The funded ratio of the average Canadian defined benefit pension plan grew by two per cent during the fourth quarter of 2024 and 12 per cent since the start of the year to 129 per cent, according to a new report by Normandin Beaudry.
It found the average solvency ratio of Canadian pension plans was flat during the quarter but still managed to grow four per cent since the start of the year and overall 114 per cent as at Dec. 31, 2024.
Read: Ratio of asset value to benefit obligation up 1.2% for Canadian DB pension plans in Q3 2024: report
The solvency financial position of pension plans remained stable, the report noted, due to investment performance being similar to return expectations and little change in actuarial liabilities due to variations in discount rates.
At the end of 2024, several plans showed surpluses on both a going concern and solvency basis, reaching levels not seen since the late 1990s, said the report.
It noted last year was marked by inflation and the response by central banks, escalating geopolitical tension as well as challenges on international collaboration. Amid this backdrop, the MSCI world index exceeded 20 per cent returns for the second year in a row. Interest rates on long-term bonds remained relatively stable, resulting in a return to a slightly upwards sloping interest rate curve.
Read: Average funded status of Ontario DB pension plans at 121% in Q3 2024: report