FPSC and Institut québécois de planification financière (IQPF) have released updated unified Projection Assumption Guidelines for financial planners across Canada. The guidelines aid planners in making medium- and long-term financial projections free from potential biases or predispositions, says a release.

Read: How to estimate future stock and bond returns when creating a financial plan

Additions incorporated into the 2016 guidelines include:

  • rate of return assumption guidelines for foreign developed market equities (including U.S. market and EAFE market equities) and emerging market equities, as well as rate of return assumption guidelines for short-term investments, Canadian fixed income and Canadian equities;
  • margins within which financial planners may deviate from the rate of return assumption guidelines, with explanation for how to apply the margins;
  • additional explanations for the rate of return assumption guidelines referenced in footnotes, as well as in the body of the report; and
  • updated life expectancy information.

Here are the Projection Assumption Guidelines.

  • Inflation rate: 2.1%
  • Return rates
    • Short term: 3%
    • Fixed income: 4%
    • Canadian equities: 6.4%
    • Foreign developed market equities: 6.8%
    • Emerging market equities: 7.7%
  • YMPE or MPE growth rate: 3.1%
  • Borrowing rate: 5%

The guidelines are drawn from four publicly available data sources: the CPP, QPP, Willis Towers Watson portfolio managers’ survey, and historical data.