A typical pension plan in Canada, modelled by TELUS Health and analysed in the company’s monthly pension indices report, improved on both a solvency and accounting basis in April.
The TELUS Health solvency index is an indication of changes in solvency funding levels for average pension plans since the start of the year. The accounting index, meanwhile, indicates changes in the accounting funding level of an average pension plan since the start of the year.
In the April report, the company’s solvency index rose to 103.4, up from 98.8 at the end of March and 100.7 reported at the end of February. The accounting index, with the exception of a dip to 99.7 reported at the end of January, has risen every month to finish at 103.5 at the end of April. This is up from 100.9 at the end of March.
“The monthly solvency index reflects estimates of solvency liabilities using the latest available Canadian Institute of Actuaries (CIA) annuity purchase discount rate guidance at each publication date,” the report explains. “The monthly accounting index reflects an estimate of accounting liabilities using a discount rate derived from the TELUS Health AA Corporate Bond Yield Curve.”
The report also includes indices measuring commuted values, plan assets and an annuity proxy index.
TELUS says the representative pension plan returned 3.4 per cent in April, driven by equity market performance, with global equities returning 7.5 per cent and Canadian equities finishing the month with a return of 4.3 per cent.
