Canadian public and corporate defined benefit plans were a median 97% funded as of Dec. 29, according to Mercer (Canada), up 4 percentage points from the end of 2016 but unchanged from three months ago.

Separately, Mercer’s pension health index, which tracks the typical Canadian defined benefit plan based on 100% funding as of Jan. 1, 1999, was 106% funded at the end of the fourth quarter, the same as the end of the previous quarter but also 4 percentage points higher than a year earlier, Mercer said in a news release.

Surging equity markets helped maintain overall funding in the fourth quarter. Partially mitigating equity gains were long-term interest rates that fell 30 basis points in the quarter.

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The brief’s key findings are:

• Since 2001, the aggregate funded status of local pension plans has lagged behind that of state plans, but the gap has been closing recently for two reasons.
• First, local plans continue to receive more of their required contributions than state plans and are a bit more likely to use stringent funding methods.
• Second, in recent years, local plans have earned stronger investment returns than state plans, perhaps partly due to a lower allocation to alternative investments.
• Despite this progress, many local plans – like their state counterparts – still face significant funding challenges.

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