TORONTO, Jan. 4, 2022 /CNW/ -- Aon plc (NYSE: AON), a
leading global professional services firm, today announced that the
aggregate funded ratio for Canadian pension plans in the
S&P/TSX Composite Index increased from 89.4 percent to 97.2
percent during the past 12 months, according to the Aon Pension
The Aon Pension Risk Tracker calculates the aggregate funded
position on an accounting basis for the companies in the
S&P/TSX Composite Index with defined benefit (DB) plans. To
access Aon's interactive tracker, which dates back to 2013, click
here. The tool uses Aon's Risk Analyzer platform, which allows plan
sponsors to track their individual plan's funded status on a daily
basis. Versions of the Pension Risk Tracker are also available for
the S&P 500 in the U.S. and for a number of indices in the
Additional key findings:
- Pension assets returned 7.0 percent in 2021 and were positive
in Q4, ending the quarter up 4.8 percent.
- The year-end long-term Government of Canada bond yield increased 51 basis points
(bps) relative to the last year-end rate, and credit spreads
narrowed slightly by 3 bps. This combination resulted in an
increase in the interest rates used to value pension liabilities
from 2.34 percent to 2.82 percent. This increase in interest rates,
along with significant asset returns, significantly improved the
funded position of pension plans in Canada.
"2021 was a spectacular year for Canadian pension plans funding,
with both interest rates and risk-seeking assets going up," said
Erwan Pirou, Canada Chief Investment Officer, Wealth
Solutions, Aon. "But with inflation reaching record highs in
North America, they will be
watching closely if central banks deliver on the expected rate
hikes in the next few months and how meaningful they will be.
Longer-term, ensuring the sustainability of plan assets to climate
change is becoming a more pressing issue as well."
"While the emergence of the Omicron variant added significant
uncertainty at the end of 2021, equity markets continued the upward
trajectory that had been established throughout the year," said
Nathan LaPierre, Partner, Wealth
Solutions, Aon. "Plan sponsors are likely to use the
significantly-improved funded positions to undertake de-risking
activities and protect those funded positions in 2022."
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SOURCE Aon plc