CANADA - Strong Canadian equity returns in 2005 were blighted somewhat by the long-term interest rates dropping yet again, according to Mercer Investment Consulting.
In its fourth quarter 2005 survey of pooled fund performance, Mercer said energy stocks took top honours for the year, soaring over 63% despite enduring a decline of 2.1% in Q4.
That helped fuel the Canadian equity market to a return of 24.1% for 2005, which was the key contributor to Canadian balanced fund returns, with the median return being 12%. But the strong Canadian equity return was only half the story for pension funds, said Peter Muldowney, business leader for Mercer IC in Canada.
“Long-term interest rates dropped for the fifth year in a row, which led to a reduction in the funded position of pension plans overall.” he said.
The decline was illustrated in Mercer’s Canadian pension health index, which showed a solvency rate of 80% at the end of December 2005 - a drop below the December 2004 solvency rate of 84%.
The top stories this week were the High Court's decision to block the £12bn annuity transfer from Prudential to Rothesay Life, and a separate court ruling that 'raises the bar' for pension rectification exercises.
Guaranteed minimum pension (GMP) equalisation has soared to the top of pension schemes' to-do lists, with 58% stating it is a priority project, research from Equiniti has revealed.
Professional Pensions is holding its defined contribution (DC) conference on 4 September.