Monthly performance results of representative and average pension plan portfolios have come in between 1.1 per cent for the quarter, as reported by RBC Investor Services and 1.3 per cent during the month of June, as reported by TELUS Health.  

According to TELUS, the funded position of a typical pension plan decreased on both a solvency and an accounting basis during the month. 

“The pension indices by TELUS Health, released monthly, condense the journey that pension plans have experienced during the year into a few key statistics,” TELUS states. “They also provide an early indicator of the challenges and opportunities that are yet to come for plan sponsors and administrators.”  

Perhaps most notable among the organization’s observations this month, is that of recent outperformance in equity markets, thanks mainly to the outperformance of artificial intelligence (AI)-related companies. This, they say, “is adding to growing concerns of an asset bubble forming.” 

Although RBC’s analysis does not mention any bubbles, it does note that the S&P 500’s gain of 5.4 per cent during the last quarter was primarily driven by the information technology sector, which returned 12.6 per cent. RBC says for the full first half of 2024 its client’s defined benefit (DB) pension plans enjoyed a 4.4 per cent return. 

Market volatility 

“This analysis emphasizes the complexities of the Canadian pension landscape and the importance of diversifying and proactive risk management,” states Isabelle Tremblay, director of client solutions, asset owner segment lead at RBC Investor Services. “The market continues to experience volatility.” 

Turning again to monthly statistics, TELUS says June was the first month that saw a slight deterioration in the solvency funding level of a typical plan. “Despite this setback, the funding level of the average pension plan improved over the first half of 2024,” they write. “Plan sponsors should ensure that their investment strategy adequately distinguishes between rewarded and unrewarded risks.” 

According to the June 30 pension indices the solvency index – set at 100 as of January 1 – stands at 107.6, down from 108.3 in May, but up when compared to every other month this year. The annuity proxy index in June was 98, commuted value index sat at 97.3 and the accounting index and plan asset index which measures asset levels since the beginning of the year were 107.1 and 105.2, respectively.