2018 Projection Assumption Guidelines

Date : 30 April 2018

The 2018 Projection Assumption Guidelines, published by the Institut québécois de planification financière (IQPF) and the Financial Planning Standards Council (FPSC), are now available.

A tool for better projections

The Projection Assumption Guidelines aim to give financial planners practical support when making long-term financial projections, an important aspect of financial planning. The Guidelines are therefore intended as a guide to help financial planners make realistic financial projections.

Predicting the direction the economy will take and how financial markets will evolve is a difficult exercise requiring the integration of a large number of variables and highly sophisticated valuation models. To protect themselves and their clients, financial planners are encouraged to rely on these Guidelines.

Developed by Nathalie Bachand, A.S.A., F.Pl., Martin Dupras, A.S.A., F.Pl., M.Fisc., ASC, Daniel Laverdière, A.S.A., F.Pl., and A. Kim Young, CFP, FCIA, the document includes estimates for the inflation rate, borrowing rate, life expectancy and different types of returns. The Guidelines also include an estimate for the growth of the year's maximum pensionable earnings (YMPE or MPE).

For 2018, the guidelines are:

  • borrowing rate: 4.90%
  • inflation rate: 2.00%
  • Growth of the YMPE or MPE: 3.00% (inflation + 1%)
  • returns
    • short-term returns: 2.90%
    • fixed income returns: 3.90%
    • Canadian equities returns: 6.40%
    • Foreign developed market equities returns: 6.70%
    • emerging market equities returns: 7.40%

The Projection Assumption Guidelines are based on various external sources such as the Quebec Pension Plan and the Canada Pension Plan.

An Addendum accompanies the 2018 Projection Assumption Guidelines. This additional document contains the data sources on which the Projection Assumption Guidelines are based, as well as the specific calculations for inflation and rate of return guidelines. The Addendum also includes historical Projection Assumption Guidelines dating back to 2009, rates of return for relevant indices and the standard deviation of returns.

The Projection Assumption Guidelines are available on the IQPF and FPSC's websites, as well as in the Solution IQPF.

A mobile app

The 2018 Projection Assumption Guidelines are also available in the Guidelines mobile app, on the web, in the Apple Store for iPhones and iPads and on Google play for Android devices (simply search for "IQPF"). 

Developed in 2015 with the collaboration of Kronos Technologies, this mobile app accompanies financial planners in their day-to-day work. Along with the Projection Assumption Guideline theoretical content, it also includes calculators for inflation, portfolio return, capital accumulation, life expectancy, LIF withdrawals and paying up the mortgage vs saving up.