The funded status of a typical defined benefit pension plan increased on a solvency basis but decreased on an accounting basis in January, according to a new report by Telus Health.
The monthly pension index found the typical DB plan increased from 100 per cent on Jan. 1 to 101.7 per cent on Jan. 31 on the solvency index, but decreased from 100 per cent to 99.7 per cent during the same period on the accounting index.
Read: Report finds solvency ratio of average DB pension plan increases to 109% in December
The representative pension plan portfolio returned 1.2 per cent for the month, driven by strong performance across both bond and equity markets.
Short-term Government of Canada bond yields decreased by roughly 0.02 per cent and long-term Government of Canada bond yields increased by nearly 0.03 per cent over the month. Corporate bond credit spreads tightened, narrowing by 0.02 per cent for short-term bonds and 0.07 per cent for long-term bonds.
“With most DB pension plans still well-funded, we expect the continuation of de-risking activity in 2026 as plan sponsors seek to protect the gains their plans have benefited from in recent years,” said Gavin Benjamin, a partner in Telus Health’s consulting team, in a press release. “One of the key approaches to de-risking is to transfer risk to an insurance company through the purchase of a group annuity for all or a portion of a pension plan’s obligations.”
Read: Solvency ratio of average DB pension fund increases to 107.4% in November: report