2021 Projection Assumption Guidelines

Date : 28 April 2021

The 2021 Projection Assumption Guidelines are available as of today. Developed and updated annually by a committee of individuals who are all licensed financial planners (through either the F.Pl. license in Québec or the CFP® certification in the rest of Canada) and either actuaries or CFA Charterholders, the Guidelines help financial planners make long-term financial projections (10 or more years) that are free from potential biases or predispositions. The 2021 Guidelines come into effect April 30, 2021.

The Projection Assumption Guidelines for 2021 are as follows:

Inflation rate: 2.00%

Return rates

Short-term: 2.30%
Fixed-income: 2.70%
Canadian equities: 6.20%
Foreign developed market equities: 6.60%
Emerging market equities: 7.80%

Borrowing rate: 4.30%

YMPE, MPE growth rate or salary: 3.00%

To ensure full transparency and replicability, the Guidelines are drawn from a variety of reliable and publicly available data sources, including the Québec Pension Plan Actuarial Valuation; Canada Pension Plan Actuarial Report; and historical data based on the S&P/TSX Composite index (Canadian equities), the S&P 500 Composite index (U.S. equities) and the MSCI EAFE (Europe, Australia, Far East) index and the MSCI Emerging Markets index. The FP Canada Standards Council and IQPF also conduct a joint annual survey of industry firms and a second survey of professional financial planners who hold both the F.Pl. (or CFP) designation and the CFA designation, to support the development of the Guidelines.

The Projection Assumptions Guidelines are accompanied by an Addendum containing the data sources on which the Guidelines are based, as well as the specific calculations for inflation and rate-of-return guidelines. The Addendum offers financial planners an opportunity to fully understand and replicate the recommended calculations for their own use.