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Global rally boosts Canadian pension plans, Royal Bank survey suggests

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TORONTO - A rally on global stock markets helped Canadian pension plans post a strong fourth quarter, according to a study by the Royal Bank.

RBC Investor and Treasury Services says the median defined benefit pension plan among those examined earned 6.1 per cent in the fourth quarter of 2013 and 14.2 per cent for the full year.

Foreign stocks were the top asset class for the plans last year, with an increase of 35.8 per cent over 2012 values.

Plans saw their Canadian stock holdings gain 19.4 per cent for the year, RBC said.

The gains came as fixed income investments such as bonds posted their biggest drop since 1994, losing 1.3 per cent in 2013.

However, the drop in fixed income investments came amid an increase in long-term interest rates — an important factor in calculating pension plan liabilities.

"Pensions gained a lot of traction in 2013," said Scott MacDonald, managing director of pensions for RBC Investor and Treasury Services.

"Strong equity gains and a weaker Canadian dollar led to an increase in assets, while higher long term bond yields reduced most plan liabilities, which will please sponsors."

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