Two reports on Canadian defined benefit plan funding painted slightly different but still fairly positive pictures for the first quarter.
Aon Hewitt said Canadian DB plans it administered had a median funding ratio of 95.4% in the first quarter, up two percentage points from Dec. 31 and 21 percentage points from a year earlier.
Meanwhile, the Mercer Pension Health index — which tracks the typical Canadian DB plan based on 100% funding as of Jan. 1, 1999 — was 104% on March 31, down from 106% at the end of 2013 but up from 82% in the first quarter 2013.
According to Aon Hewitt, about 36% of the plans it surveyed were more than fully funded in the latest quarter, compared with 26% at the end of the fourth quarter and 3% in the first quarter of last year, said Alexandre Daudelin, Aon Hewitt spokesman.
North American equity markets drove the improvement in funding in the first three months of 2014. Based on Canadian dollar rates, Canadian equities returned 4.9% and U.S. equities returned 4.6%, according to Aon Hewitt. The declining Canadian dollar increased the domestic market value of U.S. assets.
According to Mercer, the slight decline in funding for the first quarter was because of a drop in long-term bonds that were only partially offset by strong equity returns. Long-term Canadian government bond yields were 2.9% as of March 31, down from 3.2% at the beginning of the year.