Canada’s DB plans are in a stronger position than they were three months ago, according to two different consultant reports.
The Mercer Pension Health Index stood at 94% at the end of June 30, up from 87% at the end of March and 82% at the beginning of the year.
“The financial position of pension plans improved in June despite the recent pullback in equity markets,” says Manuel Monteiro, a partner in Mercer’s financial strategy group. “This was mainly driven by the significant increase in long-term bond yields over the last two weeks.”
Long-term Government of Canada bond yields were flirting with 3% at the end of June, up from 2.3% at the beginning of the year and 2.5% at the beginning of June.
And Aon Hewitt says the median pension solvency funded ratio was 77% at the end of June, compared with 74% at the end of March.
The additional contributions made by plan sponsors to reduce deficits and meet minimum solvency funding requirements also helped improve the solvency ratio.
Aon Hewitt says about 95% of pension plans had a solvency deficiency at the end of the second quarter.
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