A forecast for the Canadian economy and pension plans from Mercer Human Resource Consulting says investment managers expect moderate returns this year in the range of 7% to 9%.
Also, oil prices are expected to end this year at about US$60/barrel, which will affect the economy as a whole here at home.
As for pension plans, Paul Christiani, national partner in the Mercer’s Toronto retirement business said “plan sponsors should have seen improvement over the past year,” and he added he is, “cautiously optimistic that better times are ahead.”
He noted that plan sponsors must look for strategies this year that mitigate the peaks and valleys of the markets with a long-term focus.
He added that “defined benefit plans will survive” but they will be less generous than in the past and there will be more movement to defined contribution plans. Mercer’s forecast also predicted that in 2007 there will be a significant movement towards target-date funds for plan sponsors.
In 2006 they estimate about $375 million had been invested in target-date funds and may go as high as $1 trillion this year. A final prediction for the year showed that plan sponsors are more willing to accept socially responsible investment strategies and in 2007 more Canadian companies will become signatories to the United Nation’s Principles for Responsible Investment.
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