The funded position of a typical Canadian defined benefit pension plan decreased to 107 per cent in August, down from to 107.8 per cent at the end of July, according to Telus Health’s latest pension index.
It found a representative pension plan portfolio returned 0.4 per cent for the month due to strong performances by Canadian equities and bonds. The MSCI ACWI stayed flat, while the S&P/TSX composite index returned 0.4 per cent.
Read: Average funded ratio of Canadian DB pension plans up 2% in Q2 2024: report
Short- and long-term government bond yields decreased by approximately 0.13 per cent and 0.04 per cent, respectively, while corporate bond credit increased slightly. Market expectations for long-term inflation decreased to 1.7 per cent.
In a press release, Gavin Benjamin, a partner at Telus Health’s consulting practice, said while equity markets have performed well in 2024, the impact of volatility is concerning based on the growing influence of artificial intelligence on pension plans.
“As the effects of AI on pension plans are likely here to stay and will only grow for the foreseeable future, it is important that pension plan sponsors assess the opportunities and risks associated with this emerging technology and incorporate the management of these opportunities and risks into their governance processes.”
Read: Average Canadian DB pension plan returns 3.2% in July: report