The aggregate funding ratio of Canadian pension plans rose to 94.8% as of March 30 from 89.4% three months earlier, according to a survey from Aon.
The overall funding deficit was about $21 billion.
Overall pension assets lost about 2.3% in value over the quarter ended March 30 due to negative returns on fixed income that were partially offset by strong equity gains, according to a news release Wednesday announcing the survey.
Liabilities dropped because of the increase in the interest rates used to measure those liabilities to 3.06% from 2.34% during the first quarter.
The increase was attributed to the quarter-end long-term government of Canada bond yield inching up 74 basis points during the quarter, while credit spreads narrowed by 2 basis points.
Erwan Pirou, Canada chief investment officer, retirement solutions, at Aon, said in the news release that equity returns remained solid in the first quarter after an extremely strong fourth quarter to cap off 2020.
"Combined with a sharp increase in yields across maturity, with the 30-year bond yield reaching its highest level of the past two years, this proved to be very favorable conditions for the financial health of pension plans," he said. "We continue to see interest from plan sponsors to diversify the equity risk by allocation to real assets and opportunistic strategies."
