The median solvency ratio of defined-benefit (DB) pension plans in Ontario rose to a new high of 124% in the third quarter, up from 122% the previous quarter, according to a report from the Financial Services Regulatory Authority of Ontario (FSRA).
The percentage of pension plans that were projected to be fully funded on a solvency basis was 92% for the quarter, compared to 89% the previous quarter. Only 2% of plans had a solvency ratio below 85%, representing a one-percentage-point decrease on a quarter-over-quarter basis.
Net investment returns in the third quarter averaged 4.6%, with gross returns at 4.9%.
“Pension plans remain financially strong, with the median solvency ratio reaching a new high, primarily driven by robust equity returns in Q3 2025,” FSRA said. “In the face of ongoing trade uncertainties, market volatility and a potentially weakened Canadian economy, it serves as a reminder that achieving a pension plan’s sustainability is not a one-time exercise; rather, it requires continuous commitment, strategic planning and active oversight.”
Most DB pension assets were in fixed income (53.5%), followed by foreign equities (17.7%) and Canadian equities (17.3%), the report noted. Meanwhile, real estate (6.1%) and cash and short-term investments (4.2%) 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 increased by 10 and 40 basis points from the previous quarter, respectively. Meanwhile, the non-indexed annuity purchase discount rate decreased by 20 basis points. As a result, most plans saw a slight increase in pension liabilities.