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Canadian pension plans gain 0.5% in fourth quarter, end 2016 with 6.8% return — report

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Canadian corporate and public pension plans returned an overall 0.5% in the fourth quarter, with Canadian equities driving the gain, partially offset by losses in fixed income, said RBC Investor & Treasury Services' quarterly survey.

The slight increase was down from the 4.2% gain for the third quarter. However, the return for the year ended Dec. 31 was 6.8%, up from 5.4%. Canadian equities returned 5.7% for the fourth quarter and 21.9% for the year.

Global equities’ quarterly return dropped to 3% in the fourth quarter compared to 6.7% in the third quarter. The asset class finished the year with a 4.4% return, compared to 18.9% in 2015.

Canadian bonds returned -3.4% for the fourth quarter, down from 1.6% in the third quarter but finished the year with a 2.4% return for the year.

“Against a challenging economic and market backdrop at the outset of 2016, Canadian pension plans generated an impressive overall performance in 2016 with three consecutive quarters in the black, which culminated in a 1.4% increase in returns compared to 2015,” said James Rausch, head of client coverage, Canada, RBC Investor & Treasury Services, in a news release. “Maintaining a diversified portfolio across sectors and asset classes, and keeping a close eye on global developments were important considerations over a year, which came with remarkable change. Global markets continue to adapt to changing political tides around the world, as well as volatility in China and other global economies.”

The RBC pension fund universe has a combined C$650 billion ($499 billion) in assets.