Worth of Canadian pension funds dives
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Hey there, time traveller!
This article was published 07/10/2011 (5122 days ago), so information in it may no longer be current.
TORONTO — The value of Canadian pension funds plummeted in the third quarter as stocks and bonds lost value over fears of a new global recession, according to a pension advisory group.
The Mercer Pension Health Index fell to 60 per cent at the end of September, down from 71 per cent in June.
The index indicates a model fund’s holdings were worth only 60 per cent of its long-term obligations to retirees at the end of the quarter.
The value of pension plans varies widely from one quarter to the next, and does not immediately affect the payouts made to retirees.
In the most recent quarter, fears over European debt led to huge losses on global stock markets and cut bond yields.
The Toronto Stock Exchange fell 12 per cent during the quarter, which took three per cent from the pension index, while bond yields also fell, pushing the index down eight per cent.
Lower bond yields mean higher liabilities for defined-benefit pension plans.
“Canadian stocks fell by 12 per cent during the third quarter due mainly to deteriorating outlook for global growth and uncertainty surrounding sovereign debt condition,” said Rob Stapleford, leader of Mercer’s Investment Consulting business in Central Canada.
“Five out of the 10 TSX sectors posted double-digit decline during the quarter with information technology and energy being the worst performers (-18.7 per cent).”
Stapleford said the decline in equity markets was partially offset by a weaker Canadian dollar.
A typical balanced and passive portfolio would have seen a -3.9 per cent decline during the quarter.
— The Canadian Press