Pension Indices: November 2022

The Pension Indices by TELUS Health, 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 November, the funded position of a typical pension plan improved on a solvency basis but declined slightly on an accounting basis.
• The investment return was 5.2% for the month for a representative pension plan portfolio, driven by a partial rebound in equity markets and a decrease in bond yields. The return for the first eleven months of the year for the plan was -9.4%.
• The Canadian equity index finished the month with a strong return of 5.5%. Returns for Canadian bond indices were also positive as yields decreased for bonds of all durations. Short-term Government of Canada bond yields decreased by 0.03% during the month, whereas long-term Government of Canada bond yields decreased by approximately 0.31%.
• Market expectations for long-term inflation (the break-even inflation rate) were approximately 1.87% at the end of November, which represents a 0.10% decrease from the end of October.
• The accounting pension expense index saw an increase in November, as the discount rate decreased, but is still well below the beginning of year index value.