My Pension Statement

I got my pension statement from my employer in the mail this Friday. According to the statement, after two years service, I have accumulated $6094 in my pension including my contribution, my employer's contribution and any investment earnings.

To my surprise, despite the sub-prime crisis in the stock market, my pension still generated a 3.3% investment return over 2007. After I looked more closely at the statement, I think I found the reason.

The pension fund has been divided into four parts. 45% of the fund has been invested in the Bond fund(38% in CIBC Cdn Bond Core;another 7% in PH&N Cdn Bond Core);10% in International market(Putnam EAFE Equity);31% in Canadian Equity(Jarislowsky Fraser Cdn Equity);and the last 14% in US Equity(Northwater US Equity). I think the heavy weight, 45%, on the bond market has been the major reason for the 3.3% return over 2007.

The investment style for my pension has been very conservative considering 45% of it is in Bond. I am not sure what the average age in my company is. If it is around 45-50 years old, I will certainly understand the assets allocation. When it comes to invest for pension, security of the money is more important than the possible return,especially when my company is still offering the DB Guarantee. The company does not want to get into the situation when it could not afford to support people's retirement. For individuals, if you have a lot of pension, you might want to see how it will affect your overall assets allocation for your portfolio and adjust accordingly.