Russell Investments Canada says that the largest Canadian corporate pension plans are now almost fully funded and notes that some plans are beginning to take steps to de-risk.
In its Enterprise Risk in Canada report, Russell Investments reviewed financial data for the 25 Canadian listed corporations with pension obligations in excess of $2 billion and who together represent 50% of all corporate pension liabilities in Canada.
Russell analysts found that the aggregate funded status of these companies’ plans increased from 86% in 2012 to 97% in 2013 while their collective funding deficit went from $21 billion to $5 billion, a decrease of almost 80% in their combined shortfall. After adjusting for cash flows they also say that, on average, the group experienced double-digit returns in 2013.
Kendra Kaake, a senior investment strategist with Russell Investments and co-author of the report with institutional investment strategist Adam Hornung, notes that plans are now finding ways to de-risk their plans or adjusting their asset allocation mix and funding strategies to reduce future liability. "We see the trend toward de-risking, which has been quite prevalent in the U.S. in recent years, continuing to gain traction in Canada," she says.