Defined benefit (DB) pension plans in Ontario closed out 2024 on a solid footing. That’s according to the Financial Services Regulatory Authority (FSRA) of Ontario’s latest quarterly solvency report.
The median solvency rate at the end of last year’s fourth quarter was 122%.
“It has been a remarkable year for pension plans as they closed the year with robust funding positions from strong market gains and steady interest rates,” said Andrew Fung, FSRA executive vice-president, pensions.
The median solvency ratio — a measure of the market value of plan assets against solvency liabilities — held steady above 120% throughout 2024, “the highest since FSRA started monitoring in 2009, according to a media release.
Nine in 10 plans (91%) reported a solvency ratio above 100% in Q4. Seven per cent were between 85% and 100%, and 2% were below 85%.
Solvency discount rates rose overall between the third and fourth quarters, which lowered plan liabilities. Those rates are a measure of the present value of each plan’s future liabilities, assuming the plan is terminated and member benefits are settled at market rates.
Based on Investment Information Summary (IIS) document filings, the average plan portfolio held 53.1% of its assets in fixed income, 18.3% in foreign equities, 17.8% in Canadian equities, 6.2% in real estate, 3.3% in cash and short-term instruments and 1.3% in other investments.
This is the 16th consecutive quarter in which the median solvency funded ratio among Ontario DB plans has come in above 100%.