A representative defined benefit pension plan portfolio returned 0.8 per cent during the month of July due to a positive result from equities, according to a new report by Telus Health.
It found the funded status of a typical DB pension plan increased both on a solvency basis to 104.3 per cent and on an accounting basis to 104.8 per cent, compared to 103.7 per cent and 103.3 per cent, respectively, in June.
Read: Average DB pension plan’s solvency ratio jumps to 103.7% in June: report
Global developed and emerging equities were a particular highlight, with a 2.7 per cent return. Overall, equities returned 1.7 per cent, which offset a weak period for fixed income, the report said.
Short and long-term Government of Canada bond yields returned roughly 0.17 per cent and 0.19 per cent at the end of July. Corporate bond credit spreads tightened with a decline of 0.09 per cent to 0.11 per cent. Market expectations for long-term inflation increased to two per cent, compared to 1.91 per cent at the end of June.
Administrators should establish a risk management framework that effectively identifies, evaluates, manages and monitors the material risks to their pension plan, said Gavin Benjamin, partner in Telus Health’s consulting team, in a press release.
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