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DEFINED BENEFIT

Canadian pension plans end first quarter near full funding — 2 reports

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Two reports on Canadian defined benefit plan funding showed strong results at the end of the first quarter, with one saying median funded status reached its highest point since 2007 and the other stating that its pension funding index remained fully funded.

An Aon Hewitt report said the median funded status of Canadian public and corporate plans was 96.7% as of April 1, the highest since 99.7% at the end of the third quarter 2007.

The first quarter median was up from 94.9% on Jan. 1. Also, 39.2% of the plans were fully funded as of April 1, vs. 35.2% on Jan. 1.

Separately, a Mercer report said its pension health index, which tracks the typical Canadian defined benefit plan based on 100% funding as of Jan. 1, 1999, remained unchanged in the first quarter, at 103%.

The median funded status of Mercer’s Canadian DB clients, at 93%, was unchanged from the end of 2016.

Both reports cited international equity as being the driving force behind returns for Canadian plans in the first quarter.

“The equity rally that defined the latter half of 2016 has continued into 2017 and was a key driver behind the current solvency ratios,” said Ian Struthers, partner and investment consulting practice director at Aon Hewitt, in a news release.

Manuel Monteiro, partner and leader of Mercer’s financial strategy group, said in a separate release: “Pension plans have largely held on to the significant gains that occurred in the fourth quarter of 2016, particularly after the U.S. election.”