Pension fund growth in Canada stalls in third quarter of 2007 | National Union of Public and General Employees

Pension fund growth in Canada stalls in third quarter of 2007

Value of all pension funds in Canada amounted to $957.2 billion for the three-month period ending September 2007

Ottawa(14 March 2008) – Growth in the value of employer-sponsored pension funds stalled in the third quarter of 2007, according to Statistics Canada.

The market value of assets in these pension funds amounted to $957.2 billion for the three-month period ending September 2007, essentially unchanged from $956.9 billion in the second quarter.

Weaker Canadian stocks and the rise in value of the Canadian dollar which hindered gains in foreign stock holding were given as reasons for the flat growth. The value of Canadian stocks declined 1.6% while the value of foreign equity investments dropped 3.0% after currency conversion. The value of bonds rose 2.1%, while the value of real estate assets increased 2.8%.

At the end of September, pension fund assets held in stocks and equity funds accounted for 39.1% of total assets; bonds and bond funds, 32.0%; real estate, 6.6%; short-term investments, 3.6%; mortgages, 1.4%; and other assets, 16.9%.

Pension revenues declined to $28.3 billion in the third quarter, after peaking in the previous quarter at $34.7 billion. This decline was due to reduced employer contributions, investment income and profits from buying and selling stocks.

Contributions were down following several large special payments made for unfunded liabilities by employers during the previous quarter.

Expenditures rose 5.9% to $12.9 billion, principally because of losses on the sale of securities and restructuring costs. Pension benefits paid to retirees rose a marginal 0.3% to $8.4 billion. Net income declined to $15.4 billion from the record high $22.6 billion in the second quarter.

Of the 5.7 million Canadian workers belonging to employer pension plans, 4.6 million are members of trusteed plans. The remaining 1 million workers with employer pension plans are covered by the consolidated revenue funds of the federal and those provincial governments that do not provide for joint trusteeship of public sector pension plans, or by insurance company contracts or Government of Canada annuities. (Statistics Canada data refer only to the trusteed plans, and all values are in current dollars).

Web posted by NUPGE: 14 March 2008

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