The median funded status of Canadian defined benefit plans administered by Aon Hewitt was 89% as of Tuesday, down 1.6 percentage points from the end of 2014 and the first time the level fell below 90% since September 2013.
The first three months of 2015 marked the third consecutive quarter with a decline. Also, it follows a year that was the first with an annual drop in funded status among Canadian public and private DB plans since 2011.
The median funding ratio for the surveyed plans reached a peak of 96.6% in April 2014 before beginning its decline.
Only 18% of surveyed plans were more than fully funded year-to-date March 31, about the same asof Dec. 31.
The reduced funding so far in 2015 was driven by declining long-term interest rates, as 10-year bond yields dropped by about 40 basis points, and the corresponding decrease in discount rates, said a news release from Aon Hewitt. Performance of U.S. equities, at 9.3% year-to-date March 31, and global equities, at 11.4%, partially offset the decline.