Canadian defined benefit pension plans’ financial health has continued to improve over last month, indicates Aon Hewitt’s latest Pension Plan Solvency Survey.
Median solvency went up from 94.9 per cent on Jan. 1 to 96.4 on Feb. 1 this year. More plans were fully funded from Jan. 1 to Feb. 1, going from 35.2 per cent of plans to 38.2. Since Nov. 1, 2016, median solvency has gone up 10 percentage points, and the fully funded ratio has more than doubled, according to Aon.
Canadian market equities rise
Pension asset returns stayed about the same over the month. Canadian market equities went up by one per cent, emerging markets by 2.5 per cent. U.S. and global equities saw negative returns. International equity returns were flat.
Bond returns declined, with FTSE TMX Universe and FTSE TMX Long Term indices going down by 0.1 and 0.8 per cent respectively. Global real estate and infrastructure returns went down over the month, reflecting the change in bond yields, says Aon.
Solvency annuity purchase rates down
The survey also showed a slight decline in solvency annuity purchase rates over the past month, while the Canada benchmark 10-year and long bond yields rose by one and eight basis points respectively. However, this was offset by lower corporate bond yields.