Canadian defined benefit pension plans posted an average return of 14 per cent in 2019, according to RBC Investor and Treasury Services’ universe.
The double-digit returns were the second highest for DB plans in the past decade, bolstered by a surge in equity markets both domestically and around the world.
“Over the past 10 years, the average Canadian defined benefit plan has generated an annualized return of eight per cent on its assets,” said David Linds, managing director and head of asset servicing for Canada, in a press release. “These results are quite impressive, though we can’t discount the impact of global uncertainty and trade tensions in the years ahead.
“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.”
RBC’s latest universe, which reports on data from 119 Canadian DB plans, also indicated a median funded status of 101 per cent, up slightly from 100 per cent in 2018.
Canadian equities performed especially well during the year, posting 21.4 per cent returns, although just 3.1 per cent in the final quarter. Meanwhile, global equities returned 20.7 per cent for 2019 and 6.8 per cent for the quarter.
Domestic bonds also outperformed, returning 10.3 per cent, but actually decreased 1.6 per cent during the fourth quarter.