The median solvency ratio of defined-benefit (DB) pension plans in Ontario remained stable at 124% in the final quarter of 2025, the same as the previous quarter, according to a report from the Financial Services Regulatory Authority of Ontario (FSRA).
“After a volatile first half of 2025, the year finished on a strong note, driven largely by positive equity market performance and the continued resilience of Ontario’s pension plans during the second half,” Andrew Fung, executive vice-president of pensions at FSRA, said in a statement. “Plan sponsors and administrators should remain vigilant in the face of potential risks in 2026, including interest rate movements, equity market corrections and ongoing geopolitical and economic uncertainty.”
The percentage of pension plans that were projected to be fully funded on a solvency basis was 92% as of Dec. 31, 2025, the same as the previous quarter. Like the last quarter, only 2% of plans had a solvency ratio below 85%. Meanwhile, 6% had a solvency ratio between 85% and 100%.
Net investment returns in the fourth quarter averaged 0.6%, with the net return for all of 2025 at 7.7%.
Most DB pension assets were in fixed income (54%), followed by foreign equities (18.6%) and Canadian equities (16.8%), the report noted. Meanwhile, real estate (4.4%) and cash and short-term investments (4.8%) had relatively small asset allocations.
Solvency discount rates also changed in the third quarter. The non-indexed commuted value discount rates for the select and ultimate periods both fell by 30 basis points from the previous quarter. Meanwhile, the non-indexed annuity purchase discount rate rose by 26 basis points. As a result, most plans saw a slight increase in pension liabilities.