Value of Pension Funds Increases

Stocks and equity funds accounted for 41% of fund assets at the end of Q1; bonds and bond funds accounted for 31.7%; real estate was 6.1%; short-term investments were 3.4%; mortgages were 1.4%; and other assets were 16.0%.

Investments in foreign stocks rose an additional 6% from the fourth quarter of 2006. The share of fund assets in foreign holdings increased to 30.9% from 24% two years ago.

Pension revenues, which peaked in the fourth quarter of 2006 at $32.6 billion, dropped to $26 billion in the first quarter of 2007. This decline was due to reduced contributions, investment income and profits from buying and selling stocks.

At the same time, expenditures increased 5% to $10.9 billion. As a result, net income for Q1 dropped to $15.2 billion from a record high $22.1 billion in the previous quarter.

Contributions in the first quarter of 2007 fell to $7.7 billion from $8.5 billion in the previous quarter. Employer and employee contributions typically fall in the first quarter following special year-end payments made in the last quarter of the previous year. Contributions from employers and employees each fell 9%.

Pension benefits paid to retirees continued to climb, reaching a record $7.8 billion in the first quarter. This was a 3% gain over the previous high in the fourth quarter of 2006.

Of the 5.7 million Canadian workers belonging to employer pension plans, about 4.6 million are members of trusteed plans.

The remaining one million workers with employer pension plans are covered by the Consolidated Revenue Fund of the federal and provincial governments, or by insurance company contracts or Government of Canada annuities.

To comment on this story, email craig.sebastiano@rci.rogers.com.