Source: Benefits Canada

The aggregate funded ratio for Canadian defined benefit pension plans in the S&P/TSX composite index increased from 94.8 per cent in the first quarter of 2021 to 95.6 per cent in the second quarter, according to a new report from Aon.

It also found pension assets rose by four per cent during the same period. The rise was credited to positive returns on fixed income assets and continued strong equity market performance. However, long term Government of Canada bond yields dropped eight basis points, while credit spreads narrowed by seven basis points. This combination resulted in a decrease in the interest rates used to value pension liabilities, from 3.06 per cent to 2.91 per cent over the quarter.

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