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Pension Indices: August 2021

Pension Indices: August 2021

September 2, 2021

The Pension Indices by LifeWorks, released monthly, condense the journey that pension plans have experienced during the year into a few key statistics. More importantly, they also provide an early indicator of the challenges and opportunities that are yet to come for plan sponsors and administrators to help with the monitoring and management of their pension plans.

Highlights:

  • Over the month of August, the funded position of an average pension plan improved slightly on both the solvency and accounting basis.
  • Investment returns were 1.2% for the month for a representative pension plan portfolio. In general, returns on equities were positive, while returns on bonds were slightly negative.
  • Long-term Government of Canada bond yields increased by about 3 bps in August. Corporate bond yields also slightly increased for long term maturities, which led to a slightly lower value being placed on accounting liabilities for pension plans.
  • The accounting pension expense index continues to register a significant fall in next year’s anticipated pension expense compared to the start of the year.
  • Accounting and solvency funding levels have improved by about 10% and 9% respectively compared to December 31, 2020.
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