Low Return on Retirement Investments Predicted, C.D. Howe Institute

October 7th, 2015  |  Canadian Business

Low interest rates and shifting demographics are going to be responsible for small returns on pension and retirement plans, the C.D. Howe Institute stated.

A report by Steve Ambler and Craig Alexander states that “risk free” investments will likely return less than normal rates – predicted at about 1 percent a year. These low numbers have been anctipated to continue for up to two decades, they said.

"The level of rates today are remarkably low, they are unsustainably low and ultimately there's going to have to be a rebalancing, but when that rebalancing happens the level of rates is not going to go up to anything like we had before," said Alexander, a former T.D. Waterhouse economist.

Pension plan managers and investors will likely have to reallocate stocks and bonds within their portfolios to compensate for continued low interest rates which could open people up to some risks if the markets perform poorly.

Some of Canada’s pension plan managers have been seeking out real estate investments in countries around the world to help boost returns and stabilize their portfolios.

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