Canada. Market Value of Assets in Employer-Sponsored Pension Funds Fall by 8,7%

The market value of assets held in employer-sponsored pension funds fell by 8.7% during the third quarter of 2008 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.

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.

Source: Statistics Canada, March 12, 2009

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