Canadian pension plans nearly fully funded at year-end

The solvency position of Canadian defined benefit pension plans improved in 2017 with many defined benefit pension plans being at or very close to fully funded at year-end, according to Mercer Canada. The median solvency ratio of the pension plans of Mercer clients was 97 percent at the end of the year, up from 93 percent a year ago.

The funded position of pension plans was boosted primarily by surging equity markets, particularly in the fourth quarter. However, this was partially offset by falling long-term interest rates, which declined 30 basis points in the fourth quarter, for a net decline of 10 basis points over the year.

From an investment standpoint, equity and fixed-income markets were positive over both the quarter and year, with particularly strong performance from foreign equities during the year. Canadian equities delivered positive returns over the fourth quarter, with moderate broad-based sector performance complemented by a strong rebound in h