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End-of-year fish tail to the pension plans, defined benefit


12 February 2019 11:30

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The year 2018 year had started positively for the defined benefit pension plans in Canada. However, the growth was terminated in the fourth quarter, reports RBC investor Services and treasury services.

Each quarter, this subsidiary of the Royal Bank of Canada tracks the performance and asset allocation of its customers ‘ pension plans. It draws global data.

According to these figures, the yields were on the rise for the first nine months of 2018. The month of December disastrous experienced by the equity markets resulted in a negative return for the fourth quarter of 2018. Worse still, he has erased all the gains recorded since the beginning of the year, making sure that pension plans defined benefit plans end in 2018 decrease compared to 2017.

Thus, according to the figures disclosed by the CBR, the decline of pension plans defined benefit plans was 0.7 % in 2018 compared to 2017. This performance was a positive 9.7% in 2017 compared to 2016.

Quarterly performance historically low

In the fourth quarter of 2018, these same pension funds have registered a decrease of 3.5% compared to the corresponding quarter of 2017, according to RBC. In comparison, the yield was 4.4 % in the fourth quarter of 2017, compared to the corresponding period of 2016.

The last time the quarterly performance of the pension plans was negative, it was more than three years, in the third quarter of 2015. The decrease was 2 %.


A difficult year and concerns

This drop is explained by the poor performance of canadian equities and the benchmark S&P/TSX composite index, measuring the performance of the Toronto stock exchange, both in the fourth quarter of 2018 on the year overall.

In question, ” the geopolitical uncertainty and economic “, said Ryan Silva, director general and ceo, retirement plan and insurance coverage to clients worldwide for RBC investor Services and treasury services. The following citing examples of ” trade wars, interest rate hikes, oil prices and the Brexit “.

The interest rate and the funded status of the plans concerned

According to a survey conducted by RBC investor Services and treasury, plan sponsors of defined benefit pension plans have two main concerns felt : the low interest rates and the proper funding of pension plans, so that they can reach their goals.

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