• 73% of respondents
    already hold alternatives or plan to add them

Similar to 2019, alternative investments are most popular among large plans (96%) and new category private-public plans also has a high rate of adoption (94%). Alternatives continue to be least popular among small plans (51%) and those closed to new members (62%). While year-over-year popularity of alternatives increased for large plans (90% to 96%) and those closed to new members (57% to 62%), demand for alternatives declined among mid-sized and public plans (93% to 88% and 92% to 83%).

  • The popularity of alternatives is:
    • Highest among large and private-public plans
    • Lowest among small plans and those closed to new members

The quest for returns

A common theme

As discussed in the De-Risking section, the easing of pension funding rules appears to have triggered increased interest in alternatives—a common theme throughout this report as pensions look for opportunities to meet increasing obligations from an aging membership:

  • Nearly three-quarters of plans currently hold alternatives or intend to add them (see above)
  • Pensions identified “increased focus on alternative investments” as one of the top responses to COVID-19 (third spot at 16%)
  • “Changing asset mix” is the top strategy to ensure plan sustainability (32%), pointing to the potential for additional alternative investments
  • “Use of alternatives” is the second-most popular de-risking strategy (23%)
Pension plans that currently hold alternatives or expect to add them
This chart shows the year-over-year change in the proportion of respondents that currently hold alternatives or plan to add them overall, as well as by size, type and status of respondent.

Leading the global pack

Canadian pension plans have embraced alternative investments at a higher rate than those in other parts of the world. At the end of 2019, Canada allocated 29% of pension assets to alternatives, noticeably higher than the global allocation of 23%.1

Pension Allocations to Alternatives
This chart shows that Canadian pension plans allocate a higher proportion of their assets to alternatives than the global average (29% versus 23% at the end of 2019) based on information provided by the Willis Towers Watson Global Pension Assets Study 2020.

1Willis Towers Watson, Global Pension Assets Study 2020