Despite the challenges posed by high inflation and global economic volatility, the health of most pension plans in Ontario continues to improve, says the Financial Services Regulatory Authority of Ontario (FSRA) ‘Q1 2023 Solvency Report.
Despite the challenges posed by high inflation and global economic volatility, the health of most pension plans in Ontario continues to improve, says the Financial Services Regulatory Authority of Ontario (FSRA) ‘Q1 2023 Solvency Report.
Notably, pension fund investment returns averaged 4.3% during the first quarter, driving the median solvency ratio to an unprecedented all-time high as of March 31, 2023.
Caroline Blouin, FSRA executive vice president of pensions, says, "Most pension plans in Ontario continue to be well funded, which is good news for many pension plan members. With plans being well-funded, it may be an opportune time for plan sponsors and administrators to reassess their asset allocation and risk management strategy."
The report shows the median solvency ratio was 115% by the end of the third quarter, a 3% increase compared to the previous year. It also projects that 86% of pension plans are fully funded on a solvency basis, a 5% improvement from the previous quarter. However, 2% of plans continue to maintain a solvency ratio below 85%.
These findings highlight the overall strength and positive trajectory of most pension plans in Ontario while signaling the need for further attention to the minority of plans facing solvency challenges, it says.
