The funded status of a typical defined benefit pension plan increased considerably on both a solvency basis and an accounting basis in the month of June, according to a new report from Telus Health.
The solvency index increased to 103.7 per cent compared to 101.1 per cent at the end of May, while the accounting index rose from 101.9 per cent to 103.3 per cent.
Read: Solvency ratio of average pension fund increased to 101.1% in May: report
A representative pension plan portfolio returned 1.5 per cent due to continued performance from equities following volatility periods earlier this year. Global developed and emerging equity markets in particular were a highlight, with a 3.7 per cent return from the index, followed by 2.7 per cent from Canadian equities.
Short- and long-term government bond yields were relatively flat with long-term returning 0.09 per cent. Market expectations for long-term inflation increased to 1.91 per cent at the end of June, compared to 1.88 in May.
June delivered strong results for Canadian pension plans, marking a clear recovery from market weakness and volatility seen earlier in the year, said Amy Pun, associate partner in Telus Health’s consulting team, in a press release.
“The current environment presents a great opportunity for pension plans to strengthen their position. Those that act thoughtfully now will be better prepared for long-term success.”
Read: Average Canadian DB plan achieves 1.6% investment return in Q2 2025: report