and dividends) on the plans' invested assets. For defined benefit plans, it is the plans' income receipts plus an imputed interest on the claims of pension funds on pension managers (pension entitlements less the invested assets of the plan).
Additional information on the revision to the Canadian System of National Accounts is available in the article "Results from the 2015 Comprehensive Revision to the Canadian System of Macroeconomic Accounts."
An overview of the scope and structure of the Pension Satellite Account as well as a description of the sources and methods used to derive its stocks and flows estimates are available in the Guide to the Canadian Pension Satellite Account (13-599-X) from the Browse by key resource module of our website under Publications.
The System of macroeconomic accounts module, accessible from the Browse by key resource module of our website, features an up-to-date portrait of national and provincial economies and their structure.
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).
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