Top DC plans see asset increase, but issues remain

Read: Top 50 DC Plans Report: Why worry?

Western Canada
Each one of the 10 biggest plans in Western Canada saw an increase in assets compared to last year. In 2013, the combined assets of all these plans reached just over $12,905 million—a 10% increase from $11,689 in 2012.

This year’s Top 10 ranking includes the same plans in the exact same positions as last year. The Public Employees Pension Plan (Saskatchewan) topped the region’s list.

Central Canada
The total assets of the Top 10 plans in Central Canada amounted to $5,452 million in 2013—an increase of more than 10% from last year.

This year, the top three performers are the same as in 2012: Western University, Co-operators Group Ltd. and Manulife Financial.

The next six plans on the list are also the same as last year, but their positions have changed within the ranking.

The 10th biggest plan in that group is a new entrant—Lakehead University, replacing last year’s KPMG, which is no longer on the region’s Top 10 list.

Quebec
The combined assets of the Top 10 DC plans in Quebec climbed to $2,235 million this year. This is a 6% increase from $2,093 in 2012.

Bombardier Trust, which was No. 2 last year, came out as the top performer this year.

One of the plans on the list saw a small decline in assets in 2013. Quebecor Media Inc.—this year’s No. 2 and last year’s No. 1—had $418 million this year, compared with $426 million last year.

Another plan on that list, Ericsson Canada Inc., had the same amount of assets as last year—about $150 million.

The Quebec list also has a new player, Canam Group Inc., which is at the bottom of the ranking—a position held by Agropur Cooperative last year. ABB Inc., which was No. 9 in 2012, is no longer on the list.

Eastern Canada
The Top 10 DC plans in Eastern Canada boosted their total assets to $1,498 million this year. Last year, the figure was $1,394 million. However, back then, only eight DC plans in the region participated in the survey.

The new entrants this year are Nova Scotia Power Corp., High Liner Foods Inc. and P.E.I. Carpenters Pension Trust. The other change in 2013 is that the pension plan of St. Mary’s University is no longer on the list.

Sobeys Inc.’s DC plan once again topped the region’s ranking in 2013. The next three performers on the list are also unchanged from last year: Government of Newfoundland & Labrador, Bell Aliant Regional Communications Fund and Halifax Port ILA/HEA Pension Fund.

Concerns
While assets have increased for most of the top DC plans, sponsors still have concerns. Study after study has shown that plan members don’t save enough for retirement and fail to understand the financial risks posed by increasing longevity.

“Members are not recognizing that their retirement goals are getting away from them,” says Michelle Loder, DC business leader at Towers Watson.

But this is a problem that ultimately affects employers, too, even though with DC plans the risks are borne by the workers, Loder explains.

“As members approach retirement and realize they can’t reach their goal, they become disengaged from the company,” she says.

Another consequence is that many members are forced to delay their retirement. As a result, more and more companies are facing the prospect of having workers who are, in essence, “hidden retirees,” Loder explains. While in some industries this will be a positive phenomenon because employees will bring more experience to the position, for most industries, “it will become a strain on productivity,” getting in the way of growth targets, Loder adds.

But she notes that more sponsors are becoming aware of how the inadequate retirement preparation of their members ultimately affects their companies’ bottom lines.

Later this week, we’ll have more about the issues plan sponsors are facing in the Top 50 DC Plans Report.

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