TORONTO, July 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 100.5 to 101.5
percent during the past three months, according to the Aon Pension
Risk Tracker. It was at 96.9 percent at the beginning of the
year.
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 Q2 2022 include:
- Pension assets lost 11.9 percent over the second quarter
of 2022.
- The long-term Government of Canada bond yield increase 77 basis points
(bps) relative to the last quarter-end rate, and credit spreads
widened by 38 bps. This combination resulted in an increase in the
interest rates used to value pension liabilities from 3.78% to
4.93%. 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. However, given the volatility,
individual pension plans' results will vary significantly depending
on asset allocation.
"The rapid rise of interest rates has lowered liabilities,
offsetting the poor asset performance over the quarter," said
Nathan LaPierre, partner, Wealth
Solutions, Aon. "Plan sponsors are likely to continue de-risking
activities to further protect plans' funded positions as they
navigate volatility, be it through strengthening interest rate
hedges or risk transfer activities such as buy-ins and
buy-outs."
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
alexandre.daudelin@aon.com
+1 514 967 9330
SOURCE Aon plc