Low interest rates and declining asset values caused Canadian pension plans’ funding ratios to drop to an average 90% in 2009 from an average 99% in 2008, according to a Greenwich Associates survey.
Corporate pension plans’ funding ratios averaged 89% in 2009, compared to 102% in 2008, while public plans averaged 90% in 2009 from 95%. The survey said actual numbers could be much lower because not all funds reported updated valuations for 2009.
Canadian pension funds overall took a conservative position, increasing fixed income to 36% in 2009 from 30.8% in 2008 and dropping domestic equities to 16.7% from 18.7% over the same time period. Also, 17% of plans expect to reduce equity investments in 2010 while 5% plan to increase them.
“Although there is no strong trend toward intended significant increases in allocations among institutions that already invest in international equities, 6% of Canadian funds as a whole say they plan to hire a manager for EAFE/international equities, the highest share reported for any traditional asset class in 2009,” Dev Clifford, a Greenwich consultant, said in a news release.
Eight percent of plans surveyed said they plan to hire real estate manager in 2010; 12% are planning to hire an infrastructure manager; 4% plan to hire a private equity manager; and 4% plan to hire a hedge fund manager.
The authors of the report were unavailable for comment, said Greenwich spokeswoman Joan Weber.
Greenwich conducted in-person interviews with fund professionals at 152 corporate funds, 80 public funds and 19 endowments and foundations between July and October 2009.