The funded ratio of the average Canadian defined benefit pension plan grew by two per cent during the second quarter of 2024 and nine per cent since the start of the year to 126 per cent, according to a new report by Normandin Beaudry.
It found the average solvency ratio of Canadian pension plans rose one per cent in Q2 and four per cent since the start of the year to 114 per cent. The solvency financial position in Q2 benefited from a decrease in pension plan actuarial liabilities as a result of higher discount rates, the report noted.
Read: Average funded ratio of Canadian DB pension plans up 7% in Q1 2024: report
Despite a slowdown in investment returns from public equities, the technology, telecom and utilities sectors offered positive returns in the quarter, while longer-maturity bonds saw negative returns. Investments in real estate showed stabilized returns while infrastructure performed in line with expectations, the report said.
Meanwhile, WTW’s June pension index found the asset-to-liability ratio performance of a hypothetical U.S.-based pension plan invested in a 60/40 balanced portfolio rose by 0.5 per cent to an index level of 117, the highest level since 2000.
It noted positive investment returns from equities (1.8 per cent) and fixed income (0.9 per cent) were partially offset by increases in liabilities from decreases in discount rates. The aggregate funded ratio for U.S. plans sponsored by Fortune 1000 companies plans was 100.9 per cent in June.
Read: Median solvency ratio of Canadian DB pension plans stays flat in Q2 2024: reports