Talent Canada
Talent Canada

News Benefits & Pensions
Canadian DB pensions had 14 per cent returns in 2019: RBC


February 13, 2020
By Talent Canada Staff

Topics

Defined benefit (DB) pension plans in Canada performed well in 2019 — returning 14 per cent, according to new data from RBC.

This was the second highest annual return over the part 10 years, led in large part due to an upsurge in Canadian and global equity markets, according to the RBC Investor & Treasury Services All Plan Universe.

“Over the past 10 years, the average Canadian defined benefits plan has generated an annualized return of 8.0 per cent on its assets. These results are quite impressive, though we can’t discount the impact of global uncertainty and trade tensions in the years ahead,” said David Linds, managing director and head of asset servicing, Canada. “While the performance of equity markets suggests that investors expect to see continued growth, plan sponsors need to continue building robust strategies to prepare for higher volatility as earnings and fundamentals begin to slow.”

About the survey

Advertisment

An RBC Investor & Treasury Services report based on survey data from 119 Canadian defined benefit pension plans indicates a small increase in the plans’ median funded status to 101 per cent (as compared to 100 per cent in 2018). The report, Preparing for the Silver Tsunami, reveals that a significant majority of pension plans (71 per cent) now hold alternative investments within their portfolios, with real estate and infrastructure cited as the most popular (95 per cent and 91 per cent respectively). The overall outlook of respondents has improved regardless of plan size or type.

Additional results

  • Canadian defined benefit pension plans returned 2.0 per cent in Q4 2019, versus 1.7 per cent in Q3 2019 and a loss of 3.5 per cent in Q4 2018.
  • Canadian equities returned 3.1 per cent in the quarter (+21.4 per cent for the year), while global equities returned 6.8 per cent (+20.7 per cent for the year). The TSX composite rose to 3.2 per cent in the quarter (+22.9 per cent for the year) and the MSCI World Index to 6.3 per cent (+21.2 per cent for the year).
  • Canadian bonds decreased 1.6 per cent over the quarter, but were up 10.3 per cent for the year.
  • Canadian fixed income broad market benchmark fell 0.9 per cent in the quarter (+6.9 per cent for the year).

Historic quarterly performance

Historic annual performance

Period

Return (%)

Period

Return (%)

Year

Return (%)

Year

Return (%)

Q4 2019

2.0

Q2

1.4

2019

14.0

2009

16.2

Q3 2019

1.7

Q1

2.9

2018

-0.7

2008

-15.9

Q2 2019

2.7

Q4

0.5

2017

9.7

2007

1.5

Q1 2019

7.2

Q3

4.2

2016

6.8

2006

12.9

Q4 2018

-3.5

Q2

2.9

2015

5.4

2005

12.0

Q3 2018

0.1

Q1

0.0

2014

11.9

2004

10.7

Q2 2018

2.2

Q4

3.1

2013

14.2

2003

13.8

Q1 2018

0.2

Q3

-2.0

2012

9.4

2002

-3.6

Q4 2017

4.4

Q2

-1.6

2011

0.5

2001

0.5

Q3 2017

0.4

Q1

6.6

2010

10.4

2000

10.0