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Administration April 13, 2007
Canadian DB Plans Seeing Major Funding Improvements
April 13, 2007 (PLANSPONSOR.com) - Canadian pension
plans have reached their highest funding levels in nearly
five years on the back of favorable investment returns,
according to a study by Watson Wyatt Worldwide.
Reported by Fred Schneyer
A news release from the consultant’s Canadian unit said the funded ratio for a typical pension plan increased to 98% at the end of first quarter of 2007 vs. 86% at the beginning of 2006.
According to the announcement, the improvement was driven by a combination of rising stock markets and a modest increase in bond yields.
However, pension plan funding levels remain well below first-quarter 2002 levels, when plans were nearly 110% funded, according to Watson Wyatt.
Other study conclusions were, according to the announcement:
- Since December 2005, aggressively invested funds (i.e. those with a higher commitment to equities) have fared better than more conservatively invested funds with a lesser commitment to equities. All have performed better than long term expectations.
- As a result, with interest rates having little difference at March 30, 2007 than at December 31, 2005, there has been a general improvement in funded ratios since January 1, 2006.
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