Employer pension funds continue to rebound from the financial low point set in March 2003, according to the latest figures from Statistics Canada.
Over the 15 months to June 2004, assets in trusteed pensions funds increased nearly 24 per cent from $531.2 billion to $656.1 billion, a new record high. Before the downturn, fund assets had peaked at $614.4 billion in September 2000.
There was only a 0.5 per cent gain in the second quarter this year, however. This small gain was primarily due to a 2.2 per cent increase in the value of the funds’ foreign holdings. Foreign holdings represented 24.4 per cent of all fund assets.
Stock prices drop, rebound
Canadian stock market prices actually fell 0.5 per cent over the quarter. Stock prices have risen since then, suggesting that pension fund assets may continue to grow for at least the remainder of 2004.
Pension funds had revenues of $25.8 billion and expenditures of $8.8 billion for a net clash flow of $17 billion. This was much greater than the $4 billion cash flow in the first quarter this year.
Cash flow can vary considerably from quarter to quarter, Statistics Canada said, partly because of accounting practices within the industry, but primarily because of profits or losses from the buying and selling of stocks.
Employer contributions remain high
Employer contributions remained high at $5.6 billion. Contributions have been on the rise since early 2002 when employer contributions were typically half that amount. Many employers had been taking a contribution holiday up to that time, but declining asset values meant that employers had to start contributing again.
About 5.5 million Canadian workers belong to employer pension plans. Of these, about 4.5 million are members of trusteed plans. (The data from Statistics Canada refer only to the trusteed plans.)
The remaining one million workers with employer pension plans are covered by the consolidated revenue funds of the federal and provincial governments, or by insurance company contracts or federal government annuities.