The median Canadian defined benefit pension plan generated returns of 3.8 per cent in the final quarter of 2021, according to a new report by Northern Trust Corp.
The strong performance was driven by a rebound in equity markets during a quarter marred by escalating energy prices and uncertainty about central bank policies. Over the year, the average Canadian DB plan saw growth of about 8.4 per cent.
Canadian equities, as measured by the S&P/TSX composite index, advanced 6.5 per cent during the year. U.S. equities posted similar gains, with the S&P 500 index generating returns of 10.7 per cent.
The performance of equities based overseas was more muted. International developed markets, as measured by the MSCI EAFE index, generated returns of 2.4 per cent. The MSCI emerging markets index saw losses of 1.5 per cent.
Equities weren’t the only asset class driving gains for Canadian DB plans during the quarter. Canadian bonds finished the quarter in positive territory as well.
In a press release, Katie Pries, president and chief executive officer of Northern Trust Canada, said Canadian pension plan sponsors are adapting well to the uncertainty of the coronavirus pandemic. “This adaptability has revealed the strength and resilience of Canadian pension plans today, as evidenced by their solid investment returns. As pension plans continue to harness this resilience, they will be well positioned, shaping the path for future prosperity.”