The PBI Canadian Pension Solvency Index for the Period Ending March 31, 2016

The PBI Canadian Pension Solvency Index illustrates the development of solvency positions for a sample pension plan.

Canada’s economy grew at 1.2% for the full year ending 2015. This was less than half of the 2.5% GDP growth experienced in 2014 and the slowest since the 2009 recession. Much of the same is expected for 2016 as the economy continues to adjust to low oil and other commodity prices which, according to the Bank of Canada, may be the new normal. The tone coming out of the central bank in recent weeks has been more positive as a stronger manufacturing sector is offsetting some of the job losses in the oil patch. Gains made in a typical pension plan’s solvency since mid-2013 have been eroded by the combination of lower yields, negative capital market returns and the adoption of the CPM 2014 mortality table. Since reaching a cycle high 108% funded status in March 2014, the Pension Solvency Index has declined in almost every successive quarter. At the end of March 2016, the PBI Canadian Pension Solvency Index stands at 88%, down from 93% at the close of 2015.

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The PBI Canadian Pension Solvency Index for the Period Ending March 31, 2016