The plans that were in the worst shape – among them Bombardier Inc. and Resolute Forest Products Inc. – had hundreds of millions in unfunded shortfalls at the end of 2019, and have almost certainly seen those shortfalls balloon since.Corporate pension plans that came into the coronavirus crisis in weak shape are markedly less healthy now, and are facing hundreds of millions of dollars in new contributions to fix looming shortfalls.
Based on pension data compiled by S&P Global Markets from 150 Canadian companies’ most recent annual reports, corporate pension plans on average were 98.7-per-cent funded at the end of 2019. But there were that 67 were less than 85-per-cent funded, as measured by the ratio of assets to liabilities. “Given the massive drop in bond yields on government bonds, pension deficits should rise significantly, precisely at the wrong time when companies may have to face a potential economic downturn,” says Dimitry Khmelnitsky, an analyst at Veritas Investment Research Corp. who has authored the company’s reports on pension health at TSX-listed companies.
About one-third of Bombardier’s roughly $9.5-billion in pension assets were invested in the stock market at the end of 2019, the company’s annual report says. The company doesn’t break out its Canadian defined-benefit plans separately, but about 5,300 of Resolute’s 7,100 employees are in Canada.