Defined Benefit Pension Plans' Financial Health Steady in Q2 2022: Aon Pension Risk Tracker
July 20, 2022
The aggregate funded ratio for Canadian defined benefit pension plans in the S&P/TSX Composite Index increased from 100.5% to 101.5% during the past three months, according to Aon’s Pension Risk Tracker.
In a recent news release, Aon noted that pension assets lost 11.9% over the second quarter of 2022 while the long-term Government of Canada bond yield increased 77 basis points (bps) relative to the last quarter-end rate, and credit spreads widened by 38 bps.
“The rapid rise of interest rates has lowered liabilities, offsetting the poor asset performance over the quarter," said Nathan LaPierre, partner, Wealth Solutions, Aon. "Plan sponsors are likely to continue de-risking activities to further protect plans' funded positions as they navigate volatility, be it through strengthening interest rate hedges or risk transfer activities such as buy-ins and buy-outs."
