Aon reports aggregate funded ratio climbs to 116.7% as bond yields rise
Canadian defined benefit pension plans clawed back their first-quarter losses in the three months to June 30, according to the Aon Pension Risk Tracker.
The aggregate funded ratio for plans in the S&P/TSX Composite Index rose to 116.7 percent from 111.4 percent a quarter earlier.
Two forces lifted the ratio over the period.
Pension assets gained 1.6 percent, Aon reported, while the discount rate used to value plan liabilities climbed 24 basis points to 4.67 percent.
That move in the discount rate came as the long-term Government of Canada bond yield rose 33 basis points against the prior quarter and credit spreads narrowed by 9 basis points.
Nathan LaPierre, a partner for Wealth Solutions in Canada at Aon, tied the rebound to a still-shaky backdrop.
Pension plans regained the ground they lost in the first quarter, he said, "but volatility and uncertainty are still the name of the game."
Sponsors "continue to evaluate how they may shield their plans from that uncertainty," he added.
The Aon tracker measures the aggregate funded position on an accounting basis for S&P/TSX Composite companies that run defined benefit plans, and has tracked the data since 2013.
