Morneau Shepell Pension Indices February 28, 2021
The Morneau Shepell Pension Indices, released monthly, condense the journey that pension plans have experienced over the last year into a few key statistics. More importantly, they also provide an early indicator of the challenges that are yet to come for plan sponsors and administrators to help with the monitoring and management of their pension plans.
- The funding position for an average pension plan improved compared to December 31, 2020, as measured on both a solvency basis and an accounting basis.
- Increases in bond yields across the yield curve resulted in a fall in the value placed on plan liabilities, as well as a drop in the value of fixed income asset holdings, especially for long-term and real return bonds. The difference in short term and long term yields for government of Canada bonds has not been as high as currently since 2017.
- Plan assets for an average plan were broadly unchanged compared to December 31, 2020. The negative return experienced on fixed income assets was offset by increases in equity markets.
- Commuted values will continue to fall in March 2021 as commuted values are based on interest rates from the prior month.