Growth rates for retirement assets began slowing worldwide last year, according to a study by Watson Wyatt.
The 2008 Global Pensions Asset Study finds that the estimated growth rate for retirement assets was only 2% last year in the 11 countries—including Canada—with the largest workplace retirement systems.
This was a significant drop from the 10.5% growth rate for the five-year period ending in 2007 and from the 7.4% per annum growth rate of the last 10 years.
In Canada, 52% of retirement plan assets are invested in equities, down slightly from 55% in 1997, while 33% are in bonds—down from 37% 10 years ago—and 15% are in alternative assets compared to 8% in 1997.
“The move to alternatives is helping pension plan sponsors get more out of their assets while reducing overall risk,” says Mark Ruloff, director of asset allocation at Watson Wyatt. “However, employers need to closely monitor these investments through appropriate governance strategies. This is crucial to ensuring that fees associated with these investments don’t eat too deeply into returns.”
And the makeup of Canadian retirement assets has changed slightly over the last 10 years. The share of assets in defined contribution plans has increased to 15% from 10% while the share of assets in defined benefit plans has fell to 85% from 90%.
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