TORONTO – Two of the most important pension consulting corporations in Canada report that the monetary well being of outlined profit plans was eroded within the fourth quarter because of weak fairness markets and low rates of interest. long-term curiosity.
Mercer Canada and Everybody concluded on Thursday in separate experiences that lower than half of the nation's outlined profit pension plans had been totally funded early within the New Yr.
Mercer Canada estimated that lower than 30% of Canadian outlined profit pension plans had been totally funded on the finish of 2018, whereas Aon estimated that 38.5% of plans had been totally funded as of January 1 .
The Mercer Pension Well being Index – primarily based on a hypothetical mannequin plan – elevated to 112% on December 31st, 112% on September 28th and from 106% in early 2018 to December 31st.
On the similar time, the median Aon solvency ratio decreased within the fourth quarter to 95.three% on January 1, 2019, a lower of virtually eight share factors from the third quarter of 2018.
A solvency ratio of 100 or extra signifies plan is totally funded, whereas all that’s decrease signifies that there could be a shortfall if a plan had been to be wound up – That is typically the worst case situation for outlined profit plans.