The funded position of a typical Canadian defined benefit pension plan decreased both on a solvency and accounting basis in March, according to Telus Health’s latest pension index.
It found the average funded position decreased slightly on a solvency basis from 100 per cent to 97.7 per cent at the end of the month. On an accounting basis, it decreased to 99.2 per cent.
Read: Report finds average Canadian DB pension plan returns 2.8% in January
A representative pension plan portfolio returned negative 2.5 per cent, reflecting widespread market volatility. Global equities fell, with the MSCI all country world index down four per cent and the S&P/TSX composite index down 1.5 per cent.
The Bank of Canada’s rate cut to 2.75 per cent continues to coincide with a steepening yield curve, the report said, noting during the first quarter of 2025, real yields fell faster than nominal yields, signaling increasing growth concerns. These conditions may increase pension liabilities and influence investment returns, making strategic planning more important than ever.
“To navigate these evolving challenges, pension plans must remain agile,” said Amy Pun, an associate partner in Telus Health’s consulting practice, in a press release. “Scenario planning and climate-resilient investments are increasingly important in supporting long-term financial sustainability.”
Read: Average funded ratio of Canadian DB pension plans down 2% in Q1 2025: report