In June, the funded status of a typical pension plan improved on both the solvency basis and accounting basis.
The representative pension plan portfolio returned 1.2 per cent in June, driven by good performance across equity markets.
The global developed and emerging equity markets index returned 2.2 per cent in Canadian dollar terms and Canadian equities finished the month with a return of 1.1 per cent.
Short-term Government of Canada bond yields decreased by approximately 0.03 per cent and long-term Government of Canada bond yields decreased by approximately 0.02 per cent over the month. Corporate bond credit spreads increased by 0.02 per cent for short-term bonds and decreased by 0.03 per cent for long-term bonds.
Market expectations for long-term inflation (the break-even inflation rate) were approximately 2.06 per cent at the end of June, which represents a slight increase of 0.01% since the end of May.
“The first half of 2026 was anything but calm — a US-Iran conflict and resulting oil price shock, ongoing United States-Mexico-Canada Agreement (USMCA) renegotiations, and a technical recession in Canada all weighed on sentiment — yet Canadian defined benefit pension plans crossed the mid-year mark in one of their strongest funded positions in years," says Michael Reid, Partner in TELUS Health's Retirement & Benefits Solutions practice.
“On the asset side, Canadian and global equities delivered a strong first half — the S&P/TSX Composite finished the first half of 2026 up over 11 per cent and hit a record close near 35,390 on June 16th, with global equity markets recovering their post-Iran-conflict drawdown in fewer than 30 days. On the liability side, long-term Government of Canada bond yields decreased slightly on net over the first half, resulting in a modest increase in solvency and accounting liabilities. With much of the uncertainty that permeated the first half of 2026 continuing, mid-year is an opportune time for sponsors to revisit their financial risk frameworks and tolerances to ensure they are prepared for what the second half of 2026 may bring.”
