A significant majority of pensions (73%) currently hold alternatives in their plans or expect to augment their portfolios during the next 12 months—slightly above last year’s 71%.
A significant majority of pensions (73%) currently hold alternatives in their plans or expect to augment their portfolios during the next 12 months—slightly above last year’s 71%.
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%).
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:
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
1Willis Towers Watson, Global Pension Assets Study 2020