Canadian employer pension plans saw the market value of their assets increase 1.6 per cent in the third quarter of 2019, up from the previous quarter, according to new data from Statistics Canada.
The value of assets was also up 7.3 per cent in comparison to the third quarter of 2018.
Bonds saw the highest value gain in the third quarter, at 3.1 per cent, followed by stocks at 2.1 per cent, mortgages at 1.5 per cent and real estate at 1.2 per cent. However, short-term investments dropped 2.4 per cent and other assets’ values remained relatively flat, at a loss of 0.1 per cent.
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The value of assets in private sector pension plans grew 2.3 per cent in the third quarter and 9.4 per cent year over year, outperforming public sector plans, which saw growth of 1.3 per cent in the third quarter and 6.4 per cent year over year.
Domestic investments hit nearly $1.3 trillion in the third quarter, an increase of 1.4 per cent from the second quarter and a year-over-year hike of 8.6 per cent. Within that, both stocks (3.2 per cent) and bonds (2.4 per cent) increased, but short-term investments dropped 1.7 per cent and other assets fell 0.3 per cent.
The value of foreign investments reached $744.4 billion in the third quarter, an increase of two per cent, or $14.8 billion, and made up more than a third (36.7 per cent) of pension plans’ total assets by the end of the quarter. Year over year, foreign assets increased 5.1 per cent.
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While short-term foreign investments fell 18.5 per cent in the third quarter, bonds increased 8.6 per cent to $78.9 billion, stocks rose 1.5 per cent to $354.8 billion and other assets increased 1.3 per cent to hit $308.1 billion.
Canadian pension plans saw revenues from contributions decrease by 13.4 per cent in the third quarter, but it was counterbalanced by the growth in net profit on securities sales, at 17.9 per cent and a 3.6 per cent increase in investment income. Plans’ total revenue in the third quarter increased 5.1 per cent, to $50 billion.
Plan expenses also dropped 4.2 per cent, to $22.3 billion, which Statistics Canada said was largely due to a 3.3 per cent reduction in pension payments and a 4.7 per cent cut in administration costs. As a result, plans’ quarterly net income was $27.7 billion, up 14.1 per cent from the second quarter and 48.2 per cent year over year.
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