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Pension Indices: September 2021

Pension Indices: September 2021

October 4, 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 September, the funded position of a typical pension plan deteriorated on the solvency basis whereas it improved on the accounting basis.
  • Investment returns were negative, falling by around -2.5%. Bonds sold off in tandem with domestic and foreign equity markets as investors weighed the prospects of rising inflation and interest rates.
  • Non-indexed long-term Government of Canada bond yields increased by around 19 bps, whereas the equivalent but indexed bond yield increased by around 12 bps, an indication that market expectations for long-term inflation increased over the period. With credit spreads remaining broadly stable, corporate bond yields increased across the yield curve.
  • 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.
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