Canadian pension plans ballooned in size in 2012, but personal registered pension plans grew far more slowly than the government social security plans, providing new data to fuel Monday's expected debate in the House of Commons on expanding the Canada Pension Plan.
Data reported Monday by Statistics Canada show total pension plan assets in Canada grew by 9.1 per cent in 2012, far outstripping the 3.6 per cent growth rate in 2011 and bringing total pension assets in Canada to $2.6-trillion by the end of the year.
The growth in pension holdings was led by the Canada Pension Plan, which saw its assets climb by 14 per cent to $175-billion in 2012, according to data released Monday by Statscan. Combined with the Quebec Pension Plan, the two social security pension plans reported total assets of $213-billion at the end of 2012, up 13.7 per cent over 2011.
The slowest growth among the major pension categories in 2012 was individual registered savings plans, which grew by 8 per cent to $928-billion in 2012. Individual plans grew just 3 per cent in 2011 by comparison.
Employer-based pension plans rose by 9.2 per cent in 2012 to $1.4-trillion after climbing just 3.6 per cent in 2011. Trusteed pension plans for government workers reported 10.6-per-cent growth in 2012, while trusteed plans in the private sector grew by 10.3 per cent.
Statscan did not have 2012 information on how much pension growth was due to investment returns and how much came from new contributions to the plans. The agency said detailed data on the breakdown of growth takes extra time to collect and will not be available until the fall of 2014.
However, Statscan reported that in 2011, pension plan contributions climbed by 4.3 per cent, withdrawals also increased by 4.3 per cent, and investment income earned by plans rose by 9.6 per cent. Overall, pension assets climbed by 3.6 per cent for the year, making 2011 the second-worst year for pension growth in the past decade except for 2008, when the financial crisis pushed assets down by 14 per cent.
Investment returns earned by individual savings plans were 5.6 per cent in 2011, Statscan reported, which is below the 9.6 per cent average for pension plans and far lower than the 24 per cent earned by the Canada Pension Plan or the 14.5 per cent returns earned by trusteed employer pension plans.
Federal politicians are slated to hold a debate Monday on a proposal to expand the CPP in advance of a meeting next week between federal Finance Minister Jim Flaherty and provincial and territorial finance ministers to consider pension reform for Canada.
The NDP had urged the government to support expanding the maximum benefit available under the CPP as a way to enhance retirement incomes in Canada, arguing voluntary individual savings levels are too low and many middle-income earners are going to see a sharp drop in their incomes in retirement as a result.
However, the federal government and some provinces have expressed preference for a new voluntary savings scheme, saying CPP expansion amounts to a new payroll tax that would lead to job losses and hinder the lagging Canadian economy.