A strong equity market, a slight increase in interest rates and increased company contributions boosted the solvency of Canadian defined benefit pension plans during the first quarter of 2013.

According to Aon Hewitt, the global human resource solutions business of Aon plc, the median pension solvency funded ratio—or the ratio of the market value of plan assets to liabilities—was about 5 percentage points higher at the end of March than at the start of the year.

All the major factors influencing pension plan solvency position were favorable this quarter. Interest rates, while remaining close to record low levels, reversed their seemingly constant decline from the last few years. This pushed down the value of liabilities of pension plans, improving funding. The discount rate used to calculate the liabilities to be settled by annuity purchases in case of a plan termination went up from 2.96 percent at the beginning of the year to 3.04 percent close to the end of the quarter.