(Toronto) Two industry reports indicate that Canadian defined benefit pension plans are in a better position to withstand the challenges of the Omicron variant, having performed well in 2021.
The Mercer Pension Health Pulse found that pension plans were well funded despite uncertainties at year end.
The median solvency ratio of defined benefit (DB) pension plans in Mercer’s database was 103% at year-end, up 2% from September 30 and up 7% from at the end of the previous year.
As many as 61% of pension plans were in surplus at the end of the fourth quarter, compared to 53% at the end of the third quarter. Additionally, 27% have estimated solvency ratios between 90% and 100%, while 7% have solvency ratios between 80% and 90%. A final 5% of pension plans have solvency ratios below 80%.
Aon Plc, for its part, claims that the aggregate capitalization ratio of Canadian pension plans in the S & P / TSX Composite Index rose to 97.2%, compared to 89.4% a year earlier.
It says pension assets returned 7.0% in 2021 after ending the fourth quarter up 4.8%.
“2021 has been a spectacular year for the funding of Canadian pension plans, with rising interest rates and risky assets,” said Erwan Pirou, Aon’s Director of Investments for Canada. relates to wealth management solutions.