Half of respondents reported that their pension plans are fully funded on a going-concern basis, down significantly from 66% in 2019. Nearly two-thirds (62%) of large plans are fully funded, compared to 55% of small plans and less than a third (31%) of mid-sized plans. This year’s median going-concern funded status of 99% sits two percent below last year’s 101%.
Bouncing back?
Following a dismal first quarter of 2020, including negative median returns of more than 7%, Canadian defined benefit pension plans bounced back in the remainder of the year with positive quarterly returns of approximately 10%, 3% and 5% respectively, and an annual return of more than 9%. The returns are based on RBC Investor & Treasury Services’ All Plan Universe Survey, which tracks the performance of a cross-section of Canadian defined benefit pension plans.1
Despite favourable net returns in 2020, there was a significant year-over-year decline in the proportion of pension respondents that reported fully-funded plans (66% last year to 50% this year). This may indicate that favourable net returns were offset by the higher current value of pension liabilities, driven up by lower Canadian 10-year benchmark bond yields.
- Half of all pension plans
are fully funded - Less than a third of mid-sized plans
are fully funded
Canadian Defined Benefit Pension Plans
2020 Quarterly Median Returns1
2020 Quarterly Median Returns1
What is the current going-concern funded status of your pension plan?
1RBC Investor & Treasury Services, All Plan Universe Survey, December 31, 2020