Normandin Beaudry flags a 2027 mortality-table shift that could dent solvency numbers
Canadian defined benefit pension plans ended the second quarter of 2026 in a stronger position, as gains in equity markets lifted the surplus of the average plan.
The Normandin Beaudry updated its pension plan financial position index as at June 30, 2026, tracking DB plans across Canada while excluding Quebec's municipal and university sector, which it covers in a separate index.
The index measures plans on two funding bases: going concern, which assumes the plan operates indefinitely, and solvency, which gauges the position if the plan were wound up.
Favourable equity returns drove the quarterly improvement.
Interest rates moved during the period but finished close to where they began, so their effect on the value of plan liabilities stayed limited.
A shift on longevity is also on the horizon.
The Canadian Institute of Actuaries intends to fold its newly published mortality tables and improvement scale into transfer values from February 2027.
As a result, the financial hit from faster increases in longevity would not show up under the solvency basis before that date, though plans may recognise the new mortality assumptions earlier in their going concern and accounting results.
On markets, equities rebounded in the quarter, led by the United States, after the broad selloff in March 2026 that followed the outbreak of war in the Middle East.
Concentration in the US market deepened further, with what the firm called the “AI Big 10” now making up close to 40 percent of the S&P 500's market capitalization.
That concentration could grow, the bulletin said, if expected mega-IPOs from technology firms including SpaceX, OpenAI and Anthropic bring more names into the index this year.
The reach of the AI trade widened across industries.
Semiconductors, data centres and some Asian supply chains ranked among the quarter's winners again, while traditional software companies saw valuations slip, a split the firm said shows the technology sector is not moving in step and that AI can weigh on certain business models.
Canadian equities also performed well, gaining nearly 7 percent in the quarter.
The firm pointed to the contrast with an economy in technical recession, marked by a second straight quarter of falling real GDP, as US tariffs from Canada's main trading partner continue to pressure businesses.
Canadian bonds delivered positive returns for the quarter and year to date, according to the bulletin, with credit spreads staying relatively tight despite bouts of geopolitical volatility.
With sponsors and administrators weighing both risk and surplus, Normandin Beaudry suggested plans can draw on Quebec-jurisdiction experience, where the funding policy requirement is entering its tenth year.
Most of those policies took shape when plans ran deficits, the firm said, and now offer a way to test objectives and controls in a surplus environment while supporting intergenerational equity.
