The aggregate funding ratio of Canadian pension plans rose to 95.6% as of June 30 from 94.8% three months earlier, according to a survey from Aon.
Overall pension fund assets gained 4% in value over the quarter ended June 30 due to continued strong equity gains and positive returns on fixed-income assets, according to a news release Wednesday announcing the results of the survey.
Liabilities increased slightly because of a drop in the interest rates used to measure those liabilities to 2.91% from 3.06% during the second quarter.
The drop was attributed to the long-term government of Canada bond yield inching down 8 basis points during the quarter, and credit spreads narrowing by 7 basis points.
Erwan Pirou, Canada chief investment officer, retirement solutions, at Aon, said in the news release that Canadian pension fund clients are looking at derisking because of healthy funding levels.
Nathan LaPierre, partner, retirement solutions at Aon, added in the news release that "the group annuity market continues to heat up, with plan sponsors considering annuity buy-ins and buyouts to offload some of their pension risks, while also considering performing off-cycle valuations to lock in lower contribution requirements."