Canadian defined pension plans record record returns, ramp up alternatives

Citing an upsurge in Canadian and global equity markets, Canadian defined pension plans posted returns of 14 percent in 2019 — the second-highest annual return in a decade, 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 percent on its assets,” 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.”

RBC Investor & Treasury Services surveyed 119 Canadian defined benefit pension plans and found that 71 percent of these now hold alternative investments within their portfolios, with real estate and infrastructure cited as the most popular (at 95 percent and 91 percent, respectively).