Negative market returns weigh on Q2 pension funding: FSRA

Impacted by negative market returns, Ontario’s defined benefit (DB) pension plans saw a quarterly decrease in funding, the Financial Services Regulatory Authority of Ontario (FSRA) reports.

According to the regulator, 79% of DB plans were fully funded as of June 30. At the end of the first quarter, 85% were fully funded.

The median solvency ratio of plans decreased in the latest quarter to 110% from 112% on March 31, ending a streak of eight consecutive quarters where the ratio improved.

Despite the challenging market environment, the percentage of plans falling below an 85% solvency ratio only increased marginally to 3% from 2% in the previous quarter.

Pension fund investment returns were negative for the quarter across all major asset classes for an average net return of -10.9%. That compared with the S&P/TSX Composite index’s -13.2% return and the MSCI World index’s -13.4% return.

Ontario pension funds are averaging year-to-date net returns of -16.0%.

The average pension fund has an asset mix of 49.2% fixed income, 41.5% equities, 5.6% real estate, 2.5% cash and 1.2% other.

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