The market value of assets in Canadian employer-sponsored pension plans rose to $2.09 trillion in the fourth quarter of 2019, up 2.3 per cent from the previous quarter, according to new data from Statistics Canada.
All investment categories saw growth, led by real estate (4.9 per cent) and public equities (4.5 per cent), with mortgages (three per cent), other assets (two per cent) and short-term investments (0.7 per cent) posting smaller increases. Bonds saw modest value growth of 0.1 per cent.
“The onset of COVID-19 in March has affected the market value of assets held by Canadian trusteed pension funds,” noted Statistics Canada. “The data in this release will serve as a benchmark to help evaluate the impact of COVID-19 on the investments of trusteed pension funds in Canada.”
During the quarter, domestic assets hit more than $1.3 trillion, an increase of 1.1 per cent from the third quarter and 13.7 per cent year-over-year. While the value of domestic mortgages (10.7 per cent), real estate (seven per cent), miscellaneous assets (2.1 per cent) and bonds (0.2 per cent) increased, short-term investments dropped by 0.5 per cent, equities by 0.4 per cent and pooled assets by 0.1 per cent.
The value of foreign investments increased by $32.8 billion, or 4.6 per cent, in the fourth quarter to hit $747.2 billion, accounting for nearly 36 per cent of total assets. Since the fourth quarter of 2018, foreign assets rose 7.4 per cent. Growth in equities (8.4 per cent) and pooled assets (1.9 per cent) offset a six per cent decrease in short-term investments and a 0.2 per cent decrease in bonds.
Private sector pension plans saw a 0.1 per cent decrease in the market value of their assets in the fourth quarter, in comparison to a 3.8 per cent growth in assets held by public sector funds. However, noted Statistics Canada, the growth in private sector plans’ assets in 2019 outpaced (12.6 per cent) the growth of public plans’ assets (7.7 per cent).
All revenue categories increased in the fourth quarter, led by a 33 per cent increase in net profit on the sale of securities, followed by investment income (29 per cent) and pension fund revenue (17 per cent). Pension funds saw a 26 per cent increase in total revenue in the fourth quarter, to $62.7 billion.
However, all expenditure categories also rose, with total expenses up 24 per cent from the third quarter, hitting $27.5 billion. This was driven by a 149 per cent increase in other expenditures and a small increase (seven per cent) in pension payments.
Net income increased by 27 per cent from the third quarter, and 104 per cent year over year, to $35.2 billion in the fourth quarter.