Ontario's defined benefit pension plans strong despite dip in solvency ratios: FSRA update
December 19, 2024
Ontario’s defined benefit (DB) pension plans remain in strong funded positions despite a slight drop in solvency ratio levels, according to the Financial Services Regulatory Authority of Ontario’s (FSRA) latest quarterly update.
The report for the third quarter of 2024 revealed that the median projected solvency ratio for DB plans was 121 per cent, as of Sept. 30, 2024 — a slight decrease from the second quarter, when the ratio stood at 123 per cent. It also marked the first decline in median solvency funding levels after seven straight quarters of growth.
Although the results indicate that DB plans remain well funded, FSRA said the blip “serves as a reminder to plan sponsors and administrators to remain vigilant, be future-focused and strategic in managing plan risks as market conditions evolve.”
Other highlights from the report include:
- 90 per cent of plans were projected to be fully funded in Q3, unchanged from Q2.
- Only 2 per cent of plans had a solvency ratio below 85 per cent in Q3, also unchanged from Q2.
- Investment returns were positive across all asset classes in Q3, averaging a net return of 6.3%.
- Solvency discount rates decreased since Q2, resulting in an increase in plan liabilities, largely offsetting the impact of asset gains over the quarter.
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