Canadian DB pension plans’ median solvency ratio decreases to 123% in Q1: report |
The median solvency ratio among Canadian defined benefit pension plans was 123 per cent as of March 31, according to a new report by Mercer Canada.
It attributed the finding to recent valuation results, along with the use of contribution holidays by employers. Compared to the end of 2025, market fluctuations didn’t impact the decrease in median solvency ratio, the report noted.
At the end of the quarter, 59 per cent of plans had a solvency ratio of 120 per cent or more, while 87 per cent had a solvency ratio of 100 per cent or more and 13 per cent of plans were in a deficit position.
Read: Report finds solvency ratio of typical DB pension plan decreased to 100.7% in February
During the quarter, interest rates increased slightly, which resulted in a small decrease in the value of pension promises. Returns on investment were slightly lower as well. Overall, the decrease in liabilities was offset by a similar decrease in assets, resulting in a neutral position.
A similar report by Aon found the aggregate funded ratio for Canadian DB plans in the S&P/TSX composite index decreased to 111.4 per cent in the quarter, compared to 112.6 per cent at the end of last quarter.
It noted pension assets decreased by 0.9 per cent, while the long-term Government of Canada bond yield increased three basis points relative to the previous quarter rate and credit spreads widened by six bps. This combination resulted in an increase in discount rate of nine basis points, to 4.78 per cent.
“The first quarter of 2026 was volatile, with strong equity returns in January and February, followed by declines in March amid the geopolitical context,” said Nathan LaPierre, a partner in Aon’s Canadian wealth solutions practice, in a press release. “Despite this environment, funded positions remained relatively stable with only one per cent decline. However, as uncertainty might continue into 2026, plan sponsors should continue to look for strategies that will provide better outcomes.”
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