The funded status of Canadian defined benefit plans administered by Aon Hewitt was a median 90.6% as of Wednesday, down 0.5 percentage points from three months earlier and 2.7 percentage points below the median at the end of 2013.
It’s the first annual decline in funded status since 2011, Aon Hewitt said in a news release about the survey.
The funding ratio for the public and private Canadian DB plans surveyed reached a peak of 96.6% in April 2014 but plunged to 91.1% at the end of the third quarter.
About 18.5% of the 449 surveyed plans were more than fully funded as of Wednesday, compared with 23% in the previous quarter and 26% at the end of 2013.
Lower prevailing rates on the longer end of the yield curve helped long-term bonds return 16.7% in 2014, but also caused discount rates used to value plan liabilities to fall. Equity performance partially offset the decline, led by U.S. equities with a 26.3% return, followed by global equities, 16.3%, and Canadian equities at 10.8%. Global real estate returned 28.2% for the year, while infrastructure returned 26.9%.
The returns include the 8.5% gain from the depreciation in the Canadian dollar in 2014.