The funded position of a typical Canadian defined benefit pension plan decreased both on a solvency and accounting basis in December 2024, according to Telus Health’s latest pension index.

It found the funded position declined slightly on a solvency basis to 111.3 per cent in December, down from 111.4 per cent at the end of November. On an accounting basis, it dropped to 101.2 per cent in December from 103.3 per cent in November.

Read: Average funded ratio of Canadian DB pension plans up 2% in Q4 2024: report

The report also found a representative pension plan portfolio returned negative 1.3 per cent for the month due to weak performances across the bond and equity markets. The MSCI ACWI returned 0.3 per cent, while the S&P/TSX composite index returned negative 3.3 per cent.

Short- and long-term government bond yields went in different directions in December, declining by roughly 0.09 per cent and increasing by 0.20 per cent, respectively. Market expectations for long-term inflation increased to 1.82 per cent.

In a press release, Gavin Benjamin, a partner at Telus Health’s consulting practice, said the combination of healthy financial positions for plan sponsors along with the release of the new risk management guidelines from the Canadian Association of Pension Supervisory Authorities, means plan sponsors will likely focus on risk management in 2025. He noted artificial intelligence is an emerging non-financial risk to monitor in 2025 by plan sponsors.

“It is important for pension plan administrators to implement the safeguards needed to address AI risk, including ensuring human intervention remains an integral part of the process whenever AI tools are used.”

Read: Average Canadian DB pension plan returns 1.6% in Q4 2024: report