Solvency funded status of typical
employer-provided pension plan was stable in third quarter,
opening door to adjustments in risk management
TORONTO, Oct. 31,
2024 /CNW/ - Two new investment and pension
management reports released today by TELUS Health - Pension Indices
and Performance Universe - indicate enhanced stability in pension
plan solvency and consistent positive returns for the third quarter
of 2024. This is a welcomed overall indicator for the financial
security of individual employees and retirees, as well as the
improving health of the economy in general. Solvency stability is
good news for pension plan administrators who will be better
equipped to adjust risk management approaches in response to new
guidelines from the Canadian Association of Pension Supervisory
Authorities (CAPSA).
"When individuals are confident in their future financial
security, especially when it comes to long-term retirement
planning, they are more likely to spend money and stimulate
economic growth," said Philip
Mullen, Vice-president, Employer Solutions Consulting, TELUS
Health. "Reliable pension plans can also lead to more stable
investment strategies that contribute to overall market stability.
Additionally, they have labour market effects that can impact
retirement planning, employee retention and job satisfaction – all
important contributors to individual financial wellness."
Pension Indices: Positive investment return driven by
strength of equity and bond markets
The September 2024 Pension Indices
by TELUS Health, which includes a detailed overview of results from
the third quarter of this year, show that the funded status of a
typical pension plan increased on a solvency basis in the last
month, but decreased on an accounting basis. When looking back
across the entire third quarter, solvency actually remained
unchanged with the accounting index increasing by 1.6 per cent.
"While the funded ratio of a typical pension plan improved by
roughly 8 per cent on a solvency basis during the first nine months
of 2024, largely driven by strong equity markets returns during
this period, the solvency funded ratio stabilized in Q3. Defined
benefit pension plans continue to be well funded heading into the
fourth quarter of the year," said Gavin
Benjamin, Partner at TELUS Health's Consulting practice and
leader of the Pension Indices team. "Pension plans remain in a
solid position heading into the fourth quarter, but financial
market risks continue to pose a potential threat to their
stability, warranting additional focus on risk management in many
cases."
Performance Universe: Positive returns for Q3, but below
benchmarks
The second report, TELUS Health's Performance Universe of
Pension Managers' Pooled Funds, found that in the third quarter of
2024, diversified pooled fund managers posted a median return of
6.2 per cent before management fees and 13.3 per cent since the
beginning of the year.
"The financial position of a typical pension plan at the end of
the third quarter was nearly identical to that we noted on
June 30," said Jean Bergeron, Partner - Investment Consulting,
TELUS Health and head of the Performance Universe group. "During
the third quarter of 2024, diversified pooled fund managers
performed, on average, 0.4 per cent lower than the return of the
benchmark portfolio used by many pension funds."
Stock and bond markets continued to progress during the third
quarter of 2024. Key highlights of the Performance Universe report
include:
- The S&P/TSX Composite Index of Canadian equities posted a
return of 10.5 per cent for the quarter.
- The MSCI World Index posted a return of 5.0 per cent (in
Canadian dollars).
- The S&P 500 equity index increased by 4.4 per cent (in
Canadian dollars).
- The Emerging Markets Index rose by 7.3 per cent (in Canadian
dollars).
- For fixed income securities, the Canadian bond market increased
by 4.7 per cent.
High solvency ratio offers more flexibility to adapt to new
guidelines
The strong pension plan solvency funded ratios open the doors
for pension plan administrators to more quickly adjust to new
guidelines for risk management, adopted by CAPSA in September. The
new guidelines set the industry standard for the management of
Canadian pension plan risk, consolidating and updating approaches
to cybersecurity, leverage, third-party advisors and service
providers, investment governance, and environmental, social and
governance (ESG) policies. The next step is for pension plan
administrators to review their risk management framework to align
their practices with the new guidelines. Conducting such a review
now, while plans remain well-funded, is the recommended approach
for administrators, as the options available to manage a pension
plan's financial risks tend to be much more affordable compared to
when a plan has developed a significant deficit.
"Our focus on wellbeing is what drives us. Our expert team is
constantly combing through data to provide the most current
information to the industry supporting critical decision-making in
pension plan management helping managers mitigate risk, all with
sustainability and financial wellbeing in mind," added Mullen.
About TELUS Health's Investment Management reports
Pension Indices are released by TELUS Health on a monthly basis,
while the Performance Universe report is published at the end of
each fiscal quarter. As a major supplier of analytical expertise to
employers across Canada, TELUS
Health investment management experts harness the power of data and
technology to help clients and industry stakeholders make informed
business decisions. Our regular reports include:
- Pension Indices by TELUS Health: Providing valuable
insights into the state of pension plans in Canada, TELUS Health Pension Indices condense
the journey that pension plans have experienced during the year
into a few key statistics, offering an early indicator of the
challenges and opportunities that lie ahead for plan sponsors and
administrators. Reports are released monthly, with significant data
announcements at the end of each quarter. To access the
September 2024 report, please visit
here.
- TELUS Health Performance Universe of Pension Managers'
Pooled Funds: These quarterly reports analyze the performance
of about 311 pooled funds managed by nearly 45 investment firms in
Canada. The managers who
contribute to the Universe manage assets totaling approximately
$470 billion, including pension fund
assets of over $230 billion. The data
from these reports have provided leading portfolio managers key
insights for over four decades, and help them make informed
decisions and ensure the long-term financial health of a sponsor's
pension plans. To access the full report for Q3 2024, please visit
here.
Investment management services are provided by TELUS Health
Investment Management Ltd. (THIM). THIM is registered as a
portfolio manager, investment fund manager and exempt market dealer
in various provinces across Canada
with the Ontario Securities Commission as its principal regulator.
THIM is a wholly owned subsidiary of TELUS Health (Canada) Ltd. and is indirectly owned by TELUS
Corporation, a public company trading on the TSX ("T") and NYSE
("TU").
About TELUS Health
TELUS Health is on a mission to become the most trusted
wellbeing company in the world by enhancing the overall efficiency
of healthcare and championing workplace wellbeing. By integrating
advanced healthcare technology with comprehensive employee support
services, TELUS Health provides a holistic approach to primary and
preventive health and wellbeing for over 75 million people across
160 countries. Our innovative digital health platforms, including
electronic medical records (EMRs) and virtual care solutions,
empower healthcare professionals, individuals, employers and
governments to deliver personalized care efficiently. Our employee
wellbeing programs offer extensive support through Employee
Assistance Programs (EAPs), mental health resources, financial
counselling, and workplace wellness initiatives. At TELUS Health,
we are committed to revolutionizing healthcare to ensure people
receive the support they need and employees thrive both personally
and professionally. Together, let's make the future friendly. For
more information, visit: www.telushealth.com.
For media inquiries, please contact:
Jill Yetman
TELUS Media Relations
jill.yetman@telus.com
SOURCE TELUS Health