Canada. Market Value of Retirement Savings Down

The market value of retirement savings held in employer-sponsored pension funds declined by $58.1 billion, or 6.7%, during the fourth quarter of 2008 to $810.9 billion. This was attributable mainly to a fall in the market value of stocks and equity funds.

The drop followed a decrease of $82.7 billion in the third quarter, which was the largest quarterly decline in a decade.

The fourth quarter level was well below the peak market value of $954.6 billion reached at the end of 2007.

The market value of stocks and equity funds accounted for 31.5% of total pension fund assets at the end of the fourth quarter of 2008, down from 34.2% in the previous quarter.

The proportion of fund assets held in bonds increased to 38.0%, mainly as a result of larger declines in the value of stocks. Real estate investments accounted for 8.6%, mortgages, 1.8%, and short-term investments, 4.0%. The remaining assets, which include pooled foreign funds, accounted for 16.1%.

Expenditures of $49.3 billion exceeded revenues of $21.6 billion in the fourth quarter for a negative cash flow of $27.7 billion. This was the third time in 2008 that pension funds experienced a negative cash flow.

The negative cash flow resulted from significant net losses on the sale of securities. Collectively, pension fund managers reported $34.6 billion in fourth quarter losses.

Revenue from employer and employee contributions in the fourth quarter of 2008 amounted to $9.8 billion. Benefits paid to retirees reached $10.1 billion, up 3.4% from the previous quarter. Benefits exceeded pension contributions for a sixth quarter in a row.

About 5.9 million Canadian workers are members of employer pension plans. Of this group, 4.8 million workers are members of trusteed plans. The remaining 1.1 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.

Source:Statistics Canada, June 11, 2009

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