Canadian Pension Plans Recover Q1 Losses as Funded Ratios Rise
Event summary
- Aggregate funded ratio for Canadian pension plans in the S&P/TSX Composite Index rose to 116.7% in Q2 2026, up from 111.4% in Q1.
- Pension assets increased by 1.6% over the quarter.
- Long-term Government of Canada bond yield climbed 33 basis points, while credit spreads narrowed by 9 bps, raising discount rate to 4.67%.
- Aon's Pension Risk Tracker has monitored this data since 2013.
The big picture
Canadian defined benefit pension plans have rebounded from Q1 losses, benefiting from rising bond yields and narrowing credit spreads. This recovery reflects broader trends in fixed-income markets and underscores the ongoing challenge for plan sponsors to manage long-term liabilities against a backdrop of economic uncertainty. The aggregate funded ratio's improvement highlights the sensitivity of pension health to macroeconomic factors, particularly interest rates.
What we're watching
- Market Volatility
- How sustained volatility will impact pension plan sponsors' strategies to shield their plans from uncertainty.
- Discount Rate Trends
- Whether the increase in discount rates will continue and its effect on future funded ratios.
- Asset Performance
- The pace at which pension assets grow amid fluctuating market conditions.
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