The solvency position of Canadian pension plans improved in the third quarter of 2012.
The new Mercer Pension Health Index, which is in line with other reports released earlier this week, stood at 80% on September 30, up from 77% on June 30.
Read: Solvency funding inches up, plans no further ahead
“Equity markets across the globe performed very well in the third quarter, although returns on foreign investments were held back somewhat by the strengthening Canadian dollar,” said Manuel Monteiro, partner in Mercer’s financial strategy group. “Strong returns boosted the index by 2% with employer deficit funding adding the other 1%. Unlike the second quarter, solvency liabilities were relatively stable as long-term government bond yields were virtually unchanged from June 30.”
Canadian equities returned 7% in the third quarter, which brought the return for 2012 to 5.4%, at the end of September, and the decline in interest rates boosted fixed income returns.