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Pension plans should prepare for low returns

Report authors Steve Ambler and Craig Alexander project a 1% rate of real return for risk-free investments will form an anchor for the returns on other investments including bonds and stocks.

Three-month treasury bills currently earn around 0.42%, however the yield on the same investment was more than 4% as recently as 2007.

“Today, pension managers would be thrilled with such a return on highly liquid, sovereign-grade assets, and it may seem odd discussing such a high rate at the moment,” said Alexander, a former chief economist at TD Bank.

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