In the first quarter of 2021, the funding status of defined-benefit (DB) pensions in Ontario surged to its best level since the financial crisis.
The Financial Services Regulatory Authority of Ontario (FSRA) reported that the median solvency ratio for the province’s DB pensions rose to 103% (as of March 31), up from just 85% in March 2020 when the Covid-19 pandemic began.
In the first quarter, the median solvency ratio rose from 98% at the end of 2020, as “changes in the solvency discount rate offset negative investment returns,” the report said.
FSRA also said more than half (60%) of plans had a solvency funded ratio of over 100% at the end of March.
“Pension plans are at their best funded positions since the 2008 global financial crisis,” the regulator said, noting that this is only the second time since the crisis that the median solvency ratio has topped 100%.
The report noted that the improved funding “is a good time for [plan sponsors and administrators] to review the situation and make adjustments if needed in order to protect the improved funded position of their plans.”