Professional services firm Aon plc announced key findings revealed by its pension risk tracking tool, the Aon Pension Risk Tracker, which show a small increase in the aggregate funded status of defined benefit (DB) pension plans in Canada in the second quarter of 2023.

The tracker calculates the aggregate funded position on an accounting basis for companies in the S&P/TSX Composite Index with DB plans. They say the aggregate funded ratio for these plans increased from 101.8 per cent to 102.1 per cent for the three months ended June 30, 2023. Pension assets gained 1.2 per cent over the second quarter of 2023.

“The long-term Government of Canada bond yield increased seven basis points during the quarter and credit spreads widened by four basis points. This combination resulted in an increase in the interest rates used to value pension liabilities from 4.6 per cent to 4.71 per cent,” the firm writes.

Aon partner of wealth solutions, Nathan LaPierre says “the muted asset performance and the small increase in discount rates supported a small increase in funded status over the quarter amidst volatility.” He adds that this position gives plan sponsors time to consider de-risking activities.