Canadians’ total pension wealth increased by 7.9 per cent in 2021 to reach nearly $4.9 trillion by the end of year, according to a new report by Statistics Canada.
It found revaluations of pension asset prices — largely due to equity market gains — increased pension wealth by $259.4 billion in 2021.
On average, pension wealth accounted for 22 per cent of a household’s total assets, down slightly from 24 per cent in 2020. The report noted this was primarily due to significant growth in the value of household residential real estate, which rose from $6.6 trillion to $8.1 trillion by the end of the year, accounting for an increased percentage of total household assets.
Employer-based pension plans increased in value by 1.9 per cent to $2.5 trillion by the end of 2021. The report noted this percentage accounts for the net claims on pension fund managers as part of pension plans’ net assets, adding these net claims shifted into negative territory in 2021 as many plans switched to overfunded status, indicating their invested assets were more than sufficient to cover their current and future pension obligations.
The value of the Canada Pension Plan and Quebec Pension Plan increased by 16 per cent to $661 billion in 2021. The CPP’s assets increased in value by 15 per cent to $554.1 billion, while the value of QPP assets grew by 21 per cent to $106.9 billion. The value of individual registered retirement saving plans increased by 15 per cent to $1.7 trillion, exceeding a 5.1 per cent increase in 2020.
Pension wealth was also pushed higher by inflows from contributions, up 7.4 per cent from the previous year to reach $219.9 billion in 2021. CPP/QPP contributions grew 13.1 per cent, a marked increase from the 1.5 per cent rise in 2020.
The investment income of all pension plans was down eight per cent in 2021, after a decrease of six per cent in 2020. With positive funded ratios in 2021, the total investment income of employer-based pension plans declined 15 per cent as a result of negative imputed investment income on the surplus assets. However, when considering only actual investment income, total pension plans saw an increase of nine per cent to $112.9 billion.