Solvency of Ontario DB pension plans edged up in Q2

The funded position of defined-benefit pension plans in Ontario continued to improve in the second quarter, says the Financial Services Regulatory Authority of Ontario (FSRA).

The provincial financial services regulator released its quarterly solvency report on Thursday, showing the improved position of DB plans in the province, though gains were modest compared to the previous two quarters.

Still, the median solvency ratio reached another new all-time high, the report said, at 116%. That was up one percentage point from the previous quarter, and up three percentage points from the end of 2022.

The percentage of pension plans that were projected to be fully funded on a solvency basis was unchanged in the quarter, at 86%, the report said, and 2% of plans fell below an 85% solvency ratio, also unchanged from last quarter.

Plans eked out positive returns in the quarter, averaging +0.7%. The S&P/TSX composite returned 0.3% over the same period.

While plans were “healthy in general,” the report said, and solvency ratios have improved in aggregate, “a significant proportion of plans saw a deterioration in the funded ratio.”

The regulator urged plan administrators to develop a strategy to assess and mitigate risks.

Administrators “must ensure their plan continues to deliver promised benefits in challenging situations, e.g., when funding costs increase,” the regulator said in a release.

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