July 6, 2017 09:45
The solvency ratio of the median of the defined benefit plans declined in the second quarter from 96.7 % for the 1 April 2017 to 94.8% at June 30, 2017, according to the findings of the latest survey ofAon. In the first quarter, the performance of the assets of the pension plans had shown the highest rate since the financial crisis (3.2 per cent). In June, a change of scenery, it never reaches more than 1.6 %.
The report of Aon points to the decline in canadian equities, coupled with the decline in interest rates, to justify this decline in solvency. All, while the Bank of Canada announces the forthcoming end of the monetary easing.
«We feared during the last quarter that the market conditions that have given the record levels of solvency are likely to disappear quickly; indeed, it seems that our fears are manifested in the markets, especially in June, said Claude Lockhead, partner executive of the practice, retired from Aon Hewitt. For plan sponsors, the action remains the same, but it is more urgent; and with their plans still robust on the financial plan, the promoters must take steps to manage the risks within their plans. «
As at 30 June, nearly 37 % of plans that were fully funded, down from April, 1st (39 %). The interest rate of the purchase annuity, decreased by 6 basis points during the quarter.