Despite recent corporate scandals and the decline in stock prices for the third consecutive year, Canadians believe that investing a portion of Canada Pension Plan assets in the stock market still makes sense over the long term, according to a recent public opinion survey by EKOS Research Associates.

The survey was taken between September 3 and 13, before the recent market rebound. 1,526 Canadians were asked to agree or disagree with the statement: “Although there may be occasional short-term losses if CPP assets were invested in stock markets, it wouldn’t bother me because the gains will more than compensate over the next 20 years.” Forty-six per cent agreed with the statement, 29% disagreed and 25% had no opinion. The findings were unchanged from a similar survey in March, 2002, despite the deterioration in equities since then.

The federal chief actuary has estimated that contributions by Canadian workers and their employers will be more than sufficient to pay CPP benefits for the next 20 years. After that, investment income will be required to help pay CPP benefits.

Canadians believe (55%) that “someone who invests in stock markets at a time when they are performing poorly stands a good chance of making money because markets will recover over the long term.” Only 19% disagreed. (This question was not asked in March).

The EKOS surveys were commissioned by the CPP Investment Board to help gauge public confidence in investing CPP funds in equities. The surveys are posted at www.cppib.ca.

The September survey largely updated the March survey to determine the impact of market declines and corporate scandals on public confidence. Overall confidence in long-term market performance remained strong and generally unaffected by recent events.

The survey found that 65% of Canadians were “okay with investing a portion of CPP assets in the stock market if I knew that the rest of the assets were invested in other kinds of investments like government bonds.” This support was unchanged from March. As of June 30, 2002, the $56 billion in CPP assets consisted of 57% government bonds, 31% equities and 12% cash reserves.

Another question found that only 31% of those surveyed (32% in March) are comfortable with up to half of CPP assets being invested in equities. (Public sector pension funds in Canada invest about 65% in equities).

The survey detected softer support for equity investing when it is linked to CPP benefits. Respondents were asked if it was “a bad idea to invest a portion of CPP assets in the stock market because the CPP could lose a lot of money and not be able to pay future pension benefits.” Forty-three percent agreed it was a bad idea (40% in March), while 35% did not agree, (39% in March).