Pension Indices: October 2022

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 October, the funded position of a typical pension plan improved on both a solvency basis and an accounting basis.
• The investment return was 1.8% for the month for a representative pension plan portfolio. The return for the first ten months of the year for the plan was -13.9%.
• The Canadian equity index finished the month with a strong return of 5.6%. On the other hand, returns for Canadian bond indices were negative as yields increased for bonds of all durations. Short-term Government of Canada bond yields increased by 0.13% during the month, whereas long-term Government of Canada bond yields increased by approximately 0.23%.
• Market expectations for long-term inflation (the break-even inflation rate) were approximately 1.97% at the end of October, which represents a 0.32% increase from the end of September.
• The accounting pension expense index saw a drop in October, as the discount rate increased.