The year 2021 and the Omicron variant will not have overcome the defined benefit (DB) plans which remained well funded during the last quarter of the year.
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This was announced Tuesday by the “Mercer Index on the financial health of pension plans”.
According to the Index, DB plans have a solvency rating of 103% as of December 31, 2021, which is an increase of 2% from September 30 and 7% from the start of the year. 2021.
“As the financial position of DB plans continues to improve, many plan sponsors find their plans have surpluses, which is an enviable position. Although surpluses are preferable to deficits, they bring their share of repercussions and challenges that will have to be managed, ”said F. Hubert Tremblay, senior advisor in the Equities area of Mercer.
What about 2022?
2021 has been a good year for DB plans due to the reopening of the global economy, rising vaccination rates as well as increasing vaccine availability.
“[Ainsi,] many promoters will see their retirement plans enter 2022 in a good financial position, which will put them in a good position to face the considerable obstacles which could arise ”, one can read in a press release.
Mr. Tremblay therefore recommended that promoters review their risk exposure and, if possible, crystallize part of the gains for 2021. “Promoters will not want their surpluses to turn into deficits because of their inaction”, he added.
Inflation and the question of whether it will be really temporary, the repercussions of the Omicron variant on measurements, the possible appearance of new variants, the political impasse in the United States and heightened geopolitical tensions, are also the main obstacles envisaged for the year 2022.
“As we approach 2022, we are generally optimistic about the economic outlook. Strong income growth and healthy consumer balance sheets should continue to support consumption. Public spending and investment are expected to remain high over a long period. The reintroduction of pandemic-related restrictions could weaken growth early in the year, but we expect growth to pick up after the Omicron variant wave, putting economies back on track for a full recovery, ”said Jean-Pierre Talon, member of the Avoirs de Mercer partnership.