In for the long term:
pension plans offered by employers
Robert D. Anderson
Over 5 million Canadian employees belonged to an employer- or union-sponsored pension plan in 1998. The total assets of these plans, also known as registered pension plans (RPP), exceeded $644 billion, much more than those of the public Canada and Quebec Pension Plans and individual registered retirement savings plans combined.
One form of RPP, the "trusteed pension fund," has had great success investing contributions in the stock and bond markets. Investment income from these sources grew from $1.6 billion in 1976 to $20.5 billion in 1998, a more than 12-fold increase. The income from these investments now far exceeds the combined value of employer and employee contributions.
Trusteed pension fund managers also buy and sell stocks. The industry as a whole has shown a net profit from these transactions for many years, and since 1990 the amounts have grown significantly, reaching $23.5 billion in 1998.
Fund managers are legally obliged to ensure benefits for future retirees. The asset mix and investment strategies they adopted in the 1990s virtually guarantee that this obligation will be met.
Robert D. Anderson is with the Income Statistics Division. He can be reached at (613) 951-4034 or email@example.com.