Despite a volatile fourth quarter marked by falling oil prices and geopolitical tensions, the latest survey from RBC Investor & Treasury Services (RBC I&TS) shows that Canadian pension plans returned 11.9% in 2014.

According to the $520 bn RBC I&TS All Plan universe defined benefit (DB) pension plans continued to generate positive returns for a sixth consecutive quarter, returning 2.7% during the fourth quarter 2014 and bringing the annual return to 11.9%.

“While pensions overall continued to have solid returns against a backdrop of challenging macroeconomic factors, the decline in long-term interest rates has likely increased plan liabilities,” said Scott MacDonald, managing director, pensions, RBC I&TS. “This puts pressure on many Canadian DB plans despite strong performance in all asset classes.”

The best performing asset class in 2014 was foreign equities, returning 13.5% as well as 14.4% for the benchmark MSCI World Index.

“With the US dollar appreciating 9.0% against the loonie, US equities returned 22.9% for the year and were the largest contributor of foreign equity gains for Canadian DB Plans,” said MacDonald.

Canadian equities returned 10.5% for year, in line with the benchmark TSX Composite Index. “Canadian DB Plans were better positioned to withstand the fall in oil and commodity prices in the second half of 2014 as they were underweight in both the Energy and Materials sectors,” said MacDonald.

“Domestic bonds surprised investors in 2014, returning 9.9 per cent as yields fell across the curve. Long-duration bonds continued to be the best performing segment, with the FTSE TMX Canada Long Term Overall Bond Index returning 5.3 per cent for the quarter and 17.5 per cent for the year,” he added.