Employer pension plans (trusteed pension funds), fourth quarter 2021
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Released: 2022-06-15
The market value of assets held by Canadian trusteed pension funds followed global financial markets and continued to grow in the fourth quarter of 2021, rising $92.6 billion (+4.2%) from the third quarter to $2.27 trillion.
The growth in the fourth quarter was driven by the four top asset classes—equities (+3.6%), bonds (+3.3%), real estate (+5.7%), and infrastructure (+6.9%)—along with other assets (+9.8%), accounts receivable (+9.9%), Canadian mortgages (+1.9%) and cash, deposits, and guaranteed investment certificates (+5.6%). Meanwhile, four asset classes decreased in the fourth quarter: other short-term funds (-4.9%), Government of Canada treasury bills (-1.4%), accrued interest and dividends receivable (-2.7%) and life insurance annuity contracts (-15.0%).
Canadian bonds rose 3.7% in the fourth quarter, whereas Canadian equities fell slightly (-0.1%).
Domestic assets were up 2.4%, while foreign assets increased 5.0%.
Bottom line boosted in fourth quarter
The net income of Canadian trusteed pension funds rose by 85.8%, from $30.4 billion in the third quarter to $56.5 billion in the fourth quarter.
Total revenue rose $20.7 billion (+34.5%) to $80.8 billion in the fourth quarter. The vast majority of this increase was due to an increase in net realized gains on the sale of securities (+56.0% or +$13.4 billion). Total contributions were up 1.2%, and total non-contribution revenue increased 46.4% or $20.5 billion.
Expenditures fell 18.1% or $5.4 billion to $24.3 billion in the fourth quarter, mainly due to a decrease of 18.9% (-$3.8 billion) in pension payments out of funds, a 39.3% decline in other disbursements and losses, and a 6.8% decrease in cash withdrawals. The only two expenditure categories that rose in the fourth quarter were administration costs (+9.5%) and transfers to other pension plans (+87.2%).
Readers should keep in mind that revenues and expenditures in pensions data routinely exhibit seasonal characteristics. For this reason, readers should approach quarterly changes with some caution. Starting with the next release, the publication of year-over-year comparisons will resume.
Foreign investments outperform domestic investments
The total value of domestic holdings rose $23.1 billion (+2.4%) in the fourth quarter.
Domestic assets, while posting an overall increase, were mixed in their performance. The largest domestic asset category, equities, fell slightly (-0.1%). Infrastructure rose by 1.7%, with increases also seen in real estate (+4.2%) and bonds (+3.7%). Short-term investments fell 1.4%.
Foreign assets rose 5.0% to $1.06 trillion in the fourth quarter, with all asset categories except for short-term investments increasing in value. Foreign equities led with a gain of 4.7%, followed by infrastructure (+8.6%), real estate (+7.3%) and bonds (+1.0%). Short-term investments fell by 2.2%.
Assets of nationality unknown accounted for 10.6% of all assets at the end of the fourth quarter, up from 10.2 % in the third quarter.
Public sector outpaces private sector
The value of assets held by both public and private sector plans rose in the fourth quarter, with the public sector posting a 5.0% increase (+$83.9 billion) to reach $1.78 trillion. The private sector holdings rose 1.8% (+$8.7 billion) to $498.3 billion.
Public sector assets accounted for 78.1% of the total assets held by trusteed pension plans at the end of fourth quarter, up slightly from 77.6% at the end of the third quarter.
Note to readers
Starting with the first quarter of 2021, the survey was redesigned to collect additional variables and increase the number of pension funds covered quarterly.
The new design eases data collection for respondents and data interpretability for users by reflecting the format of financial statements more closely. It also allows for higher accuracy in certain variables, such as the share of assets invested abroad. Additional detail in the reporting categories also reduces the share of assets classified in the "other assets" category.
Previously, the quarterly survey included approximately the 150 largest trusteed pension funds, and the remainder of the pension amounts was imputed based on the results of the biennial Census of Trusteed Pension Funds. In the new design, the quarterly sample includes the top 250 trusteed pension plans, equating to approximately 90% of the total value of all trusteed pension assets, and the biennial Census of Trusteed Pension Funds will no longer be conducted, resulting in reduced respondent burden. Therefore, the values reported in this release refer to the 250 largest pension plans and no longer include an estimate for the remainder of the trusteed pension plan universe.
Because of these changes, data for 2021 will not be compared with those of previous quarters. The first year-over-year comparison will be provided with the release for the first quarter of 2022.
Tables 11-10-0076-01, 11-10-0077-01 and 11-10-0079-01 are now terminated. They have been archived and replaced by tables 11-10-0084-01, 11-10-0085-01 and 11-10-0086-01.
For the purposes of this survey, trusteed pension funds include the assets of one or more registered pension plans: those held under a trust agreement, those held by a pension corporation or pension fund society, those administered under legislation by the Government of Canada or the government of a province of Canada, and those held by an insurance company for investment management only.
Pension funds held in total under an annuity insurance contract are excluded from the survey.
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