Value of assets in employer pension plans fell 4.7 per cent in the first quarter
Employers are still being forced to pump cash into their beleaguered pension plans thanks to continuing weakness in stock prices, according to the latest figures from Statistics Canada.
The value of assets in employer pension plans fell 4.7 per cent in the first quarter of 2003. As of March 31, the value of assets in these funds amounted to $518.2 billion, down from $543.8 billion at the end of the fourth quarter of 2002.
These declines are due to falling stock prices that resulted in a devaluation of fund assets. This devaluation forced employers to increase their contributions to these plans, halting a contribution holiday period for many funds that lasted up to four years in some cases.
Stock market down 4.1 per cent
According to the Quarterly Survey of Trusteed Pension Funds, 37 per cent of total assets were invested in stocks as of March 31. In the first quarter, the Standard & Poor’s/Toronto Stock Exchange Composite Index lost 4.1 per cent of its value.
Employer contributions expected to rise
Employer contributions in the first quarter amounted to $3.3 billion, down 17.5 per cent from $4 billion in the fourth quarter of 2002.
But total employer contributions for 2003 are expected to match or exceed the previous year’s level of $12.6 billion. In 2001, employer contributions amounted to $7.3 billion.
The industry experienced another quarter with a negative cash flow. Expenditures of $14.6 billion in the first three months of 2003 exceeded revenues of $10.2 billion for a negative flow of $4.4 billion. Collectively, trusteed funds have not had a positive cash flow since the first quarter of 2002.
Negative cash flows can result from losses on the sale of stocks. The industry has been selling off devalued stock in efforts to rebalance their portfolios to longer-term value, according to Statistics Canada.
At the end of 2000, trusteed pension plans, which are managed by legal trustees who invest the funds in financial and capital markets, had 3.5 million members. This level likely has not changed greatly since then, according to Statistics Canada.
In total, about 5.5 million Canadian workers are members of employer pension plans which include trusteed plans as well as others.
The 3.5 million members had assets of $596.6 billion at the end of 2000, whereas all registered pension plan members had assets totaling $817.6 billion.
The value of assets in employer pension plans fell 4.7 per cent in the first quarter of 2003. As of March 31, the value of assets in these funds amounted to $518.2 billion, down from $543.8 billion at the end of the fourth quarter of 2002.
These declines are due to falling stock prices that resulted in a devaluation of fund assets. This devaluation forced employers to increase their contributions to these plans, halting a contribution holiday period for many funds that lasted up to four years in some cases.
Stock market down 4.1 per cent
According to the Quarterly Survey of Trusteed Pension Funds, 37 per cent of total assets were invested in stocks as of March 31. In the first quarter, the Standard & Poor’s/Toronto Stock Exchange Composite Index lost 4.1 per cent of its value.
Employer contributions expected to rise
Employer contributions in the first quarter amounted to $3.3 billion, down 17.5 per cent from $4 billion in the fourth quarter of 2002.
But total employer contributions for 2003 are expected to match or exceed the previous year’s level of $12.6 billion. In 2001, employer contributions amounted to $7.3 billion.
The industry experienced another quarter with a negative cash flow. Expenditures of $14.6 billion in the first three months of 2003 exceeded revenues of $10.2 billion for a negative flow of $4.4 billion. Collectively, trusteed funds have not had a positive cash flow since the first quarter of 2002.
Negative cash flows can result from losses on the sale of stocks. The industry has been selling off devalued stock in efforts to rebalance their portfolios to longer-term value, according to Statistics Canada.
At the end of 2000, trusteed pension plans, which are managed by legal trustees who invest the funds in financial and capital markets, had 3.5 million members. This level likely has not changed greatly since then, according to Statistics Canada.
In total, about 5.5 million Canadian workers are members of employer pension plans which include trusteed plans as well as others.
The 3.5 million members had assets of $596.6 billion at the end of 2000, whereas all registered pension plan members had assets totaling $817.6 billion.
