© Copyright 2000 Rogers Media. The following article first appeared in the September 2000 edition of BENEFITS CANADA magazine.

Top 50 Defined Contribution Pension Funds

BENEFITS CANADA's third annual ranking reports solid growth among the country's largest defined contribution pension funds. Several have seen an exceptional increase in assets.

By Kevin Press

Feeling good about your pension plan member communications program? The folks over at Saskatoon-based Co-operative Superannuation Society Pension Plan certainly are.

The fund publishes its own magazine, specifically for the membership. TimeWise goes out twice a year, offering a mix of financial planning assistance and pension plan news and information.

"It's a very important objective here that we're an industry leader in the area of communications and education," says Bill Turnbull, the Society's general manager. "Obviously we're here to help people save money for retirement. But there's a lot more required to have a successful retirement than just to hand somebody a pot of money."

The organization's complete communications strategy also includes a newsletter, Web site, annual reports, financial statements, seminars, workshops, a financial planning workbook and more.

"We have always taken the position that there is [a difference between] helping your members prepare for retirement financially, and helping your members prepare for retirement in terms of lifestyle change, investment knowledge and the full spectrum," says Turnbull. "We've always been focused on how we can help our members take a planned approach to a successful and dignified retirement."

It would appear the communications bar has been raised yet again by those on the defined contribution (DC) pension side of the business.

Canada's largest DC funds also raised the asset bar one more time in 1999. There are now two funds with over $2 billion in DC assets in this country, and a third is within reach.

By this time next year, there could be five or more funds topping the $1 billion mark in benefits canada's Top 50 Defined Contribution Pension Funds report. As it stands at the end of 1999, no fewer than 11 pension funds have over $500 million in DC assets.

MAKING THE GRADE

Saskatchewan Public Employees Superannuation Plan in Regina tops the benefits canada list for the second year in a row with $2.4 billion in DC pension assets. The fund saw a 14% increase in pension assets for the year ended Dec. 31, 1999. The Saskatchewan Public Employees fund is 100% DC, and has 34,575 active plan members.

Co-operative Superannuation Society Pension Plan ranks second, with $2 billion in DC pension assets. That's an increase of 4.3% during 1999. The Society's fund is also 100% DC, and has 14,555 active plan members.

Rounding out the top three DC funds is the Quebec Construction Industry fund in Montreal. The fund has $1.8 billion in DC assets as of Dec. 31, 1999, which is an impressive increase of 26.2% over the previous year's figure.

Quebec Construction Industry is the only fund in the top three that is not 100% DC. It is a hybrid plan with $7.3 billion in total pension assets, and 331,600 active plan members.

SOLID GROWTH

As extraordinary as Quebec Construction's 26.2% year-over-year jump in DC pension assets is, it is not the largest increase among the Top 50. In fact, it is only the third largest growth rate.

Toronto-based Manulife Financial's DC assets rose 28.8% to $106.4 million in 1999. The largest year-over-year increase in DC assets occurred in Bombardier Trust's fund. The Montreal firm's DC assets grew 37.5% to $124.3 million.

benefits canada's Top 50 report is based on information from Rogers Media Inc.'s Canadian Pension Fund Directory database of more than 2,500 funds. All of the country's large DC pension funds--100% DC or otherwise--are measured for this study. Group registered retirement savings plan, profit sharing plan and other money purchase-type plan assets are not included.

The Top 50 funds are showing solid growth in their DC assets for the year ended Dec. 31, 1999. The average increase among them is 8.9%. Total DC assets for the Top 50 is $17 billion. That's up $2.9 billion from a year ago.

Interestingly, the cut-off mark for the No. 50 position on this year's list is $60.2 million, only marginally higher than last year's cut-off of $60 million.

Of this year's Top 50, 18 are 100% DC. Three of the top five are 100% DC, but only four of the top 10 are 100% DC.

WHAT THE FUTURE HOLDS

The database reports that 419 of Canada's 1,000 largest pension funds contain some percentage of DC assets. That total is up from 328 at the end of 1998 and 303 at the end of 1997.

Clearly, the DC marketplace in Canada continues to broaden. We can expect that to continue, at least as long as global capital markets maintain their winning ways.

Looking out toward the long term, however, raises some important questions. "I don't think you're going to see the same kind of growth that you did from 1985 to 1995," says Turnbull. "Employers, generally, have woken up to the fact that going DC isn't a panacea in terms of avoiding liability. You trade one set of risks and liabilities for another."

Turnbull also believes the formation of the Joint Forum of Financial Market Regulators will impact the development of the DC business in Canada. The Joint Forum brought together the Canadian Association of Pension Supervisory Authorities, the Canadian Council of Insurance Regulators and the Canadian Securities Administrators. Among the group's projects are national investment disclosure standards for DC plans.

"That will be a bit of a discouragement," says Turnbull. "It's good for the members, but it makes the DC plan a little less attractive to the employer. Why not just [establish] a group RRSP, and let some financial services provider run the whole thing?"

The future of DC--perhaps one of this industry's favourite topics for debate--is seen, at best, in cautiously optimistic terms.

There is tremendous potential to be sure. But for now, it is possible that the motivation that led so many plan sponsors away from defined benefit plans--a perceived relief from undue administrative burden and fiduciary responsibility--may well drive them away from defined contribution plans too. There is much to be seen.

Kevin Press is editor of benefits canada. kpress@rmpublishing.com.

*** ***

Top 50 Defined Contribution Pension Funds

DC at a glance
Pension assets of Canada's Top 50 DC funds
1999: $17,024.2 million
1998: $14,131.8 million
1997: $11,906.2 million

Pension assets of Canada's largest DC funds
1999: $21,182.7 million (419 funds)
1998: $16,553.2 million (328 funds)
1997: $15,126 million (303 funds)

Number of Top 50 funds that are 100% DC
1999: 18
1998: 21
1997: 23

Assets of those funds
1999: $8,300.6 million
1998: $8,027.2 million
1997: $8,476.4 million

Number of Top DC funds that are 100% DC
1999: 177 (of 419 funds)
1998: 125 (of 328 funds)

Number of Top 50 funds with over 1,000 active members
1999: 24
1998: 32

Provincial breakdown of fund administration head offices
Ont.: 23
Alta.: 11
Que.: 4
B.C.: 3
N.B.: 3
Sask.: 3
Man.: 2
N.S.: 1
Nfld.: 0

Group RRSP assets of Canada's largest DC funds
1999: $1,113.5 million (419 funds)
1998: $635.7 million (328 funds)
1997: $521.6 million (303 funds)

SOURCE: Canadian Pension Fund Directory database

Top 50 Defined Contribution Pension Funds

Asset figures in 000s as of Dec. 31, 1999

1 Saskatchewan Public Employees Superannuation Plan
2 Co-operative Superannuation Society Pension Plan
3 Quebec Construction Industry
4 University of British Columbia Faculty Pension Plan
5 Queen's University
6 University of Western Ontario
7 York University
8 Dofasco Inc.
9 International Union of Elevator Constructors ¹
10 Hudson's Bay ^{1 , 2}
11 Co-operators Group Limited
12 Sobeys Inc. ³
13 IBM Canada Ltd.
14 Canada Trust Company
15 Honeywell Ltd. ^{1, 4}
16 Edmonton Pipe Industry
17 Simon Fraser University
18 Canadian Merchant Service Guild
19 Falconbridge Ltd. ¹
20 Evangelical Lutheran Church in Canada
21 Lakehead University
22 NBTel Inc.
23 McCain Foods Limited
24 Videotron Ltee.
25 Transalta Utilities Corporation
26 Cameco Corporation
27 Luscar Ltd.
28 Bombardier Trust
29 Canada Safeway Limited
30 Syncrude Canada Ltd.
31 RBC Dominion Securities Inc.
32 Manulife Financial
33 Petro-Canada
34 Bridgestone/Firestone Canada Inc.
35 Procter & Gamble Inc.
36 Canadian Baptist Ministries ⁵
37 Unisource Canada, Inc.
38 PanCanadian Petroleum Limited
39 Hewlett-Packard (Canada) Ltd.
40 Canadian YMCA Retirement Fund
41 Weyerhaeuser Canada Ltd.
42 United Grain Growers Limited
43 Trimac Corporation
44 Agrium Inc.
45 Pepsi-Cola Canada ⁶
46 Shell Canada Pension Trust
47 Avco Financial Services Canada Ltd.
48 Mount Allison University
49 Provigo Inc.
50 Suncor Energy Inc.

Footnotes

The 1999 figure represents the combined DC assets of the two companies.

100% DC

Among the top 50 DC pension funds, 18 are 100% DC. These funds represent over $8.3 billion in pension assets.

SOURCE: Canadian Pension Fund Directory database

Three of a kind

This year's Top 50 DC list features three funds from the country's Top 50 DB pension funds. Quebec Construction Industry, IBM Canada Ltd. and Shell Canada Pension Trust.

Quebec Construction Industry
(24% DC, 76% DB)

IBM Canada Ltd.
(12% DC; 84% DB, 4% RRSP)

Shell Canada Pension Trust
(3% DC, 14% DPSP, 83% DB)

The Romanow Commission has released its final report on the future of healthcare in Canada.

For Commissioner Romanow's recommendations, click here.

Click here for Senator Michael Kirby's report, "The Health of Canadians – The Federal Role: Recommendations for Reform."