2014 Projection Assumption Standards

Date : 25 April 2014

The 2014 Projection Assumption Standards are now available. This essential tool for financial planners is updated yearly. This is its seventh year, since it was first presented at the 2008 IQPF Congress.

A tool for better projections

An important aspect of financial planning is to make a variety of projections: retirement needs and retirement income, insurance needs, children’s education funding needs, etc. To make these projections, financial planners must estimate future inflation and borrowing rates, returns, life expectancy… In short, they must make assumptions. How, then, can they make sure they draw realistic scenarios?

This is why we created the Projection Assumption Standards: to help financial planners make their projections. Judicious use of these assumptions should protect both the client and the financial planner.

Put together by Nathalie Bachand, A.S.A., F.Pl., Martin Dupras, A.S.A., F.Pl., and Daniel Laverdière, A.S.A., F.Pl., the document includes estimates for the inflation rate, borrowing rate, life expectancy and three types of returns: short-term, fixed income and Canadian shares.

For 2014, the standards are:

  • Borrowing rate:   5.00%
  • Inflation:    2.00%
  • Short-term returns:   3.00%
  • Fixed income returns: 4.00%
  • Canadian shares returns: 6.50%

The Projection Assumption Standards are based on sources such as the Quebec Pension Plan, the Bank of Canada and private actuarial companies.