The solvency ratio for defined benefit pension plans in Ontario edged up in the second quarter of 2025, both from the previous quarter and year over year, according to two reports the Financial Services Regulatory Authority of Ontario (FSRA) published Wednesday.
The median solvency ratio of defined benefit pension plans in Ontario rebounded by three percentage points to 122% in the second quarter of 2025, compared with the quarter prior. The United States’ announcement of global “reciprocal” tariffs on April 2 led to a five-percentage-point decrease in the solvency ratio.
“Despite this setback, pension plans demonstrated resilience and recovered over the remainder of the quarter,” FSRA said.
The funded position of pension plans improved in 2024 compared with 2023, both on a going-concern basis (up one percentage point to 112%) and a solvency basis (up five percentage points to 112%).
The percentage of fully funded plans also increased by one percentage point to 84% on a going-concern basis and nine percentage points to 80% on a solvency basis.
The reports “illustrate that pension plan funding positions are sensitive to market conditions and reinforce the importance of ongoing vigilance and risk management by plan sponsors and administrators to achieve long-term sustainability,” FSRA said in a release.
As of June 30, defined benefit pension plans in Ontario on average allocated 53.3% of assets to fixed income products, 17.9% to foreign equities, 17.5% to Canadian equities, 6.3% to real estate, 3.9% to cash and short-term investments and 1.1% to other investment types.