TORONTO, April 4,
2022 /CNW/ -- Aon plc (NYSE: AON), a leading
global professional services firm, announced today that the
aggregate funded ratio for Canadian pension plans in the
S&P/TSX Composite Index increased from 96.9 percent to 100.5
percent during the past three months, according to the Aon Pension
Risk Tracker.
The Aon Pension Risk Tracker calculates the aggregate funded
position on an accounting basis for 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 UK;
moving to this platform in Canada
allows Aon to take a global view of pension plan funded status.
Key findings in Q1 2022 include:
- Pension assets lost 7.2 percent over the first quarter of
2022.
- The long-term Government of Canada bond yield increased 69 basis points
(bps) relative to the last quarter-end rate, and credit
spreads widened by 25 bps. This combination resulted
in an increase in the interest rates used to value pension
liabilities from 2.77 percent to 3.71 percent. Given a majority of
the plans in Canada are still
exposed to interest rate risk, the decrease in pension liability
caused by increasing interest rates offset the negative effect of
asset returns on the funded status of the plans.
"There has been considerable volatility over the last quarter
and increasing inflationary pressures impacting markets," said
Nathan LaPierre, partner, Wealth
Solutions, Aon. "Nonetheless, increasing nominal interest rates
have likely had a positive impact on pension plans' funded
positions. Plan sponsors should consider taking actions to lock in
the gains that they have recently experienced by de-risking plans
through asset mix or liability settlement opportunities, preparing
them for the volatility ahead."
About Aon
Aon plc (NYSE: AON) exists to shape
decisions for the better — to protect and enrich the lives of
people around the world. Our colleagues provide our clients in over
120 countries with advice and solutions that give them the clarity
and confidence to make better decisions to protect and grow their
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Media Contact
Alexandre
Daudelin
+1 514 967-9330
SOURCE Aon plc