The average Canadian defined benefit pension plan returned 0.6 per cent during the fourth quarter of 2025, down from 4.4 per cent in the previous quarter, according to a new report by the Royal Bank of Canada Investor Services.

It found the average DB plan returned 7.9 per cent for the full year, down from 11.3 per cent for 2024.

Canadian public equities returned 6.1 per cent for the quarter and 31.1 per cent for the full year, closely tracking the TSX composite index, which gained 6.3 per cent for the quarter and 31.7 per cent annually.

Read: Average Canadian DB pension plan returns 1.6% in Q4 2024: report

Global equities returned 1.4 per cent for the quarter (versus 4.1 per cent in Q4 2024) and 16.7 per cent for the year (compared to 24.1 per cent in 2024). The MSCI world index returned 1.6 per cent and 15.4 per cent for the quarter and year, respectively, while the S&P 500 index lagged with a 1.1 per cent quarterly return and 12.4 per cent annually. Meanwhile, the MSCI emerging markets index delivered 27.3 per cent annually, outpacing the MSCI World Index for the first time since 2020. This reversal reflects attractive valuations and resilient growth in Asia, the report noted.

Fixed income returned negative 0.6 per cent for the quarter and 1.4 per cent for the year, underperforming the FTSE Canada universe bond index, which returned negative 0.3 per cent and 2.6 per cent for the quarter and year, respectively. This gap stemmed from client portfolios’ heavier allocation to long-term bonds, which declined by 1.4 per cent in the quarter and by 0.7 per cent annually. Shorter-term bonds outperformed in the quarter (0.3 per cent), while mid-term bonds were the best-performing segment for the year at four per cent.

“Canadian pension plans navigated a year of stark contrasts in 2025, leveraging domestic equity strength amid global volatility,” said Isabelle Tremblay, director of client solutions and asset owner segment lead at RBC Investor Services, in a press release.

“While 2024’s gains were fueled by U.S. equities and the information technology sector, 2025 saw a decisive shift toward Canadian materials and financials. This highlights the importance of strategic rebalancing in a fragmenting global market, a lesson reinforced by last year’s U.S.-centric rally and this year’s currency-driven opportunities.”

Read: Average Canadian DB pension plan returns 4.4% in Q3 2025: report