Rising bond yields pushed the discount rate to 5.22%, shrinking pension liabilities
Canadian pension plans in the S&P/TSX Composite Index closed the third quarter of 2026 with an aggregate funded ratio of 123.3 percent, up from 117.6 percent at the end of the previous quarter.
Pension assets lost 1.5 percent over the quarter, the Aon Pension Risk Tracker found in results released Thursday.
The long-term Government of Canada bond yield increased 57 basis points relative to the previous quarter rate and credit spreads increased by 1 basis point, Aon reported, a combination that raised the discount rate 58 basis points to 5.22 percent.
Nathan LaPierre, partner, Wealth Solutions, Canada, at Aon, said in the firm's release that Canadian pension plans saw funded positions improve during the quarter despite modest weakness in equity markets, as higher discount rates reduced the value of pension liabilities.
He added that in an environment that continues to be characterized by uncertainty and market volatility, strong funded positions give sponsors flexibility to manage pension risk proactively.
The tracker calculates the aggregate funded position on an accounting basis for companies in the S&P/TSX Composite Index with defined benefit plans, and Aon has tracked the data since 2013.
