The funded position of a typical Canadian defined benefit pension plan increased both on a solvency and accounting basis in January, according to Telus Health’s latest pension index.
It found the average funded position increased slightly on a solvency basis from 100 per cent to 101.6 per cent at the end of the month. On an accounting basis, it rose to 101.8 per cent.
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A representative pension plan portfolio returned 2.8 per cent, driven by strong returns from bonds and public equities. The MSCI ACWI returned 4.1 per cent, while the S&P/TSX composite index returned 3.5 per cent.
Short- and long-term government bond yields both decreased during January by 0.27 per cent and 0.09 per cent, respectively. Market expectations for long-term inflation increased to 0.07 per cent since the end of December.
In a press release, Gavin Benjamin, a partner in Telus Health’s consulting team, said the results serve as a reminder of the uncertainties faced by Canadian DB plans. “The possible warning signs from early 2025 emphasize the importance of pension plan administrators developing and maintaining a holistic pension risk management framework.”
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