An improvement on the Toronto Stock Exchange in the third quarter helped improve the health of Canadian pension plans, a report by consulting firm Mercer suggests.

The Mercer Pension Health index, which measures the ratio of assets to liabilities for a model pension plan, stood at 80% at Sept. 30, up from 77% at June 30.

Mercer said strong returns boosted the index by two per cent with employer deficit funding adding the other one per cent.

“Unlike the second quarter, solvency liabilities were relatively stable as long-term government bond yields were virtually unchanged from June 30,” said Manuel Monteiro, partner in Mercer’s financial strategy group.

However Monteiro noted that while the third quarter was positive the majority of pension plans still face significant solvency deficits.

Mercer said Canadian stocks returned seven per cent in the third quarter to bring the return for the first nine months of the year to 5.4%.

The DEX Universe Bond Index gained 1.2% in the quarter for a year-to-date return of 3.3%.