The median projected solvency ratio for Ontario defined benefit pension plans was 123 per cent as at June 30, 2024, up slightly from 122 per cent as at March 31, according to a new report by the Financial Services Regulatory Authority of Ontario.
It found this increase was attributable to a rise in solvency discount rates as well as an average pension investment return of 0.6 per cent.
Read: Ontario DB pension plans’ average solvency ratio increases to 122% in Q1 2024: FSRA
The vast majority (90 per cent) of pension plans were projected to be fully funded on a solvency basis, with just two per cent of plans falling below an 85 per cent solvency ratio, unchanged from last quarter.
“Over the past four years, pension plans have shown remarkable financial resilience despite facing significant market fluctuations,” the report noted. “This steady performance has helped to enhance public confidence in the pension sector and the significant role they have in providing financial security and contributing to the economy.
“Although recent successes provide a solid foundation, the possibility of future interest rate cuts, unforeseen changes in the financial landscape and new challenges are inevitable, putting pressure on the funded position of pension plans. Plan sponsors and administrators must continue to be proactive in understanding and assessing how future uncertainties might impact their pension plans.”
Read: Ontario DB pension plans’ average solvency ratio increased to 119% in Q4 2023: FSRA