The aggregate funding ratio for Canadian pension plans in the S&P/TSX Composite Index slipped to 105.5% at the end of the fourth quarter of 2024 from 105.8% at the end of the third quarter, according to the Aon Pension Risk Tracker.
For comparison’s sake, the corresponding figure was 100.7% at the end of 2023, said a Jan. 2 release from Aon.
In addition, Aon said in the release, in the fourth quarter of 2024, pension assets climbed by 2.3%; the long-term Government of Canada bond yield increased 20 basis points relative to the previous quarter rate; and credit spreads narrowed by 29 bps. These factors resulted in a decrease in the discount rate to 4.33% from 4.42%.
"Most pension plans performed well in 2024, with a meaningful uptick in funded ratios," said Nathan LaPierre, partner, wealth solutions at Aon, in the release. "Uncertainty is the name of the game for 2025. Many plan sponsors likely still have room to derisk and should consider doing so in light of healthy funded positions and that uncertainty."
The Aon Pension Risk Tracker calculates the aggregate funded position on an accounting basis for companies in the S&P/TSX Composite Index with defined benefit plans.
