Money world

Canadian pension plans remain fairly healthy despite a third consecutive quarter of lost ground as a credit crisis rocked markets worldwide, RBC Dexia Investor Services says.

In its first-quarter survey of pension funds, RBC Dexia found the plans’ assets declined 1.9 per cent in the January-March period, pushing the sector’s 12-month loss to 2.7 per cent.

Even so, "by and large pension plans were in pretty good shape" at the end of last year, Don McDougall, director of the firm’s advisory services, said yesterday after the release of the survey. "I suspect that’s also true as of the end of March. Their health has deteriorated a little bit, but this is a three-month snapshot," he added. If markets bounce back over the next six months, "that could be fixed pretty quickly."

Global equity suffered most among the asset classes surveyed, mitigated somewhat by a weaker loonie. The MSCI World Index plunged 11.9 per cent in local currency terms, McDougall said.

"Performance nearly matched the index, but Canadian pensions lost only 5.5 per cent once exchange rates are taken into account," he said.

McDougall noted the Canadian dollar depreciated almost 7 per cent versus a basket of world currencies during the period, falling 2.7 per cent against the U.S easy fast cash. dollar, 10 per cent against the euro and 13 per cent against the Japanese yen.

The Canadian stock market was down 2.8 per cent during the period, bolstered somewhat by strong commodity prices, the report said, with gold and crude oil reaching record highs.

While the materials sector was up 7.3 per cent and energy 1.2 per cent, "unfortunately, Canadian pensions had generally reined in their exposure to both growth sectors and underperformed the S&P TSX composite index by 1.6 per cent this quarter, and by 3.8 per cent over the year," McDougall said.

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