Canadian pension plans nearly fully funded at year-end
A booming stock market helped the solvency position of Canadian defined-benefit pension plans improve in 2017, with many defined-benefit pension plans being at or very close to fully funded at year’s end, according to Mercer Canada. For the pension plans of Mercer clients, the median solvency ratio 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, but 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 2017.
“Although Canadian equities are up over the fourth quarter and overall for the year, we have observed a heightened level of vo