The aggregate funded ratio for defined benefit (DB) pension plans for Canada’s largest publicly listed companies rose to 112.5% at the end of the third quarter, up from 107.8% in Q2.
That’s according to the Aon Pension Risk Tracker, which calculates the aggregate funded position on an accounting basis for DB plan sponsors on the S&P/TSX Composite Index.
The improvement marks the continuation of a trend, with the aggregate funded ratio rising from 105.8% at the beginning of this year, and from 100.7% as of Jan 1, 2024.
During the third quarter, DB pension assets climbed 5.4% in aggregate.
“Asset returns were strong in the third quarter,” said Nathan LaPierre, partner for Wealth Solutions in Canada at Aon, in a release. “While markets have been favourable, it’s important for plan sponsors to remain vigilant and continue exploring strategies to manage and reduce pension risk.”
Aon noted that the long-term government of Canada bond yield increased 11 basis points quarter over quarter, and credit spreads narrowed by seven basis points. This combination pushed discount rates four points higher, to 4.62%.