Canadian DB pension plans post 3% return, buoyed by equities: report

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Stock market chart data screen on technology background © Monsit Jangariyawong / 123RF Stock PhotosCanadian defined benefit pension plans posted a median three per cent return in 2020’s third quarter, buoyed by positive performance in equity markets, according to the RBC Investor & Treasury Services plan universe.

Year-to-date, the median return was 5.2 per cent for the period ending Sept. 30, 2020.

“Canadian defined benefit pension plans remained in positive territory through the third quarter as global markets continued their liquidity-driven climb from the first quarter,” said David Linds, managing director and head of asset servicing for Canada at RBC Investor & Treasury Services, in a press release.

“As we head now toward year-end, we are facing potential headwinds such as the resurgence of COVID-19 and uncertainty over the upcoming U.S. presidential election and government support programs. We can expect an increase in market volatility, as these factors have the potential to discourage global markets and lower investors’ appetites for taking on risk.”

DB pension plans’ Canadian equities holdings returned a median of 5.2 per cent for the quarter. In comparison, the TSX composite index posted a 4.7 per cent return, led by industrials, utilities and materials at 13.6 per cent, 11 per cent and 9.1 per cent, respectively.

Foreign equities holdings returned a median 5.8 per cent, with U.S. stocks outperforming their non-North American counterparts. The MSCI world index posted a 5.9 per cent return.

Canadian fixed income returned 0.7 per cent, while the FTSE Canada universe bond index returned 0.4 per cent over the third quarter. Year-to-date, Canadian fixed income saw a median return of 10.3 per cent.

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