Financial health of Canadian defined benefit pension plans continues to improve in second quarter 2021: Aon report

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TORONTO, June 30, 2021 / PRNewswire / – Aon plc (NYSE: AON), a global professional services leader providing a broad range of risk, retirement and health solutions, today announced that the aggregate funding ratio of Canadian pension plans in the Composite Index S & P / TSX went from 94.8% to 95.6% in the last three months from June 30th, according to the Aon Pension Risk Tracker.

The Aon Pension Risk Tracker calculates the overall funding position on an accounting basis for S & P / TSX Composite Index companies with Defined Benefit (DB) plans. The tool uses Aon’s Risk Analyzer platform, which allows plan sponsors to track their individual plan’s funding status on a daily basis. Versions of the Pension Risk Tracker are also available for the S&P 500 in the United States and for a number of indices in the United Kingdom.

Main conclusions:

  • During the second quarter of 2021, the aggregate funding ratio of Canadian pension plans in the S & P / TSX Composite Index increased from 94.8% to 95.6%.

  • Pension plan assets gained 4.0% in the second quarter due to positive returns on fixed income assets and the continued strong performance of equity markets.

  • Long-term government at the end of the quarter Canada bond yield fell 8 basis points (bps) from last quarter’s end rate while credit spreads narrowed by 7 bps. This combination resulted in a decrease in the interest rates used to value the pension obligations from 3.06% to 2.91%.

“Equity markets continue to do well in the second quarter and, combined with relatively stable interest rates, this has resulted in further improvement in the funding ratios of Canadian pension plans. risk and consider hibernation strategies to protect the gains made, ”said Erwan Pirou, Canada Chief Investment Officer, Retirement Solutions, Aon.

“With maintaining well-funded positions, plan sponsors continue to have options to reduce risk and fund their plans,” said Nathan La Pierre, Partner, Retirement Solutions, Aon. “The group annuity market continues to warm, with plan sponsors considering annuity buybacks and buybacks to offload some of their retirement risk, while also considering performing off-cycle valuations to lock in pension requirements. lower contributions. “

About Aon
Aon plc (NYSE: AON) is a leading global professional services company providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower clients to drive results using proprietary data and analysis to deliver insights that reduce volatility and improve performance.

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Aon plc (NYSE: AON) is a leading global professional services company providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower clients to drive results using proprietary data and analysis to deliver insights that reduce volatility and improve performance. (PRNewsfoto / Aon Corporation)

SOURCE Aon plc

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